Thursday, 25 September 2014


This is an article I found on the internet by Michael Yardney, a popular property commentator.
I have republished it without alteration because it is spot on. I hope you all get something out it.

·         Michael Yardney
·         Michael Yardney's Commentary, Property Investment, Where to buy investment property
·         September 25, 2014

Everyone knows that location is critical when selecting an investment property that will outperform.

But what makes a good location and why are some locations better prospects than others?

When I started investing around 40 years ago the emphasis for homebuyers was largely affordability and proximity to infrastructure.

The outer fringes of our capital cities were developed in the wake of freeway extensions on all sides and commuting from vast, newly born suburbs into the CBD became commonplace.

As far as amenities went, as long as you had a relatively easy drive to your place of employment, as well as nearby shops, healthcare services and schools, life was pretty good.
It’s different today

Nowadays the property choices Australians make are still driven by lifestyle, but how we think and function in today’s world has changed.

With more than half Australian households having only one or two people in them, more of us are:

·         Choosing to start a family later in life.

·         Enjoying the opportunity to work flexible hours and from home offices.

·         Seeking better work-life balance and prioritizing downtime before overtime.

·         Opting to live within walking distance from not only infrastructure necessary for daily living, but also cafes, restaurants and recreational facilities, as lifestyle moves to the top of the owner-occupier and tenant wish list, alongside affordability.

·         Downsizing to easily maintainable and cost effective apartments and townhouses, with smaller gardens and more efficient, compact design.
A short stroll to success

This means that “walkability” has become the new buzzword on the property investment block.

Of course proximity to amenities such as shops, parks and public transit that allows local residents to either walk or take a short train, bus or tram ride, has long underpinned property values in inner city neighborhoods throughout the developed world.

But now we are witnessing a similar trend across an increasingly cosmopolitan Australia.

In fact it is common for a considerable premium to be paid for properties that are a short walk to the beach or café strips and long term capital growth figures show that in Sydney the city’s most “walkable” suburbs have outperformed the averages by up to 20%.
Where it’s “at” – the café culture

It should come as no surprise that as our lives become busier and time is in increasingly short supply, cafés have become a kind of transition point where we meet up with friends, family and often business associates for a “catch up”.

Many city dwellers have their favored haunts, where they’re on a first name basis with the local barista and have a “regular” order.

The serving and consumption of coffee has become somewhat of a ritual and many of us fancy ourselves as coffee connoisseurs.

Given that more of us are living alone or in smaller households, it’s not surprising that the relaxed, “home away from home” vibe of inner city cafes is becoming an increasingly popular draw card for those seeking a familiar social outlet.
Lifestyle locations dominate

Yes…lifestyle has undeniably become the fundamental force in today’s residential real estate market.

Culturally, we have become a nation that enjoys strolling to the local corner eatery to catch up with friends or just enjoy some time out with a latte.

But it’s not only suburbs close to beach and bay that command premium. Proximity to schools with a good reputation is a must for many family buyers, with some purchasers prepared to pay extra to be within a particular school catchment zone so their children can either walk, bus or “train it” to school.

In fact in my experience, parents are more willing to spend half an hour or more driving to work if it means their children can safely walk to an esteemed, local school.
Australian cities have now been ranked by Walkscore

As our population grows and our major cities increase in population by an estimated 10% over the next five years the walkability of an area will be become an even more important consideration for property investors seeking locations that will outperform into the future.

Well…now you can find out how “walkable” your suburb is., which measures the number of typical consumer destinations within walking distance of a dwelling, with scores ranging from 0 (car dependent) to 100 (most walkable) has recently ranked more than 100 Australian cities and 3,000 suburbs.

And the good news is that walkable neighborhoods were recently recognized for their health and economic benefits afforded to residents by the University of Melbourne, where a ten year study found good access to local infrastructure encouraged more people to ditch the drive and adopt “health-enhancing behaviors”.

For property punters, the cultural transition that Australians are currently undergoing is important to note.

It signals an end to the suburban Mc. Mansion “fad” and demonstrates just how crucial demographic waves of change can be to planning and executing a successful, long term property portfolio.

While affordability will always be a factor in our property decisions, lifestyle is the fundamental key in our marketplace today.

Inner city, bayside apartments filled with character and complemented by flowing, commonsense floor plans, with excellent nearby lifestyle amenity have become the “new black” in residential real estate for many buyers – young and old.

This is where investors would do well to focus their property investment activity in years to come.


Thursday, 18 September 2014

Why finance is the reason you invest in property

Why finance is the reason you invest in properties –

property itself is merely a vehicle...

We all know the quickest way to create wealth is to use other people’s money, and this is exactly what finance is all about. Property happens to be one of those asset classes that can convince other people to lend you their money easily. The underlying growth of the property itself is not necessarily better than other assets such as shares, but their price stability and sustainable growth over long term have enabled us to use more of other people’s money.

Investing in anything ( not necessarily property) is about getting the best return with the lowest possible risk.  And there is always a balance of risk and return to consider before starting our on any investment activities.

But it can also increase your risk and lower your return through


if you don’t manage it properly.

Ironically, the majority of property investors spend most of their time and effort searching for the best

property deals. They will seek finance to match the deal they find. In fact, a lot of them fall in love

with the deal even when there is very little finance available to make it a viable investment.

The message is that you should start with finance in mind before

you look for any property deals.

If you know what finance options are available to you before you start looking, you’re more likely to

stick to your investment strategy and get the return that you want.

Property deals are merely the

vehicle you choose to realise the finance strategies available to you, not the other way


. Unfortunately 90% of property investors do it the other way around.

Many property investors believe that property finance is about getting the cheapest interest rate.

Interest rate is definitely not unimportant

, but for investors who have a set of finance strategies in

place, it’s normally the last thing they consider after many other components such as:

gearing ratio


terms and conditions, etc.

House prices ALWAYS go up!

Some interesting data came out of the Reserve Bank recently. They have been tracking house prices and movement back to 1950. That is even before I was born… just.

It turns out that house prices have gone up since 1950… what!

They pay people lots of money to come up with that sort of revelation.

But actually the research has been more useful than just that because what they have done to give it more relevance is to strip out inflation.

So when it says that the median house price was about $100,000 in 1950, that wasn’t what the market price was back then, it was a lot less. That is in 2014 dollars, given what money buys you today. It is an interesting way of looking at it.

So when you look at the graph above you will notice that it was fairly flat through the late 70s and early 80s spiked in the early 90s to catch up to where it should be if you drew an average line through the graph and then flattened again later in the 90s. That was when inflation was high. So for example, if inflation was 17% as it was during the 80s and the graph is flat that means that property was keeping pace with inflation, hence 17 – 19% growth. Those of us that invested then will know that was the case. I bought quite a few apartments in those days and they doubled in value in just over 3 years.

So what does all this mean for the average investor?

It means that house prices go up consistently even during periods of high inflation.

It means that property is a good investment even in bad times so long as you hang on through the tough times.

It also means that anyone investing for anything less than about 7 years is gambling with the possibility that that might have hit one of the flat periods.

We have just gone through one of those flat periods similar to the early 90s so it would be reasonable to suggest that we might see a few years of catch up growth.

But it is important to realize that these figures represent the average… and there will be properties that underperform the average and there will be some that will out preform the average. That is where Investment Property Finders can help!

Give us a call on 1300 131099 if you are considering property investment in the next 12 months.


Wednesday, 3 September 2014

Who influences your property investment decisions?

Who influences your property investment decisions?

Family, friends, the media, your next door neighbour or your hairdresser…
Everyone has an opinion about property investing. A lot of our clients that come through our doors seem to be making property investment decisions without accurate information.

There is also a lot of misinformation out there.

Take one of our clients for example. He had some general questions about positive cash-flow property. It quickly became apparent that he had been sold on a story that doesn’t address his needs and goals, but was a good and compelling story none the less.
If he went ahead he might have a property that was going to put a few dollars in his pocket each week but if it did not grow in value (or even went down in value) over the long term what had he really achieved other than to tie up his borrowing potential and expose himself and his family to risk of a change in circumstances?

And then I realised that therein lies the problem, a lot of the misinformation about property investment is based around what are quite compelling stories. But those stories leave out crucial pieces of information or don’t address the real needs of the client.
It is the compelling nature of the story that gets people hooked. And then it is hard for them to see the truth without being embarrassed.
I guess that “spin” has found its way from Government and Politics and into property investment, and that is a real shame. (Safety Cameras... Ha! they are just Cameras the rest is "spin")

Take NRAS for example; thankfully it is gone now, but when it was being promoted the marketing material said that these properties were aimed at providing affordable rental accommodation to service industry worker like Teachers, Police Officers and Ambos etc.
But the bit they glossed over was that the maximum income an NRAS tenant could earn was less than about $50,000 per annum for a single person and a bit more for married and families. The only Teachers etc. that would earn less than that income would be working very part-time. So who was it really aimed at?

What NRAS really was, is social housing. The Government wanted to get out of providing housing to those that can’t afford it. The cost to them in unpaid rent and damaged properties was overwhelming their budget. So to pay $10,000 pa to get someone else to take on the problem was a bargain.
I am not saying that every NRAS property was a disaster. There are some very nice people renting NRAS properties but we have been told by some of the Property Managers that there is a higher than average number of NRAS properties that are significantly in arrears with their (discounted) rent and similarly large number that have been badly damaged. These were brand new houses, and unfortunately a lot were in areas that will not experience much growth over the long term. Particularly given the high numbers of NRASs that were built in some suburbs. So they could be hard to sell in the future and by the time you repair the damage will be over capitalised if they are not already.

But on the other side of these transactions were very high commissions paid to the sales agents in a lot of cases as encouragement to “sell the story”. It is a bit like I heard that Malaysian Airlines were paying Travel Agents double commission if they could get people to fly with them. Is that the right way to sell a product or to fix a problem?
This is just a couple of example of the misinformation that is guiding people into making poor investment decisions.


What we do is look at your circumstances and your needs and goals.
Then we establish a budget of what you should spend on a property in both total price and a net cost per week.
We then locate properties that fit into that total price budget and do some extrapolations as to what growth should be achievable from that property given the history of the area and what upcoming economic factors we know about that might affect the future.
We then compare that to the net cost to determine whether it is a worthwhile investment. Sounds simple when you put it like that!
What we wish for is that all property investors were able to get more accurate and reliable information before making a property decision?
So email me your questions and I will do my best to get back to everyone.
All the very best to you...

Graeme Clark