Spending six years travelling across Australia to invest on properties has given Kevin Sum the experiences he needed to grow into a more sophisticated investor.
From playing it safe in regional areas to exploring more industry-diverse towns, one could say that he really has learnt his way through the Australian property markets by taking risks.
Aside from ensuring that yield play is good, Kevin also offers some more great advice to help investors find the right town, the right suburb and the perfect property to purchase:
Research on cheap properties
While cheap is usually good, it will always do good to ask why. Kevin spent hours every night on real estate websites studying properties in Brisbane before deciding to buy one of his nine properties in the Deception Bay.
“Brisbane ... it’s a capital city which I had no idea about. I look at relative value, so I start off in suburbs near the city then go further out. So it’s like, ‘Okay, why is this suburb much cheaper than that suburb, but it’s only like a five-minute drive?’ Then I start researching into it. ‘Okay, that’s a flood’ or ‘What type [of] demographics? Is there potential? Is there infrastructure?’" he told Smart Property Investment.
Kevin added: "For example, Springfield and Redbank Plains is like five, 10 minutes’ drive. Why is Redbank Plains much cheaper than Springfield? Yes, Springfield has a lot of infrastructure, but when you’re talking about a 10 minutes’ drive, it doesn’t really matter. I just look for relative value."
Be wary of easements
One reason why a property is being sold at a low price might be easements, or “some restrictions to doing anything to the property,” according to Kevin.
It is possible to get attached to a potential purpose of a property and look past an easement, rationalising by saying “We’ll fix it later” or “It doesn’t really matter.” However, this seemingly basic problem is actually one of the fundamental things that can change the upsides in investment.
Kevin said: “An example might be, if there’s a sewer drain, a council sewer drain, or a rain water drain – a lot of houses might be effected by the gas pipe. Building up, there might be restrictions on how tall you can build. If there [are] easements, then depending on what easement, it’s probably another ‘forget about it.’”
Be fluid and organic
Study the area and the property thoroughly, but be open to different options. While it is good to have a checklist of the things you’re looking for in a property, according to The Smart Property Investment host Phil Tarrant, you can often trust your gut when it comes to property investing.
“You just get a gut feel for it and you start to sort of ... I guess you start drawing the dots, right? You start going, ‘Okay, that’s right. It’s got that, it’s got that. Let’s explore this place a little bit further,’” he said.
Whichever plan of action you choose to jump-start your property investing journey, make sure to keep your head on one primary goal – to grow and evolve as an investor.
Tune in to Kevin Sum's episode in The Smart Property Investment Show to know more about his exceptional cross-country investment journey.