How to do property investment research right
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How to do property investment research right

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1 minute read

How to do property investment research right

February 07, 2018

Aside from being the director and location researcher for wHeregroup, Todd Hunter also spends most of his time managing his 50-property portfolio. How does he do it all at the age of 31?

Constant research is instrumental to success in property investment, but only a few have mastered the skill of determining the exact elements that indicate which suburbs are primed for growth, Mr Hunter said.

According to him, hotspots are often hard to identify because the moment everyone knows about them, they will almost instantly cease to provide good deals and bargains.

Fundamentals 

Between March 2014 to February 2016, Mr Hunter has invested in seven suburbs in Brisbane, including Kallangur, NarangbaNarangba, QLD Narangba, QLD, Dakabin, Griffin, Murrumba Downs, Petrie and Lawnton.

These areas, he said, were tagged as 'poor performing markets' following the global financial crisis and the flooding in Brisbane—meaning he had less competition and he could enjoy significantly reduced prices.

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Moreover, the suburbs are also located between 25 km to 35 km north of Brisbane’s CBD.

Mr Hunter shared three other factors that influenced his decision:

1. Ability to secure under $400,000
2. Houses, not units, nor townhouses nor subdivided blocks
3. Capital city suburbia or large regional

The quality of transportation, education, and employment in the area are also among his criteria when picking a suburb to buy properties in.

Special criteria 

Aside from the fundamentals that he shared above, Mr Hunter also considersTodd also considers his gut feel as the main criterion when choosing the location of his next property.

Throughout his journey, he has made it a point to inspect properties on the ground before purchasing them.

In fact, there are many suburbs he has walked out from mainly because of this special criterion, including Whyalla, Midland WA, Elizabeth SA, and Logan Shire.

According to him, every suburb offers different opportunities, which may not be apparent if you only check out brochures or websites.

The investor explained: “In Lawnton, Petrie and parts of Kallangur there were some great older, three bedroom houses that offered opportunities to value add through low-cost renovation.”

“In Narangba, Griffin and Dakabin, I only purchased four-bedroom, two-bathroom houses with double garages that were 8-12 years old.

“Kallangur had some of these houses too as there is an old section plus a new section to the suburb [while] Murrumba Downs were more three-bedroom, two-bathroom houses built in the early 2000s,” he added.

Consider infrastructure, but...

Although many investors believe that infrastructure plays a big part in an investment’s success, for Mr Hunter, it should not be a great consideration when choosing suburbs to invest in.

According to him, a property market can stay dead even with the best infrastructure projects in motion.

As prime examples, the very suburbs he has chosen to invest in has grand projects that were already approved and underway, but their markets remained poor-performing for quite some time.

He said: “Not even the volume of projects with all those benefits to investors and home buyers made an ounce of difference to consumer confidence in the dead part of the property cycle.”

“Sure, they are a great selling point now for many buyer's agents and house and land package companies, but by investing there now, they have all missed the boat,” the investor added.

Due diligence

In order to avoid making mistakes when researching, Mr Hunter recommended engaging with real estate agents who know the ins and outs of the market you’re looking into.

Aside from helping you with the fundamentals, agents can also present more opportunities for bargain and good deals.

In fact, Mr Hunter’s relationship with certain agents had given him a unique chance to secure the best houses in a particular area at a very discounted price more than once.

When the financial crisis struck, his agent who used to sell house and land packages to interstate investors was able to refer him to former clients who want to get rid of bad investments.

The investor shared: “As many paid way too much for these houses in the peak, along with giant hidden kickbacks to property companies when they were sold, they were now willing to sell at a huge loss to simply get that bad investment out of their life.”

“Their mistake wasn’t investing in the wrong location; it was simply wrong market timing.

Mr Hunter has since achieved an impressive 15 per cent growth in a little over a year and he expects to see double-digit growth each in the next two years.

“Research is [simply] knowing where to invest, along with when … [and knowing] know what to avoid,” he concluded.

“This meant we were buying under market value and buying lots of houses that never made the market—allowing us to see significant growth even though the stats show less,” he explained further.

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