Data and information are among the most important keys to success in property investment. With a plethora of data and information available and easily accessible today, how can investors avoid ‘analysis paralysis’ and ultimately maximise their resources?
How do you find the right sources? Which questions should you be asking? Which advice should you be taking?
Find out how CoreLogic's head of research Tim Lawless provide reliable data to property investors across Australia and how budding investors can simplify investment research and ultimately make the best investment decisions.
While there are various information that investors can study and analyse, one of the best questions to ask first during an investment research is: Where would you like to buy your property?
Investors can start immediately at suburb-level or gather capital city-level data and drill down from there. Either way, experts strongly advise investors to pay attention to the movements of the market, both past and present.
Mr Lawless said: “Are prices going up or down? Is there any momentum in the market that might show you where the trends are heading? What's happening with the volume? How much supply is in the pipeline? How many homes are being advertised for sale?”
After analysing the area they would like to invest in, investors can start identifying the property type that they want to purchase. Is it going to be a house or an apartment or a townhouse or a villa?
Before making a final decision, investors are advised to consider more specific personal information such as their goals, capabilities and limitations, both personally and financially.
With their personal criteria in mind, they can now start searching specific properties to buy through an online portal or with the help of real estate agents.
Once they come up with a shortlist of good investment properties, investors must strive to understand the data that makes up these properties. How will the numbers play out?
Mr Lawless highlighted: “How long have they been held for? How long have they been owned? How long have they been on the market for? What negotiation might be able to apply in these properties when I'm looking to buy them? What rental market conditions am I looking at? Is the vacancy rate going to be low enough to ensure I'm attracting a tenant all the time?”
Even information about the surrounding properties is going to be vital for tracking the trends in the desired investment area and understanding the wealth-creation potential of the desired property.
"What did the property sell for previously? How long has it been on the market? Are the vendors getting a little bit more inclined to discount their prices? What's the negotiation position like? Are surrounding properties selling or are they on the market longer? What's their sales history? What's the ownership profile? Are their more investors or owner occupiers?” he added.
For Mr Lawless, ’there's no replacement for actually doing the numbers on an individual property.’ Being able to analyse and understand the trends within the area and individual properties allows investors to make smarter investment decisions based on concrete data and ultimately maximise the opportunity to create wealth through real estate.
At the end of the day, experts strongly encourage investors to drill down to the micro-level before ultimately making any major decision for their portfolio, particularly regarding a new purchase.
“If you're making a decision that's costing you hundreds of thousands of dollars, you really want to be looking at the nuts and bolts," the property researcher concluded.
Property professionals and seasoned investors would always emphasize the importance of research and many aspiring investors take this advice to heart, as they should, only to be overwhelmed by the amount of information available—from publicly available resources to professional advice.
However, Mr Lawless said that there's one good remedy to 'analysis paralysis': Make a decision and act on it.
“It's actually really common, and people call it analysis paralysis. You're stuck just trying to work out your numbers way too much.”
“Research is really important as is getting your numbers right. Investment is all about the numbers and taking the emotion out of it. But at the end of the day, you've got to make a decision. You've got to go with your instinct in some conditions.
“Even when everything stacks up, you've still got to have a choice of which properties actually fit your considerations and choose amongst them. Then, it comes down to negotiating."
Ultimately, success in property investment cannot be achieved with data and information alone—investors must find the courage to actually make the jump into the real estate market.
“Generally, the best advice I can give is act. Do your research, but execute, follow through,” Mr Lawless concluded.
Tune in to Tim Lawless' episode on The Smart Property Investment Show to find out more about how property investors can utilise their data to make smart property investment decisions.