The property market – know it, don’t guess it!

Property Investing Research

 

Like many people interested in property, I love watching all of the property shows on TV.  At the moment we are spoiled for choice with shows like The Block, Hot Property, Grand Designs, the Renovators and Top Design.  Whilst I don’t get time to watch most of these I have watched every episode of ‘The Block’ this season (mostly via the internet several days or weeks after the actual show has aired).

The other night I watched a recent episode where they put on a mock game show aimed at estimating sale prices of homes.  The contestants had 10 minutes to look around a home and then had to give their estimate of what the property sold for at auction.  It was really entertaining for several reasons:

  • The houses they were looking at were mostly in markets that I’ve not purchased in – they were in the hot and expensive suburbs of Melbourne.
  • It was really interesting to see how houses are designed, decorated and furnished.
  • It was fun watching the contestants try to estimate the sale prices – and often be way off.
  • It was fun to try and take a stab at the estimated sales price myself and see just how close – or not – I was!

What the show reallyhighlighted to me was that unless you have studied and researched a market then you just have no idea what a property is worth.  And when I say ‘a market’, I don’t mean something like ‘Melbourne’, I mean a particular suburb and even the areas and streets within that suburb.

You may think that if you are from an area then you know the market, but really, unless you have put in the time and effort to understand the market then you really are just guessing.   Markets also change, so just because you looked at houses in a suburb 12 months ago or even 3 months ago, things change so you may need to revisit your research phase again.

So, if you are serious about purchasing property then you really need to take the time to research the location well before you consider buying and there are several things you can do:

  • Research properties that are currently on the market via the internet
  • Research recent sales prices in the area
  • Research the sub areas within the location and map out the sales prices against your map to get a feel for the various price ‘pockets’.
  • Visit a suburb and drive around
  • Attend open for inspections – the more the better.
  • Speak to agents in the area.

So the take home message – whether you are selling your own home, purchasing a new home, selling an investment property, buying an investment property, wanting to undertake a renovation project or a development project, don’t guess the market, know the market!

Save time researching your next location

Property investment research
You can only guess where the next boom town will be.
I used to spend hours, days, at the computer researching, looking for the next boom town. I would check key indicators in several locations and set up a plethora of spreadsheets and other tracking devices. I pored over data, made lists and reviewed my sources. I now realise that all I was really doing was wasting a lot of time.
Yes, you do need to thoroughly research the area(s) where you hope to buy. Yes, you need to do your due diligence. Yes, you will need to compare figures before you make your choices.
But the lesson to be learned here is that nobody really knows where or when the next big jump will happen for an area. Save your time but still ensure your target has good prospects for growth. Good research will help you make a profitable purchase, reducing your chance of losing out.
Make a list of your key factors; population, future spending, demographics and so on. As long as your future property scores well, you should be OK.
So save your time and target your research. You might pick the next big thing, or you might just pick a solid performer that you’re proud of.