How To Find The Best Suburb To Invest In
How do you find the best suburb to invest in? Finding a great suburb isn’t about hotspotting, it’s about finding the right suburb for your financial goals.
Ryan: [Ajeed’s 00:00:01] asking, “What do you guys think about Collingwood Park in Queensland to invest?”
Ben: I don’t know too much about Collingwood Park, to be honest with you, on a suburb level. I probably can’t answer that question with authority.
Ryan: Fair enough. Sorry guys. We’re not also at the super suburb specific ones because we do look at individual suburbs and we don’t know every suburb in the whole market. But if you have more general questions, then we’ll try our best to answer them.
Ben: My approach as a buyer’s agent is to identify maybe 10 suburbs every six months to focus on and to not even think about a suburb outside of those. It’s a really specific approach, which is the same an individual should take or I take when I’m buying on my own. When I’m buying for myself I really narrow it down to one area or one suburb specifically, so that I can obviously get myself the best information to make the best decision on that suburb when the right property comes up.
Ryan: I think this is probably important to talk about because a lot of people are kinda asking, “Well what do you think about Suburb A, or Suburb B, or new build developments in Newcastle,” sorta thing.
Which I think is the wrong approach, if you just say … You hear about some opportunity in some suburb, whether it be Collingwood Park or whether it be anywhere else, and to say, “Well, what do you think about this? Is it good?” That’s the [crosstalk 00:01:23] most backwards way to approach it if you wanna do a good job and find the best suburb. ‘Cause you’ve got all the suburbs in Australia, right? And you’re just saying, “Well what do you think about this one?” Whereas really, like Ben says, he narrows down to 10.
But what he actually does first is zooms out and looks at basically the whole of Australia, will narrow into a city or an area, and then will research those suburbs and find what he thinks are gonna be the best ones for the future, and then narrow it down again to that 10 or 20 suburbs and then we’ll constantly be analyzing those suburbs across a variety of factors.
It’s about getting a strategy and then looking at everything and trying to work out well what’s going to be best for your strategy, but then comparing so many different suburbs to each other. ‘Cause that’s the only way, I think, to really work out what’s gonna be good.
It’s not to say, “Is this one suburb good?” but to say, “How does this one suburb compare to these hundred suburbs?”
Ben: That’s such a really good point, man, and a really common question that I get asked almost every single day is, where do I see value or what suburbs do I think are gonna perform better than others? It’s like, it doesn’t really matter what you buy.
This is the worst thing to say when I’m talking about buying property every day, but, what you buy is just a reflection of what your strategy is. If your strategy is, “I will not buy a marketplace that hasn’t in the last 10 years grown by at least 5 or 6% per annum,” then that wipes out 90% percent of the markets in Australia.
Then if you say, “I won’t buy a property that doesn’t have a rental yield below 6%,” and “I won’t buy a property where I can’t manufacture 80 grand on the way in,” or 50 grand, or 20 grand, whatever it is.
These things that we use from a strategic perspective to say, “This is what I want out of my property,” are the things that help us narrow down the focus in scope and market place.
If you get as focused as Ryan and I do when we think about property and start talking about property, you’d realize out of every thousand properties on the market, there might be two that you would actually seriously consider buying after you overlay all of those important things.
It doesn’t have to be as complicated or as detailed as we make it. We get the luxury because we get to spend all day, every day doing this stuff to get to that detail.
But you definitely have to start with what it is that you want and what it is that this property needs to achieve to be deemed successful in 12 months, 5 years, 15 years from today, not so much hot-spotting and all that other crap. Because 90% of the time when someone says that a suburb is awesome, they’ve heard it from someone that isn’t financially independent already.
The validity of that data is, you wouldn’t go to the gym and listen to someone that didn’t have the body shape that you wanted. Why would you listen to someone that hasn’t done what you wanna do?
Ryan: I think having that criteria is so key for finding your ideal property. Otherwise you just get so overwhelmed.
Ben: Sorry, I’m into training at the moment, as Ryan knows, so everything I talk about is gym-based. It’s so dumb.
Ryan: We went [inaudible 00:04:33] I was like, “Oh man, I need to work on my body.”
Ben: I’ve got this personal trainer that’s got 300,000 followers on Instagram and he looks like an actual [inaudible 00:04:44], like the statue of David. He’s got me thinking about stuff and talkin’ like I normally don’t talk. I’m sorry. That was the worst analogy ever.
Ryan: But I was thinking, when it comes to narrowing down property, having the criteria is so important when you’re looking for the right property for your goals and your strategy. Otherwise you’re looking at the market and you’re wasting time analyzing every single property.
Every property you analyze is also a potential distraction away from the goal that you’re actually trying to achieve and the property that you actually want. By knowing your goals first, and knowing the criteria for property that fits within that, like maybe Ben was saying, over 6% rental yield.
Then whenever you’re looking for properties, you go down the list of real estate investor, and you’re like, “What’s the rental yield? It’s 5.5%. Throw it away.” You don’t even look at it. You don’t even consider it.
Or if you wanna be in a certain kilometer range to a CBD and it’s outside that kilometer range, we just say, “Okay, well ditch it. I’m not even gonna waste my time on it.” That sounds like you could be throwing away a lot of opportunities.
In truth, you probably are. But, there’s so many opportunities out there, if you can narrow your search, you increase your chances of actually finding one because you know your specific market and the specific property you want so much better because you get more exposure to that.
Ben: That’s such an important point, man. When I’m buying for myself these days, knowing what I know, I’m not trying to buy a property, I’m trying to not buy one.
I’ve got a list of about 30 things that, if it’s any of these things it’s just an immediate no. By going through that list really quickly on a potential property, it saves you so much time. Time’s the asset. Time’s the racehorse, especially in a rising marketplace or a marketplace that’s just about to rise.
Ryan: If you’re not a professional investor and you’re not looking at the market every day and you don’t know every single suburb. Which, even Ben, who’s a buyer’s agent and does this for clients every single month, he doesn’t know every single suburb.
You’re not gonna be able to get the knowledge and absorb enough information to even understand how one property or one suburb compares to another. You’re spreading yourself so thin. Definitely try and find your key areas. Focus on those and get good at doing your research.
Ben: The cool thing about focus, and I’ll just finish on this ’cause I know I’ve been talking about it for a bit, but the great thing about focus is it gives you confidence. Because if I’m just looking at one suburb at a time as opposed to 10, it’s … I’m just looking at your face and you’re just laughin’ like I can see somethin’ tickin’ away in the back.
Ryan: [inaudible 00:07:20]
Ben: You’re like, “I’m gonna say somethin’ to you off air, man. Like, shut up.” But, focusing on one suburb means that there’s only six sales a month that you need to know occur. There’s only one suburb-worth of alerts that you need to get each week via email from realestate.com and domain. It becomes super simple.
If you’ve looked at all of the sold history for that suburb and you get the suburb, then the confidence that you have when you see the right one comes up means that you can move on that property that day, not second-guessing yourself, not having all the fear and joy of buying property. You can just be stable and you know that it’s a logical, as close to non-emotional as you can make it.
Ryan: Hey guys, I hope that you enjoyed the answer to this question, which came from my live Q&A episode with Ben on YouTube. We will be doing more of these in the future.
If you wanna check out Ben then he is offering free strategy sessions to On Property listeners. To find out more about that go to onproperty.com.au/session and you can see all the details over there. That’s it for today. Until next time, stay positive.