How do you find suburbs that are both low risk that are also likely set for good future capital growth?
In this episode we look at:
– The ‘Portfolio Killer’ mistakes that people make when buying property
– How to Dot Map Technique can uncover the ripple effect
– How to lower your risk by avoiding red flags
– What are the indicators of suburbs that have gone up in value
– How two suburbs with a similar price can be SOOOO different in terms of growth potential and risk factors
We also go through the data and do some analysis on a couple of suburbs in Melbourne so you can see side-by-side how we compare one suburb to another.
If you liked today’s episode then Jane is hosting a free webinar where she goes into this topic of finding high growth suburbs in more detail.
I have attended many of Jane’s webinars in the past and they are always jam packed with useful information and this one won’t be any different. You owe it to yourself to get on there and learn how to find these high quality suburbs to invest in.
You Ready? I’m always ready when it comes to investing in property. One of the most important things that you need to do is choose the right suburb. So today I have with me property expert and suburbs, select expert Jane Slack Smith’s. Hey Jane. How’s it going today? Good, Ryan. Thank you. Yeah. So Jane has been a friend of the channel for quite some time, hasn’t been on for over a year. We have talked a lot about self selection in the past, Jane, in relation to renovation because I know that you have done a lot of renovations and talk to people about that. So I’ve done that. But in this episode I wanted to talk more broadly about suburbs selection, how to avoid those bad suburbs as well as how to find those good suburbs for your everyday investors.
Absolutely. And you know, one of the things, um, I, as you said, I love renovation and renovation is one of the three prongs of my trading strategy. So having been an explosives engineer and you know, really risk adverse, I wanted to kind of risk assess all the risks in property and and kind of, you know, shortcut the way to make money without making mistakes. So I came up with three ways of making money, money and one was to buy below the market. So you had had intimate knowledge of the market in the suburbs and then add value and I was using renovation is that technique and some people use your granny flats or development and then buying a high growth area because all they can make some short term gains with buying below the market and renovating, you know, if you can get in a growth area, that’s where the money is. So you know, getting the right suburb and the right property and the right street is so critical to whatever your next part of your strategies.
Yeah. And for those of you who don’t know, I’ve actually been doing Jane’s one of Jane’s courses on suburbs selection and she talks a lot about the stuff that I already do, but then she adds on top of that as well. So she has a great deal of knowledge around this stuff as well as knows where to pull the data from and stuff like that. And I really love the approach that you take. It’s really in line with like the research that I’ve done in the past as well. So let’s talk a bit about first the mistakes that people make when they choose a suburb. You’ve got a webinar coming up and you’re going to be talking about these portfolio killers, I think you called them, which I love, but people often make so many mistakes when they invest into an area. The biggest mistake that I see is that they just don’t even do any research to start with, but what are some of the things that people should avoid when they’re looking at suburbs?
Actually just on that point, Ryan, I spoke to one of the ceos of one of the biggest property management companies in Australia just last week and I was saying to him, have you done big data analysis on where people are buying the landlords of buying their properties? And they said on average then within 15 kilometers from where they live, so we are parochial animals and we think we know what we know. But when it comes down to really knowing a suburb and you have someone challenges you on, you know, what’s the growth rate for the last three, five, 10 years, you know, what’s the yield, what’s the average vacancy rate, what’s the percentage of rent? It’s one of the best streets of buying. People kind of go, oh no, I don’t know that, but I really know the suburb. And as you said, you know, there’s this portfolio killers and every single day, you know, we come across people that have, they’re just disappointed that properties haven’t performed.
And usually it’s one or two or even a mixture of some of the key portfolio killers. And I think the first one is, you know, they just aren’t looking at the pricing pressure. So if we think about being in a cbd area and we know that people want to be close to where they wanted they work, that’s why we had those inner ring suburbs that are actually in a higher end price. And they have more growth, but as people can’t afford these suburbs, they go out to the next ones, the next ones, and you know, I know in 2006 I was looking to buy in Sydney way before the house prices where they are today. Um, I was looking at least in suburbs and there was a Randwick, could she and Kensington or had a million dollar price points, whereas Kingsford the next suburb out with $625,000.
So I bought a $625,000 property in 2006 and we’re talking, you know, 12 years later it’s worth two point 2 million. That’s the ripple effect because people then could move down and bought in that suburb and the growth went up. So that’s just an indication of, you know, they haven’t, they’ve looked at a, um, an area. And I thought, well, I like this area, it’s kind of works. It’s close to home and they haven’t actually found some of the key indicators. So they haven’t got the pricing pressure to start with. That gets that real bumpy growth.
Yeah. And that pricing pressure is so true. So many people, they want to live in a particular area, but then they can’t afford it. So then they do. What do they do? What’s the next step? Well, let’s look at the surrounding suburbs closest to it and look where we can afford renters, do it home homebuyers to it. Everybody does it. And so you’re saying that people should be looking for this rather than just like buying where they are because they might not be in an area that has pricing pressure.
Absolutely. Look, I remember doing a. I’m a top from money magazine at one of the home shows and the. I did analysis on three suburbs beside each other that each had the same medium price, but due to infrastructure and some other things we’ll get into a bit later. They each had predicted growth. That meant that one sub in 10 years time will be $300,000 more then the suburbs side them, which means you know, even if you use these tactics by your own home, that’s $300,000 more wealthier. You are by just doing a little bit of analysis in the suburbs and even the suburbs beside each other.
Yeah. And so it’s not just the medium price that you need to look at when you’re investing in a capital city. It really is like the surrounding suburbs and the pricing pressure and the growth that surrounding suburbs have had over the course of a number of years.
And you know, one of the techniques that I teach is the doc map, which I’ve stole quite heavily from Medina Simmons, who’s a fabulous property expert in, in her own right. I was watching the video on the map and you said this was invented in like the fifties or something.
Oh, well she’s, she hasn’t made, she’s not that old, but she’s been doing it for a long time and it, you know, it’s uh, it’s amazing. Some of my students bring up these met company and they say, you know, we need a quarter inch transparent, um, dots and, and these, these guys ended up ringing me up and I go, what are you doing? You’re sending all these people to us, to this net company and we’ve never had this many people buy dots before me, so we’ve got this map technique. We take the 10 year past growth and we added a legend and we actually tried to find that ripple effect and he said the only people who used to buy these dots was Audi when they first came to Australia and they bought green and red dots and they actually put down, we’re in every city in Australia where all the woolworths and coles work so they could work out where they are going to buy by locations. So I think it’s been done by other people too.
And so now you’re propping up this map company by teaching us all about how to invest in property and find the best of it. Obviously could do it cheaper with highlighters, but you know, we find dot. Yeah. Well and then you can get the kids involved as well and then they can. I know we pay like twenty cents per dot. Okay. So what are some other portfolio killers that people should be aware of?
I mean, what we’ve obviously saying, some of the tragedies that have happened to people’s portfolios by buying in single mining towns and you know, just the, the, uh, the devastation to complete portfolios based on some of the people who’ve bought in port hedland and Marimba and you know, having been a mining engineer and having been to probably every mining town within Australia overnight, a new period, you know, there’s highs and lows and the market follows the infrastructure spend and the commodity market and it’s just so variable. But you know, there’s also, I’m single industries in a lot of regional towns to like avatars or you know, even in bigger areas like car manufacturers. So sometimes when there’s that, that one industry that the entire economy is based on, you know, a slight change can make a significant difference. So we often see portfolio Kyla is where people have actually invested in, you know, that short term gain. And um, and you know, I’d kind of be a little concerned about people investing in Hobart around that short term gain right now as well.
Yeah. And so it’s people really chasing that short term money isn’t in areas that just don’t really have the infrastructure to support it or it could go good, but then like if a mine closes or if there’s not as many workers in that area, then all of a sudden prices plummet, which we’ve seen in so many towns over the years.
Absolutely. And I’ll make just the converse to that when there’s been some significant, uh, like on a government departments. So in Melbourne they moved some out to Bendigo in Newcastle, they moved some out into some of the outer suburbs. The people moved with that so they can generate growth as well and you know, but the realities and that’s a good thing. But if there’s no other economies there, I wouldn’t be chasing that one big move unless you kind of flipping property and you’re not into the longterm game, which is where we know people make most of the money.
Yeah. Well I think we should make clear to people that we are about the longterm. We’re not about, we’re not talking about finding like hotspot suburbs that you’re going to make heaps of money in the next 12 months. We’re talking about investing in suburbs that over the next five, eight, 10, 20 years, you’re going to outperform the surrounding suburbs and be a good longterm investment.
Absolutely. And you know, it’s just, it’s funny, we’ve got one of our students, a renovation students and you know, he’d waited 25 years before he invested in his first property. He really got into any, did the dot maps and did the methodology and he bought in Melbourne and Preston and he did a, like an 18 day renovation that costing like eight grand or something and added 70 grand of value straight away. And he was on fire. It was this, this was the biggest thing that had ever happened, you know, incredible. It was like, you know, years income and he’s like, this is fabulous. But in the last three years, his property’s gone up by $300,000, you know. So he had that small, you know, growth spurt that we had from the renovation. But their longterm growth has actually given him hundreds of thousand dollars. Let’s cumulative and will go on in the future.
Yeah. And just that difference of one percent to two percent. Like I talk a lot with Ben Everingham and he’s always hopping onto me about if you invest in somewhere where it gets four percent versus somebody that gets six percent, here’s the difference. Over 15 years. He that loves the personnel moves.
I know, I know. And it’s funny, I probably got here on my desk because I, I keep it close, but I did some analysis on the Sydney and Melbourne market because people keep asking me at the moment, oh I shouldn’t be embarrassed, but the market’s kind of gone quiet and, and we should stop. And I’m not about timing the market. I’m always time in the market by the best possible thing when you can at the market’s going down grades cheaper, you know by now. But you know, I did some analysis around Sydney, you know, and when the market went down a few percentage for a couple of years and everyone’s like, oh, there’s a crash. It’s gone down by four percent, which is what’s happening right now in, in Sydney, and, and then it bounced back and does, you know, 10, 15, 17 percent and that tiny increment changes is just substantial. It means you lose, you know, maybe five, 10, 15, $20,000. But the upside is, you know, when the growth comes back, which are 50, 60, 70 of growth, so you know, just looking at those numbers, it’s an ease. It’s just the small percentages and people sometimes focus when they’re focusing on the short term on those, those incremental things that we say in the papers about there’s been a one point four percent know drop this quarter in Sydney and you’re like, but they made 17 percent last year, don’t complain.
And then as well, I think so many people, yeah, they look at the averages of Sydney and they see that it’s dropping, but they don’t feel empowered because they don’t know anything about how to do southern research. I looked across the last 46 years of data across Sydney, Melbourne, Adelaide, and I can’t remember the other city, but looking at when the prices did drop and how long it took to bounce back to the highs and which averages for the capital city and it was like most of the time it was one, two or three years that it took after the drop to bounce back. Sometimes it was a little bit more like four or five, but it was never so extreme that the fear that people have is just intense and so I’m really excited to be impairing people today to do some of this research themselves and to understand how to select suburbs to themselves because it’s not just about, well what Sydney doing on average because we want, we want to invest in the better suburbs. We don’t want to do the average or below average. We want to do above average. And so even if an area like the whole city’s going down and you can still invest. Well.
Exactly, exactly. And, you know, when we talk about what you’ve just touched on then the population growth, so that’s one of my drivers that I look for for growth and you know, when there’s um, infrastructure spend and the, where, you know, there’s people who are coming in and infrastructure spend on a sustained a asset is going to require people to actually operate it as well. So for instance, the airport at Bankstown, there’s going to be a lot of people actually have to create that, but there’s also gonna be a lot of people working there. Whereas when we looked at gladstone and you know, the LNG plants out there, you know, there was a lot of people constructing them and he took a few guys to switch the switch, the switch on and make it run. So, you know, we kind of have to be aware of our population. But if you look at population at moments like Elena hundred people awaken, moving to Melbourne, 1500 people are moving to Sydney. But all those 1500 people moving to Sydney, most of them from overseas where Melbourne mostly it’s internal. So if there’s any changes to visas or student visas or whatever it is that could actually switch off the population in Sydney or Melbourne is predicted to be the biggest capital city in Australia in the next 30 years. And you know, and we’re seeing that with population drivers that are internal and external. Yeah.
Melvins and awesome city. I love Melbourne. It’s too cold for me. I could never live there, but coffee, I was down there a couple of weeks ago for a tournament. It was um, yeah, really good. Went out for ramen. Had some good ramen down there. Um, so let’s talk about some of the drivers of growth of these suburbs within a city. So you’ve talked about the map. I’m guessing people probably don’t know what we’re talking about there. So can, can we explain that driver of growth and how you look at the growth of different suburbs compared to each other?
Actually, I might even be able to share my screen if I can do that. I can kind of do a little bit of an image of what it looks like. So I’m just going to jump into one of my courses here, share screen. I’m going to go real technical here. Let’s see if it works. Okay. Can you see my screen? Yeah, I can see your screen. Okay. So what am I going to show you is kind of what, what this document looks like. So what I’ve got here is essentially a map, so you can see here we buy the at from networks and you’re getting a mat and usually it’s called a hammer match h e m, m a and then we come up with a, a, a legend. So from zero to four point nine percent is blue. So it’s Kinda like traffic lights. It goes from green to red.
Now if I was mapping Perth, I would possibly have, you know, minus one percent to one percent is blue and one percent to two percent is purple and two percent to three percent is green. But this is kind of what the document looks like. Now you can do digital maps, but what gives you an idea of is when you’ve got, for instance, you know, a lot of that we’ve got, you know, blues and regency and we come out from the capitals, the capital city area, and we might go, you know, there’s all these great, this pink pink pink, but he’s a grain here. So there’s a pink to green. It’s actually two percent differential in capital growth. So this would mean that there’s some pricing pressure in this area. So, I mean obviously there’s a whole tutorial on how to do this, but it just gives you an indication.
And what we use is the 10 year past capital growth because we’re not into the short term. We don’t want the, you know, the variabilities of highs and lows that happen over a couple of years. And as you’ve said, you know, market’s bounced back. So there could be two to three actual complete cycles within a 10 year period. We actually want to look over that 14 year period and get a feeling where that, um, the, what we would call the pricing pressure is because I think that really gives you an idea of where the market’s going. And as I said with my example of Kingsford, it’s Kinda like, well, we can’t afford this suburb so let’s go to the next suburb. And that’s kind of like the dogma and it gives you an idea also of what’s happening in surrounding suburbs.
And I love being your course, how we go through and we do the map and you identify some suburbs that have that pricing pressure on them, but you don’t just stop there. You’re not like, I just found this suburb. That’s it. I’m going to invest in this suburb. Happy days. It’s like, okay, this is one indicator among many things that we’re going to look at when it comes to investing in a suburb. And I think people out there need to know. Often they might read a magazine, they’ll see the hotspots and then that’s all the research that they’ll do. Or they’ll do an exercise like the map and that’s all they’ll do, but I believe, and I know you do as well, Jane, to take multiple sources of information and multiple indicators and put them all together so you can really get a view and compare suburbs to each other. So this is like a really good way to narrow down and to identify some potential suburbs, so suburbs that have the potential for growth, but it doesn’t mean that they’re definitely have that pricing pressure that they’re definitely going to grow. This is like step one. So instead of looking at however many suburbs are in a capital city, like hundreds maybe, or nearly $100 in, narrow it down to a few suburbs and you can then go from there.
Yeah. And I think the thing is I don’t proclaim to be the expert that knows everything. I have a framework and a structure that allows us to draw on the bigger brains in the business. So we’ve got so many property experts out there and, and what I really says, getting information from everywhere, you know, do the ripple effect and do the job. And come up with your first list of suburbs and then if you want to you can go and buy reports. So there’s so many different reports you can buy and there’s a lot of experts that have done a lot of analysis on the reports or you could get a free report from, you know, there’s an economist and magazines and newspapers. But as you know, Ryan, you know, I’m, I right to magazines, I’m writing three months before it’s published. So when I started writing for, I did a regional area of prediction for money magazine early in 2017.
I wrote that in 2016 and you know, a July and picked along and did analysis. And so it’s kind of like when you read it in magazines, it’s almost like that hotspots gone because, you know, it was written three months previous. So for me it’s Kinda like we’ll take everyone’s knowledge, taxing job, it’s knowledge and, and what I have done is kind of curated in a software to allow you to put all of that into one place, but put it against your criteria. There’s no point looking some fancy pants suburb. It’s got a million dollar price point when you’re buying a $500,000.
Yeah. Well, and that’s another thing with adult Matt, right? We’re indicating areas that could have that pricing pressure but you might not be able to afford to purchase in that area because it’s outside of your budget.
Exactly. Exactly. So, so that’s where I think, you know, we come up with the list and then we start feel trained. So my thoughts started, the filtering process is pay, what can you afford, let’s be honest to you and where do you want to buy? You might only want to buy, you know, 20 ks from the CBD, you don’t want to be buying out in the outer suburbs and then let’s start putting some other filters on and the filters that I apply a really, um, to, to, of filled with some of my low risk kind of filters around, well how can I minimize things that I see as problems? So one of my portfolio is high vacancies, you know, if there’s over three percent vacancy, there’s a lot more people are trying to rent their properties out there, the property straight, so I don’t want to have like high vacancy.
So I start looking at risk things, but also start looking at some of the, you know, like you, I’ve down near 20 years worth of study, you’ve got 46 but 20 years of the study of past data or not. And I’ve looked at what have been indicators of suburbs that have gone up in value. So I’m looking at, you know, um, things like, you know, the past growth, we’re looking at yields, we’re looking at the population, we’re looking at the typical demographics of the area. So we’re actually then getting into some of the predictions of what has driven growth in the past. So there’s two types of filters that I applied and then you know, the convenience of being able to go through. I mean, you know, you’ve got magazines that you might grab and you can get all of the free information that you need from magazines. But you know, you’ve come up with one suburb and Tempe in Sydney and you’d have no idea what their surrounding suburbs are because we shouldn’t be doing the analysis on those so you then have to go to another website and find out what the surrounding suburbs and then you go and look at that southern bring cheap spreadsheet so they can be a lot of research as well.
It can be very time consuming, but I also, I also think it’s totally worth it because you’re investing so much money and most people only go into purchase maybe a couple of properties in their lifetime as well. And taking the time to do this stuff in the beginning will pay longterm in the future. And I love that you talked about those two different things that you’re looking at your low risk or you’re looking at your indicators of risk as well as you indicate as the growth. Because obviously there’s going to be some areas that are high growth, high risks. Like we talked about those mining towns, right? And they could have like all the signs for high growth and so you could just go ahead and invest in that, but if you didn’t look at the risk factors and you know you could be left holding a dead five years down the track. And so I really liked that. I call them red flags in when I do research that if you find these red flags, you want as few red flags as possible because we never know the future, like neither myself nor Jane have a crystal ball as to exactly how these suburbs are going to perform. But if we can minimize our risk and maximize our chance of return, then chances are we’re going to get something good.
Well, I mean if you want to, I could just run through some quick analysis to show some of those indicators because I think there are two basic drivers of growth and kind of things that I would look at. So let’s do that. I think people would love that. I can do that. Going to go high tech again. Okay. So I’m just jumping in here. So let’s just say said this software covers the major regionals and the capital cities of Australia and you know, this is updated with sqm research data every month. So we’ve got the up to date data rather than, you know, reading the data in the back of the magazine. So let’s just have a look at Britain and say, you know, we’ve got a purchase price of $550,000. We’re very happy to go, you know, 40 percent below that. And if you think you’re a bit of a negotiator, you can go a little bit above it.
And we might want to say 15 k’s from the CBD. Now the thing here is that you’ve had that list that we talked about. You could go through and say, oh, look, Banjo was on the um, uh, you know, hotspotting report and you know, Ge was on the radio the other day that someone was talking about. So this is where your list comes in, but we’ve already started, you know, bringing it down because we’re looking at what you can afford and where you want to be. So, you know, we might take say three suburbs into the next step and what I’m looking at here is I’m looking at the surrounding suburbs of the actual suburb that I’m looking at. So this is kind of like, instead of going in the back of the magazine and trying to find all the surrounding suburbs, here they are for you and what you.
I love that it does that, that’s so cool that it just pulls in those surrounding suburbs and just gives them for a analysts and gives you all these details with that.
You don’t even have to ask it. Just does it. Well look, I’ve designed it for myself. So what I’m trying to do is try to hack it so I can save myself time. So, um, you know, and you can click on this and go to the maps and see where they are, but what you say, you know, he’s been yelled at 11 point two k’s from the cbd at 5:50 and then you look at some of the other suburbs that are closer and the closer suburbs are usually more expensive, but it’s 10 year growth that we’re actually mapping in that job map. So this is almost like a digital roadmap met for you where you can actually go, oh, you know, um, has is their pricing pressure, you know, in, in this area. So, but some of the things that I would, you know, look at when I was considering, you know, the filters that I would use for these suburbs is I’ve sat at the percentage of renters.
Now I have a kind of a, you know, 30 percent renters in an area. For me it kind of gives me that confidence that there is enough of a market for me to rent to as a buy and hold investor. But it was another filter which is just a convenience filter. Is it? How many properties have sold for the year, so you know, if there’s any, for instance, 30 properties that have actually solved for the year and we’re talking about less than three a month, do I really want to be spending every single weekend they are looking. So this kind of gives you a bit of an indicator as well as you know, is it really worth my while to look in the area?
Yeah. Well that’s A. I think people often get caught up on the idea that there’s one perfect suburb out there and that they have to invest in that perfect suburb, but I think we want to get the idea across that there’s a lot of different potential suburbs out there and you can spend your time on a lot of different things. And so the idea here is to really narrow it down to the suburbs where you’ve got a good chance of achieving success. And like you’re saying, the number of properties sold per year. If you’re looking at a suburb that’s only so 32 in the year, so maybe less than three a month, it’s going to be pretty hard to find your ideal property in that area versus an area where you’re selling, you know, more than 10 a month. There’s a lot more opportunity there to find the property that you want in suburb.
Exactly. And even little things like, you know, the stock 12 month change, I mean if I’m looking at this and I say that over the last 12 months is eight percent less now than there was 12 months ago. Although 34 sold in a year, it’s probably going to be less going forward that are on the market now, but if I look at this at 32 percent, 32 sold last year compared to last year, there’s 100 percent more than this one makes me want to think, oh, I want to have a look about how many properties are in this suburb. How big is this? Because this is extraordinary and this is really this everyone’s selling and why are they selling? Is there a new marketplace going in or is there something going there or development changes in the council that have created some angst for it’s that, you know, we really want to have a little more detail so it kind of gives you a really quick way of going, well what do we want to look at and it, and, and I think that’s really important because a lot of people just miss that, that capability of going well, you know, what should we be looking at and why is it important?
What’s the red flag as you say? Yeah. But you know, if we compare to suburbs, you know, the other thing to minimize the risk that I’m very big on is understanding, and this is straight from census, what the typical property is, you know, there’s no point buying a two bedroom property unless you can convert it to a three bedroom property if the majority of the market. What’s a three bedroom property and saying to a, buying a four bedroom property where everyone else wants a three bedroom property. So I’d definitely be looking at the typical property type and I think this also gives you the demographics of the area, kind of, you know, if there’s a large percentage of moms and dads and kids, then you’re interested in making sure that you might have the things in your property that attracts them so you might have, you know, the, the fencing for the pit or you might have the zoning of the teenagers in one area and, and the parents and the other, or you might have a multi renting opportunity with a high level of university students in the area. So this Kinda just gives you a bit of an indication of what’s happening in the area and who your potential market rental market is.
Yeah. And that can help you determine what type of product to buy, like what type of house to buy as well as what type of error. If it’s mainly couples with children, you know, there’s parks or schools nearby then that can have an influence on where the best houses are going to be in that area.
Absolutely. And you know, just not knowing the number of houses. And the number of stemies, like if you Wynnum West here, I can see that there’s actually quite a bit of a demand for semis as well, but I wouldn’t be buying a unit in Banjo and that’s another portfolio killer. People do all this research and they find this fabulous suburb and they’ve done all of this work. And then they go, oh, I can’t afford it. I’ll buy a unit here. Instead. We’re an actual fact. This is not the market for units, you know? And they’d, and they’d go, why can’t I rent it out? And why does no one want to buy? I’m desperate. So, you know, the numbers are actually upfront. You can find those numbers.
And that’s, I think people should know that you can, um, like you could buy units in these areas and I’m sure some people can have success in them, but you just, you making your life so much harder, even not buying for the majority of the people who live in that market. So if someone’s a super advanced investor, sure, maybe they can see an opportunity there. But for most of most of us, it’s just making life harder, it’s a lot easier to invest in what the majority of people want in that area and buy a good version of that. So that’s three bedroom houses, then that’s what you would look for.
And, and I think what I love about this and the reason I created it because I just wanted to be able to analyze suburbs really quickly rather than going into the 15 websites that I used to go to. But you know, we’ve just got to suburbs here and there’s the red flag, you know, here’s a vacancy of three point four percent compared to two percent. The yield is a little bit less. We’ve got days on market hasn’t changed so much. So you know, what this is saying is that it’s been a consistent market. We’ve got a great percentage of renters, you know, average income, so it’s not lower socioeconomic, but the is a bit of a flag red public housing. So when we get into the suburb to suburb due diligence, then that’s when we actually come into our own and go, okay, we’re in the suburb. We should buy, which is probably a whole nother podcast.
That’s probably a whole nother episode to look at that, but this is good. This is good though for people to see that you did. You can do this side by side analysis of suburbs and instantly you can see whichever of you would prefer versus not and how to cancel suburbs out. So then ano, with a vacancy rate of three point four percent is probably too high for me. So I would just cancel that out on my list, show up, looking at it completely and I would now focus my time and energy on finding better suburbs than that.
Lower vacancy rates. You know, there’s a good number that is sold per year. There’s a great, it’s a great number of houses and the pricing differential between the two suburbs, you know, this is how you can get down to, well, what my willing to afford and how can I compare the suburbs quickly. So I just think that, you know, when we look at the portfolio killers, it’s around people just not knowing the questions to ask. And, and I think that’s the shame when we say the people who, you know, they’ve committed, they’ve saved this nest egg or the credit as equity in their home and they’re at the point to buy and then they buy where it’s familiar because they feel it’s safe. But in actual fact it’s the most unsafe decision they’ve ever made. Them investing because they don’t know what they don’t know which is there is data available and information that can actually allow you to choose a better suburb over another.
And that’s the thing. And it can sometimes be something so small as well. Like we were looking at the vacancy rates. This like such a small integrator, similar prices of houses that were both like majority three bedrooms in those suburbs. But then that indicator of vacancy rate, that one indicator shows us that one a higher risk than another. And if we only did that across to today to the suburbs. But when you’re doing that across 10 across 20 suburbs, you can really start to see which suburbs look better than others. And I think that’s where the real power is not doing this analysis on one suburb and looking at this data from one suburb. It’s like comparing the suburbs side by side, looking at all these different data points to really bring out which suburbs look like the lowest risk as well as the highest potential
and, and you might come down to three to five suburbs, which is what I usually do when I go searching, but there might be one suburb that you just, you looked at it and go, oh you know, at 60 styles a year. Like am I willing to waste my time on it? It’s got all the criteria, I’ll have a cursory look. But that’s not where at a spend my majority of my looking to set up some alerts in rp data professional or in a domain or real estate. So if something comes up right, but you know, at this age, not so much.
Yeah. And so this is kind of the first step. And then the next step, which will probably have to say for another episode, is once you choose your suburbs, then it’s all about knowing that suburb in depth, knowing the streets, knowing the past sales, knowing the real estate agents, all of that sort of stuff is the next step. But really if people can just get to this point of finding a good suburb, the chances of success are going to be so much higher than if they don’t.
Absolutely. And you know, and what I love about that next step is that you can, I mean, I’m always looking at hacking the system and trying to find the easiest path to get to the solution. And you know, the information’s out there that tells us exactly what street the renters want to live in. And there’s information out there as we can see from sense, there’s the typical house and we know the typical size block. So why set yourself up for failure by buying a property people don’t want in a street they don’t want to live in and you know, on a size block that doesn’t suit the neighborhood. So you know, you can ask hack straight down to that within minutes finding that Diana.
Yeah, and that’s so valuable. So thanks so much for coming on today and sharing this session. I know that you have a free webinar coming up that people will, if they’re interested in this, if you guys want more detail than that Webinar is going to be the place to go. Do you want to talk a little bit about that Jane and then I’ll link people up to that.
She’ll look. Basically I’m going to go into a whole lot more detail on all of these things and give you, I think that the five steps that allow you to systematically find by profit from suburbs in high growth areas and I, you know, I’m completely committed to like Uri and giving people as much data and information as possible and you know, there’s obviously tools and things that are available to make it easier for you. But you know, there’s a lot of free information and I want you to know what criteria to start with when you start looking at suburbs because it’s the growth that is going to get your papa your portfolio bigger and when you sell that, that’s what you can leave off.
Yeah. So have you guys are interested in learning more about how to do suburb research, how to find those areas that we talked about today that had that lower risk profile as well as having the higher potential for growth than I do highly recommend Jane’s Webinar. I’ve been on webinars before in the past and they’re always a blast and I always learn a lot from them. So if you’re interested in that, go to on-property Dotcom, Daddy, you forward slash location and I will link up to that webinar there so that’ll take you straight through where you can register for it. But that’s going to be a great nights and to be a lot of fun. And I really do believe that it’s worth investing into your knowledge in this area specifically in finding these key areas and building the skills around that. Because I just feel people in the market have so much overwhelmed when it comes to finding suburbs. So thanks so much for coming on today for sharing this knowledge. Thanks so much for hosting this Webinar and giving away that free information as well. Again, guys that links on property.com down at you for a session location and I’ll leave the links in the description down below as well. Uh, is there anything that you want to leave people with before we go, Jane?
No, we’re just, we’re here for your property success and uh, anything we can do to help contribute to it, you know, more than happy to answer the questions as well. But you know, we really appreciate, um, the opportunity to talk to your audience because I think it’s great to speak to someone who agrees with the importance of location being the first thing that people should look at it. So thank you very much.
So to talk to someone who just doesn’t give out fancy brochures about how good a suburb is when it’s not really. And someone who actually looks at the data like I do. So it’s, it’s been a great time. All right, that’s it from us today guys. Until next time, stay positive.