Developing Property Investment Strategy during and post COVID-19

This is the third video playlist and blog post in the Over and Above series. In this post we explain all the ins and outs of planning and due diligence commonly performed by successful strategy-minded investors. Summary of the videos below:

Video 1: Maybe you would like to achieve $2000 a week passive income. Or increase your net worth to $4 million dollars. Whatever lifestyle you want to create – you need to define it and work out a plan as to how you’re going to get there. Because by identifying the goal and setting out the roadmap, you will have checkpoints and markers that will allow you to measure your performance – and know what it’s time to pick up the pace, pull in the discretionary spending, or evaluate your portfolio. It is through this ongoing evaluation and critical analysis that you will be able to take a birds eye view of the grand plan – the overall objective – and work with professionals to strategise the right next move to get you closer to the end goal.

Video 2: The common belief that there is going to be a small pool of investors who are going to be snapping up a whole lot of bargains under market value post COVID-19 – I am not so certain. It is my opinion that demand will continue to outweigh supply in markets that are currently experiencing heat. These markets possess strong local economies, multiple employment nodes, strong infrastructure and vacancy rates hovering well under 1%. Remembering the key fundamentals to purchasing property is going to be paramount to remove the temptation of buying the potential “bargain” in a town or city that does not possess the essential growth drivers for long term

Announcing New HtAG® Team Member

We have seen a couple of very good years at HtAG. The organization has experienced substantial growth — we have gone from 200 subscribers in 2018 to an excess of 1,700 this year. There are many new features in the pipeline and we are also looking at expanding internationally, bringing data science to property investors in New Zealand and Asia.

On that note, we are ecstatic to announce that Vedran Maric has been appointed to the role of Head of Finance and will be joining the HtAG board of directors. Mr. Maric has spent the last 11 years with Citibank Australia undertaking a variety of senior roles.

Introducing Key Property Market Metrics

In this video post we introduce you to the key metrics that real estate professionals use when evaluating a property market for “investability”. The 5 videos in the playlist are summarised below.

  1. Understanding the days on market for a local area could be the most powerful piece of data you get your hands on. Firstly, when buying, by understanding this key metric, you are provided an indication of the stability or volatility of a region. If the days on market are high, it can indicate that the demand is low. You will need to do further research to understand why, to be able to make an educated decision as to whether a region is investable from a purchasing perspective.
  1. Vacancy rates should be one of the first factors an investor considers before purchasing in a local area. Vacancy rates will also give you an idea of supply and demand in an area . When vacancy rates are low, you can feel confidence that you property will be tenanted quickly. Target vacancy rates of 3% or lower to reduce the risk of your property being vacant for extended periods and maximise the opportunity for a constant flow of rental income.
  1. As your first property builds up equity, you can leverage the equity in that property to purchase subsequent properties. Capital growth is king and is what will allow you to continue to utilise this strategy – either through capital growth or manufacturing growth or a combination of the two. By leveraging equity, this will allow you to hang onto your cash and still invest in property now, to continue building your portfolio.
  1. There are two types of yield to consider – gross yield and net yield. A gross yield does not take into account any expenses – from repayments, to property managements fees, maintenance, rates or insurance. Your net yield is the yield you achieve after these expenses have been factored in and demonstrates a positive or negative cashflow position. Gross yield is the simplest metric for all investors – but it is absolutely crucial for investors to control the costs associated with their investment to arrive at their net yield position.
  1. Investing in property in regional suburbs throughout Australia can minimise your risk profile and maximise your investment outcomes, along with forming a secure foundation for first time and experienced investors alike, achieved through lower entry costs. These key regional suburbs generally appeal much more to the masses as a more affordable market, which when coupled with growth drivers and fundamentals, can put pressure on property prices and rents, attracting higher yields and potential for capital growth. Careful, professional due diligence should be carried out to understand comparable recent sales in the region, days on market, vacancy rates and rental yields – all critically important, before deciding on a regional area in which to invest.

Intro to Property Investment by a Real Estate Professional

Are you just starting your property investment journey? Or are you a one time investor looking for the next opportune moment? Either way we encourage you to listen to the YouTube playlist created specifically for those aiming to adopt a professional approach to property investment and learn from a team with proven results.

This playlist is a compilation of 4 videos by Over and Above Buyer’s Agents. The playlist is a great introduction into the growth mindset that you will need to acquire in order to achieve and maintain long-term financial success through investing in property market.

Video 1: The top 2% of investors in this country are spending countless hours getting their strategy together before they even consider looking at properties. They’re lining up their professional property team and having everyone work collectively to build a strategy that suits their personal situation, income, requirements and objectives. Professional investors minimise their risk profile and position themselves to be able to leverage the success of their property portfolio.

Video 2: Not all suburbs are investable suburbs. There are many critical elements to identifying a high performance investable suburb. These include government spending, population growth, employment, low vacancy rates, affordability and projected cashflow – the higher the rental yields, the greater your net cashflow position. By combining these 6 fundamental factors, you’ll position yourself amongst the top 2% of investors who invest backed by data and statistics, rather than emotion.

Video 3: The first reason most investors never reach their full potential is that they purchased the first property with no long term plan. If they have experienced negative gearing, this often paralyses the next step. Or perhaps they have never assessed how their property is truly performing to understand if there is enough equity to leverage into another asset. Planning, strategising and measuring performance are three critical factors most investors skip over and as a result, never reach their full investment potential.

Video 4: More often than we would probably like, life throws a few curve balls at us all – and it makes us question if we’re truly ready or if it’s the right time. It all comes down to mindset. It’s not always going to be the right time. It’s not always going to feel comfortable and it certainly won’t always be convenient. But this is all part of the journey of life and the longer you wait for the perfect time to get started in property investing, you will continue to realise that nothing changes if nothing changes.

Do you have questions or comments? Feel free to post them in the comment section below.

Days on Market & Discounting Data Release

Days on Market (DoM) and Discounting are important metrics used by real estate professionals to gauge market demand. Over the last 3 months, our data analysts made good progress integrating additional data sources into our dataset, which enabled us to incorporate these 2 metrics into HtAG reports and dashboards.

Our dev team are now focusing on enabling this feature on the site, targeting an early December deadline. In this post, we are releasing the preliminary Q3 DoM/Discounting report for 3,342 suburbs to the public. The table below summarises these 2 metrics for house, townhouse, unit and land sales in Q3.

Please read till the end to see the top performing market in Australia right now. I also hope you can help me answer the questions in the last paragraph.

Deep Dive into the HtAG Algorithm with The Investor Lab

Did you know that you can outperform other investors by predicting the future of the property market? What if there is a way for you to foresee how it will be doing in the next three or four years? If you are an existing HtAG Subscriber you may already know that as unreal as it sounds, it is possible.

Matt and Sasha had a lot of fun chatting with Goose from the Investor Lab about machine-learning algorithm and how it’s different from AI… What makes the human element essential to this kind of technology… Why there are multiple growth drives that factor in… And lots, lots more!

In this video, we cover:

  1. The origins of Higher than Average Growth [04:49]
  2. The team behind HtAG [09:11]
  3. Using past property market performance data to predict the future [11:41]
  4. Challenges in predicting the property cycle, all variables considered [15:41]
  5. How HtAG measures accuracy [18:15]
  6. AI vs machine-learning algorithms and their roles in property investing [20:09]
  7. The downside of applying technology to property investment [25:21]
  8. The biggest drivers of the growth of an area [30:02]
  9. The future of HtAG [36:16]
  10. Data interpretation still requires a human element [37:45]
  11. The only way to get your answers would be to keep probing [41:15]
  12. To train an algorithm, you have to feed it with a good diet of healthy data [42:40]