Property Research

We research every property we offer and our point of differentiation is that we seek only the very best quality properties to satisfy the needs of our clients. Unlike a general real estate agent we do not seek listings but rather we qualify each project or development and partner with the developer to deliver a property that meets the needs of investors.  We recommend new properties for a number of reasons:

1. The maximum depreciation benefits occur in the first 5 years of a new buildings life
2. New properties generally provide warranty on workmanship
3. New properties require much lower maintenance
4. New properties command higher rents
5. New properties are easier to let

To reach the short-list of properties which we offer to clients for consideration a great deal of data will be processed by our researchers. This data covers many fields which we classify as one of the following three types:

1. Economic

2. Area Specific

3. Property Specific

Economic

Supply & Demand: We review data and opinion from the National Housing Supply Council, the Australian Bureau of Statistics, Real Estate Institute of Australia and many other experts to determine the factors influencing the supply of and demand for new property in Australia generally, and by specific location.

Rental Growth: We study the historic rental growth for each area we review and look at current trends

Vacancy Rates: Residential rental vacancy rates can provide us with a guide as to the likely pressure on rents. Low vacancy rates mean supply of rental properties may be constrained and therefore rents may rise.

Current price growth trend: As we have stressed property is a long term asset and we advocate a buy-and-hold strategy. We are also interested in the historic and current growth trends of property at a national, state and regional level. Suburb specific data is published by a number of providers but needs to be viewed carefully to determine if the sample size is meaningful. One new record sale does not mean the whole suburb is booming!

Interest Rates: A common misconception amongst investors is that rising interest rates must be bad for property. This is simply not true. In fact some of the best returns on property have been during times of rising interest rates. The reason is simple enough if you think about why the Reserve Bank raises interest rates. The Reserve Bank has a mandate to keep inflation within certain parameters (currently 2-3%). As the economy grows, capacity utilisation rises, wage pressures increase, inflation rises, asset values increase and interest rates go up. Of course interest rate increases mean a greater expense for borrowers but for property investors these expenses are generally offset by rising rents and faster capital growth. As we keep re-enforcing property is a long-term asset and short term interest rate increases should not concern us.  

Area Specific

Location: Or location, location, location as real estate agents would say is a fundamental part of any property research. We research each area or suburb to determine the factors that are likely to drive future demand. Changing demographics, town planning, development requirements etc all drive the capital growth of an area.

Infrastructure: We consider the current and planned infrastructure of the area we are reviewing. The area must have the obvious requirements of its residents such as transport availability, employment options, educational choices, shopping facilities, entertainment, restaurants etc. but we also look at future public and private spending plans. For an area to grow successfully we believe significant forward planning is required.

Amenities: The things that attract residents to an area are many and varied and not every potential tenant has the same needs but we believe amenities such as open space, parks, sporting fields, bicycle paths, walking trails, tennis courts and natural features such as beaches, rivers etc will make an area more desirable to the majority.

Rental Demand: We believe a mix of owner-occupiers and tenants is healthy for an area. A balance of up to approximately 40% tenants ensures a reasonable pool of potential “customers” for our investors. We encourage our clients to think of their investment properties as their business and therefore by definition the tenants are their customers. 

Property Specific

Position: You might think that since we have already discussed location we are repeating ourselves, but position is also important. A mansion in Toorak may be in a great location but if it is built too close to high voltage power lines or a major road junction it’s value will suffer. We are looking for well positioned property as well as well located property.

Rental Return: We will always obtain an independent rental appraisal of the properties we offer. We will approach local property managers whose business it is to understand the local supply and demand for rentals. We also look at rental guarantees and long term tenancies to determine the best result for our clients.

Value for Money: With the tightening of lending practices by many financial institutions and the changed face of lending that has resulted from the GFC valuations are critical to our business.  Frankly it would be a waste of both our time and our client’s time for us to recommend a property only to find it fails to meet their lenders valuation criteria. For this reason we will only recommend property which we are confident will meet valuation standards. To achieve this we will do a comparative market analysis of every property we offer. We have been asked if we can provide a valuation with the property and the answer to this is more complicated than it seems. Valuers, generally, prepare a valuation for a specific purpose and for a specific entity. When a valuer prepares his valuation he will add a disclaimer saying it is not to be used for any purpose and by any entity except the one who commissioned it. So if we commission a valuation we are not allowed to give it to you and you are not allowed to rely on it. This may all sound like legal semantics but it is the reality of the area we operate in. The only valuation that really matters is the one commissioned by your bank or other lender. This is the valuation which they will base their decision on.

Design & Finish: Design and finish of a property are important. Although we have stressed that this is a financial decision and we should not care about colour of carpets (within reason – lime green shag will not help) we do care about the properties let-ability and saleability. A well designed property with a high level of internal finish and spaciousness will obviously rent and eventually sell better than a poorly designed one. We recommend properties which include features which will attract the highest potential rent. These things vary from area to area but in Queensland features such as airflow and air-conditioning are important to most tenants.

Quality of Developer: Many investors never have any contact with the developer of their property. In most cases this is because the project goes smoothly and no contact is required. We aim to ensure that this is true of our projects. Many of the developers we partner with will be household names and particularly if our client is buying off-the-plan we aim to provide peace of mind by only working with developers who we are confident will deliver the property as described and on time. We research the developers based on their longevity and track record of delivering high quality, low maintenance product.

Facilities: When we look at the facilities of a development or property we look for a balance between those which will add value to your property either through higher rents or increased capital growth potential. Features such as swimming pools, gardens and gymnasiums all add to the appeal of your property compared to those surrounding it. These facilities also add to the on-going costs of your investment. We aim to balance these and recommend properties which offer the highest level of facilities on a value for money basis.

On-site management: As a general rule we believe on-site management adds value to your investment. On-site managers usually run the complex as a business and therefore it is in their interest (and yours) to keep the complex looking and feeling inviting. If the on-site manager is also your letting manager his interests are further aligned with yours. Essentially each time he accepts a new tenant he is accepting a new neighbour and good neighbours are generally good tenants.

Special Features:Special features are those “x-factors” which might be difficult to quantify but which have the potential to add vale to you as the owner through either increased rent or greater potential capital gain. These may vary from energy efficiencies and sustainability features to lifestyle features or future upgrades.