By Rich Harvey, CEO & Founder, propertybuyer.com.au
Property investment research is absolutely critical. The more you know about a potential purchase, the better informed you can be about how it’s likely to perform and whether it fits your strategy.
We live in exciting times where you barely need to leave the comfort of your favourite recliner in order to know the ins and outs of a property. Just fire up the phone or laptop and start delving through a whole stack of tools online. Most are free or very affordable and can give you an idea of current price, historic movements, demographic changes and supply and demand, to name a few.
Doing your homework can help determine whether a potential property investment is worth going for, or worth running away from. Let’s face it, it’s just not possible to physically visit every property you spot online that has potential. Why not just filter your list early and concentrate on the real estate that deserves your attention?
A word of early warning though – just because you may be good at armchair research – there is no substitute for a physical property inspection. Seeing a property in the context of other properties, its proximity to amenities, road noise, overshadowing, lack of privacy from neighbours and walking the internal layout are all things that mean you have to eventually get out of your chair.
That said, here are some of the best sources for doing you armchair research to help fast track your shortlisting.
Know the area
Finding the right property is important, but it all starts with location. It’s crucial to determine how local factors could impact your investment.
Get to know the basics of a suburb with this free guide on realestate.com.au, which gives a bit of a profile that includes median price, median rent, a trend over time, an indication of supply and demand, and the type of people who live there.
Google Maps is a tool we’ve all used to get around, but type in the area you’re considering and start exploring from above. Zoom in and out to get an idea of transport facilities, the number of schools, the types of commercial and retail businesses, the abundance of parks and proximity to good or bad neighbouring areas.
ID is a service used by governments to help map and forecast population and demographic trends. This could provide valuable insight into how an area you’re looking in is shifting.
Also, find out what council looks after the suburb and go to their website to search development applications. See what urban renewal has been proposed, including any projects that could have a negative impact.
Dig into the data
Data is important. It can tell you what’s happened, what’s happening and what’s likely to happen to an area’s property market.
There’s a wealth of information out there that can give you a keen insight into real estate at a city and localised level.
On The House has some good information for your property research basics. You can get a good starting idea of estimated values and sales history for properties you’re considering.
The most comprehensive database coverage of historical and current property data resides with CoreLogic, but it is a subscription based program with high fees designed for property professionals.
Again, try realestate.com.au. It has regular property reports that give an outlook on a capital city’s market. It’s a good summary from their chief economist of what to expect, as well as a guide to what’s happening. It also breaks it up by city regions, rather than just looking at a huge area as a whole, so you can drill down a bit deeper.
Not to be left out, Domain publishes regular updates on auction clearance rates in each city, so you can see how many sales are done under the hammer.
Meanwhile, SQM Research has a postcode-by-postcode snapshot of vacancy rates.
And PropCalc can give you an estimate of a property’s cash flow potential, so you’ll know how much income to expect.
What the experts say
Everyone has an opinion on the state of property markets. Just ask anyone at a backyard barbeque or dinner party. But cutting through the misinformation and opinion is critical.
Find the best minds in property and start consuming as much of their insight as you can. A word of warning though – ensure they’re independent, properly qualified and have a proven track record in the industry.
Some of the good media outlets and blogs include Property Observer, Your Investment Property magazine and Property Update.
And there are a whole host of professional services that provide information.
BIS Oxford Economics, formerly known as BIS Shrapnel, is a leading economics powerhouse that offers commentary and analysis of property markets, while Residex is a Core Logic product that provides regular reports on for investors.
And knowing what other property investors are thinking or looking at can be useful too. Online forums such as Propertychat are also worth a visit, as are some discussions on Whirlpool.
Interpret the data
Be careful not to get overwhelmed or confused by data sources and commentary. Median price movements can be misleading and taken out of context. Auction clearance rates can be very seasonal and fluctuate wildly. Look for ways to meaningfully apply the property data to your individual situation so you can make wise decisions. Or engage our buyers’ agents who will expertly prepare a detailed property appraisal and give you accurate information on the right price to pay for your next property.
Armchair research has never been easier with plentiful information and easy access. That said, it should only ever be a method of shortlisting the options. In reality, the boffins are yet to create an app or website that can effectively replace on-the-ground experience when it comes to researching a potential investment option. Nothing beats “ground-truthing” your desk top research. Come on, get your shoes on, get out there and make the effort to touch and feel the property before you leap.
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