Road to success means business-like attitude
Leading analyst offers tips to make the most of opportunities
SUCCESSFUL property investors are those who treat it as a business, according to a leading property analyst.
Even if it is just one investment property, having the right mindset from the start can spell the difference between success and failure, according to Terry Ryder of Hotspotting.
Mr Ryder, who analyses the best areas to invest in throughout Australia, said the people who struggled with property investment were those who treated it like a part-time hobby.
Pinpointing the best place to invest involved plenty of research and analysis, he said.
Mr Ryder said many would-be investors got too hung up on focusing on one particular suburb because someone told them it might be good.
“The strategy in play is to find the right areas and then the right properties within those areas,’’ he said.
And don’t only focus on past performance as that could often be misleading and wasn’t necessarily an indicator of future price growth.
“Nowhere grows forever, as we are seeing with Sydney and Melbourne, and nowhere is down forever,’’ he said.
“In 2011 and 2012 if you looked at past performance you would not have invested in Sydney, it had been a poor performer, but if you had done the wider research or had good research sources, you would have been aware with what was coming up for Sydney because there was an improvement in the economy and all sorts of other factors.
“If you looked at the numbers right now for Townsville, you wouldn’t want to buy there, but we think that Townsville, because of this massive upcoming expenditure in infrastructure and business investment generally is creating jobs and the unemployment rate is coming down, confidence levels are rising. Now is the time to consider buying there because it is going to grow, but based on the past performance or current performance you wouldn’t want to buy there.”
Mr Ryder said investors should start out broadly and then focus in their search.
“You start out with a raw area, which might be the overall city capital city or major regional city,’’ he said.
He said underlying economic trends (on a local level) strongly correlated with property market performance so it was important to be across those.
“We are not so much interested in the national economy, and not so much interested in the level of interest rates which the economists like to talk about a lot,’’ he said.
“We look for economic indicators – infrastructure spending is a very big factor.’’
Once those larger areas have been identified Mr Ryder said they started looking at the smaller precincts within those areas.
“We tend to then think in terms of local government areas, clusters of suburbs. We are looking for a number of factors – sales volumes, because price rises tend to follow (a rise in sales).”
On the other hand a slow down in transactions or plateauing could indicate price growth was about to come to an end.
This was borne out in the Sydney market where transaction numbers had been gradually slowing in recent years and so the result was now a slowdown in price growth.
Mr Ryder said an important consideration for him when deciding where it was best to invest was the general level of amenity and infrastructure in an area, these made suburbs popular with renters and helped improve values in the area because they were more in demand.
In greater Brisbane Mr Ryder said the rail link to Redcliffe had had an impact on values and a new university campus in Petrie would all have an impact on the local market.
“If there is a new rail link, if there is a new motorway or upgrade it is going to help the property market at the end as well because it creates economic activity and jobs along the way.’’
While following the infrastructure trail could be one that paid off for investors in the long run, Mr Ryder said investors should weigh up when was the best time to buy.
“There has been plenty of announcements made of things that have gone ahead or not gone ahead when they were expected to.”
He said the announcement stage was probably not the most certain time to invest.
“Certainly being cautious myself I would be waiting until I had reason to believe it was actually going ahead, contracts have been awarded, physical works happening,’’ he said.
In Adelaide Mr Ryder said there were some big projects about to happen which would change the face of its property market.
“I think it is a very underrated economy and property market,’’ he said.
“One of the big things there is these massive contracts to build navy submarines, and so it is tens of billions of dollars over a number of years.
“They are actually building the infrastructure right now to construct these vessels, so we believe that with that happening the Port Adelaide area is going to get a boost. These are the sorts of things that we look for.”
A leading property analyst says successful investing comes down to treating it like a business..