Lunch Money Property Investing - Step 5 - What To Buy


The fifth step to successful investing is knowing What To Buy.  Different types of property have different demands, different cycles and different returns.  Buying the right type of property will ensure you have good returns and great growth for the long term.

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Transcription

Hi, I'm Phil Anderson from LifeCorp, the home of street smart property investors. I've been a property investor for more than twenty years in the Australian property market, and in recent years I've narrowed down all those lessons I've learned into an absolute formula that hundreds and hundreds of Australian property investors are using, incredibly successfully, to target the best areas to buy, how to protect their pockets, how to buy properties with lunch money budgets, and a whole range of very, very cool things. Today, though, I wanna focus on how do we target, and how do we identify what's the right property types to buy. It's one thing about targeting where to buy, but how do you target what to buy? Today I'm gonna give you my top three tips.

Once I've targeted exactly where to buy, it may surprise you that when I enter that market, I very rarely talk to real estate agents. Real estate agents, unfortunately, will be there to serve their clients. They're there to sell the listings that they have. And I've got mates that are incredible real estate agents, and I've got nothing against real estate agents. I just find they don't serve my research as well as what property managers do. You see, property managers have become a very professional service within the real estate industry, and I think they're a great resource for property investors. When I hit a market, I'll go to property managers and I'll ask them a whole series of questions. Now, I've actually got a full list of about 25 things that I check out, what I call my acquisition checklist, when I hit the market. But here's the top three things that I would suggest you first understand. And quite often, it's the property managers who will help you understand these three key elements.

Number one would be what is the most in demand property type? In demand. What I would want to know is, what's the most rent-able properties? What's the most sought-after properties? What floorplans? Are they units? Are they houses? Are they three bedroom? Are they two bedroom? Are they four bedroom? Do they have one living space? Two living space? I wanna see, upfront, before I've got any perception as to what it is I'm gonna buy, what is the most in-demand property type? Because I wanna hit the sweet spot of that rental market. I wanna be in the meat in the sandwich. I wanna be in the most popular property type when it comes to buying a property in that particular market. What is the most in demand property type will be my first question.

Number two- I wanna be all about yield. Now, yield is gonna be made up of two things. It's gotta be affordable, the property type, and the rent's gotta be strong. Between those two numbers, and by assessing, well, what would those property types cost? We know what's the most in demand. What's the price point of those properties? And what's the rent that we're likely to get from those properties? The yield would be a big, big sorting tool for me, because you know I won't buy a property unless I can buy it with my lunch money. So, yield is gonna be number two that I'm gonna be asking about. I'm gonna be using that as a bit of a sorting tool when it comes to, is this area going to provide me with a great investment opportunity?

And number three is all about the tenant. Buying a property, and basically being able to buy one with your lunch money, is all great. But I'm in this for the long term. I like to buy and hold properties. I'm don't buy and sell them. I buy and hold them. And you can always sell them if you wanna trigger your retirement or whatever. But, whilst you're in a buy and hold pattern, I wanna make sure that we're gonna get great quality tenants. So for me it's about, what's the quality of tenant look like? What's the type of tenant that'sgonna rent these properties? I wanna have a great long-term holding experience, which quite often means I'm not in little rental communities, I'm in great communities that are mainly owner-occupied.

And there's a whole range of other elements within my 25-point checklist, but these three things will allow me to really understand, very quickly, by talking to a property manager, is this likely to be a great area for me to invest, what's that property type likely to look like? And there's so many great elements you can get just by asking the right questions upfront.

Now, I've put together a checklist. I've got a seven point checklist that I use. This is all within number five in that stepping stone checklist that I have. But, I've put together an infographic that I'd love to share with you. If you click on the link below, you'll be able to grab that infographic. It'll give you a great visual representation of all seven steps that I use. It's yours free of charge, so please click on the link and grab it. Inside, you'll get a bit of a feel for all seven steps. But inside of this particular step, targeting where to buy, there are a few of the very high-level things I'd wanna know pretty quickly when I came to targeting the right properties to buy in that market.

But remember, once you've got a market, and once you've got these sort of elements all put together and you're ready to buy a property, my golden rules always exists. If you can't buy a property with your lunch money, don't buy it.

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