Property Selection Pointers

I recently came across a few property selection pointers while reading a transcript of an interview with Micheal Yardney. This guy seems to keep landing on my radar because of his common sense approaches and of course his prevalence throughout the digital medium. The full interview with Kevin Turner can be found here.

1. Buy homes that are attractive to Owner Occupiers, and buy in an area that is predominantly owner occupied. These guys tend to hold onto their properties during tough times, and will also be buying similar properties; your home will be marketable at all times.

2. Buy properties below intrinsic/market value. Dont buy new or off the plan properties as they come at a premium.

3. Buy in an area with a history of capital growth, and which is likely to outperform averages for the region because of demographics. Demographics would include areas of predominantly owner occupiers, living there because of the many lifestyle choices. These areas also have locals who can afford, and are prepared to pay a premium because they’ve got higher disposable incomes. In general, these are the more affluent inner and middle ring suburbs of our capital cities.

4. Buy a property with a twist. It should be unique, have special qualities that set it apart etc (ie you wouldn’t buy an apartment building full of the same indistinct apartments).

5. Only buy properties to which you can add value through renovations, refurbishments, or redevelopments. You want to manufacture some capital growth rather than waiting for the market to deliver it.

6. The Statutory Land Valuation should be no less than approx 75% of the purchase price.

Some commentary about #6. I recently attended a seminar given by Micheal Yardney, with the intention of stopping in for a quick look, then paying once I was satisfied I might learn something. After arriving late (the seminar was half over) I popped in and sat down, only to find I was sitting in staff seating at the rear. As it happened, I was immediately noticed by his wife who inquired why I was sitting there, and after explaining my intent, kindly invited me to stay free of charge for the remainder.

If there was any takeaway from the seminar that surprised me, it was #6. The idea is of course (in hindsight) common sense, but to have a number on it, even better. This was the first time I’d heard of it, which is why it’s here with Micheal’s other ‘strands’ of property selection for future reference.