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Discover the secrets of successful property management and investing on "The Property Investors Handbook" podcast. Join Colleen Sutherland as she shares expert insights and strategies for acquiring, managing, and maximising returns on real estate investments. Whether you're a beginner or seasoned investor, this podcast is your essential guide to navigating the world of property investment. Tune in and unlock the keys to financial success in real estate.
Produced by Pod Pro Australia
Hello and welcome back to the Property Investor's Handbook. I'm your host, Adam Bell. And today we're looking into one of the really critical factors in property investment, and that's picking your location. Now the right location can make or break an investment and really plays a big role. Big part in how well it's going to perform for you.
So here to help us identify prime investment areas and the things that go into choosing your location again is Colleen Sutherland from Sutherland's Property Management Group. Welcome to the podcast.
Thanks
Adam. Okay, so why is location so important when choosing where to invest?
Because what you're looking at is the growth.
So, again, you begin with the end in mind. So, you've done all your research. So, you decide on an area and then you decide on the property.
Sure. So
that's the basic of location, yes.
Okay. So as we sort of break this down, location, do you select a property, the type of property you're looking for first, or maybe look at location first and then work out what's the best property, which comes first, the chicken or the egg here?
I think it's the location. That's me personally, because you want to know that there is infrastructure around you or going in around you. And the infrastructure means, you know, whether it's highways, it's public transport, and then it comes down to shopping centres, CBDs, that sort of thing, train stations.
And that's what tenants are looking for. So you're not looking for a property that you would love to live in. You're looking for a property that is most popular
So that's a fairly important point, isn't it? That when looking at the property and taking the location is not to think like, well, would this suit me?
It's would this suit the, the bigger population and, and the people who would be considering living here.
If you've gone that far into research for an investment property, you need to take into account. Take the emotion out of that, buying that property. Would I live here? And it's like, nine times out of ten, no.
But it's a necessity, it's an area that probably needs tenants because there's lots of demand in that area, that sort of thing. So the next thing you look at, if you've chosen your location, then you choose, is it going to be a house, a townhouse, a unit, that sort of thing.
And that will depend on the budget because clearly houses are going to be more expensive, but then in a body corporate situation, you have body corporate fees.
Sure. So probably a tough question here. If you're looking, you found the area that you'd look, you're looking for an area that's going to have great, You find something that, you know, it ticks all the boxes on that, but it's not the greatest property when it comes to being tenanceable, if that's a word.
Have you seen this before where it's a great spot for capital growth, but you've come in as a property manager and, well, there's a few things here that really are going to make this hard to find a good tenant for.
Yes, I have, but when, if your budget is dictating what you can buy, that might be the only area you can afford to buy in, or you bought this old unit because it is a development site.
But what you need to take into consideration is the condition of the property. There's, it's always tenable because it's, probably going to be cheaper, but your initial investment, it's cheap for a reason.
Sure.
So don't, expect again, major prices increases that sort of thing because it's cheap for a reason.
Sure. Okay. Now, how would investors maybe be able to research and identify up and coming neighborhoods for want of a better phrase?
They're, sales agents out there who just concentrate on these new pockets of development. And when you're buying in that area, ordinarily nine times out of 10, it would be an investor who buys the property.
So you're surrounded by investors and the whole estate will be, tenants, but there could be maybe 10 percent of owner occupiers. Initially, it will be investors and then as those investors sell their properties, it will often go to first home buyers or downsizers and that sort of thing that, then it turns, the tables turn towards a owner occupier estate.
Sure. Now you mentioned amenities and infrastructure a little earlier. How important, you know, are they when selecting a property to, to invest in? You know, having that. Access to public transport, being close to shops, being on a train line that takes you into the, into the city. How important is that when, you know, looking at an investment property?
I think it's vital because when you're renting it, you can promote it as it's close to the train station, walking distance to the train station. The shops are just up the road and all that sort of thing. So I think it's vital. So then when you go to sell it, you say the exact same thing, but you're targeting a different audience.
And it will go right across the board. So the infrastructure in the area. is quite vital.
Right. And something I hadn't thought of until you mentioned it then, I was thinking of that in terms of, you know, the rent you can get in terms of being able to market it to prudential tenants. But I didn't think about, of course, when you go to look at selling that property, very important, that those things are there to be able to get the very best price for the next, the next buyer who comes along.
Yes, that's right. And When you're looking at a rental or a sale, they're fairly similar style of audience, as in the rental will want that infrastructure, but when you go to sell it, it's close to, you know, XYZ. So, an owner occupier would want to buy that.
Sure. Have you had Investors, come to you and ask for your advice because it's probably not something that a lot of people think of to go and talk to property.
They think of a property manager, I would imagine, after they've gotten the property or as they're doing the deal, but maybe not beforehand. But I'm thinking there's a lot of benefit in talking to you or others or property managers who have a lot of properties in that area, to talk to first.
Yes, and it would be a good idea if you're talking to the right property manager because there are property managers who only have their property manager's cap on.
Not their, this is an investment and this is what we are experienced to be because they may not experience that. So you'd have to strike it lucky to get a property manager who actually knows about that. All this stuff,
right?
So what we do is we manage the property that will increase the value of the property.
So when you go to sell it and you probably will, or you'll gift it to your children. You know that your money is working hard for you and we're looking after that. Sure. it is one of the biggest investments other than your own home to make
absolutely. So, it was something that we were going to bring up in another podcast, but we ran out of time, but, I was thinking the accidental, what you call the accidental property in, investor. Explain what that is, firstly, for our listeners.
That is my term. Because
Also, it's not a I thought that was a term across the industry. That's your term. It
may well be, but that is my term. It's like landlords in business. In protection insurance. Yeah, we call it human nature insurance, right? I don't know whether everybody else does okay Yep, so as an accidental investor that may mean They have a job transfer to another state or another suburb, but they don't want to sell their house They want to retain that because they have every intentions of coming back or it could be on a normal market I can't sell this house but I need to, move or I'm going overseas or whichever it might be.
So we'll put a tenant in there. They're the two main investors. They become investors. And the other one is an inheritance. So, it could be that you've inherited the property and you want to hang on to it and get the benefit out of it for two years, without the tax implications. So, and again, you've just fallen into a property that you're renting out and you know nothing about it.
Then that's where you'd go to, property management. and or property manager and ask for their professional advice on how to rent it. They can't tell you why, but they can tell you how.
Sure. And of course, get good advice on what maybe you need to do to the property in order to make it, you know, more suitable as a rental, because in all of those scenarios you've just talked about, it was, the house is there as you know, for an owner occupier, isn't it?
And there are certain things that you need to be aware of. with a property that, stark differences for an owner and occupier versus a rental, isn't there?
There is. So I have a checklist if anybody is interested in, getting a copy of that checklist. But the other thing is, if you're an accidental landlord and you're going to move away, but I have every intentions of coming back, what you need to pack in those boxes when you're packing to move is your emotion, because it goes from a home to a business.
To an investment, yeah?
Yeah, so the investment should be treated as a business. So, you're paying it all. That must be hard for someone
who's planning on moving back.
It is, because that's where we used to get, Oh, I don't want any pets in my house. Right. And we used to be able to do that. But can't anymore.
We can't do that anymore. So, if you've got an allergy to cats, and that, all these tenants have cats that are applying for the, for it, it's too bad because I have to put them in. And you have to deal with it when you get back.
Look, this is really interesting. And perhaps we need to do a full podcast on this Colleen
cause it's just opened up a can of worms in my mind, because, a lot of properties are actually built these days for investments, literally, you know, they're built to within an inch of the boundaries. Yeah. And they don't do anything to the gardens. It's everything's as low maintenance as possible, but.
When you think about, yeah, this where someone's lived in a home, cared for it, loved it, I've said it a few times, I rent, and I would love to have done a whole heap of stuff to the place I live in, but I don't because it's a rental. I think what's the point? I would have loved to have landscaped the gardens and you know, all the things you would do if it was your own place, which someone will do if it is their own place, but if they're then turning it into a rental and then they see someone come in and just let all that go, you know, within
Yes, so the tenant is responsible for the garden.
So let's just take the gardens for example. They are responsible for the maintenance of the garden if it's basic. But if you've got luscious landscaping and hedges and fruit trees and all that, that goes along with owning a home, I would recommend to you to have a gardener come in once every month, six weeks, and include it in the rent.
So the tenant doesn't have to look after all those hedges or fruit trees or whichever and someone will come in and take care of it for you. And so when you become the tenant, I say to you, and you don't even have to look after the hedges and the fruit trees because the landlord has someone coming around.
And then, you know, you adjust the rent accordingly. You're keeping it
to the level that you want. You've got to take that on yourself if, for whatever reason you want to, want to do that. Yes. Ah, very interesting. So, look, coming back to location, How can investors balance affordability with desirability when selecting a location?
That must be one of the toughest things.
It is a tough thing, but if you're doing it solely for an investment, you need to really have your investor's cap on.
Get rid of that emotion, as you've said. Yeah, the
emotion will . Wreak havoc on you because you're thinking, Oh, but that house needs painting and it needs new carpet.
Like I said at the start, it's cheap for a reason. So you're going to bring it into the 21st century, but then you'll get a 21st century price for it. And then you've got those capital gains, and tax deductions at the end of the financial year. So your investment is not Don't think that you're going to get an immediate, wow, this is a great idea.
It's going to cover everything. What it is you're investing the money and the money's going to work for you, but it will come back to you in the equity. So if you then need to borrow money to buy your next investment property, this investment property that you've only spent 350, 000 on, with your, improvements, it could be worth 450, 000.
So you're able to borrow money against the equity of that one. So it's really a complex thing when you go that far into it. But just remember, if you're buying a place and it's cheap for a reason, you need to do some work on it.
Well, look, thank you once again, another really, insightful episode and look, I want to implore anyone out there listening or watching this, you know, whether you've got investment properties now or thinking about it, have a chat to Colleen and think about it, talking to a, a property manager before you do it.
It's probably not something you've thought of before you think about talking to accountants and, developers and even
financial
advisors, or even real estate agents, they're the ones you, for maybe more an impartial view, talk to a property manager, all those others really, you know, have, reasons of why they would tell you, but a property manager will give you the low down and, something I'm sure you wouldn't mind giving to anyone who's looking at, looking at investing.
I will. Yes.
Fantastic. All right. Well, look, stay connected with us here at the property investors handbook. Every episode we've got. Insights and practical advice, and, we love having you listening, reach out to Colleen and her team. One person in your team that we haven't mentioned a lot about is Bree, but Bree is wonderful at what she does, and has been doing this for, well, how long has Bree been in the business?
She's been with me for, Nearly 12 years. Wow. I know. So I must be doing something right. Absolutely.
Absolutely. So reach out if you need anything at all. And look, thanks again for joining us on the property investors handbook.
Thanks so much, Adam.