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Housing expert John Pidgeon who owns $6million worth of property shares his top tips for finding a hotspot and dodging the 'not-spots'
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An Aussie property expert who own six homes worth a combined $6million has shared his top tips on how to make a mint from the market.
John Pidgeonwas just 22 years old when he bought his first property in Horsham, Victoria, in 1999, but he was 35 before he actually lived in one - before that, he was buying to rent them out.
'Houses are something that everyone needs, so I thought about the supply and demand and the capital growth rate that was occurring with property when I started out,' he told Daily Mail Australia.
He took his time to carefully building his portfolio, saying 'it wasn't really a race to the top. It was more of a long-term plan to buy my dream home in a great location'.
After 10 years, Mr Pidgeon and his wife had four properties and have continued to add since then, along with having three children.
The family lives in NSW and owns properties there, as well as South Australia, Queensland and Victoria.
Having now spent 25 years as a property coach and investor, Mr Pidgeon has explained the factors behind finding the right place to invest, which he divides into macro (large scale) and micro (small scale) factors.
He also explains the pros and cons of different property types and how to find a hotspot and avoid pitfalls.
Macro factors
1. Population and growth
There are over 15,000 cities and towns across Australia. How are you supposed to find the one location to invest in from such a large pool of potential locations? Answer: you aren't.
Focus on the top 50 or so markets across the country by population, which will help narrow down your search significantly. But, more importantly, narrow it down once you have identified your price point, desired yield and type of property.
2. Property cycle
Knowing when to make your next property purchase comes down to when you're ready, both from a lending and strategy perspective, as well as when 'The Property Clock' is set to the best time to invest, aligning with your strategy.
3. Supply and demand
Supply and demand can be influenced by government land release, gentrification, employment, infrastructure and services, general area appeal or investment from investors.
Other factors can include how many homeowners are wanting to upsize, downsize or enter the home ownership market for the first time.
High demand usually creates upward pressure on prices, whereas low demand usually creates downward pressure on prices.
4. Unemployment
Consider the national average for unemployment and compare it against the unemployment rate in the market you're considering.
High unemployment typically aligns with low population growth, which poses a challenge to your property investing.
5. Economic strength
Look at the industries currently operating in your markets of interest and see how diversified and strong they are.
Also consider what new industries are being developed in the market, setting up businesses and employment for the future.
6. Government spending
Are new transportation routes, parklands, public spaces, services or other infrastructure going to be developed?
How many years away are these developments expected? Talk with local councils to get a sense for what is going to be developed in the future.
7. Lending conditions
Are interest rates high or low? Which banks or lenders have an appetite for the area you're considering? Have lending regulations been relaxed to encourage more investors and home buyers to get involved?
Micro factors
1. Vacancy rates
Look at vacancy rate data online and assess the trends. What has historically been happening in the market?
If the rate is higher than 4 per cent, be wary of supply issues, but also see where that trend has developed from – is it on the way up or down?
2. Affordability
Everyone's definition of 'too much money' for a property is subjective. Get to know the affordability of the surrounding area to understand where the market sits.
3. Demographics
What shapes the local population? What cultural backgrounds, life stages, ages and lifestyles do you see? What's the socio-economic makeup of the area and the suburb you're looking to invest in?
These trends determine the lifestyles, behaviours and interests of potential residents, and the kinds of properties they're looking for.
4. Sales data
Consider what sales have happened in the area in the past 12 months, and in particular, sales of properties like the ones you're considering.
5. Suburb stigma
How do the locals perceive this suburb? Speculation holds back a lot of people from buying or investing, but is the stigma justified?
6. Walkability and general access
Walkability is an accessibility advantage. It encourages health and wellbeing, ease of access, convenience, timesaving, cost-saving, social interactions and generally has a positive impact on property prices.
7. Income levels
If incomes are higher, this enables residents to make upgrades to their homes, renovate or improve their properties, which increases the value of the surrounding suburb or town.
8. Family friendly
Are there playgrounds, schools, after-school activities, services and facilities? Are the suburbs attractive to families because they're safe and suited to kids? This impacts property prices and also affects who will or won't move into the area.
9. Which side of the tracks?
If there's good growth in the area, the undesirable sides of a major roadway or train line aren't left behind – all sides are impacted positively, often benefiting from growth, even if it's a bit delayed.
10. Type of property in demand
There might be an undersupply of one type of property which could lead to better performance due to demand.
Get a good understanding of who's moving to the area and what type of properties have performed in the past, and look for trends.
John Pidgeon's new book Sort Your Property Out & Build Your Future is out now.
- https://www.msn.com/en-sg/news/other/housing-expert-john-pidgeon-who-owns-6million-worth-of-property-shares-his-top-tips-for-finding-a-hotspot-and-dodging-the-not-spots/ar-BB1k2IEV?ocid=00000000
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