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OK peeps, it’s the real deal now.
MrsFrugalSamurai and I are in the market officially looking for a place to call our own.
Not that we’re homeless at the moment mind you, just that we’re now looking for a place to put down roots for at least a few years.
We’ve always been rentvestors, but I think the current market is as good a time as any to call a place our own.
Naturally, as I’ve been in the property game for some years now “tugs at lapels on jacket” I have my investor lens on when I’m looking for a place.
But let’s face it, we most likely will end up where MrsFrugalSamurai feels happiest.
I wear the pants you see.
Although if I was a first time property buyer, I must admit that you can’t help but feel daunted.
Because the property market is huge.
I mean enormous. There are more than 10 million properties spread over 15,000 suburbs.
However, if I had my way, I would be treating the property search exactly like buying an investment property.
This means sorting each suburb into groups depending on risk profile, opportunities and investment potential.
What groups you ask?
Well, let me introduce you to the 4 types of property locations being:
Cash Cows, Steady Eadies, Hail Mary’s and the Holy Grails.
To put it bluntly, cash cow locations are the ones which offer the highest rental yields.
Now I know when searching for an owner-occupied property, rental yield is not something many of us think about.
However, there is a strong likelihood that the first property we buy will not be our forever home.
So we need to have a bit of foresight here.
Cash cow locations are those areas with a higher rental yield, because typically they have a higher rental demand.
You’ll find them usually in the outer suburbs of our capital cities or in regional locations.
Actually this was my investment strategy from the get-go. Targeting 8%+ rental yields in metro areas.
Capital growth might be a bit compromised down the track, although entry prices are usually lower hence mortgage repayments lower.
I have no qualms about moving a bit further out, and have discussed this with MrsFrugalSamurai.
She has put the kibosh to this idea. So that’s that.
I wear the pants you see.
This is the vast majority of our suburbs and are located in all the established areas of our capital cities and regional towns.
They are Steady Eadies because they make up the average.
In that values (and also rents) move up and down with the market.
You’ll usually know what you get with these locations, as they are established, well developed with the usual amenities – schools, transport, infrastructure, shops etc.
Your typical suburban street and er, suburb.
Nothing wrong with buying into these areas, and what most people want to buy into because everything is already laid out.
Most likely we’ll end up in one of these locations.
This is where you look to buy into a location right before it bursts with spectacular growth, and you are literally sitting on a gold mine (not literally on a gold mine, that would be harmful).
A good friend of mine has a cousin whose best friend’s uncle’s neighbour had a dog named JimJim. JimJim ran away from home. Please help to find JimJim.
JimJim reminds me of a guy I know named Jimmy (no relation) who did ludicrously well buying into a Hail Mary location.
He purchased his owner occupied home in Austral (South West Sydney), in the mid 2000’s straight out of school.
He bought it for no other reason than to be close to his parents who lived nearby.
Jimmy won’t mind me saying this – because he bought in the 200’s (k), and sold a few years ago for $4.35 million.
The reason of course, is the famed 2nd Sydney Airport to be built next door.
Mind you, the 2nd airport was first proposed back in the 1940’s… and confirmed in 2014.
That’s the Hail Mary for ya. More dumb luck than sheer brilliance.
Ah yes, the fabled Holy Grail of house hunting.
This is like an urban myth – everyone knows about them but no one can find them.
It is in these locations where demand increases exponentially both from a buyer and renter perspective.
Sometimes it’s because of suburb gentrification, where a dramatic uplift in demographics, income and demand sends both valuations and rentals rocketing.
Or other times, it can be the location of the property itself, such as a nice flat corner block, clean title and potential to subdivide or add a second dwelling.
Or it can be the property itself – where you can renovate to add value, or add another bedroom, or improve the floor layout.
This is what I’ve been sniffing around for as our family home. It ain’t easy to find, but I think it’s do-able.
Tell ’em they’re dreamin’.
MrsFrugalSamurai mind you, will still have the final say.
I wear the pants you see.
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Joyce P Lai
Good luck with your property search!
The Frugal Samurai
Thanks Joyce! It’s a bit painful sometimes haha!