The world of real estate has changed drastically since the turn of the century.

Back then, property investment as a wealth creation strategy was really only in its infancy. Today more and more Australians are interested in property. Real Estate Agent

Over that time the role of real estate agents has changed.

In the past, agents held much more power.

They have access to data such as past property sales and local values, as well as details of properties for sale.

Remember back then agents usually just advertised listings in newspapers and their shop windows.

Within a few short years, property listing portals became common place and that meant  the balance of power changed with buyers having easy access to data.

Also, the days of agents driving prospective buyers to properties soon came to be a relic of a bygone era.

So, with so much change in such a short period of time, what does the next decade herald for the real estate sector?

1. Agent value

While there is no doubt that the role of sales agents has changed dramatically that doesn’t mean that an agent’s intrinsic value in a transaction has disappeared. 

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You see, the main value that selling agents have always brought to the table is their ability to negotiate between the seller and the buyer.

Because they are not emotionally attached to the property like sellers are, they are able to suggest a price that both parties are happy with and bring a protracted negotiation to a conclusion.

Whereas, left to their own devices, private sellers generally struggle to accept that buyers don’t view their property as a castle like they do.

While agents will communicate with both buyers and sellers differently in the future, for example social media, videos and virtual tours, I believe  a good agent will continue to help both buyers and sellers achieve the results  they desire.

2. Cut-price commissions

Over the past decade or more, the era of cut-price sales commissions has entered the real estate industry.

We’ve seen agencies like Go Gecko and now Purple Bricks set up shop offering a reduced sales commission for a reduced level of service.

There will always be sellers who are motivated by price and this means these types of agencies will likely always be around.

But remember the old saying: prices what you pay – value is what you get!

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You see…the cheapest agent is the one who gets you the best price, not the one with the lowest commission and who likely works on a quantity over quality model.

Sellers loose out in a number of ways.

I’ve found these cut-price agents are less motivated to get their vendors the top price.

And many of these cut-price fees include a non-refundable levy that must be paid regardless of whether they sell the property or not.

That is contrary to the standard commission structure that is only paid when a successful sale has been completed.

At the end of the day, while cut-price agencies might grow in number because of technological advances, most vendors that use them will probably end up with a cut-price result.

3. Free data

One of the biggest changes in the property investment space in the past 20 years has been the rise and rise of data.

When I first started out, there was very little available to help investors research the various property markets.

Today, there is more “free” online data than you can poke a stick at, but much of it is inaccurate.

It’s too easy to stumble into the wrong information.

Take the online property “valuation” reports – these are generally inaccurate (as often on the upside as on they are on the downside) as they have no idea of the condition of the property in question.

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Similarly, sellers can be misled by those “find the best agent in your area” websites, which make their money, and therefore we can assume their recommendations, based on commissions paid to them by agents looking for listings.

While the volume of available free data has skyrocketed one thing that hasn’t changed much is the ability to analyse it correctly.

Most buyers lack the expertise to understand what the numbers in front of them are really saying and how best to interpret them.

To be blunt: they lack the perspective to know what’s important and what’s not.

This is most obvious when lists of “best performing” suburbs are released, which some people confuse with signposts of where they should invest next.

My strategy is about buying investment-grade properties that will  continually outperform the averages, that doesn’t  change to suit the short-term changes of the market.

I only invest in the type of property and location that has “ always worked” rather than looking for what “works now” – you know the next hotspot or get rich quick scheme.

My research and that of our team at Metropole involves analysing leading indicators- signs of what will happen in the future, rather than the type of content freely available on the internet which tend to be lagging indicators – a record of what’s already happened.

So what’s ahead…

It is no secret that we’re in an age of rapid technological change that is having a significant impact on the types of jobs that people do.

The continual evolution of the internet, social media and technology will clearly cause disruption in many industries, including the property industry.

  • Your FutureBuyers will have more power being have to search and research properties and loans  online.
  • More buyers will use buyers agents to protect their interests, just like vendors have selling agents on their side
  • Electronic conveyancing is now happening through the Pexa portal with close to 1,700,000 property transactions having now been completed through this E-conveyancing network.
  •  How we handle our money and online banking is going to evolve. The day of cheques being written for deposits will soon disappear and it is possible that Bitcoin will play a role in future property transactions

However I don’t see real estate agents jobs being replaced by artificial intelligence any time soon.

And I’m not even going to go down the route of making a joke about the level of real estate agents intelligence!

You see…when it comes to real estate I believe that the sector will evolve and change but that the buying and selling of property will always remain a skillset that requires the expertise and knowledge of experienced professionals.

WHAT CAN YOU DO TO STAY AHEAD?

As signs point to softer growth conditions for Australian property over the coming months, independent professional advice and careful consideration will be as important as ever in navigating Australia’s varied market conditions. 

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If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

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Options for savvy investors to take advantage of the boom in the staycation sector

Politics and economies are constantly changing. Savvy investors watch these changes, and, where others see problems, they see opportunities. Take the hot topic of today (and the last two years, and likely the next two years): Brexit.

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Welcome to one of the happiest cities in the UK

Off-plan property investment is a great investment strategy for all lifestyle goals, provided you buy in the best places to invest in property UK. Our research tells us that Leeds is one of those places. It is regularly rated as one of the UK’s best lifestyle cities, with a relatively low cost of living and a growing local economy. As if this isn’t enough to make Leeds one of the UK’s happiest places to live, the city is home to some amazing leisure, shopping and cultural amenities for residents to enjoy.

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Damian Collins, president of the REIWA, said the overall regional median rose by 7.8 per cent to $345,000 and overall sales were up 1.2 per cent.

“It’s the first time this year we’ve seen overall sales activity and median house price improve simultaneously in regional WA,” Mr Collins said,

“The results of the September quarter are very promising and suggest a recovery is not too far away.

“Although regional WA continues to feel the effects of the market slowdown, the results of the September 2018 quarter suggest the worst is over, with a number of regional centres starting to find their feet.”

Median prices

Out of WA’s 11 regional centres, five did not record any declines, REIWA analysis showed.

The top performer, according to Mr Collins, was the Albany region, with its median price rising by 26.8 per cent to $430,000.

“It also experienced an improvement on an annual basis, with its median price now 17.5 per cent higher than last year’s September quarter median,” the REIWA president said.

“There was a shift in the composition of sales in Albany during the September 2018 quarter, with significantly more activity occurring above $350,000 than there previously has been, and fewer sales occurring below $350,000, which is where the bulk of activity has typically occurred in this region.”

Other improving regional centres for median price rises included Bussleton with a rise of 9.8 per cent, Bunbury with a rise of 1.9 per cent, Geraldton/Greenough with a rise of 1.8 per cent and Broome which held steady.

Sales activity

Sales activity in regional WA fared slightly better than price rises, with six out of 11 regional centres seeing a rise in sales.

The largest increase, Mr Collins said was in Broome, which experienced a 90 per cent rise of sales up to 38 over the quarter.

Following this was Port Hedland, up 51.7 per cent to 91 sales, and then Karratha, up 23 per cent to also 91 sales.

“The Pilbara region remains one to watch, with the announcement of three new mining projects in the region by BHP, Rio Tinto and FMG going a long way to restoring confidence in the area,” Mr Collins said.

“With 20,000 new local jobs expected to be created as a result of these projects, this should support population growth in the region, improve demand for housing in the area and aid recovery.”

Other improving regional centres for sales included Geraldtown/Greenough by 31.8 per cent, Kalgoorlie/Boulder by 26.8 per cent and Mandurah/Murray by 8.5 per cent and Albany, which held steady.

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21 questions to ask yourself before investing in UK property

Successful property investors all have one thing in common: they have a plan, and simply don’t make it up as they go along. They read investment blogs and digest all the property investment education they can get their hands on before investing.

A good friend of mine is a project manager and controls projects worth multiple millions. The services are in constant demand. When I asked my friend to explain the secret of his success, he simply said, “Advance planning”. He told me that with every project he works through a list of questions with the client. These include questions about objectives, budget, maintenance, plans for the future, and so on. Armed with this knowledge, he then plans a project to the nth degree – especially when it comes to allowing for the unexpected.

Property investment research and considering investment opportunities in the best places to invest in property UK should be approached similarly.

Here’s a list of 21 questions that you should ask yourself before planning a UK property investment.

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What goes up must come down, which seems to be  true of our property markets at present.

Now that doesn’t mean that they’ll come down with a bang – but rather a whimper in some locations and just changing down a gear in others.

With the Sydney and Melbourne property markets having experienced significant price growth over the past five years, property investors are not guaranteed of ongoing strong growth in the next few years.  Melbourne property skyline

But that’s not necessary a bad thing.

Why do I say that?

Well, a rising tide lifts all ships – and one of the worst things that can happen to a beginning investor is to get it right first time – it gives uneducated investors an over-inflated sense of their own ability.

Some will get caught out over the next few years, while those following a sound investment strategy will win the day and will also produce solid results regardless of the state of the market.

In fact, there are multiple property markets around Australia, defined by geographic location, price point and type of property, which are all currently at different stages of the property cycle.

So let’s look at 9 ways you can outperform a slow or mediocre market.

1. Outperform the averages

Here’s the thing: you are not buying the market, but a particular property in the market.

When I say that I mean that sophisticated investors buy properties that will outperform the averages.

And those types of properties are ones that I call “investment grade.

You know…the ones that offer a level of scarcity, in locations with multiple growth drivers and that will always be in strong demand from owner-occupiers, who drive up prices because they buy emotionally.

2. Don’t try to outsmart the market 
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Too many novice investors try to outsmart the market by buying in areas they “believe” will perform well at some stage in the future.

In my mind this is speculation, not investment.

That’s because these locations are often the more affordable ones on the outskirts of the city, which they mistakenly think will one day be worth millions.

But they’re wrong.

While all segments of the market tend to do well in an upswing – unless there’s an oversupply – during softer market conditions it is these more affordable areas that are most likely to suffer, especially as interest rates increase.

That’s because these are likely to be first home buyer or blue collar suburbs which are more inters rate sensitive and where wages are going up by less than the CPI, if at all.

3. Inner- and middle-ring wins the race

In my experience, it is the inner- and middle-ring suburbs of our major capital cities that remain resilient in the face of soft market conditions.

That’s because there is always strong demand to live in these areas by people who have the financial means to do so.

As long as they have good jobs, and there’s no sign that our employment sector is wavering, they will desire to upgrade to a more premier or gentrifying suburb that usually have many lifestyle attributes.

And they’re prepared to pay to achieve their property goals.

4. Free advice isn’t free

Everyone likes free stuff, don’t they? light-bulb-with-drawing-graph_1232-2775

But free investment advice is normally never free – in fact, it often comes with a hefty learning fee.

In a market upswing, you’ll see many such “advisers” offering insider intel on particular properties.

What they don’t tell you is that they’re usually getting paid a commission to spruik it to you.

When a market is flat, that is the time to get good solid advice from people who have invested successfully in multiple market cycles.

Not someone who happened to make some money during the latest Sydney boom because everyone did, including the investors who didn’t know what they were doing.

5. The horizon matters

I’ve said it before, growth financial independence though property investment takes time – a long time.

In fact, the power of compounding only really starts to show its true colours after about 10 or more years.

That’s why it’s so important to keep a long-term perspective and follow a long term investment strategy that will help you reach your goals.

It’s equally important that you develop the ability to ignore short-term market fluctuations.

Just because a market is experiencing a fallow patch doesn’t mean you should sell up before you “lose it all”.

No – what you should do is ignore it and keep your eyes firmly on the horizon, which evens almost everything out in the end.

6. How do you select an investment grade property?

Over my decades of investing successfully, I’ve developed and fine tuned strategies which ensure that I only buy investment grade properties for myself and we use the same strategies for our clients at Metropole.

These are called my top-down and 6 Stranded Strategic approaches and follows a series of steps that include:

1. Buying at the right stage of the property cycle. I look at the big picture – how the economy is performing and where we are in the property cycle.

2. Then I look for the right state in which to invest – one that will deliver future economic growth which will lead to jobs growth and population growth . 17034015_l

3. Then within that state, I look for the right suburb – one that has a long history of outperforming the averages. I’ve found some suburbs have 50 to 100 per cent more capital growth than others over a 10-year period. And one that is likely to continue to outperform because of multiple growth drivers.  Obviously those are the suburbs I target.

4. Once my research shows me the suburb to explore, I then look for the right location within that suburb.

5. Then within that location I look for the right property, using my 6 Stranded Strategic Approach. And finally I look for …

6. The right price. I’m not looking for a “cheap” property (there will always be cheap properties around in secondary locations). I’m looking for the right property at a good price.

To ensure I buy a property that will outperform the market averages I also use a 6 Stranded Strategic Approach, which is a property that: 

1. Appeals to owner occupiers. Not that they should plan to sell their property, but because owner occupiers will buy similar properties pushing up local real estate values. This will be particularly important in the future as the percentage of investors in the market is likely to diminish. location map house suburb area find

2. Below intrinsic value – that’s why I would avoid new and off-the-plan properties which come at a premium price.

3. With a high land to asset ratio – that doesn’t necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.

4. In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area as mentioned above.

5. With a twist – something unique, or special, different or scarce about the property, and finally;

6. Where you can manufacture capital growth through refurbishment, renovations or redevelopment rather than waiting for the market to deliver me capital growth.

7. Location is non-negotiable

One of the most interesting things about successful property investment is that it doesn’t have to be exciting.

What I mean by that is that there are fundamentals that are tried, true and tested and that you can rely on to deliver capital growth.

One of the most important factors is location because it will have a major influence on your property’s performance.

As up to 80% of your property’s performance will be determined by its location , why would you even try to pick the hotspot the “next” up and coming hot spot, when there are a large number of capital city suburbs that continue to outperform the averages?

Never compromise on location – it really is as simple as that.

8. Know your finances economy-property-market-grow-wealth-house-dream-first-home

Far too many Australians become investors by chance and don’t have the correct ownership or finance structures to underpin their portfolios.

Instead, smart investors begin their investment journey with their eyes open and with a clear financial structure to see them through the ups and downs of market cycles.

One of their most important tools is a financial buffer, perhaps via a line of credit, which can keep their cash flow flowing during any rainy days they may encounter during their journey.

9. Never set and forget 
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Another bugbear that I have is the term “set and forget”.

Successful property investment is never something that you should just forget about.

In fact, the very best investors regularly review and assess their portfolios annually to evaluate its financial performance.

One question that I regularly suggest you ask yourself is: “If I knew then what I know now, would I have bought that property?”

If the answer is no then it may be time to jettison any under-performing assets so you can buy investment grade ones instead.

There’s no point hanging on to a property that is dragging your financial future down.

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By now I hope you’ve realised that successful property investment doesn’t really have much to do with the market at all.

By following a proven strategy that helps you identify investment grade properties in inner- and middle-ring city suburbs you can regularly outperform the averages.

That way you’re not relying on a market upswing to make money because your well-selected properties will be doing that for you – even when the wider market is struggling.

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The profit potential and tax advantages of a brick-and-mortar staycation investment

Buy-to-let property investors have been put under some pressure over the last couple of years. The UK government has seemed hell-bent on making life difficult, with regulatory and property tax changes denting income potential. Such changes include a reduction in mortgage interest tax relief and the 3% stamp duty surcharge on property investment. Despite such changes, property remains a solid investment in the UK.

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A booming economy, high population growth and much more spells huge potential

Leeds is attracting the money of clued-up property investors, and for good reasons. Leeds is the UK’s second-largest employment centre outside London, with another 25,000 new jobs forecast to be added to the local market over the next 10 years. This will build further on the 6.1% growth in private sector jobs between 2007 and 2017 (Leeds.gov.uk), with the highest jobs growth expected in:

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