Are you doing "research" before investing in property?
Are you thinking of beginning your journey in property investment? Or perhaps you’ve started that journey and are looking for the next investment opportunity? No matter where you’re at, property investment research is a critical starting point and one you don’t want to get wrong.
Why is research necessary?
You might be thinking, ‘Can’t I just talk to an expert and get them to do the research?’ While you can employ property consultants or buyers agents to guide you through your investing journey, understanding the property market is invaluable.
Doing your real estate investment research will help you understand whether a property is for your portfolio or whether it will help you achieve your goals. Clarification and certainty of what you are after means that this can be easily conveyed to the expert, who is then in a better position to aid you in your journey.
How to research a property before buying?
So, where to begin? Perhaps you’ve already started on websites like realestate.com or Domain. If so, a word of warning.
While it is okay to consider these sources, using these sites exclusively will limit your property investment research and education.
This is because these websites have a limited ability to compare and analyse suburbs for property investment properly. There are 15,000 suburbs in Australia. Around 3,000 are statistically reliable, meaning there are enough transactions/listings/sales for the data to be credible and usable.
On sites like realestate.com, there is no way to properly compare and analyse 10, 20, or even 100 of these within a reasonable amount of time while considering all the necessary data points.
Sites like realestate.com can also manipulate data to the point where it can be misleading. These websites have an agenda, which involves generating an audience and revisiting the site. These websites can also miss out on some of the best property deals, and using them exclusively for your research means you’ll also miss out.
These might include those with under-market value, without competition, or perhaps a quick distress sale. Don’t limit your research and your investment options!
Also, consider that generic knowledge, general statements, and opinions will not make you an advanced property investor. Be aware of patterns emerging, where people claiming to be “experts’ are all saying the same thing and pursuing that lead.
You might consider this pattern the truth and start googling terms like ‘infrastructure projects in this location and seeing all the planned improvements in the area. But every year, there is a list of infrastructure projects in almost every city, most of which don’t make the slightest dent in property prices.
Be wary of this type of information and patterns, as there is always the risk of seeing no growth in the short term.
Instead, take those 3,000 suburbs and figure out what the short-term and long-term growth drivers are. In this research, it is essential to focus on short term growth factors, analysing factors beyond just population growth and how close the property is to schools, hospitals, etc.
We consider about 35 quantitative or qualitative fundamental data factors like average vendor discounting, stock on markets, building approvals, online search interests, and more in our rental property research!
If you want to know more about analysing accurate data and how to start your research with a reliable source while also optimising your time and opportunities!