Which City Should I Pick for My First Investment? | Throwback Tuesdays

When starting your property investment journey, it’s easy to get pulled in every direction.  

One person says Brisbane is the place to buy. Someone else suggests Melbourne. And before long, the question becomes: Which market should I pick?  

But as Bryce and Ben unpack in this Throwback Tuesday episode... that might not be the best place to start. The real question is: What do you need this property to do for you?  

For the original episode, tune in here: Episode 272 | The Unspoken Truth About Growth Corridors & Picking the Right Property Investment Strategy. 

LISTEN TO THE FIRST 20 EPISODES HERE >>

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Transcript

SPEAKER_02 0:02

Um but the first one's from Jack on Brisbane versus Melbourne and differing opinions. Yeah. So let's have a little listen to Jack's question now.

SPEAKER_00 0:12

Hello there guys. Um I just want to say first up, I've only just tuned into a podcast recently and I'm absolutely loving it. I'm gonna be uh buying a couple of books too because I think they've got a lot of great reviews, and yeah, I'm really excited to read them. Fellas, I'm looking at starting my property investment journey about this time next year, December 2020. Now I've been I'm following a couple of property investors. One guy he's currently investing up in Brisbane. There's another guy that I follow as well. He's like purely local inventory, mainly Melbourne. He's explaining with the growth corridors. Uh you know, they're not really growth corridors, uh, Packingham, Windenville, Tony, Point Cook, and I've had a look in there, and yeah, they don't average as much as what I thought they would. Not much prices, but yeah. I can't afford to invest in Melbourne itself. And the difference in the two is one's um uh he's starting on people up in Brisbane, getting the introduction into the property market up in Brisbane, uh for anybody at the 500 county market, and then the other guy I invented in Victoria. Um, he suggested we're starting at say something like Bindigo or Bellarat. He doesn't believe Joel Long's got good growth. Um, yeah, I'm hesitant to go to Bindigo or Ballarat because I am our England, but I'm also afraid that my judgments have been included. Uh I grew up in coastal areas, I've always lived near the coast, I've always loved the coast. If you guys would give me your opinion, that'd be fantastic. Well done again on the podcast. I'm absolutely loving it, and uh I've watched seven episodes today.

SPEAKER_02 1:34

Okay, that was from Jack Ben. Um, before we go ahead, um just want to say, Ben, late last year, you and I decided that we would approach our publisher and we would buy some books and give them out to folks if they're prepared to pay for shipping. Now that actually went really well over Christmas. Quite a few people put their hands up. So just saying that we are going to every now and then go and buy some more books, Ben. Yep. Um, put them up. So if people want to go whilst they last, if you go to thearmchairguide.com.au, you can get a physical copy of our book. If you're prepared to pay for shipping, we'll send it out to you. Or Ben, if you are still bootstrapping your research and your knowledge, you can go to make money simple again, Ben.com.au, and you can get a free copy of the digital book so that you can check that out. So that was just because Jack said he was going to read the book, so there's a way to go and get it for free. Ben, what do you think about that?

SPEAKER_03 2:19

So there's a fair bit going on here. And it comes back to also what Jack's goal is. Um we all know that capital growth is king when it comes to investing in property. You are getting an asset, the higher the asset grows, ultimately the more you will be able to charge for that asset as well. Um, but like everyone's circumstances, we all can't go out and buy the scarcest land in Australia, which is going to appreciate at the best value, right? So we have to have trade-offs. There are some trade-offs as part of that call. Now, obviously, what Jack's doing is listening to different marketplaces and different opinions around what's out there, and there are huge amounts of opinions as to what's going to be a better story. My view is always been I'm not uh I'm bipartisan in the sense that I don't care which city, um, which state that property is in, and as I consider my options, I do bring into things like land tax if I've already overexposed and undiversified in different different locations. So for me, when someone says Bendigo or Ballarat, I'm like, yeah, really good yields. Um Bendigo, uh, you would probably argue still struggles with access to Melbourne. Uh it's just that road too far. Um, but that's not to say that over time it's not going to do all right. Ballarat, you know, an hour and six minutes by train, so you know, and reasonable yields, but just remember they're not going to grow as quick as the bigger cities are. Um and when we talk about growth corridors, we always talk about the fact that there is risk in oversupply in those growth corridors. Melbourne is not landlocked, it does not have that challenge that we see in other cities. But when you look at Melbourne as a as a brain centre and a centre for higher incomes and job opportunities and livability, it's off the charts. So you're going to get those high-paying jobs, and when you get those high-paying jobs, you're going to have long-term demand. And I'm on record as saying I definitely want people to own one property in Melbourne. Um, because we do know that Melbourne is going to be uh Australia's largest city if it keeps going to trend because of the affordability down here and everything that's happening in in regards to job opportunities. Now, I say that versus Bris Vegas. Now, with Bris Vegas is effectively we are talking about the merging of the Gold Coast and the Sunshine Coast into one potential mega area over the next 40 or 50 years. So I still potentially see opportunity in that in that market as well. Um so it's about trying to get the location that has the best demand and supply, uh, not only for the short term, but also has longer scarcity of land and where you can get that best bang for buck.

SPEAKER_02 5:04

That's it. Well done, Ben. Hey, I think it highlights the um the importance of um not being a sort of wandering without a rudder, without knowing where you're headed. Because you you you talked about it at the beginning, but I always find that if you if you lack the the goal or the the sense of which direction you're heading, you can actually be easily blown off course by the next expert, what they've got, because you know, we we've been doing this for a long time, Ben, and there's there's there's assets that we buy for clients that have got um seven plus percent um capital growth precedent, and we're buying assets that have got um well higher, and we've got assets that might be sitting around five or six, depending on on what it is that the client actually needs. So I think it's really important for the listeners to know that on the ground, these are real decisions that our buying team have to have to balance up between why would I go to a certain location based on what uh what the brief is. And ultimately it comes from the client is very clear on knowing where they're heading. I've got this much to spend, I need this much growth, I need this much yield, to fulfill my own unique individual plan. That the the the the road that I'm walking on, not actually comparing myself to anyone else. And I think, you know, I can't impress upon Jack who's about to embark on this journey enough that you actually just need to know where you're going. Because people who uh get engaged in barbecue conversations around my one's better than yours, forget the fact that it doesn't really, it doesn't really take into account which destination that you're actually going towards. So if you have a, it's true, if someone has a budget of 500,000, well they can't get in close in Melbourne, but there are pockets of Brisbane that you can get in close, there are a pocket of Adelaide that you can get in close. So that's number one that's really, really important. But two, understand with the absence of a clear goal, you are going to be susceptible to these barbecue chats about mine's better than yours. So be clear on that. Secondly, the point about growth corridors is they are actually growth corridors, but be very clear on what the growth is. The growth of people moving there. And supply. There's a growth of supply. It's not actually saying it's a capital growth corridor, although sometimes it's misheard or misused or misappropriated by the wrong people saying it's a capital growth corridor. What it's saying is the population's growing, we need to put people into housing stock, we need to put people into accommodation, and the growth is actually out towards these regions. They're up in the north bend, as you know, they're down in the south bend, as you know, they're out in the west, as you know. So be very, very clear that in Melbourne you have this almost infinite um sprawl that's available to you. So I find it interesting that uh one of these people talk about Geelong Ben. As you know, I live down at the surf coast, so I see Geelong very, very regularly. And what I am seeing is subdivision after subdivision after subdivision going down there. So that is also a growth corridor. Doesn't necessarily mean a capital growth corridor, but there's lots and lots of people who are moving to these places that are affordable. But what I would say about Geelong is it's very built up, it's got a bay, Ben, it's got a big highway at the back, it's got very established suburbs that have been around for a while. So in certain parts of Geelong, I would suggest that because of all those subdivisions, that would be making that scarcer and scarcer and more and more desirable. So therefore, if you're buying the right properties in those locations. So, Jack, be very, very clear about a couple of things. What your goal is, where you're headed, because that will determine what the capital growth that you'll be acceptable. Be very clear on the definition of what a growth corridor is. It's a population growth corridor, not necessarily a capital growth corridor. And also, thirdly, when it comes to hearing what someone says that a particular region, Geelong, for example, or if they might have an opinion on the Gold Coast or they might have an opinion on Adelaide or whatever, just ask a little bit more about well, I don't know anyone who's ever bought Geelong, Ben. I know someone who's bought a house in a street in a suburb of Geelong, but I don't know anyone who's ever bought Geelong. So be very specific about what um what advice or mentoring you're taking as to what does that actually mean.

SPEAKER_03 9:01

Yeah, I love it. So planning is critical. Um, in terms of, I always say for for those people just beginning, just understand you want to get in the game. Okay, so um Jack's made a a pledge to try and get into the game by 2020 in December. Um, so to get in the game, cash flow is important. To stay in the game, cash flow is important. What's important about that? The surplus in that cash flow and any change in your cash flow, in the income coming in, because that's going to determine what you can buy. So uh the blend of assets. So whether it'd be higher yielding and you're gonna forego a little bit of growth, or you're gonna try and get the magic of two, where you find those best locations which have also got some high yield, but some growth pent up demand there that we'll see some short term and then long term growth. Because once you get in and you get a bit of equity out of that property, you can then rinse and repeat into the next property and beyond. So, great question, good starter for our QA for 2020. Thank you, Jack.