Property Collectors Club

Feb-10
Welcome
 Agenda
State of the Market – Anthony Smith
Buying and renovating in a group - Frank Valentic
Quiz – Anthony Smith
BREAK
Sydney Market Update – Monique Llanes A1 Property Finders
Hotspotting –What can we learn from the past
Client Case Study – Noel
Success Stories – Anthony Smith
State of the Market

Anthony Smith
Hindsight February 2009
 Negative Media Releases
“Melbourne housing worst-hit”
Business Day - Chris Zappone - February 2, 2009

“Aust resources hit by China's downturn”

ABC News – January 15, 2009

“Australian unemployment rises to two-year high”

The China Post – January 16, 2009

“Low-doc market tightens further”

Aust. Broker – February 2009

“Australia’s housing bubble yet to burst”

The Briefing – January 27, 2009
 Negative Media Releases
“Consumer spending to 'drop up to 60 pc' ”
Bigpondnews.com – February 24, 2009

“Australian property sales dry up”

News.com.au – February 23, 2009

“Bleak year ahead for housing

News.com.au – February 24, 2009
 Positive Media Releases
“Why Melbourne's properties will keep on rising”
Your Investment Property Magazine – February 11, 2009

“Clearance rates rise sharply”

Hotspotting.com.au – February 16, 2009

“ First signs of global improvement:” The Age

- February 6th, 2009

“Decline in approvals good news for investors”

Hotspotting.com.au – February 5th, 2009

“Housing affordability at a five-year best”

ABC News – February 16th, 2009
 Positive Media Releases
“Housing market to lift after latest rate cut”
Aust. Broker – February 2009

“House prices to hold firm in 09”

Mortgagebusiness.com.au – February 2009

“$42bil stimulus package passes Senate”

Hotspotting.com.au – February 2009

“Bet on more RBA interest rate cuts”

The Australian – February 3, 2009
Positive Media Releases – Feb 2010
Melbourne's media house price soars record $70,500
in just three months - Herald Sun 23 Jan 10
Signs point to a better financial year - News Limited

Punters prefer property and shun shares - The Australian

Small rental supply, big rental prices - The Australian

Rent rises and price growth predicted for 2010 - APM

Housing boom spreads – Herald Sun

Race on as keen buyers chase too-few properties –

The Australian

Population Growth At Record Levels – API Jan 2010

money
MONEY
5013951
Negative Media Releases

Fear of rising rates fuels debt aversion – The Australian

Housing sector hit by rate rises, end of grant – The

Australian
My Two Cents Worth

Anthony Smith
Lies, Damn Lies & Housing Statistics!
Distorting Factors
• Size of sample

• Segment of market with most activity

• People presenting the figures

• New developments in the area

• The way sales are recorded

• Melbourne entering its 3rd year of boom.

• First Home Buyers greatly reduced.

• Victorian FHB worst conditions in Australia.
•Population growth to continue in major cities.
• Interest rates on way up again.
• Investors have flooded back to market.
• Housing shortage worsening.
• Lending for existing investors tough, especially
cashout.
• Another perfect storm is brewing in Melbourne maybe
2012-2103
Block Investment
Opportunities
26 Ruskin Street, Elwood

Purchased for $375-400k

Rented at $200pw

$12,500 external renovations

$25,000 internal renovations

Valued at $500-$550k

Rented at $450pw
Quiz
Break
•Monique Llanes founder
•Licensed real estate buyers’ agent
•Qualified property lawyer and accountant
•Over 23 years experience in buying
properties for investment and development
…quote by famous 19th century American author Mark
Twain

Source:
www.kyleabaker.co
m
 What we will discuss:
Buyers’ Agents

The Sydney Property Market

Sydney Hotspots
$$$$$$$$
Our knowledge of
property prices and our
negotiation skills can
save you money.
We never accept any fee or commission from
the Vendor
What is happening in
the Sydney Property
Market?
1988 and 1989 huge property boom at a time
when interest rates were at their highest.
What do you think happens
to new developments?
New Infrastructure
Shopping Centres
Population growth
Jobs
Lifestyle trends
 Sydney
Hotspots
Units and freestanding or attached houses
•Suburbs within and surrounding the Green Square
Town Centre
•North Ryde, Ryde, West Ryde
•Suburbs with schools in the new website top 20 list
other than in the Ku-ring-gai local govt area
Freestanding Houses
•Upper North Shore especially St Ives
 What is the Green
Square Town Centre?
The largest urban renewal project in
Australia Comprising 276 hectares of
land within the suburbs of Zetland,
Beaconsfield, Alexandria, Rosebery and
Waterloo.
Sydney City Council Projections
about the Green
Square Town Centre

Construction commencement 2010

First residents to move into the Town Centre: 2011
Projected resident population at 2021: 33,000 appro

Projected workforce at 2021: 28,000 approx

 Ryde and surrounding
suburbs

New train station (North Ryde) opened 2009

Huge new shopping centre still under constructio

1st stage 2009 Projected completion August 2010

Median price units Ryde LGA under $450k Ryde

under $370k
Source : UBD Sydney Map
213
•Families moving to Upper North Shore because more affordable –
larger houses
more land than closer to CBD
•Most suburbs serviced by train line and express buses to the city
•New town centres LEP recently approved by local Council
currently before the Minister for final approval and gazettal -
improvements to public infrastructure must follow
•St Ives LEP will allow existing shopping centre to expand and
provides for rezoning to permit more high density development
•Recent Herald analysis of federal government my schools website
shows St Ives as the only suburb with more than one school in the
top 20.
No one has a crystal ball but if you are thinking
of investing the economic indicators seem to
be saying that now is the time to go back into
property and that Sydney exhibits many of the
fundamentals needed for price growth.

Disclaimer: A1 Property Finders are not

financial advisers. If you need financial
advice structured to meet your personal
needs then you should consult a
licensed financial adviser.
 Hot Spotting

What can we learn

from the past?

Anthony Smith
 Hotspots Vs Bluechip
Hotspotting is buying in an area where it is
anticipated there will be quick growth, often
regional and industry related.
Bluechip - Buying in well established
suburbs close to capital cities that have a
proven long term growth pattern.
Ideal Hotspot is also a Bluechip area, ie
2007 & 2009 Melb, Perth 2004 Darwin
2003, 2004 and 2009, Sydney 2010?
 Hotspotting
If you intend to grow your property portfolio quickly the
first property decision is the most important.

Current finance climate accentuates this further.

Over time as portfolio grows it becomes far less

important and in fact almost unnecessary.

Hotspot until you can bluechip.

June 2003
The Big Decision

$30,000 to invest

St Kilda Unit Vs Newnham ( House)?

What would you prefer in portfolio?

What was the best option?

George Town Road Newnham
Purchase Price $72,000

Rental $120pw
 What Happened Next?
Newnham doubled in value in under a year
Very slow growth since, worth about $190k
St Kilda off high growth 2001-2003 was flat
Shaun and Eb Curtis
2006 had $13,000 deposit to spend

Gladstone Queensland Unit or

Georgetown Tasmania House $125k max
purchase.
Ann St Gladstone - $125,000
 Portfolio Feb 2010
Shaun & Eb

Parkdale $650,000

Gladstone $230,000

River Heads $265,000

Maryborough $230,000

Port Augusta $360,000

Portfolio Value $1.73m
10 ways to pick a Hotspot
1. Population Growth 2. Hot 2-3 years

3. Established Cap B-mark 4. Industry/ Employ

5. Fallen Blue Chip 6. Limited Supply

7. Rental Return 8. Infrastructure Upgrade

9. Baby Boomers 10. Water

Hotspot Areas
Area Year
Tasmania 2003
Darwin 2003
Mackay 2004
Perth 2004
Ipswich 2005
Townsville 2005
Gladstone 2006
Hervey Bay 2007
Melbourne 2007
Port Augusta 2008
Melbourne 2008-2009
 Area
Hotspot Areas Year Star Rating
Tasmania 2003 ***
Darwin 2003 ***
Mackay 2004 **
Perth 2004 ***
Ipswich 2005 *
Townsville 2005 **
Gladstone 2006 **
Hervey Bay 2007
Melbourne 2007 ***
Port Augusta 2008
Melbourne 2008-2009 ***
Sydney 2009 Too early
Hotspot
Area Areas Year Star Rating
Tasmania 2003 ***
Darwin 2003 ***
Mackay 2004 **
Perth 2004 ***
Ipswich 2005 *
Townsville 2005 **
Gladstone 2006 **
Hervey Bay 2007
Melbourne 2007 ***
Port Augusta 2008
Melbourne 2008-2009 ***
Port Headland 2000-2009 ***
The Dream Hotspot
Port Hedland WA

2009 Median $800,000

10 year average growth = 20% pa

Median 2000 = $140,000

Port Hedland House for Sale

Sold - $850,000
 Port Hedland Rental

Rental $1,300pw
 Common Factors In
Successful Hotspots
Rental returns
Population Growth
Established Capital Benchmarks

Limited Supply

Industry/Employment
 Hervey Bay
Rental returns - not great

Population Growth – wrong type - income

Limited Supply – Effect of units

Hot-2-3 years - Tried to pick bottom

Too close to previous boom?

 Port Augusta
Hot 2-3 Years

Population Growth – Had not started

Relied on one project “Olympic Dam” that has

been delayed

It’s a Dump!
 Need to add new criteria
Affordability
Percentage of income on mortgage
In 20%’s lots of room to move
Around 40%, nearing peak
Perth 2004 27%
Sydney 2003 41%
10 ways to pick a Hotspot
1. Population Growth 2. Hot 2-3 years

3. Established Cap B-mark 4. Industry/ Employ

5. Fallen Blue Chip 6. Limited Supply

7. Rental Return 8. Infrastructure Upgrade

9. Baby Boomers 10. Water

 7
10 ways to pick a Hotspot
 Regional Hot Spot Criteria
1. Rental Returns 7% +
2. Population Growth – Right demographics
3. Wages To Value Ratio
4. Market started to move ( reduces mistakes, like paying
insurance)
5. Market flat at least 3-4 years
6. Established capital benchmarks

7. Industry/Employment
Capital City Hot Spot Criteria
1. Population growth
2. Wages to value ratio

3. Fallen Blue Chip

4. Market started to move ( signs of life)
5. Rental returns improved dramatically
6. Limited supply
7. Industry/Employment
Regional Hotspotting Tip
Bottom of the market seen the biggest
growth

Cheap Units

Darwin, Mackay, Gladstone, Townsville,

Port Hedland
Opportunities again towards end of 2010

Any suggestions?
QUESTIONS?
Client Case Study

Noel
Investment Strategy:
• Using equity in home to start investment strategy.

• Look for properties with good rental returns in areas

likely to have quick growth.

•Invest with the smallest impact on cashflow & lifestyle as

possible.

• Used “Buffer” to help service loan.

• As rental returns increase & properties increased in

value, purchased more property.
Sept 03 – Mackay QLD - $92,000
Nov 03 – Darwin - $120,000
Nov 03 – Georgetown - $83,000
Nov 03 - Burnie Tas - $126,000
Mar 06 – Mordialloc - $255,550
Sept 09 – Harrow Rd Auburn - $222,000
Oct 09 - Station Rd Auburn - $267,000
Portfolio Summary:
Property: Purchased: Price: 2010 Value:
Mackay 2003 $ 92,000 $280,000

Darwin 2003 $120,000 $340,000

Georgetown 2003 $ 83,000 $155,000
Burnie 2003 $126,000 $230,000

Mordialloc 2006 $255,550 $380,000

Auburn 2009 $267,000 $277,000

Auburn 2009 $222,000 $232,000

Portfolio Summary:
Rent When
Property: Purchased: Purchased: Rent 2010:
Mackay 2003 $ 130.00 $285.00

Darwin 2003 $ 180.00 $360.00

Georgetown 2003 $ 110.00 $190.00
Burnie 2003 $ 120.00 $220.00

Mordialloc 2006 $ 230.00 $290.00

Auburn 2009 $ 350.00 $350.00

Auburn 2009 $ 295.00 $295.00