Nothing is more important when undertaking the journey into property investment, than education. The education I speak of however is not something static. Rather, it should be an ongoing process that accommodates your changing needs and trajectory as an investor.
Being as informed as possible is particularly critical at point of purchase. When you find that potentially perfect asset to add to your growing portfolio, it’s time to knuckle down and do some serious research.
Ask any buyer’s agent and they’ll tell you one of the most important insights you can glean into a prospective investment property is the sales history of the area in which the dwelling is located.
More specifically, you want to focus on comparable sales. That is, properties which have sold in the same vicinity with a similar style, building and land size.
What is it and why is this data important?
Logically, sales history refers to the prices properties have sold for in a particular area, at a particular time. Often data will include details such as land size, property type, number and composition of rooms and of course, the sold price.
There are various reasons it pays to have this information to draw on when drilling deeper into any possible investment opportunity you identify…
- Firstly, you’ll know whether the agent has done what agents are renowned for doing in Australia, and that is listing the property at an obviously inflated price. This provides an important edge for the negotiation process.
- If you find a tired dwelling in need of some sprucing up, comparing sale prices for similar houses that have already been renovated can give you an excellent benchmark for value add potential. It will also give you an insight into the maximum you should invest pre-improvements, in order to ensure there’s a decent gain to be had at the end of your hard work.
- Ultimately, this knowledge will prevent you from over-capitalising on an investment, leaving you better positioned to pay fair, or under market value – the ideal scenario for an investor seeking maximum capital growth.
How do you find it?
The good news is with such a plethora of information available across multiple online resources and property portals, there’s no shortage of comparable sales data for you to explore on practically every region in Australia.
Some you can source at no cost, while more comprehensive stats and facts tend to come at a price, albeit generally quite reasonable.
The more popular free sources of comparable sales data are:
- realestate.com.au. In the ‘sold’ tab you’ll find a wealth of free information to kick off your search, with further details being added all the time. A recently included feature also gives you a glimpse into the history of the agent selling the property and his or her past performance. Excellent knowledge to have under your belt when it comes time to negotiate!
- onthehouse.com.au. Although this resource only holds probably about one to two thirds worth of available house price data at any given time.
- domain.com.au. Not quite as extensive as its major rival above, but well worth a look nonetheless.
Investing in further knowledge is often a good idea, and don’t forget that the money you pay to research a possible real estate asset could be claimed as a deduction at tax time.
Subscription services offering great value for money when it comes to sales history reports include RP Data (by far the most comprehensive due to its use by practically every single real estate agency) and Real Estate Investor, which attracts a monthly access fee.
Remember, sales history data is the number one method successful buyer’s agents use to benchmark a potential investment property against others in the same vicinity. Seeking out this information will give you an immediate and significant edge on the game. Who wouldn’t want that?
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).