Property Hub - Investment Insights & Inspiration - Get Invested: Part 4, Invest by design - Strategy-First with Brendan Kelly

Starting point is 00:00:00 So what I see occurring is that those who are good get in there first, they get in there early and they promote it to their clients and their clients get in. This leads in a particular, in a smaller area or a remote area or a regional area, this leads to an amplification of median price value, number of sales and declining listings. And you can go, oh, wow, this is an area of growth. then people who don't necessarily know how to forecast and just look at current data and emerging data might go, this seems to be a place to go. Let's go and have a look, make some inquiries. And they go, oh, I will get on that bandwagon too. Then those who are even

Starting point is 00:00:41 less skilled go, oh, it's been growing for a year or two years already. This must be a hotspot. I'll get my people into there now. I'm going in for the third wave and the first wave's already saying, stop buying there. They're those who know less again, who are just starting out go, oh, look at the growth this has occurred in the last five years. This is going to go up forever. Am I ever good at knowing what I do? Get your buyers in there and they buy at the top. This is what the stock market calls the bigger fool theory. Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show for Australians who want to learn how to unlock their full self, health and wealth potential.

Starting point is 00:01:23 I'm your host, Bushy Martin, and each week I go deep with the best investors, experts, leaders and founders to find out what it takes to break free from the grind, discover freedom and to live by design. Subscribe now and join me and get invested in the life that you really want. Let's get started. Hi, Freighted Voters. Let me hit you with a few curly questions. If you could read tomorrow's property headlines today, would you still be buying where you're

Starting point is 00:01:52 buying now? What if a handful of free websites could flag an oncoming boom six months before it makes the news? Would you know how to interpret the signs? And how different might your future look if you could spot the moment a hotspot quietly turns into a not-spot, jump off the wave and bank the profit, while everyone else is still waxing their surfboards? As the old Mark Twain line goes, it ain't what you don't know that hurts you, it's what you know for sure that just ain't so. Smart words delivered with a grin and never truer than in today's data-drenched property game.

Starting point is 00:02:32 So let's start by reviewing what we've learned so far. Over the last three parts, Brandon Kelly has already shown us how to know that sustainable success starts with a crystal clear vision not a crystal ball he warned us that the rapid fire dinner party purchase that ready fire aim special usually ends in very poor property performance he gifted us his 1110 one funnel plus those four killer agent questions for sniffing out real off-market deals and he's reminded us to trust no one assume nothing check everything and get it in writing in short we shifted from blind hope to deliberate strategy. But strategy needs fuel, and the high-octane fuel of property investing is reliable forward insight, which is exactly where we're heading

Starting point is 00:03:27 today. So in part four, we pick up the conversation exactly where Brendan teased us last week when he promised to open the kimono on reading the market. We dive into supply, demand, median price and time, the four cylinder engine that drives every suburb. We unpack how a simple listings to sales ratio can tell you at a glance where the prices are gearing up or about to grind down. He shares the free data traps that most investors overlook and the lag that he can leave you three months behind the smart money. He lets us know why sentiment is useful until it isn't and how to separate noise from narrative when the media turns manic. Plus, Brendan reveals the exact websites he uses daily

Starting point is 00:04:18 and shows you how to stitch them together like a market forecasting Franken-map. We're talking practical, actionable X-ray vision here. No eye-watering spreadsheets. No black-box mysticism. As Louis Pasteur quipped, chance favours the prepared mind. by the end of today's chat your mind will be absolutely armed and ready and if you want the shortcut where the numbers are already crunched trends are filtered and suburbs ranked brendan's real estate success community app now puts the full property predictions engine right there in

Starting point is 00:04:56 your back pocket no ads no fluff completely free links as always sit in the show notes so settle in, grab a pen, and prepare to discover how to read the tea leaves before the leaf even hits the cup. Let's jump back in as Brendan pulls back the curtain on forecasting in future, so let's resume and get invested. Let's switch now into what I touched on in the introduction, Brendan, because there's a lot of people who are out there making some pretty interesting forecasts based on opinion, not facts.

Starting point is 00:05:31 property predictions has a unrivaled record of achievement in relation to accuracy around that equation. For those that recognise the importance of understanding that, how can property investors forecast future property condition trends with some confidence in order to select where, when and what to invest in to satisfy their strategy? So you're suggesting I you'd open the kimono and share all just give us a peek a people or you tease all right so so the upshot for people who who want to understand the market there are some key things that they need to look at um but they're not a lot of them yeah i mean from a basic knowledge position from a basic get started position there are a few keys um really really it comes down to a relationship

Starting point is 00:06:32 between supply demand median price and time yeah yeah right so let me get into that there are a couple of websites so do you mind if i share a couple websites okay please so yipmag y-i-p-m-a-g YipMag.com.au or YourInvestmentPropertyMagazine.com.au. They have a suburb profile thing on that. So you go to YipMag.com.au, they have a suburb profile. You click on the suburb profile, you type in the suburb that you're interested in. Great. Down the bottom, there are graphs.

Starting point is 00:07:05 So they give you a whole pile of words. I've never read them, but they give you a whole pile of words. Then they give you a table. I look at that from time to time where I delve is mostly into the graphs. There's some graphs. Now, there's a median price, the graphs that you want to really focus your attention on, again, from a growth perspective, because that's what you were talking about. Yes, a growth perspective. Exactly.

Starting point is 00:07:26 Market conditions, growth perspective, value perspective. All right, great. So you want to look at median price and you want to look at number of sales. Yeah. They have a chart that goes for 12 months. Yeah. Now, the median price chart is three months old. Typically, it's three months old.

Starting point is 00:07:45 and there's a reason for that because you can't get the data any faster no a sale occurs so if you think and again think about this oh i want to list my property all right list the property i want to sell my property six weeks marketing campaign you sell the property i want to settle on my property six weeks selling settle period three months is already up then you've got to correlate that data with other data inside that suburb and then you've got to assess that value over a 12-month period against other values in that, and you've got a three- to six-month lag time already. So the data at median price for YipMag is already a little bit late,

Starting point is 00:08:27 but it is the cleanest, it's supply-by-call logic, it is the cleanest and most reliable data for, I guess, direction or where the market is at as the latest possible truth. right i'd notice i turned determined i termed that specifically the latest possible truth right got it how sales are exactly the same thing doesn't get registered to sale at contract doesn't get it gets registered to sale as as as at settlement so there's a whole or list get it so settlement and then there's a lag time for adding that up and then you've got to correlate that over a 12-month time frame again it's also 12 so there's a three-month lag time so while it's

Starting point is 00:09:13 valuable it's already out of date now if you're in a volatile market you look at the median price and you go 400 000 is the median price cool let's go into the suburb and you can't find anything for 400 000 yep and everything's already above it you know what the heck come it's supposed to be 400 but by that stage you're already on the ground and you know what you're starting to see on the ground and you can afford to ignore that because the only purpose of that data is to get you to a location that you can get on the brand for. Propertyvalue.com.au. Propertyvalue.com.au is also an awesome website. Love that website. You can be a member of it, but I don't get into the membership component of that. I'm not into the actual properties per se around that right now.

Starting point is 00:09:58 My objective is to look at the suburb meeting profile. So get into propertyvalue.com.au, get into the suburb meeting profile. Again, there's a process to get to that. It's not too hard suburb median profile page comes up down the bottom is graph i don't know i love graphs graph down the bottom of the graph it'll have again median price number of sales uh as well as days on market as and others but they're the three i look at predominantly median sales now if you go oh many sales value yeah the median price value cool um so you would expect that to correlate with YipMag. No. The basis of property value data is based on a collection of, for want of a better word, opinions of owners of the value of the house entered into the database and correlated based on

Starting point is 00:10:49 an assessment, an AI assessment of values. So it is a significantly more volatile read of median value median price movement than YipMag has, which is also called Logic Data. Great. What it does do and what it does provide you is an insight into the sentiment around where the market might be going and the movement. And it's more timely. It's often less than a month old that you can actually get this data for. Yep.

Starting point is 00:11:22 Right. So you've now got suddenly a similar value that is different to another data source. What's the truth? And it's more timely, but that one's more the trick. Where do I go with that? So suddenly we've got confusion if we're not careful. Great.

Starting point is 00:11:41 The number of sales on both websites is exactly the same, so I don't need to worry about it. Excellent. Okay. So we're looking for number of sales and we're looking for median price. What we want to do then, we can assess median price Yip Mag against median price property value against the number of sales. Great.

Starting point is 00:11:57 The last component we need is listing, supply. Excellent. Go to realestate.com.au, search the suburb, and as soon as you search the suburb, a little number comes up underneath, one of 25 of, insert number here. That number represents the total number of listings. All right, good. if you look at the last number of sales and you look at current listings you can form a relationship i call it the ratio yeah sales to listing or listings to sales is how i prefer to look at it

Starting point is 00:12:27 great if you've got 10 listings and 100 sales the ratio is 1 to 10 if you've got 100 listings and 10 sales the ratio is 10 to 1 what you're attempting to do is understand the nature of that relationship because supply demand if i've got 100 say 100 listings and 10 sales i've got more supply than i do with um sales demand in which case prices are likely to go down yeah 10 to 1 i've got 10 listings for 100 sales shortage prices are likely to go up yeah so you're cross-referencing yip mag data property value data for median values and getting an understanding of where the trend is broadly and then cross-referencing that against what the ratio is telling you yeah but the ratio is a snapshot in time yep the sales trend from the

Starting point is 00:13:14 two graphs in number of sales. You'll look at that. Delightful. If it's going up, that's a good thing. If it's going down, that's not a good thing. If it's flat, cool. What we need to do then is get listings data. Now, you can't get listings data anywhere other than SQM Research. But SQM Research only does postcode, doesn't do suburb. So therefore, there's a disconnect between your number of sales supply and your listings data available on sqm research yeah now you can look at sqm research data and see where it's going and say assumedly on the broad concept that the number of people in any suburb remains constant over a period of the last 12 months then it's likely that if it's five percent it'll go on or go and everything else goes up by 20 then that five

Starting point is 00:14:07 percent, we're all listed by its own 20 percent, and you can get a concept of what listings may be doing, but you can't hold it as a truth. You can just go, the only way to do it is to monitor that statistical relationship over time. If you can see sales going up and listings going down, increased demand, decreased supply, prices will climb. If you see listings going up and sales going down, increased supply, decreased demand, prices are likely to come down. If you see both of them climbing the same speed, start climbing together or falling together or both of them flat, there won't be any movement in the median price. And therein lies your ability to be able to read the nature of the market right here and now and where it's going for a period of three to six

Starting point is 00:14:54 months, just from that alone. Yeah, I love it. What I love about that is because a lot of people guys and you hear this all the time oh you know you can't rely on past data to tell you what the future is going to going to hold but what what you've very clearly defined there is the changing trends over a period of time which does start to give you a directional indicator and because there's over 15 000 of these across the country the average investor ain't going to have the time or energy to do that work and to save them all that time. I'm assuming that what you've just described is very neatly encapsulated in what property projections does, plus a whole heap of other stuff

Starting point is 00:15:40 that then provides some real confidence around the direction of a particular area. Yeah. So with the database that we have and the ability to look at all suburbs for which there is enough data across this country. You can very quickly isolate those which have the greatest growth potential, the greatest declining positions right now, those that are currently flat right now.

Starting point is 00:16:06 And then through the trend analysis, start to begin to forecast where that movement might likely to go. So you're assessing the median price and the variations of the median price. You're assessing the number of sales and other data, of course. You're assessing the number of listings and other data, of course. and then you're able to see where the market might be headed for an individual suburb. And people can buy reports.

Starting point is 00:16:31 So if they go to the website and they get onto the shop, they can buy reports. We do primarily two. One of them is the buy, hold, sell. I've got a house in a suburb. Tell me what's happening in that suburb so I can make an investing decision on it. Or I've already done my research. This is a suburb I'm passionate about.

Starting point is 00:16:49 Tell me what's actually happening in this suburb. can give me a clue about whether my assumptions are right or not and as an assumption check it's really valuable the other one is the personalized report which is me and the person who's interested get on the phone together and i have the database available to me and i mentor them through the choices and options available relative to their strategic choice their options their desire their cash position. And we come up with 20 to 50 suburbs throughout the country that may work for them and what they want to do and cut down from a 15,000 base into about 20 suburbs that they might want to search on that's going to serve their needs. And that's the outcome that I provide.

Starting point is 00:17:36 Yeah, I love it. I can say firsthand, in the midst of COVID, when everyone was all the so-called gurus were claiming the sky was going to fall in and that property was going to fall through the floor. I actually sat in on one of your webinars. It was mid-2020, I reckon. Yeah, it was March 2020, 16th. Yeah, well, there you go. You know the day.

Starting point is 00:18:02 There you go. That was the day that everyone turned around and they said, hey, guys, lockdown, close your doors. Yeah, I remember the webinar with you and Simon, and you actually had the property projections indicating against everyone else's opinion that property was going to actually overperform and that's absolutely proved to be the case. Yes.

Starting point is 00:18:25 I walked away from listening to that with a lot more confidence around what was going to happen because I was interested from myself but also a lot of investors that we've been helping and so I can sort of validate firsthand how useful that approach that you've just described just on the surface, because I know there's a lot more to it, it's useful. But something I'd love for you to comment on as well, because there's a lot of talk

Starting point is 00:18:51 about supply and demand, as it should be. How much do you believe the sort of sentiment, perception, confidence piece affects property price performance? And are you seeing any trends or changes as a result of the importance or otherwise of sentiment? sentiment yeah sentiment's been low for a long long time starting to lift gently now um sentiment does carry weight uh but again from a macro perspective you can do in a national assessment of sentiment and consumer sentiment and we're talking consumer center we're not

Starting point is 00:19:27 talking about um business sentiment they're right yeah yep um and that and that that influences so if consumers are particularly nervous or self-conscious. That's a problem. And they don't generally want to. But that said, there are pockets and idiosyncrasies for the investors that don't necessarily relate directly to the sentiment concept. So, for example, if you've got teenage kids that are young and your sentiment's been down for about, what, 18 months, two years,

Starting point is 00:20:02 something like that, I can't remember. because it was about that much. If sentiments have been down that long, if you've got teenage kids and they're 15 and 16, two years later, they're now 17 and 18, allow me to assure you, you want space in your house. You are up to your eyeballs in teenage stuff that you just don't want to deal with anymore.

Starting point is 00:20:23 And irrespective of sentiment, if you've got the ability to get a loan and to move house into a bigger property where you can get some space, you'll do it. yeah so so the domestic environment sometimes is forced to defy the broader consumer confidence and and perform anyway now so we've got an environment now which and again you if you look at the the broader market and the idea of demand and where the players go there's investors and there is owner occupiers they're not the same group of people i know um and it is the owner occupiers

Starting point is 00:20:58 generally and broadly determine the nature of movement. Investors hope to ride the wave of growth that owner-occupiers start and get out before or soon after owner-occupiers say enough. So you've got to get a concept around where that happens. So you follow the owner-occupiers. And then you've got, well, if it's the owner-occupiers that are doing, you've got to start to look at target markets and where they play out. It gets into a very big conversation. But the upshot though is owner-occupiers still need to perform their lives and they still need to move accordingly. So there's some, it's all about the ability to borrow money, the ability to save, disposable income. And there are some charts you can get from the ABS on a monthly pack that I encourage

Starting point is 00:21:42 people to look at if you're into that sort of economic data. That is just brilliant from the perspective of where are we at with savings, where are we at borrowing, debt management, where are we at with disposable income? It's just brief. Yeah, 100% agree. You know, I've touched on in both the intros this week and last week that, you know, that rapid rise of always on easily accessible dynamic data,

Starting point is 00:22:07 the impact of social media, the sort of property price affordability concentration that's happening because of the squeeze there, the sort of national borderless buying and the growth of these sort of instant overnight high-profile buyers agents really does appear to be leading to this hotspot FOMO feeding frenzy, almost market-making behavior if you compare it to the stock market. What are your thoughts on what appears to be a bit of a growing phenomena around, can you say?

Starting point is 00:22:35 Yeah, there's a couple of thoughts around that. One is, and you said it earlier, it is a time restraint on behalf of investors that is causing the ability or the requirement to lean on a buyer's agent that, and as you just pointed out in the question, the plethora available of data that's there now. I'm so confused about what I see. I don't know what to look at, what the truth is. I've heard so many conflicting stories about what the truth is what to look at is i don't know where to go i don't know what's true i'll trust somebody who says that who says they do and i'm so time poor and i so don't know where to go to get the right information i'm forced to trust somebody who says that they understand um that and as you say that

Starting point is 00:23:29 is i back you that is a dangerous position to be in and there are some real problems with that um the big the big trick here and again i've just gone through with you so and i'm going to call it really insightful ways to be able to read the market i mean that that series of of stuff i gave you there's that's a kimono sort of stuff that will give you some insight yeah if you do that it won't take long if you do that you get an idea to cross-reference fairly quickly what comes out of the mouth of the people who are telling you yeah this is what's actually there all right, great. And if you do the test and measure against what's currently listed and make an assessment, you get to know who you can trust pretty rapidly and who you can't.

Starting point is 00:24:12 Okay. The key here, a lot of people do good work with buyer's agents, no question, but you've got to know who's who. You've got to get into who's who in the zoo and you've got to understand it. There is more not so good than there is good. So there is a greater risk of attaching yourself to a not so good than there is to a good yeah so your model there is that you've got to do not only research on the market per se or or when they come to you but you also got to research on the people that you're playing with so you'll look for for buyers agents x scam and google that or look for look for um asic buyers agents x cases and you look for what cases might there are ways to go about doing some due diligence on that um and references uh what is it

Starting point is 00:25:05 what's it reviews reviews that's what sorry you look at reviews yeah what does people say that all right so yeah the key here though is you can't be the last yeah you can't be the last so what i see occurring is that those who are good get in there first they get in there early and they promote it to their clients and their clients get in. This leads, in particular in a smaller area or a remote area or a regional area, this leads to an amplification of median price value, number of sales and declining listings. And you can go, oh, wow, this is an area of growth. Then people who don't necessarily know how to forecast and just look at current data

Starting point is 00:25:53 and emerging data might go, this seems to be a place to go. let's go and have a look make some inquiries and they go oh i will get on that bandwagon too then those who are even less skilled go oh it's been growing for a year or two years already this must be a hot spot i'll get my people into there now are going in for the third wave and the first wave's already saying stop buying there then those who know less again who are just starting out go oh look at the growth this has occurred in the last five years this is going to go up forever but am I ever good at knowing what I do? Get your buyers in there and they buy at the top.

Starting point is 00:26:31 This is what the stock market calls the bigger fool theory. Yeah, absolutely. As long as it's the bigger fool to keep buying, then you're okay. Just to put some shape around this, are there any, just as examples, any locations that you've seen in recent times that would fall into that category? Yeah, I'm nervous around Townsville. I'm nervous around Townsville.

Starting point is 00:26:53 Yeah, me too. Townsville has been, there's some infrastructure that's occurring up in Townsville, and that's good infrastructure. There is some movement of employees into that town for the purpose, and that's the initiating cause of lift and the trigger for this might be an area of consideration. Then those people who are smart and know and know what to look for will go, there is a correlation between infrastructure project underway employee required infrastructure project will be underway for a little while there's a bit of light time and latitude market movements are

Starting point is 00:27:33 changing now um there is likely to be growth in the core fundamentals and they will they will let people go and guide people there and there will be a genuine great time to be getting in to experience a genuine lift but then you get those who come late and later and later so i'm nervous now that as the infrastructure project progresses they'll need less people yeah um i'm nervous that the wave and i heard it around the traps a number of people from different variety different locations i'm nervous that people going to townsville now might be getting in a wee late to be going. Now, here's my nervousness. Bushy, if your database is so large for property investors, and I've just said that, everybody's going to bail immediately or

Starting point is 00:28:25 not want to go in there and we've caused a crash in the market. I'm nervous about that. Well, let's qualify that because you're absolutely right. And I don't want to be part of a market making activity and that's right by by nailing by nailing uh areas but i but i let's put that aside from it but i but i agree with you i think one of the uh almost misleading signals uh because infrastructure is a is a great driver but uh there's a difference between the employment that's required to build that infrastructure and the ongoing employment and workforce that flows out of it and that and that's where you can get trapped so so i think uh picking that timing out and i'm gonna i'm gonna qualify that a little bit more if i may yeah um i agree with you the

Starting point is 00:29:15 employment to do so if you need people to be in a remote area in order to get a project done that will amplify buying and renting activity no question yep but you're right it's a short-term thing yeah great what what is the long-term thing with infrastructure is there are two reasons there are two reasons that property prices go up lifestyle and convenience yeah yeah if you buy a property that's ugly make it pretty and sell you have improved the lifestyle environment of that property yeah if you put um a extra bedroom on that house then you can accommodate more heads you've improved the convenience of that property yeah but if you've got a development where you do a three union two multi-unit development you've improved the lifestyle and the convenience and

Starting point is 00:30:10 you're entitled to a larger profit as a result yeah infrastructure is not too different yeah if you put infrastructure in place such that is an effective infrastructure and it deserves the population, you will get people going, oh, I don't have to drive so far or through so much traffic now to get where I need to be. Things are more convenient. Yeah. And if there's money here and the councils have invested cleaning up the streets and putting in trees and shopping center developments, there is a lifestyle improvement.

Starting point is 00:30:45 Yeah. And it is that which would trigger price rise. Yeah. now from a from an investor's perspective you want to go into that market the day before they cut the ribbon and open the infrastructure yeah they're right yeah because that's when people don't know yet that's when people start to experience and that's when you'll get to see a good two three years of growth yeah beautifully said i i often talk about the three eyes of growth being infrastructure industry and incomes because they're sort of interrelated and and if you've got

Starting point is 00:31:18 the infrastructure that either follows or creates the opportunity for the industry, which brings the jobs, which brings the incomes, then you've got some of the key ingredients there that are going to drive the future growth. So I love that. Hi, Fred and Fodders. We're breaking Brendan's great conversation here this week. But before you dash off to crunch the numbers, let's lock in today's big takeaways. Firstly, data beats drama.

Starting point is 00:31:45 Brendan showed us how four simple metrics, supply, demand, median price and time, let you read any suburb months in advance. Secondly, the ratios rule. Watch that listing to sales number. One to ten is rocket fuel, ten to one is quicksand. Thirdly, if you miss the first wave, don't be wave four's bigger fool. And never forget, trust no one, assume nothing,

Starting point is 00:32:13 check everything and get it in writing if you're hungry for more tap the links in the show notes and grab brandon's brand new real estate success community app it's free and it's where top mentors investors developers and renovators trade off-market leads live events and case studies so grab your iphone or your android now and one click and you're in and while you're there stream brendan's fresh new community tv series aussie property riches on ctv plus where you'll see real deals broken down step by step and next week we swing the spotlight to you why most investors spin in diy circles how results mentoring turns deers in the headlights confusion into clear profitable action and brendan finally names the three markets he's backing for the next

Starting point is 00:33:08 cycle plus the one that he's quietly exiting so that's part four wrapped hit subscribe share it with a property mate and meet us back here next week for the concluding part five of this awesome comprehensive get invested mini series masterclass until then get out there get educated and of course always get invested thanks for tuning in to get invested on the property hub podcast channel your home for property investment insights and inspiration make sure you subscribe to property hub for free get your weekly dose of get investing inspiration along with every episode of realty talk australia's top online property show for red hot property investing news and insights direct from industry leaders and influencers and finally i'll see you next time

Property Hub - Investment Insights & Inspiration - Get Invested: Part 4, Invest by design - Strategy-First with Brendan Kelly

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