A 4–17% Premium on your Next Real Estate Deal

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How does a free 4–17% premium on your next real estate deal sound? Today’s Daily Reckoning will reveal one of your best shots at bagging a deal like that. Sound good?

So what do you do with your money? As we keep emphasising in Cycles, Trends and Forecasts, the most important thing is to understand where we are in the real estate cycle.

At this time in the cycle, you should be looking for well-located property. If you’re wondering why, just have a look at the gains being made.

Take Brisbane, for example. If you thought Sydney and Melbourne were the hot places to watch in property, Brisbane is starting to warm up by any measure.

Reports this week showed a general 9.7% rise in land values across the city last year. Down by the river things are even more toasty. The suburbs of Chelmer, Graceville and Sherwood, for example, are up 33%, 37% and 36% respectively, according to the Australian Financial Review. Keep in mind this is in an area that was flooded in 2011.

Of course, those gains are in the price now. What about today? Where should you look? Well, whatever state you happen to be interested in, one strategy to start with is to look for the best public schools with growing demand and then look for a place nearby. That’s what buyer’s advocate firm The Secret Agent revealed in the AFR on Monday.

Check it out for yourself…

A study of historic property sales in neighbouring Melbourne public school zones found schools that performed better academically within the same suburb were surrounded by property that sold at significantly higher prices compared with property around schools with poorer academic scores…

The report zoomed in on sales in three inner-city suburbs – Brunswick, Carlton North and Parkville – and compared sales in neighbouring government school zones. In all three, houses near better-performing schools commanded a premium of between 4 and 17 per cent.’

All this is why we see rundown dumps sell for a fortune.

Just this morning the AFR reported houses with 50 year old kitchens, outdoor toilets and peeling paint are ‘smashing’ auction reserves. Of course, buyers aren’t paying for the building. They’re paying for the location. As reported this morning, ‘Homes … close to schools and railway stations were selling strongly even if little work had been carried out to keep the property up-to-date.’

Of course, if you subscribe to Cycles, Trends and Forecasts, you already know all this. Real estate expert Catherine Cashmore told us late last year in a report she did for us. If you want to know the suburbs where she suggests you begin looking, start here.

Regards,

Callum Newman,
for The Daily Reckoning Australia

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Callum Newman

Callum Newman

Callum Newman is the editor of The Daily Reckoning and Associate Editor of Cycles, Trends and Forecasts. He also hosts The Daily Reckoning Podcast. Originally graduating with a degree in Communications, Callum decided financial markets were far more fascinating than anything Marshall McLuhan (the ‘medium is the message’) ever came up with. Today Callum spends his day reading and researching why currencies, commodities and stocks move like they do. So far he’s discovered it’s often in a way you least expect. To have Callum’s thoughts and insights on the current state of the currency, commodities and stock markets delivered straight to your inbox, take out a free subscription to The Daily Reckoning here.
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