Where NOT To Invest And WHY ‼️ Despite Hundreds Of Property Investors Buying Here Last 5 Years
Summary
TLDRIn this video, PK discusses two Queensland locations, Leichhardt and Mango Hill, that have been poorly performing in terms of property investment despite being heavily marketed by agents and advisors. He emphasizes the importance of analyzing data rather than relying on marketing narratives, highlighting factors such as rental yields, days on market, and online search interest. PK advises viewers to do their homework and learn to interpret real estate data to make informed investment decisions, suggesting that understanding this data is crucial for predicting short-term property growth and achieving both positive cash flow and capital appreciation.
Takeaways
- 🏠 The speaker warns against investing in certain locations, such as Leichhardt and Mango Hill, despite many agents and advisors promoting them.
- 📉 Leichhardt's median property value has declined, and it has missed out on recent property booms in other areas.
- 🤔 The speaker emphasizes that factors like population growth, infrastructure, and schools are less important for short-term growth (within 5 years) compared to equity uplift and capital growth.
- 📈 The speaker advises that high rental yields can be misleading as they may not translate into capital growth, which is crucial for generating equity for further investments.
- 🔍 Data and statistics are highlighted as the key tools for predicting short-term price movements in property, rather than relying on marketing or general advice.
- 🚫 The speaker discourages solely focusing on positive cash flow stories, population growth, or proximity to infrastructure as indicators for property investment.
- 🏢 High rental yields in areas like Leichhardt and Mango Hill may come with higher tenant turnover, damages, and insurance premiums, reducing the net yield.
- 📊 The speaker provides specific data points like days on market, online search interest, and vendor discounting to illustrate why certain areas may not be good investments.
- 💡 The importance of doing one's own homework and learning how to analyze property data is stressed to make informed investment decisions.
- ⏰ The speaker suggests that with the right data analysis, it's possible to generate a significant passive income and potentially retire or reduce work hours within 10-15 years.
Q & A
What is the main reason why many agents and advisors are recommending properties in Leichhardt, Queensland?
-The main reason is the high gross rental yield, which is around 6.31%. This is attractive because it suggests positive cash flow, which is an easy story for agents and advisors to sell to their clients.
What are the potential issues with investing in Leichhardt despite the high rental yield?
-Despite the high rental yield, there are issues such as the median value of properties having fallen, a high percentage of rental properties leading to increased competition, longer days on market indicating soft demand, low online search interest, and high vendor discounting, which are all signs of a potentially poor investment.
Why is the sociodemographic of Leichhardt a concern for investors?
-The sociodemographic of Leichhardt is a concern because it is lower than normal, which can lead to higher tenant turnover, more tenant issues, and higher insurance premiums, thus reducing the net yield after maintenance and vacancy.
What is the significance of the high percentage of rental properties in Leichhardt?
-A high percentage of rental properties, over 60%, indicates a lot of competition for tenants, which can lead to difficulties in renting out properties, increasing days on market, and potentially lower rents.
What does the speaker suggest about the property market in Mango Hill and Deception Bay?
-The speaker suggests that despite the popular narrative of these areas being good investments due to their proximity to the ocean and potential for growth, the actual data shows that they have not performed well, with flat prices and high supply of developable land.
Why does the speaker emphasize the importance of doing one's own homework before investing in property?
-The speaker emphasizes the importance of doing one's own homework because relying solely on marketing or general recommendations without analyzing data can lead to poor investment decisions. Data and statistics are crucial for predicting short-term price movements and identifying areas with potential for both cash flow and capital growth.
What are the key data points the speaker suggests looking at when evaluating a property investment?
-The key data points include median property value trends, percentage of rental properties, days on market, online search interest, stock on market, and vendor discounting.
What is the speaker's stance on using buyer's agents for property investment?
-The speaker suggests that while buyer's agents can be helpful, investors should not blindly follow their recommendations without doing their own research. They should ensure that the buyer's agents are focusing on data and not just marketing narratives.
What is the speaker's advice for investors looking to build a property portfolio without relying on buyer's agents?
-The speaker advises investors to learn how to analyze data themselves, focusing on key indicators that predict property performance. This can be achieved through self-education and spending time learning about property market trends and data analysis.
What is the speaker's final message to potential property investors?
-The speaker's final message is to learn the data, as it is the key to making informed investment decisions and potentially achieving financial success through property investment.
Outlines
🏠 Warning Against Investing in Overhyped Locations
The speaker, PK, starts by addressing the audience and expressing his intention to discuss locations that he believes are not good for investment despite being heavily promoted by agents and advisors. He mentions that these locations have performed poorly over the last five to seven years. PK decides to share not one but two such locations, starting with Leichhardt in Queensland, with the postcode 4305. He emphasizes the importance of understanding why these locations are not good investments and encourages viewers to do their own research. He also prompts viewers to like or subscribe if they find the content valuable, promising more similar content in the future.
📉 Analyzing Leichhardt's Property Market Performance
PK delves into the specifics of Leichhardt, discussing its average yield and how it compares to current interest rates, suggesting that while the positive cash flow might seem attractive, it's not a good indicator of short-term growth. He argues that the focus should be on equity uplift and capital growth within the first five years. PK then presents data points indicating that Leichhardt's median property value has fallen, and a high percentage of rental properties suggest an oversupply, leading to increased competition and longer days on market. He also points out that online search interest is low, and there's a high percentage of stock on the market, indicating a lack of demand. Lastly, he mentions that vendors have to offer significant discounts to sell properties, which is not a good sign for the area's market health.
🌊 Deception Bay and Mango Hill: The Illusion of Proximity to the Ocean
Continuing the analysis, PK shifts focus to Mango Hill and Deception Bay, two areas near the ocean that have been marketed as good investments due to their proximity to the water. He challenges this notion by pointing out that despite the positive cash flow and the appeal of being near the ocean, these areas have not seen the expected growth. PK provides data showing that the rental yield has been flat, and the stock on the market is high, indicating a surplus of properties. He also notes that these areas have a lot of developable land, which keeps supply high and prices stagnant. He emphasizes the importance of looking at data and not just the surface-level appeal of a location when considering property investments.
📚 The Power of Data in Property Investment
In the final paragraph, PK concludes by reiterating the importance of doing one's homework and learning how to analyze data to make informed property investment decisions. He suggests that it's possible to learn the necessary skills in a short amount of time without needing to attend seminars or rely on marketing pitches. PK encourages viewers to seek out buyer's agents who focus on data and to consider learning how to analyze property markets independently. He offers a case study for those interested in learning more and ends the video by asking viewers to like or subscribe for more content and providing a link for further information.
Mindmap
Keywords
💡Investing
💡Location
💡Cash Flow
💡Capital Growth
💡Data-Driven Analysis
💡Rental Yield
💡Days on Market
💡Online Search Interest
💡Scarcity of Supply
💡Vendor Discounting
💡Sociodemographic
Highlights
The speaker warns against investing in certain locations that have been poorly performing despite being heavily marketed by agents and advisors.
Leichhardt, Queensland (postcode 4305), is identified as one such location with a high percentage of rental properties, indicating potential oversupply.
The median property value in Leichhardt has fallen, contrary to the advice given by many agents and advisors.
Days on market in Leichhardt have been trending upwards, suggesting a lack of demand and a longer time to sell properties.
Online search interest for properties in Leichhardt is very low, indicating soft demand.
The speaker emphasizes that high rental yields do not guarantee good investment locations.
Tenant turnover and issues can reduce the net yield in areas like Leichhardt, despite high gross yields.
Mango Hill and Deception Bay are mentioned as other locations that have been falsely promoted as good investments.
Deception Bay's appeal is falsely attributed to its proximity to the ocean, which does not guarantee high property value growth.
The speaker advises that understanding data and statistics is crucial for predicting short-term property price movements.
The importance of equity growth for generating passive income through property investment is highlighted.
The speaker offers a case study for those interested in learning more about property investment strategies.
A call to action is made for viewers to learn about data-driven property investment to avoid being misled by marketing.
The speaker suggests that with the right data analysis, it's possible to build a portfolio without relying on buyer's agents.
The video concludes with a reminder to do one's homework and learn from data to make informed property investment decisions.
Transcripts
hey guys it's pk here so i promised that
i would be
giving you a location today which
i don't think you should be investing in
but there are literally
dozens and dozens and dozens of agents
and advice advisors
um and marketing companies property
companies that are getting
literally hundreds of their clients into
this location
over the last actually five six seven
years
okay and over the last five six seven
years these locations have done really
poorly
but still to this day there are so many
agents and advisors
getting their clients into this location
so i just thought i'd share that
location with you but more importantly
explain to you the reasons as much as i
can within 10 minutes
of why it's actually not a good location
right and so you can kind of demystify
all of these recommendations and do this
yourself okay that's an important thing
um and so if you like this video and if
you got value and if you get value
just give it a like or love on facebook
and that way you'll get more of these
types of videos and if you're watching
on youtube
just hit subscribe and once again you'll
get more of these videos so
um let's get into instead of one
location i'm going to give you two
locations
okay so the first one is leichhardt okay
so queensland
postcode is 4305 i'm looking at my
computer right now because i'm going to
be pulling up data and sharing it with
you
so like art is an ipswich in
um which is obviously in western
um in western brisbane now the reason
why
lots and lots of agents and advisors get
their clients
into like art is because
it's because it's positive cash flow
right so
let's have a look at the average yield
6.31
now in this day and age where interest
rates are you know in the high twos
or they're about six point
you know five or you know above six
percent gross yield is easily positive
cash flow in fact
above five percent is basically neutral
if not positive cash flow
so it's a really easy story to say okay
look i'm a i'm an agent i'm an advisor
i'm going to get you
my client into leichhardt you're going
to be making three to five to seven
thousand dollars every single year
positive cash flow bob's your uncle
happy days now
now let's look at why that's not a good
idea
all right and i'm not going to be
talking about population growth
not going to talk about infrastructure
i'm not going to be talking about
migration
you know the the parks the schools
because none of that matters
when it comes to short-term growth and
short-term growth
in my book is defined as within the
first five years
really we want equity uplift we want
capital growth in the first two or three
years
but at a stretch let's say five years
just to make sure that this
property is actually increasing in value
and
giving us positive cash flow so i'm
going to be telling you why i'm proving
why that's not going to be the case the
door is just open i'm going to close it
and i will be
right back okay
so let's look at the data for leica um
and i'm not going to be covering all the
data i don't have time for that but just
a few key data points so the first one
is the typical value now
the median value for leica has actually
fallen since about three years ago and i
know
agents that were getting their clients
into this location 2014
15 16 completely missing the sydney boom
the melbourne boom the newcastle boom
the regional victoria boom the tasmanian
boom
clients have suffered in this location
it has gone back by about twenty thirty
thousand dollars in that time frame
all right and that in of itself is no
reason to
to say it's a bad suburb though it might
just be ready for a boom but let's see
it
if it is more than 60 of all investment
properties are rental properties which
means that
what i've just said agents are
definitely getting their clients into
this area
all right and you know that's too much
competition when it comes to
rental demand when it comes to getting a
tenant and increasing
rents days on market and once again just
some top level uh metrics here we can't
we won't go through everything in my
system
but days on market have been gradually
uh
trending upwards what that means is that
it's taking longer and longer and longer
to sell a house on average in a month in
leica
so back in may 2018 it was taking about
50 to 60 days and more recently it's
taking up to
125 days which means it's taking four
months to sell a house
now that's a surefire way to lose money
because demand is very soft
okay um online search interest
so there's almost no one looking for for
property in leichhardt
but importantly the trend is not super
hot
okay so in recent times it has been
tracking a little bit higher
but it's on an absolute level very very
low
it's basically in the bottom five fifth
percentile of
online search hits from real estate and
domain compared to most other
suburbs around queensland so from that
perspective demand
quite soft um
percentage stock on market so there is
well over two percent
of all properties in that suburb
actually listed for sale we want that to
be under one percent so it constraints
supply
when supply is low prices have more
chance of increasing because there's
scarcity there's no scarcity of supply
in this suburb
what is the next thing that we can look
at
vendor discounting so on average vendors
are having to discount
up to about six percent to actually sell
a house we want that to be well under
five percent
five percent at the worst but the thing
is that this
isn't trending the right way and it's
really high you know for a property
they're having to
massively discount consistently month
after month
to even get rid of it so overall i mean
this is just a few data points we need
to look at 30 to 35 really to get
an a sort of conviction or some
robustness and our confidence of whether
we should buy in the suburb or not
but just at these sort of key data
points initially the ones that we sort
of
just just scanned to see if it's worth a
further look
i wouldn't be recommending this at all
yes you
will get high grocery yield but the
reality in
um in leichhardt in in ipswich and leica
is that the sociodemographic is a little
bit lower than what
is normal and so therefore you get a lot
of tenant turnover
tenant issues tenant damages insurance
premiums a little bit higher
and so that gross yield even though it
seems like it's really good
it gets brought down quite significantly
when it comes to net yield post
maintenance post vacancy right so so not
great in terms
of that furthermore there's lots of
developable land supply
in leichhardt and there's lots of new
builds because
land is so cheap right all things that
say that supply is high
and demand is low the fundamentals of
economics the second suburb that i want
to talk you through hope i didn't go
through that
too fast so i know there's plenty of
buyer's agents getting their
investors into um into this area
there's one not called the b team but
very close to it
um no disrespect to them they're
they're good in other ways and that is
mango
hill so mango hill is right next to
deception bay which is also an area
where um
close to redcliffe which is also an area
where lots of agents are getting their
clients in um for probably about five
years you know brisbane's going to be in
brisbane's going to boom brisbane's
going to boom brisbane never booms it
hasn't boomed
um once again the the cell
for for mango hill um or actually let's
not look at mango hill let's
look at deception bay because it's one
that's actually more popular
the cell for deception bay is that it's
next to the ocean
now in melbourne and sydney if you're
next to the ocean
it is a very expensive suburb and so the
logic goes
dear client that we will get you a house
within 20 to 30 kilometers
and um you know the brisbane cbd
great lifestyle next to the beach next
to the ocean
in a quiet peaceful area with lots of
activity happening in terms of um
commercial and
residential you know population is
growing
let's get you into that area and that's
a really solid property investment i'm
talking about deception bay
now that is completely wrong the easy
way to sell that is what i've just said
and also the fact that it's neutral to
positive cash flow
you can see how i can convince you to
buy and lie card i can convince you to
buy
in in deception bay but the reality
once again if we look at that is
the percentage renters are almost 45
percent above 40 percent
tad on the high side online search
interest is also very low
um it's in the lowest 20 of online
interest or amongst queensland um
suburbs um the gross rental yield like i
said is pretty good but it's been pretty
flat there's not been much growth in
rents
stock on market is once again well above
1.5 percent which means that
there is not much scarcity of listings
when there's
lots of listings it tends to suggest
as a percentage of total properties on
the market it tends to suggest that
supply is high
okay and so this isn't really shaping
that well
for deception bay um
and yeah those are the key reasons some
other points are relatively good
but the the main thing i wanted to share
right is that
even in deception bay it's right next to
north lakes it's right next to mango
hill
lots of residential development
occurring lots of developable land
supply
and what that means is that prices won't
grow
and so let's see what prices have done
for
deception bay over the last few years
and they have basically been flat okay
so once again
if you were a client of a mainstream
agent buyer's agent etc you would have
bought in this location
five years ago four years ago three
years ago and yes
it's a cash flow neutral property but it
hasn't gone up in value
so what have what does it actually
achieve for you meanwhile
you could have bought a mildura like i
shared on one of these videos before
meanwhile you could have bought in
bendigo ballarat meanwhile you could
have bought in western adelaide
meanwhile you could have bought in
hobart and made a hundred to two hundred
sometimes two hundred fifty thousand
dollars
of equity gain offer you know four to
five hundred thousand dollar house
depending on the region
in the same time frame okay so the key
takeaway message from this video
is a do do your homework
do your homework do your homework the
system to understand
which suburbs are going to do well from
a cash flow and capital growth
perspective
is possible to learn you don't need to
spend
your full-time career on it you can
understand how to do this
within five to ten hours worth of
learning
all right not learning at a classroom on
a seminar or some sort of
yuck hotel sort of seminar where they
sell you stuff at the back of the room
but deep data learning adding
subtracting division you don't need to
be a rocket scientist
you can learn how to pick the right
suburbs yourself
in no time okay but if you do want to go
to a buyer's agent please please please
don't just go for the high level
recommendations
don't just go for the positive cash flow
story don't just go for
the population growth don't just go for
the
activity or the um the income story
don't just go for the fact that it's
close to an infrastructure or new
infrastructure project or it's close to
an ocean
you need to look at data because data
true data statistics
is the only thing that can predict or
forecast or anticipate
short-term price movement sub five years
ideally
sub three years long term 20 years from
now everything does well
all right but we want to buy high cash
flow property
positive cash flow property that gives
you an income from day one
and we want to buy positive cash flow
property that also grows in value
capital growth in the first one two
three four five years
so that we can take the equity out and
buy more cash flow property
right i'm not against positive cash flow
we want more of that the only way we can
get more of that is through equity
growth as well
okay in a passive strategy so that's
what we want if we put in a twist a
kicker
and development opportunity renault
opportunity buying under market
all that stuff is also good to learn and
the stuff that i teach as well
so look if this is resonating if this is
meaningful to you if this doesn't just
seem like marketing
then potentially there's something for
you to learn there's potentially
something for you
to take and really accelerate your
property investing because
what is possible is for you to generate
a sizeable passive income
in for most people 10 to 15 years time
and actually give yourself some choice
so that that you can retire at least
reduce your hours
and get out of the rat race so if that
is something that you're interested in
look there's plenty of buyer's agents i
don't need to market then some very good
ones that
don't do the marketing that i just
described that actually focus on the
data
but if you want to do it yourself and
you want to be self-sustaining
and you want to build a portfolio of two
three four five six seven properties and
don't want to spend 10 to 15k
every single time on on buyer's agents
and at the same time
you don't want to waste your weekends at
inspections and you don't want to waste
hours and hours and hours of research on
realestate.com
and get nowhere then feel free to drop
me a message you can dm me but
i'll also leave a link right below a
case study where you can find
out more if you think we're on the same
frequency if we vibe
then you can get in touch and i can see
if i can help you and you can see if i
can help you
as well right and equally if if i'm not
a good fit or if
if this doesn't vibe with you i still
highly recommend that you learn the data
right learn the data learn the data
learn the data because the data will
make you rich
not marketing not webinars not seminars
not anything else it's the data so
really learn that
and get your time back um all right well
that's basically all i have to say my
name is pk
and once again i really appreciate it if
you get some love back and and like or
love this video
if you watch it on facebook and you
actually see more of them that's how the
algorithm
works and if you're watching this on
youtube just hit subscribe
all right guys well i'll leave the link
below and speak soon
catch ya bye
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