Where NOT To Invest And WHY ‼️ Despite Hundreds Of Property Investors Buying Here Last 5 Years

Summary

In 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

00:00

🏠 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.

05:01

📉 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.

10:03

🌊 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.

15:05

📚 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.

Keywords

💡Investing

Investing refers to the act of allocating resources, such as money, with the expectation of generating an income or profit. In the context of the video, the speaker discusses investing in real estate, specifically in locations that have been poorly performing but are still being recommended by agents and advisors. The speaker aims to demystify these recommendations by analyzing data and suggesting that investors should be cautious and conduct their research before investing in such areas.

💡Location

In real estate, 'location' is a critical factor that influences property value and potential for growth. The video script mentions specific locations, such as Leichhardt and Mango Hill, which have been identified as areas where agents are advising clients to invest despite poor historical performance. The speaker uses these locations to illustrate the importance of analyzing more than just the appeal of a location and to consider data-driven factors like rental yields and market trends.

💡Cash Flow

Cash flow in the context of property investment refers to the net amount of cash generated by a property after all expenses, including mortgage payments, taxes, and maintenance costs, have been paid. The video emphasizes the allure of positive cash flow as a selling point for certain properties, but the speaker warns that this alone is not a reliable indicator of a good investment. They argue that investors should also consider the potential for capital growth in addition to immediate cash flow.

💡Capital Growth

Capital growth, also known as equity uplift, is the increase in the value of an asset over time. The speaker in the video argues that investors should focus on properties that not only provide positive cash flow but also show potential for capital growth within the first few years of investment. This is important because capital growth can provide additional funds that can be used to invest in more properties, thus expanding the investor's portfolio.

💡Data-Driven Analysis

Data-driven analysis involves using quantitative data to make informed decisions. The video script emphasizes the importance of data-driven analysis in property investment, suggesting that investors should rely on concrete data points such as rental yields, days on market, and online search interest rather than just marketing claims or general impressions of a location's potential.

💡Rental Yield

Rental yield is a financial metric that measures the income generated by a rental property as a percentage of its total value. The speaker points out that while high rental yields might seem attractive, they can be misleading if they do not take into account other factors such as tenant turnover, maintenance costs, and potential for property value appreciation.

💡Days on Market

Days on market refers to the number of days it takes to sell a property. In the video, the speaker uses this metric to illustrate the demand for properties in a given location. A higher number of days on market can indicate a softer demand and potentially lower property values, which is a factor the speaker advises investors to consider.

💡Online Search Interest

Online search interest reflects the level of online activity or inquiries about properties in a specific area. The video mentions that low online search interest can be an indicator of low demand for properties in a particular suburb, which can affect the potential for capital growth and rental demand.

💡Scarcity of Supply

Scarcity of supply in the context of real estate refers to the limited availability of properties on the market. The speaker suggests that a low percentage of properties listed for sale can indicate scarcity, which can drive up property values due to increased competition among buyers. Conversely, a high percentage can signal an oversupply, which may lead to lower prices and less potential for growth.

💡Vendor Discounting

Vendor discounting refers to the practice where sellers reduce the asking price of a property to facilitate a sale. The video script uses this term to highlight situations where sellers in certain locations are consistently having to offer significant discounts, which can be a sign of a weak market and potential for further price reductions.

💡Sociodemographic

Sociodemographic factors refer to the statistical analysis of social and demographic factors of a population. In the video, the speaker mentions that the sociodemographic profile of an area can influence property investment decisions, as areas with lower sociodemographic profiles might experience higher tenant turnover and issues, which can affect the net yield of a property.

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