One of the things you’ll know if you’re a regular listener to the show, is whenever I talk to Michael Yardney or anyone of his team from Metropole Property Strategists, they always talk about finding a property with a twist.
Okay, what’s a twist and how do you find it? Well, let’s talk to one of team members from Metropole. Shannon Davis, who looks after the Queensland operation, joined us last week on Real Estate Talk. Here’s what he said:
Kevin Turner: Shannon how do you go about finding a property with a twist and what sort of twist are we looking for?
Shannon Davis: I think when you’ve got the benefit of showing houses over and over, and collecting feedback you get to see what’s in demand. What we’re looking for are things that are going to out perform the market over the long time.
We’re looking for properties with a twist, something special about them, something that makes them a little bit rare. That can be from it’s features, it can be from where it’s located or it could be what the potential value add that you can do with it going forward.
Some of the things we look for too, is like cul-de-sac position, walking distance to the train, maybe extra off street parking. We look for spacious bedrooms, we look for maybe a river or city view, things like a good school catchment or two street frontage. These are like special features about your property that over time will hold it in good stead.
Kevin Turner: It seems to me that properties with a twist or something that you’re going add value to, which is one of the things you mentioned there, whether that’s some kind of an extension or even putting another property on the particular site because it might be that location. That seems to be the easiest way to get a property with a twist. Am I right there?
Shannon Davis: Yeah, definitely. Especially if you can see the opportunity rather than the obstacle. We’ve helped people put one wall up, which has converted the property from three bedrooms to four bedrooms and added significant equity straight away.
We’ve helped people add an extra bathroom and make it a two bedroom, two bathroom where the walk in robe used to be, but it increases the market debt, the amount of demographics that would like to move into that property, rent it, buy it off you and therefore increases your capital growth.
Kevin Turner: Another type of property that I like to look for is one of the oldest style units, where the bedrooms were of a much more generous size.
Also it gave you the ability to actually, because the laundry was inside, to make a compact laundry, and turn that laundry then into an on suite bathroom, which would give you two bathrooms. That’s a great way to add value to some of those older units, Shannon?
Shannon Davis: Oh, definitely, definitely. We’ve done that on a few occasions. What it means is, you’ve now got something that’s not only suitable for singles and couples, but shares, and you’ve increased your market debt and therefore your capital growth. It’s a great value add.
Kevin Turner: Just speaking about units for a moment, Shannon, one of the things that I constantly hear is this concern about units don’t have any land so therefore that affects the value. Give me your view on that.
Shannon Davis: Recently we bought an apartment for a person and we had the same objection. It’s not got much land there, wouldn’t we better be buying up the road in this newer development?
There was only 10 units, it was on the riverbank of New Farm, it had a view that could not be built out, it would get fireworks every year and when we worked out the land value, the unimproved land value was five million dollars for this block of dirt, and it’s one of ten units on there.
So the land value of this six hundred thousand purchase was actually five hundred thousand dollars in land. It’s a bit of a myth, that units and apartments don’t have land value.
I think you’re always better off to buy in the smaller complexes rather than the ones that are say a hundred and fifty units, because there’s your main component there, but units and townhouses do have land value.
Kevin Turner: Shannon, what is one of the other twists that you can get into a property that you haven’t mentioned so far that is a bit of a stand out for you?
Shannon Davis: I think anything that really makes demand high and there’s limited supply is going to be going well for you in capital growth. One of the things we look for is school catchments.
A lot of people think it’s about the private school catchments, but it’s more to do with really, really good public school catchments that helps drive prices.
Kevin Turner: This would be, I guess, family oriented type properties you’re talking about?
Shannon Davis: Yeah, if you’re looking for a house with good green space and a good school catchment, where it’s pretty much [inaudible 00:04:26] with houses that are in domain and there’s not too many projects going up beside you, that’s really good fundamentals for an investment and something that we look for.
Kevin Turner: Excellent stuff. Shannon Davis, there from Metropole Property Strategists, that looks after the Queensland operation. Shannon, thanks for your time.
Shannon Davis: No worries, Kevin, any time.
Listen to the full show at RealEstateTalk.com.au and while you’re there subscribe and receive our weekly podcast (or the transcripts) where I interview Australia’s leading property experts.