A perfect storm for property investing | Jane Slack-Smith

 

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s you’ve heard us say many times on the Real Estate Talk show, you need to have a strategy. There are so many opportunities around Australia right now.

No matter what the climate is, there are always opportunities, but there are some outstanding ones right now that I’ve heard about that I want to share with you.

To do that, I’ve interviewed Jane Slack-Smith, who is the director of Investors Choice Mortgages and also Your Property Success.

Here is the transcript of that interview:

Kevin: You and I were talking off-air about the excellent opportunities in Brisbane. Are there any other places? Tell us why you’re looking at Brisbane.jane slack smith

Jane: I just think 2014 is such a wonderful opportunity for people to start in building or starting a property investment journey. There’s a number of perfect storm situations that come together.

We have prices, they’re going up. The people have more equity in their home than ever before that they can release, and they’ve got their buying capacity is the highest it’s ever been because interest rates are so low, and there’s still opportunities.

We think [inaudible 00:01:00]Brisbane is just starting to move and I’ve just had so many clients that have been able to buy using the Trident strategy that I take and actually make money straight away from their purchases.

Kevin: Okay, well tell us what the Trident strategy is, please?

Jane: I’m really low risk so I don’t want to make money one way out of properties. All the properties that I’ve bought I’ve always looked at three ways that I can make money.

I’m trying to buy below the market by being very aware and intimately across the costs in the market. I’m trying to grow equity quickly to having a good capital growth plan. I’m buying with this predicted growth and then I’m actually trying to add equity even faster.

My strategy for doing that is renovating, so I can improve the rental income and I can improve the equity so I can pull it out and do it again.

Kevin: Jane, how can we apply that now in the market?

Jane: Well, in actual fact I think there’s opportunities and what I’m seeing in our business is we’ve got people in Sydney trying to fit into the market and upgrade their home quickly, and often what they’re doing is they’re buying what they can afford now and what they can afford with the plan of using renovation to add some equity and to build the home they really want.

Kevin: Is that a good strategy?

Jane: I think so because in actual fact, what they’re doing is they buy where they want to live and they’re recognizing that they may not have the money now to create the perfect home but they can do that in the future, and as they do that, they’re actually creating their own wealth, it’s like building your own gold mine.[sam id=37 codes=’true’]

Kevin: The danger there of course would be, could be overcapitalizing that, couldn’t it?

Jane: Absolutely, and that’s where homeowners need to take some of the strategies of savvy investors when they renovate. We’re always looking at they’re not having the best house in the street so you actually try to renovate to the need of your family, but also be savvy in the realization that in reality when you move every 9 years, although you can build the dream home for ourselves, most of us do move.

When you do renovate, don’t create the specialised theatre room or sewing room, have the room that you can use now for that purpose think for later, but then be able to turn them back quickly when you want to sell the property into a room that looks as general purpose as possible so most people want to buy, but you’ve added the equity and you’ve actually added to the property so the value is higher.

Kevin: Gee, that’s a great tip, doing the renovation to suit you now, always with a view to being able to convert it back to something that the market will accept in, say 4 or 5 or even 6 years’ time.

Jane: Look too many success in the [inaudible 00:03:34]. I’ve got clients at the moment who bought a year ago for $420,000 within 7 kilometers of the CBD Brisbane, did a $35,000 renovation, had the property re-valued straight away at $480,000, and now it’s worth $500,000, $520,000. It’s over $100,000 worth of value within one year for a $35,000 investment. I’m kind of rejuvenating the property with a new kitchen and bathroom.

Kevin: It’s obvious to me Jane that you take such a long-term view with your investment strategies as well. Do you think that’s one of the areas where we go wrong is that we try and do too much too quickly?storm

Jane: I think so, and as I said, the Trident strategy for me, I’m trying to create equity immediately by buying below the market and the fast market, that’s hard to do. So having a better Plan B and C is good enough sometimes.

Creating equity straightaway for renovation or realizing that what you can’t afford, you can renovate the property and add some value, but also having the long-term view of buying where the population wants to live and the demographics fit where you buy, so there’s capital growth.

One of the properties that I own went up by 21% last year, and when you’re talking about adding hundreds of thousands of dollars to your property portfolio over a year by doing nothing, having a long-term view for me is one that suits my low-risk strategy but it allows me to build a multimillion dollar portfolio without worrying every night on going backwards.

Kevin: Wonderful. It’s great talking to you, and if you want to contact Jane and her team, you can do that through their website, yourpropertysuccess.com.au. My guest has been Jane Slack-Smith from Investors Choice Mortgages and Your Property Success. Jane, thanks for your time.

Jane: Thanks, Kevin.

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