Which has grown more, houses or units in capital cities?

Which has grown more, houses or units in capital cities?

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today were going to talk about which has grown more houses or units in capital cities?

There is often a debate about which one to buy.

Some say houses due to land content and more versatility i.e. the ability to do more with it.

Some like units because of the prime locations and easy rentability.

For investors the answer is simple in my opinion, which I will get to shortly.

Since 1975 Sydney’s housing market has outperformed the unit market by 4 times.

In Melbourne it’s 10 times.

In Brisbane since 1980 its 14 times.

To give some closer perspective.

Since 2000.

Sydney and Brisbane houses have outperformed units by 1x.

Melbourne by 1.5x.

I would argue houses increase faster because of land content.

As land becomes scarcer demand increases.

Causing increased competition.

And in turn increased prices due to this increased competition.

A quote by Mark Twain best emphasises this point.

“Buy land, there not making any more of it”.”

Why median prices aren’t always reliable

Why median prices aren’t always reliable

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today we’re going to talk about why median prices aren’t always totally reliable.

I was taught in year 12 maths, that a median is the middle number.

For example.

You have 3 numbers.

1, 5 and 10.

The middle number is 5.

The issue median prices have in many property markets is the limited number of sales.

For example.

If you have a property market with 100 properties in it.

But only 3 sales during the month.

What do you think will happen to the median price?

It will highly fluctuate depending on the number of sales.

For example.

One month may have a sale of $500,000, $800,000 and $1.5m.

The next month may have sales of $800,000, $1.2m and $2m.

Suddenly a massive increase in prices!

Boom times ahead!

But in actuality it doesn’t really mean this.

These median sale figures don’t necessarily take into account how renovated a property is.

For example.

If you suddenly have a re-sales from a fancy new development.

What do you think will happen to prices?

Boom times!!

Be careful of only looking into median prices.

There’s more than meets the eye with them.”

Hurdles buyers face

Hurdles buyers face


Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today were going to talk about some of the hardest things you go through when buying property.

Buying a property on the surface seems relatively straightforward.

Find a property you like.

Check it out.

Make an offer.

Presto. You’ve bought a property!

But in actuality there’s more to it than that.

Mainly because of the sheer amount of money a property costs.

Finance is one of the biggest hurdles for buyers.

The initial process can be time consuming with the paperwork.

Getting the pre-approval, is the ideal.

This means you can start making offers straight away as you know much you can afford.

Often times pre-approvals lapse.

Generally around 3 months.

Sometimes there’s simply not enough money to purchase the property you want.

The offer stage is another hurdle.

How much do you offer?

Do you go in low, high, medium?

Are you wasting your time on this particular property?

To make a successful offer the most important tip is to understand what the property is worth.

For residential property this is usually achieved through comparable analysis.

Another hurdle is the pest and building stage.

Particularly if it’s an old house you want to renovate.

Structural issues or termites can be alarming for the non-builder.

I would always highly recommend getting a professional and licensed solicitor or conveyancer to go through the contract for you.

Emotions are also one of the biggest personal challenges you will face.

There are emotions around inspecting, finance, dealing with agents, making an offer, missing out, securing it, exchange, moving out, moving in, settlement.

Buying a property can be an extremely fun process.

Hopefully some of these tips help make the process a little easier.”

Why buyers have historically made money in property

Why buyers have historically made money in property

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today were going to talk about why buyers have historically made money in property.

It’s funny because the reason has nothing to do with property.

It’s all about the finance and what happens because of the finance.

Banks and financial institutions lend money to buyers or borrowers.

Usually 80% of the property’s value is lent.

Whilst the other 20% is from your own savings.

So on a $1m property $800,000 comes from the financial institutions and $200,000 from your savings.

Think about that for a second.

Imagine if you had to fund the entire 100% purchase.

That would make it much much harder to buy.

Lending enables purchases to buy property they don’t have the full amount for now.

In turn you pay interest.

What is happening when prices rise is your getting the 100% benefit on the 20% you physically invest.

A compounding affect takes place over time.

Which is where the equity and wealth is made.

There must be a reason why Einstein said “compound interest is greatest mathematical discovery of all time”.

There’s more than just market movement

There’s more than just market movement

Transcript
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.

Today were going to discuss what to do when a property market isn’t rising quickly.

Over the last few years markets have been moving upwards.

Sometimes they move downwards.

And sometimes they move sideways.

These are signs of normal property markets.

Some investors have the belief if the market doesn’t go up then they won’t make money.

This is always necessarily the case.

There is another way to make money besides market movement.

Which is ‘sweat equity’.

This is done by improving the property.

Making it a better living standard through a cosmetic or structural renovation.

Other examples include a new build, extension, subdivision, granny flat or small development.

To use a simple analogy.

Sweat equity is like getting a haircut or doing lots of gym.

It will make you feel and likely look better.

Why can’t we give our investment properties a transformation?”