Why demographics count for any property investing strategy

About the author
Jane Slack-Smith has been named one of the Top 10 Property Experts in Australia by Money Magazine, one of the Top 4 Financial Influencers by Qantas and been awarded the Australia’s Mortgage Broker of the Year twice.

Demographic analysis is one of the most crucial steps property investors can take, especially if they’re planning a strategic renovation. Because the bottom line is, if your finished renovation doesn’t match the target market… you’re investment will not be profitable. So let’s take a closer look at why demographics count.

As an investor and renovator, there’s absolutely no point in creating a home that nobody wants…

The only way to avoid this is by knowing your target demographics.

Because even if you purchase a property under market value in a growing suburb with good pricing disparity between renovated and unrenovated homes…

None of this can help your portfolio if you blow your budget on a renovation and create something that doesn’t appeal to the local demographic – aka your target market.

So step one is figuring out who these people are.

Now, successful investors complete their demographic analysis during the suburb selection and due diligence stage.

(That’s well before they make a purchase!)

Because demographic insights are crucial to selecting a property that matches your strategy.

Demographics reveal important insights like whether an area has greater demand from renters or owner-occupiers and the type of housing they want.

To show you how much of an impact demographics can play in your property investing, let’s jump back to the beginning…

Before you purchase your property and shortlist suburbs to buy in.

At this point, all you have is your property investment strategy.

This is a strategy you’ve chosen because it’s strongly aligned with your ultimate goal.

Say, for example, your goal is to have $50,000 in passive income within 15 years.

A portfolio of 2 properties and 1 renovation purchased with a buy-and-hold strategy will get you there.

So now it’s time for step 2…

Identifying suburbs that match your strategy.

If you purchase in an area that’s not aligned with your chosen strategy, you’re not going to reach that $50,000 passive income goal.

I actually started working with a client who made this mistake and she was considering selling off one of her properties.

So together we…

✅ Looked at her current portfolio

✅ Assessed her properties from the viewpoint of “would I purchase this now if I was seeing it for the first time?”

✅ Considered projected growth

✅ Reassessed the area

✅ And reviewed the demographic of people buying and renting in the area

To help with this, I purchased a suburb report from Residex which analysed the median price and predicted growth…

Unfortunately, we discovered that the suburb wasn’t growing well at all.

In fact, it was expected to budge as little as 1% in the next 5-8 years!

So, it wasn’t a property you’d be holding for capital growth.

However, if she was earning a high rental income on it, you could justify hanging on it.

So we did a bit more research.

When we got into local demographic analysis, we discovered that:

❗ 70% of people lived in houses but she owned a unit

‼️ Only 7% of people in the area rented so more than 90% of residents were owner-occupiers!

Because my client didn’t have these demographic insights, she purchased the wrong type of property in an area where there was almost no rental demand.

Q: So, was it worth keeping the property?

The rent wasn’t great…

And it had very little predicted growth!

Q: So if you were considering this property now — knowing it needs to match your ‘buy, renovate and hold strategy’ — is it a good fit?

No.

You’d walk away from this property, because the suburb and property don’t suit your strategy.

Now, if you were planning to flip — the ‘buy, renovate and sell’ strategy — this property might be a good match…

However, there are a number of factors you’d need to consider such as pricing disparity to ensure it stacks up.

If there’s one thing I want you to remember from all of this…

It’s that demographics count big time!

Without it, there’s no way of knowing who your target market is and what kind of property they truly want.

And if you’re investing with a goal in mind — as all successful investors do — this information is crucial to getting a property that matches your strategy.

Whenever you’re ready… here are 3 ways I can help you right now:

Your Portfolio Building Blueprint Book The 7 simple steps to rapidly grow your portfolio with absolute confidence & minimal risk. Free book download here

 

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