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.
Successful property investors know that shortlisting suburbs is only half the job of finding the best area to invest in.
Because within a suburb there are particular areas (aka pockets) that have greater potential to get you to your goals than other areas.
A good pocket will have higher demand (from renters or buyers) and strong growth factors like gentrification and good infrastructure.
But a bad pocket may struggle to grow because it’s on the wrong side of the main freeway or in a section that’s notorious for crime and drugs.
I’ve come across many investors who purchase in the wrong pocket of the right suburb.
That’s why it’s crucial to take your due diligence and research to street-level.
Doing this will allow you to invest in the best location possible!
If you’re planning to use my Trident strategy®: buy a property in a high-growth area, for a price below market value and do a strategic renovation to add instant equity…
I highly recommend you find out the following information as part of your pocket due diligence:
🔸 Is there renovation potential? (Is there pricing disparity between renovated and non-renovated properties?)
🔸 What’s the median type of property? (Is it a 3-bedroom house or a 2-bedroom apartment?)
🔸 What is the median value of properties?
🔸 Who is the key demographic?
▪️ Are most people renters or owner-occupiers? (What’s the percentage for each?)
▪️ Are they families, young professionals or students?
▪️ Do most people have cars or do they rely on public transport?
▪️ What is the median income?
▪️ What are the most common occupations?
This will help you gauge which pockets match your buying criteria.
Every investor’s buying criteria is different.
One investor may be interested in doing a strategic, cosmetic renovation to hold and lease, and their total budget may be $300,000 to cover everything including purchase, acquisition, holding, renovating and leasing costs.
While another investor with a total budget of $650,000 may want to do a structural renovation and add a bedroom to the property so they can sell it after works are complete.
The pockets (and suburbs) that suit each investor will be very different.
So always do your own due diligence with close attention to your unique goals and strategy.
The horror of buying in a bad pocket
Getting to know a suburb at pocket level is one of the most crucial things you can do as an investor to mitigate your risks.
Say, for example, you’ve found a great property with renovation potential in your favourite suburb.
Now, the actual property itself is in a block of streets with 1950’s homes where the population is mainly older, retired couples.
It’s quiet and safe, what could go wrong?
So you purchase the home from a retiree and dive into a renovation.
You turn the property into a stylish, modern family home and can’t wait to put it back on the market so you can make a neat profit.
You think:
“Wait till everyone sees this… my property looks awesome compared to all the other homes next door.”
But a few weeks go by and nothing.
Months roll into a year…
But the “for sale” board is still up!
What went wrong?
The mistake made here is that the renovated property is not typical for the pocket it’s in so it doesn’t have appeal to the local demographic of elderly residents.
Some early due diligence and demographic analysis would’ve red flagged this early on!
We would have been able to tell — before wasting money on this renovation — that a stylish, modern home for growing families was the not the best choice for a neighbourhood of 1950s homes and retirees.
This is why it’s so crucial to know whether or not the pocket you’re considering is a match for your strategy and goals — before — you run ahead and purchase a property to renovate.
And that’s what strategic renovations are all about…
Buying a property below market value in the right pocket of a high-growth suburb and doing a renovation that matches actual demand.
Without this, it’s impossible to make any investment strategy profitable!
Investigating pockets online
Online research is a powerful tool for investors to gather crucial data and demographic insights on suburbs and pockets.
I believe you can find at least 80% of what you need to know about a suburb and its pockets through online research…
And you don’t have to pay a fortune for this data!
In fact, I’m going to share with you a collection of the most important websites you can access to do your suburb and pocket due diligence.
I’ve created this list from more than a decade’s worth of property investing!
Now, most of these sites are free to use but you may find that purchasing a report to collate data for you can save you lots of time and effort.
Suburb and demographic analysis
www.investsmart.com.au/property – essential suburb insights
www.domain.com.au/suburb-profile – suburb profile with demographics
www.abs.gov.au or www.censusdata.abs.gov.au – a gold mine for demographic data that lets you build your own tables with raw data sets to answer crucial questions on specific areas
www.id.com.au – population insights
www.corelogic.com.au/reports – suburb reports (can get one free)
https://sqmresearch.com.au/free-statistics.php – free property data including vacancy rates and demographics by postcode
Sales data
www.suburbview.com.au – insights into pricing at street-level, historically and for current listings
www.realestate.com.au – current listings, rentals and free suburb profiles which provide insights on median price, demand and demographics
www.domain.com.au — current listings, rentals and suburb insights include street profiles
www.allhomes.com.au – current listings, rentals and and suburb insights for investment potential
www.onthehouse.com.au – current listings, rentals and mapped estimated pricing of properties for street-level analysis
www.nmddata.com.au – mortgagee and deceased estate listings and data
Free trials
www.ripehouse.com.au — your due diligence “best friend” that will save you hours in weekly research on suburbs, pockets and properties
www.realestateinvestar.com.au — research done for you (aimed at helping property investors build wealth)
Paid property and suburb reports
www.residex.com.au — wide range of reports on property data and analytics
www.rpdata.com.au — comprehensive source of property data and insights
www.apm.com.au — property intelligence platform
Whenever you’re ready… here are 3 ways I can help you right now:
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Your Portfolio Building Blueprint Book The 7 simple steps to rapidly grow your portfolio with absolute confidence & minimal risk. |
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