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Episode 272 | Q & A: The Unspoken Truth About Growth Corridors & Picking The Right Property Investment Strategy

How many times have you heard something along these lines…?

“This suburb’s a growth corridor…”

“There’s heaps of development happening here… it’s the next growth corridor.”

“With all the new public transport networks, job opportunities and shops coming in, this place is absolutely a growth corridor… full of investment potential.”

With all this buzzword talk, it’s would appear that all us property investors need to do is hunt down the next “growth corridor”, invest in it before it really kicks off, and then sit pretty for the rest of our lives …

BUT. Folks, there is a massive problem with this! An unspoken truth about growth corridors that trips up a lot of investors out there. Sure, some “growth corridors” might indeed grow in value, but there is a huge misconception out there that we want to clear up today.

So, in our first Q&A of 2020, we’re diving deep on this unspoken truth and we’re also going to answer your questions about how to pick the right investment strategy… ‘cos guess what? While a whole lot of you folks know the fundamentals of property investing, you don’t necessarily know how to apply these to your own situation and goals!

 

Here’s a 30,000-foot view of what we’ll cover … 🚀

 

Resources Mentioned

 

The Questions

03:26 – Question from Jack on Bris vs Melb and differing opinions:

Hi there guys, first up I just want to stay that I’ve just tuned into your podcast and I’m absolutely loving it! I’m going to be buying a couple of your books too they seem to have a lot of great reviews and, yeah, I’m really excited to read them.

Fellas, I’m looking at starting my property investment journey in December 2020. Now, I’m following a couple of investors – one guy’s currently investing up in Brisbane. And this other guy I follow as well stays purely local, mainly Melbourne. He’s explained to me about the growth corridors – how they’re not really growth corridors – Packenham, Windenvale, Tarneit. I’ve gone and had a look and they don’t average as much as I thought they would. Nice places, but yeah. I can’t afford to invest in Melbourne itself and the different to the two is – the one up on Brisbane is getting people starting up around the $500 mark. And the other guy who invests only in Victoria says start out somewhere like Bendigo or Ballarat. He doesn’t think Geelong’s got good growth. Yeah, I’m hesitant to go to Bendigo and Ballarat as they are inland, but I’m hesitant that my judgement’s being clouded. I’ve always grown up in coastal places – always lived near the coast and love the coast. If you guys could give me your opinion that would be fantastic

 

13:18 – Question from Nick on Investing as an Expat:

Hi Bryce and Ben, my name is Nick. I’m calling all the way from Switzerland, although originally from the northern beaches in Sydney. My wife and I are both from the northern beaches, but we have been working here in Europe for the past 3 years and we are looking to buy our first property back in Australia. We’re keeping an open mind and looking all over the country – so not necessarily in Sydney.

We have a general question about what type of strategy we should be looking for being non-residents for tax purposes but Australian nationals, taking into account we can’t take advantage of first home owners grants, or negative gearing as we have no income back in Australia. Originally, we were considering purchasing an apartment with potentially 5-6% rental yield with the idea of having a high yielding property so one that can be potentially positively geared. What are your thoughts on this?

 

20:03 – Question from Nikii on upgrading PPOR now or later based on economic forecast:

Hi it’s currently June 27 2019, currently my husband and I purchased a 3 bed 2.5 bathroom 2 garage, 243sq townhouse, freehold in prime real estate in Hawthorne, Brisbane. We have been provided by market experts that we could get $830 – $850K  from the sale of our property. We’re currently wanting to upgrade to live in a better area. Would we be best with the economic forecast over the next couple of years to keep that property as an IP before upgrading to a property just in the very low millions.

 

26:03 – Question from Craig on selling a property at a loss or wait to recoup loses:

Good afternoon The Property Couch, my name’s Craig and I have a question. My partner and I currently own 3 investment properties between us. 2 of these properties are performing quite well, in terms of growth and low upkeep. The third investment property in Darwin was originally bought as a PPOR and is not performing well as an IP. The market is at the 32% downturn and is unlikely to recover any time soon. My question is… Should we continue selling the Darwin property at a loss and still walk away with about $30,000 to reinvest into a new or existing investment OR should we hang onto this investment long term with the intent of recuperating our losses, even though this property costs us about $8K a year? Thank you for your time.

 

31:40 – Question from Scott on what to do with money in the bank:

Hi guys, Scott* here, I’ve been on board following the podcast at April 2015 and have loved the journey. Almost five years in and I thought it was finally time to hit you guys up for some advice!

My wife Teresa* and I live in regional WA with our two kids aged 7 and 9. Both of us work full time for a state government department and we currently earn $270k gross per year combined. We own two properties in our hometown Perth. Our first home in Bibra Lake (shout out to Bryce!) which is valued at 430k with 350k owing. Our other property is a 1940s weatherboard cottage 5kms from the city with owner-occupier appeal, valued at 630k with 500k owing. So our total LVR is about 80%. Both loans are interest only and both properties have reliable tenants in them, paying $350 and $410 a week respectively.

We aren’t big spenders, and have no personal, car or HELP loans. Due to this, and the fact that our employer has heavily subsidised our rent whilst we’ve lived regionally, we’ve quietly amassed savings of $320k which currently sit in an offset account. We intend on staying in the bush for at least another 2 years before heading back to the big smoke, and in this we anticipate the $320k we have will grow by $75k each year in which we don’t do anything with it. However, I’m sensing there’s a huge opportunity cost here if we leave things any longer! Any advice as to what our next move should be would be very much appreciated. Keep up the stellar work.

 

39:30 – Question from David on Subdividing Parent’s Land:

Hey Ben and Bryce, Really been enjoying the podcast. I’ve got a bit of a unique question. At the moment I live with my parents and I am in my mid-20s, and I’m looking to subdivide a bit of their land as housing pricing are a bit too expensive for a single income. I was wondering if I classify for the First Home Buyers Grant if I build on their land and whether the actual certificate of title transfer needs to come onto my name, or can it remain in their name? Cheers, David.

 

Quote of the Episode

“An informed investor is a smart investor.”

 

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