Comments on: Buy The Cream, Not The Crap

By: pat loves property

pat loves property — Mon, 09 Apr 2018 03:10:04 +0000

I know before I invest in an area I look at the big picture and then the best suburbs, eben the best streets down to the old saying”worst house on the best street”

By: Steve McKnight

Steve McKnight — Wed, 07 Mar 2018 22:54:55 +0000

Hi team,

I have not read any of Jan’s books, so I can’t comment on her recommended approach.

What you’ve described here Les does seem sound under the principle of ‘buy the middle of the market’, which captures those trading up, and those trading down.

A strategy may be to:

1/ Research the median house for the area
2/ Search for homes that are +/- 10% of that value
3/ Buy the worst house in the best street, believing that land value will appreciate and you can always ‘value add’ to the property to bring it up to par with the land appeal.

– Steve

By: Benny

Benny — Wed, 07 Mar 2018 22:33:02 +0000

Hi Danbel,
I don’t know about Steve, but I did read Jan’s books – like Steve’s, they were great reading for one wanting to learn quickly. What I recall from Jan’s teaching was to buy properties around the 3-5 in an area. This was a Decile scale (divided into 10) and the 3rd to 5th Decile was where she was looking to buy. Now, that scale is based on Property Values in an area. The Median for the area would have been 5/6 (right on the border between them). So, she was saying buy below Median – not the really crappy cheapies at 1 or 2 (the bottom 20%), but better ones UP TO the Median Value.

Does that fit with Steve’s “nice houses with nice people in nice suburbs”? I’m not sure – could Steve have been thinking more like Median and above? I doubt a “3” on Jan’s scale would suit, but perhaps a 4 or 5 could !!

Good question btw,

Benny

By: Danbel

Danbel — Fri, 02 Mar 2018 11:53:53 +0000

Thanks for sharing Steve.
I feel like this sort of approach was advocated by Jan Somers in an early book of hers 20-25ish years ago. Did you read any of Jans material?

By: Cloppers

Cloppers — Fri, 02 Mar 2018 02:14:01 +0000

Good point Steve!

By: Anthony

Anthony — Thu, 01 Mar 2018 05:07:51 +0000

Very true. Give me one Westfields over a property portfolio anyday!
“Cheaper in, cheaper out”

By: Steve McKnight

Steve McKnight — Thu, 01 Mar 2018 02:59:26 +0000

Thanks for posting a comment AJ.

– Steve

By: AJ

AJ — Thu, 01 Mar 2018 02:54:36 +0000

A couple of years ago I thought I had found an investor’s opportunity in a country town in NSW (name not given to avoid hurt to residents/investors in the town). Prices were attractive, rental yields were strong double digit, local industry and planning looked good. The types of properties I was interested in were in the lower price bracket. I jumped on a plane from Sydney and stayed a couple of nights. In the end I didn’t buy anything – I could see rental collections might be tough, maintenance was needed, ground had movement problems, and distance meant that I couldn’t do any work myself. Last night I took a look through my saved properties on realestate.com.au and found that 90% of the properties I looked at are still for sale. While in hindsight I can look at many suburbs I should have bought in, I am glad I passed on this area!