Chapter 1: What is the main focus of this podcast episode?
It's the Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of the Real Estate Podcast, available on iHeartRadio, also on Spotify and Apple Podcasts, or wherever you get your podcast from.
It's a Wednesday, the 6th of April, and coming up, we're going to be talking to a first-time property investor and finding out where they bought the type of property that they bought, the yield return, the rental, and also whether the investor is likely to invest again and buy another property. But first, let's have a look at today's weather forecast.
It's the main centre forecast with propertybuyer.com.au. And for Sydney, expecting a few showers today. 23 degrees. Melbourne, cloudy with 21. Brisbane, partly cloudy with 28. And in Perth, expecting a sunny day with a high of 29 degrees. We feature market updates, interviews and trends. It's your real estate podcast for breakfast.
Well, something that I watched last night from the war in the Ukraine was a story about two primary school teachers from Mariupol. Now, before the war broke out back in January, a journalist went to Mariupol where they spent time filming with two school teachers at a local school in the east of the city.
Chapter 2: What motivated the guest to invest in property?
Since then, as we have horrifically seen, Mariupol has been reduced to ruins, destroyed by Russian bombs. But what has happened to the two teachers? Well, the journalist set out to answer that question, and I'm going to leave the video link in the show notes so that you can watch it, which left its mark on me. It's definitely worth a watch this morning.
across every state, city and town of Australia, The Real Estate Podcast. And this morning, we are looking at how to invest and buy an investment property through the eyes of a first-time investor, Mohamed Radwan, who did the numbers and the calculations and bought in a suburb on the Gold Coast. And a very good morning to you, Mohamed. Hey, good morning.
I should start off by saying a lot of people can procrastinate, can't they? And some never end up buying in terms of an investment property, while others will get one and suddenly they've got four investment properties. So Mohamed, perhaps firstly, tell us a little bit about what led you on this path to wanting to buy an investment property in the first place.
Um, I'm an accountant and, uh, I, I kind of have a division in my firm that, uh, specialize in advising, uh, investment property owners on their tax consequence of buying and selling a property. Um, so I deal with lots of property investors and I felt I always advise them about the tax side of property, but I never actually had my own feeling of buying a property.
And I can see lots of clients done well of buying properties. Myself, I've been so busy focusing on the business and so busy with life and family that I never had the time to actually start looking at investing.
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Chapter 3: How did the guest determine their investment budget?
And yeah, that's how it started. I just started looking at clients and I decided, oh, if I'm advising all these investment property owners on tax side of buying a property, then I need to have a property myself. I need to start pushing myself into the investment property game, I guess.
Yeah.
That's quite interesting. So in other words, you've really been getting an education through the clients that you've been advising and seeing those numbers, of course, and saying, well, I've got to get in on this. Exactly.
I have to get in before I miss out.
You know what they call that. It's called FOMO.
Yep, exactly. Especially being an accountant, we tend to be very conservative people. We calculate everything. We try not to take too much risk. We are an accountant.
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Chapter 4: What criteria did the guest use to select their investment location?
That's the reality. So seeing all these clients, how they've done well out of properties, how they've been really adding all the numbers. And as I said, I get the education out of clients, which is true.
And there are a multitude of areas on the Gold Coast. I mean, a lot of people don't realise just how spread out the Gold Coast is because most interstate buyers, they've kind of got this perception of what the Gold Coast is when they go on holiday, when in fact, the reality is very, very different. So talk through how you decided to narrow the areas based on a criteria that you were working to.
Obviously, when you jump into investment, you have to work within a budget. And this budget normally is based on how much you can borrow. That's sometimes the case, especially when you're a first-time investor. You don't really have too much knowledge. You're just trying to get in. And the first question you ask, whoa, how much I can borrow and what type of price range I need to look at.
And then once I... spoke to the bank and had a bit of conversation and I asked him, all right, so I'm planning to buy a property. What's the price range you think I can afford based on my finance situation?
Chapter 5: How did rental yields influence the guest's investment decision?
And then at the time he told me, I think you can buy a property around 500,000. And then that's when I start looking at, all right, let's look at the go costs at the time I purchased and see what can I get for 500,000 in a good, reasonable area that will give me a good yield pretty much. And that's how I start narrowing locations.
And unfortunately, when I jump into the market, there was already a bit of growth happening and there's not many places for 500,000. Right. So that was my experience in Gold Coast, yeah.
And rental yields are obviously a key component in the whole decision-making when buying an investment property. So how did you balance, I guess, the type of areas that you were looking at in terms of suburbs with the yield expectation that you were looking for?
Rental yield, because probably all the prices was going up. So when I was looking at expensive areas, even the yields didn't catch up by the time. The price normally go up first and then the yields kind of catch up with it trend-wise. But then the area I looked at, rent was already good in comparing to the price. And the price is, yes, was going up, but it was not going up crazy yet.
So that's why I felt it's good to buy into an area and mainly focus on the positive cash flow and the yield.
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Chapter 6: What property did the guest ultimately purchase?
And as long as property can pay itself up, that's positive for me. And I don't really have to stress much about it and will clear some room for me to maybe borrow more to buy more properties. So yield is very important, yeah.
And one of the things to look at when investing in growth is in terms of people and infrastructure, because infrastructure on the Gold Coast and people growth has definitely a tick next to that column. Location is obviously another powerful ingredient and the Gold Coast gets another tick.
So, all right, let's hear a little bit, Mohamed, about the property and the location that you finally decided to buy and invest in.
Yep. So I end up buying in Pimpima, in GoCoast. So Pimpima is kind of close to the borders of GoCoast and Brisbane, straight away on the motorway. So you get like an easy motorway access, which is normally very important for people who may be working in Brisbane, working GoCoast, and they need like an easy access to the motorway.
so that's that's one of the reason i liked pimpama same time the whole uh suburb is a really new uh good infrastructure i can see lots of government spending in the infrastructure you get a new train station coming there you get like this it's like yeah there's lots of infrastructure and one of the reasons i like pimba because i go every sunday to play soccer there they have like a really good soccer field even though i live like
25 minutes away, but I still drive all the way there just to go and play soccer in the area there. So the area ticked many boxes for me as a location. At the time, it was within my price range.
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Chapter 7: How did the guest evaluate the condition of the property and its tenant?
And that's why I chose Pimpama.
And what sort of money did you spend and what was the property? Because it was a house that you purchased, right?
Yep. So it was a four-bedroom standalone house. I think the block is 420 square meters. So it's a double garage. So it's really good for family to rent. So it's currently rented by a family. The price that I get it for is $485,000. And how long ago was that? I signed the contract in May 2021.
You're already laughing. Anyway, it's been slowly increasing. Well, not slowly.
Chapter 8: What are the guest's future investment plans?
It's been a good investment thus far.
Yeah, I think I got a market appraisal for it. It's still a market appraisal, so it's not a sale, and I'm not planning to sell. I think I got a market appraisal for it from a local reset agent just last week, and he told me he can sell it for $680,000.
Wow. Yeah, that's just how crazy. So what about the rent itself? Because some investors buy an investment property with a tenant in place. And a lot of the time, investors, they just want to turn the heat on with full maximum on the weekly rent increasing. And it's an automatic response. But sometimes a good long-term tenant is
who has been treasuring the property for years and years, can make just as much of a return on investment with less repairs, stable rent, no dead rent between finding new tenants. So tell me a little bit about what happens with your purchase because I think it came with a tenant attached.
So one of the reasons I really like the property, when I went to inspect it, I seen the tenants really looking after it. And like the house is very clean, all the rooms is clean, everything is sorted. Like you can tell the house have a family and even they had a dog, so you can tell they have a dog. in the house, but then the house was extremely clean inside.
And for a tenant who's been there since 2012, to keep the house in that good standard, it's a really good tenant. So that's one of the reasons as well I like the property. That's kind of what happened. I just bought it with a tenant in it and I felt it's good for this tenant to stay.
And it sounds to me like the equity that you've gained in your property, it sounds to me like you're probably going to look at increasing your portfolio down the track.
Yeah, that's the plan. So it's kind of on the line. I already have a pre-approval. I'm an accountant, so I know we try to look for bargains, but there's not much bargains in the market anymore. So there is obviously opportunity, but I'm waiting for this right opportunity just to jump in. I am watching. I'm watching the market. I'm watching the properties. I tend to kind of shortlisting areas.
And same time, again, like any other investors, I'm busy with my business and my work. So it's a mixture. So it's a hard balance.
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