Investment & Development Advice

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10 Questions to Ask Your Buyer’s Advocate

10 Questions to Ask Your Buyer’s Advocate 2560 1440 Andrew Stone

As you set your sights on your dream property, it’s only natural to feel a sense of anticipation and enthusiasm. These emotions, however, should be tempered with a dose of practicality. Have you got all the right information to make a smart decision?

If you’re serious about buying a property, you need to ask the right questions – and lots of them. Why? By the time settlement day arrives, it’s too late to address any issues with the property, and they become your responsibility. 

As the eyes and ears of the real estate market, an experienced buyer’s advocate knows Melbourne and can address all your questions and concerns. A buyer’s advocate is a licensed real estate professional who works exclusively for you, the buyer. They are legally obligated to protect your interests and deliver expert guidance to facilitate the best possible deal on your behalf.  

So, before you sign the dotted line, start by asking your buyer’s advocate these 10 essential questions: 

1. Who owns the property and why are they selling?

As a buyer, you need to understand the identity of the property owner and the reasons behind their decision to sell. This knowledge can also impact the negotiation process in a significant way. 

Here’s a quick example: If the seller has already secured another property and is in a hurry to sell, there may be more opportunity to negotiate a lower price. Whatever the motivation, whether it’s downsizing or a divorce settlement, assessing the seller’s intentions can give you a strategic advantage. 

2. What are your thoughts on the location?

The surrounding area of a property is as important as the property itself. Looking at the area’s demographics, as well as the suburb profiles (amenities, access to transport, parks, schools and so on), is very important. How come? You’re not just buying a house – you’re also buying into an area.

A good buyer’s advocate in Melbourne can provide a treasure trove of information and insights about the locality, the neighbourhood, and more. They can equip you with data on demographics, property pricing, local population statistics, growth rates, and prevailing market trends. This additional knowledge and insight allow you to make a more informed assessment of whether a particular price for a specific street or location within a suburb is reasonable.

Want to know if the area is full of young professionals, families, students, or seniors? Or if the area has grown recently in popularity with one of these groups? As seasoned buyer’s advocates in Melbourne, you can chat with Property Analytics about these details. 

3. What are the neighbours like?

Applicable to both residents and businesses, friendly and respectful neighbours can significantly contribute to the overall ambience and experience of your chosen locality. This is both relevant to those buying for themselves, as well as anyone buying for the purposes of investment.

While visiting the area at different times of the day can provide some insights, a buyer’s advocate in Melbourne can offer valuable information about the neighbours and the community you otherwise wouldn’t easily uncover on your own. 

4. Have there been any recent renovations?

Understanding the property’s renovation history is crucial for assessing its true value. If significant renovations have been carried out recently, you need to take this into account when comparing the property’s current market price with its last sale price. Verifying that these renovations received council approval and met the necessary quality standards is equally as important.

You should also get to know any existing warranties or any local development applications that might have implications for the property’s future. Once you have a grasp of the property’s renovation history, you’ll be better equipped to evaluate its potential risks and advantages, as well as an accurate assessment of its true market value. 

5. Have there been similar sales in the past year?

This question is invaluable as it allows you to gain real insights into the demand for properties comparable to the one you’re interested in, and the price range to anticipate. It also allows you to gauge the realism of the seller’s asking price and empowers you to make a fair offer. Another general recommendation is to enquire about the number of properties sold in the area recently, pricing trends, and any seasonal fluctuations in the market. 

Property Analytics keeps a close eye on insights and studies of the Melbourne property market. To get in touch with a top buyer’s advocate in Bulleen and surrounding areas, reach out today

6. Can you show me a recent property sales report to show what the house is worth?

This is an important but often overlooked question with three parts:

1) Enquire why the property is listed at its current price; 

2) request a recent sales report; 

3) and ask for a showcase of similar properties and their sale prices. 

These reports make sure that you’re not overpaying and that the property is fairly priced compared to the local market. 

7. How long has the property been on the market?

The duration a property has spent on the market tells a real story. If a property lingers for more than six weeks, it might be overpriced or have underlying issues. In Australia, the average time for a home to sell is approximately one month, so significant deviations warrant scrutiny. Here, you should ask whether the property went to auction and failed to sell, and if so, enquire about the specifics surrounding the auction, including the pass-in price.

8. Are there any known issues with the property, land or neighbours’ properties?

Sometimes, unforeseen issues  impact a property’s value, so it’s quite important to question the agent. While your building inspector and conveyancer are poised to identify most potential concerns, consulting with the agent before signing the contract can uncover additional insights. Buyer’s advocates in Melbourne often operate in good faith and may disclose any issues that could affect your decision.

What questions should you be asking? Start with any  known issues regarding the property, land or neighbouring properties. For example, if there was a past dispute between neighbours that could result in future issues, this should be discussed. Another issue could be a neighbour’s construction project that may have an impact on your views or privacy. The agent may also know of any zoning regulations that are likely to affect your future plans. 

9. Are the sellers open to negotiating on the price?

If you want to secure a property at a favourable price but the  listing exceeds your budget, it’s important to gauge the seller’s willingness to negotiate. Understanding the minimum amount at which the seller would consider a sale enables you to assess your affordability and whether further pursuit is warranted. Of course, this also depends on the current demand and number of interested parties.

When negotiating the price of a property, there are several questions you should ask your buyer’s advocate in Melbourne to set you up for success. Get in touch with Property Analytics for valuable market insights. 

10.  And what’s the sales history of houses in this area?

Researching the sales history in the area is always advisable. This data provides a  comprehensive outline of recent property values, their evolution over time, and potential return on investment,  Engage with a buyer’s advocate for insights on the number of properties sold in recent years, prevailing market trends, sale prices, peak selling seasons, and other relevant information. The more thorough the investigation, the more you’re equipped with valuable market knowledge to negotiate the best price. 

The Importance of a Buyer’s Advocate to Facilitate Your Property Purchase

When you are in the process of purchasing a property, there is no better resource to have on your side than a buyer’s advocate.

However, the effectiveness of their role hinges largely on your ability to ask the right questions. These questions will not only give you a clear understanding of the property market and the potential of your chosen property, but also allow you to evaluate your agent’s expertise and commitment to your cause.

Remember, it’s not just about the property; it’s about the context surrounding all aspects of the transaction – so make sure you ask. There’s no harm in taking the time to gain more clarity and take full advantage of the advocate’s wealth of knowledge. 

Looking for a Buyer’s Advocate in Melbourne? Let’s Talk 

By now, you should have some burning questions for your buyer’s advocate. As a proactive and inquisitive buyer, you’ll be rewarded with deeper insights into the property, the seller’s motivations, and various other considerations that will help you manage your budget effectively. 

If you are a prospective buyer, reach out to Property Analytics, your trusted buyer’s advocate in Bulleen and surrounding areas of Melbourne. 

Man looking at plans

10 Team Members You Need as a Property Developer

10 Team Members You Need as a Property Developer 1000 667 Andrew Stone

From blueprint to building, a successful property developer relies on the collective efforts and expertise of their team members. Without a competent team to support them, the entire project is at stake.  

Meet Alex, an ambitious property developer with his sights set on a mammoth future project. Looking to cut corners (and costs), Alex sacrifices valuable positions and skill sets in his property development team. Because of this decision, Alex’s property development venture is eventually plagued with obstacles and risks.

The absence of a draftsman leads to design and regulatory issues; the lack of a competent construction team results in delays and shoddy workmanship; an inexperienced strategist brings financial mismanagement; and without a property manager, operations and maintenance suffer. 

Sounds rough, right? With so many preliminary costs already involved, it can be tempting for property developers like Alex to bypass hiring all the recommended professionals. As experienced property development consultants in Melbourne, all we can say is “trust the process” and keep a checklist handy of the ten key players essential to your success story: 

Buyer’s Advocate can provide market insights to make informed decisions about demand and property trends.

Property Accountants understand the industry and help with taxes, financing, and asset protection.

Property Lawyers set up investment structures, handle legal requirements, and make sure contracts are in order.

Mortgage Advisor/Brokers find specialised lenders and secure the right loan for your project.

Land Surveyors/Arborists ensure compliance with environmental regulations. 

Town Planner Consultants navigate local regulations and help you gain approval efficiently.

Draftsmen understand town planning regulations and complete drawings for a successful property development. 

Property Development Managers oversee the project, manage timelines, and stay within budget.

Construction Contractors transform plans into reality with quality workmanship.

Real Estate Agents assist in site selection and facilitate property sales.

Successful property development requires teamwork under decisive leadership. As the developer, you’re responsible for every single decision – this complete level of accountability can be daunting, especially given the breadth and depth of challenges involved. That’s why it’s so important to assemble a team of experienced professionals who you can rely on for expert advice.

Assembling Your A-Team: The Key to Property Development Success

When it comes to property development, two heads are definitely better than one – or in this case, ten heads. However, the success of your development projects heavily relies on the calibre of your team. Without the right combination of industry professionals, you increase your investment risk from the start and are likely to encounter costly mistakes along the way. 

One question that property developers often ask is, ‘Do I really need all these experts?’ To put it simply, yes. Each team member brings a unique set of skills, knowledge, and experience to the table, and they all play a vital role in ensuring the project’s success. 

For instance, your finance strategist will provide invaluable advice on managing expenses and potential profits, while your architect and engineers will work together to create a code-compliant design. 

Another aspect to consider is the constantly evolving nature of the property market. Working with a team of professionals who are up-to-date with the latest market trends, regulations, and technologies can help you stay ahead of the curve and make smart decisions about your project. 

Building the dream team takes effort. Choose wisely, considering qualifications, experience, and a solid track record. As with any team effort, foster collaboration and communication from the beginning for a smooth ride.

From a resourceful property accountant to a market-savvy real estate agent, let’s get to know the ten experts you need to boost that all-important profit margin.

1. Buyer’s Advocate:

When I say that the first person you should appoint is a buyer’s advocate, I genuinely mean it. Why? Because purchasing well is the single most important determinant of success, and the primary job of a buyer’s advocate is to ensure that you purchase a quality site. A good buy doesn’t simply mean a good price. 

A buyer’s advocate in Melbourne can provide valuable insights into local property market trends and demographics, helping you make informed decisions about property development and features. They study historical and current market trends, assess data like property prices and buyer preferences, and analyse demographics such as population growth and income levels to guide your development decisions.

You want to purchase in a neighbourhood that’s likely to see above-market future median $ price growth – I’ve overseen developments where as much as half of the profits were attributed to price increases in just two years.

You’ll need to effectively determine the development potential of sites, and ensure the design scenarios match with end-buyer demand (e.g. why build ten one-bedroom apartments where nobody wants to buy them?).

You must build an accurate project feasibility study that accounts for all costs – purchase, planning, holding, construction, etc. – and for likely resale values, based on in-depth analyses of the area’s sales and trends.

All of this time-consuming work needs to be done prior to purchase and requires considerable experience and intellectual property to do properly.

Lastly, and most obviously, a buyer’s advocate should be able to source off-market properties for you and negotiate purchases effectively at auction or via private sale. I strongly recommend considering a licensed professional who can help you minimise the risks of development and maximise your return on investment.

As licensed buyer’s advocates in Melbourne, we look after all aspects of property negotiations, from research to settlement.

2. Property Accountant:

As a master of numbers, a property accountant is an invaluable team member who manages the financial intricacies of your project. A property accountant with industry experience is essential for your property development squad, and here’s why: 

Understanding tax claims: A property accountant wears many hats, but their primary focus is on maximising tax benefits and streamlining financial processes. You may encounter tax claims that are unique to the industry. By working closely with a property accountant who’s well-versed in these nuances, you can capitalise on every available tax incentive, saving you money in the long run.

Preparing financial documents: A property accountant will play a key role in preparing financial documentation for loans. In a property development project, securing financing can be challenging and may require specialist lenders. With the help of a mortgage advisor or broker, your property accountant will prepare the necessary paperwork to strengthen your loan application, increasing your chances of approval.

Protecting your assets: Another responsibility of a property accountant is working alongside your property lawyer to protect your assets. This includes setting up appropriate investment structures, ensuring legal compliance, and managing risk. As a property developer, your assets are your most valuable resource, and a property accountant will help safeguard them against potential pitfalls.

3. Property Lawyer:

The next key player is a property lawyer, who works hard to safeguard your investment. A knowledgeable property lawyer plays a critical role in helping you navigate the legal complexities of the industry, making sure your investment is protected every step of the way.

Set up investment structures. First and foremost, your property lawyer will assist in setting up the appropriate investment structures for your property development project. Collaborating closely with your property accountant (team member #1), they’ll determine the best structure for your specific circumstances, such as a company, trust, or partnership.

Ensure legal compliance: Legal compliance is another area where a property lawyer is worth their weight in gold. They’ll confirm your development project adheres to all relevant legislation, regulations, and bylaws. This includes obtaining necessary permits and approvals, adhering to zoning and land use restrictions, and addressing any environmental concerns. Staying on the right side of the law is crucial for avoiding costly fines, delays, and even the potential failure of your project.

Handle conveyancing: When it comes to conveyancing and contracts, your property lawyer will be your go-to expert. They’ll review, draft, and negotiate contracts, making sure the terms and conditions are favourable for you. This includes contracts with your architect and engineers (#5), town planner consultant (#6), construction contractors (#9), and real estate agents (#10). With a skilled property lawyer on your team, you can rest assured that your contracts are watertight and your interests are protected.

Assist with asset protection: Asset protection is another critical aspect of property development that your property lawyer will address. They’ll work to safeguard your personal and business assets from potential risks, such as litigation or bankruptcy. By implementing strategies like holding assets in separate legal entities, your property lawyer can help minimise the impact of any unforeseen circumstances on your overall investment portfolio.

4. Mortgage Advisor/Broker:

A mortgage advisor or broker is a financial expert who specialises in sourcing property development loans. They have extensive knowledge of the lending market, including specialist lenders who cater specifically to property developers. By working with a mortgage advisor, you gain access to their industry expertise and valuable network, allowing you to find the most suitable and competitive loan products for your project.

Negotiating power: One of the most significant advantages of partnering with a mortgage advisor is their ability to negotiate better loan terms on your behalf. They can leverage their relationships with lenders to secure lower interest rates, flexible repayment schedules, and other favourable conditions that may not be available to you if you approach lenders directly. This can ultimately save you thousands of dollars over the course of your loan and contribute to the overall success of your property development project.

Industry Insights: In addition to securing the right financing, your mortgage advisor can also offer valuable insights into other aspects of your property development project. For example, they may work closely with your finance strategist (#3) to help you create a financially sound strategy that keeps your project afloat even in the face of challenges. They can also collaborate with your property accountant (#1) and property lawyer (#2) to ensure your loan structure is tax-efficient and legally compliant.

5. Land Surveyor/Arborist:

Before any serious design work can be done, you need a land survey and an arborist report – getting these done is a top priority once a contract of sale is signed. 

Land Surveyors: Laying the Groundwork for Success

Land surveyors play a vital role in the early stages of property development by accurately measuring and mapping out the site. They assess the topography, boundaries, and any potential constraints, ensuring your project complies with regulations and minimises the risk of disputes with neighbours. This information is essential for architects as they consider the  layout and positioning of your development, therefore maximising its potential and appeal to prospective buyers.

Arborists: Analyising Tree Impact on Development 

An Arborist uses the survey report, and identifies the species, heights, diameters, and health of all vegetation on the block. They provide a full report, complete with retention values of each tree, and structural root and protection zones. This report is critically important to the development design, as it identifies which trees will likely need to stay, and how close you can build to them. If there are significant trees on the site, it’s absolutely worthwhile seeking informal advice from an Arborist prior to purchase – particularly if overlays exist that will restrict tree removal.

6. Town Planner Consultant:

A town planner will help you navigate local council requirements so your development fits seamlessly within the local area and infrastructure.

One of the most important aspects of a town planner consultant’s role is to help you simplify the often complicated world of local council requirements. These requirements can vary significantly between different regions, and having a professional on your team who is well-versed in the specific regulations of your project’s location is invaluable. The town planner will assist you with obtaining necessary permits, submitting development applications, and ensuring that your project complies with zoning and land-use regulations.

Seamless Integration with the Local Area and Infrastructure

Aside from adhering to the local council requirements, a town planner consultant also ensures that your development project fits harmoniously within the existing local area and infrastructure. They will consider factors such as the existing streetscape, nearby amenities, and public transport options, as well as the overall character of the neighbourhood. By taking these factors into account, the town planner can help you design a development that not only meets the needs of its future occupants but also contributes positively to the local community.

Working in Tandem with Other Team Members

A town planner consultant doesn’t work in isolation – their expertise is most effective when combined with the skills of other essential team members, such as architects, engineers, and market analysts. For example, the town planner’s understanding of local council requirements will complement the architect’s vision for a visually appealing and compliant design. Similarly, the insights provided by market analysts will help the town planner to make sure the development caters to the needs and preferences of the target demographic.

7. Draftsman: 

For a number of reasons, I choose to work with a draftman instead of an architect; mainly, it’s about fees, incentives, and creative license. 

A draftsman specialises in translating your ideas and vision into practical and functional designs. With their in-depth knowledge of architectural principles and building codes, they can create designs that meet both your aesthetic preferences and regulatory requirements. Their creative problem-solving skills enable them to optimise space, enhance functionality, and deliver innovative design solutions. 

Your initial efforts with the draftsman should focus mainly on the orientation of each dwelling: which ways they face, where their driveways and garages are located, how the finished floor levels sit in relation to ground levels outside, where the secluded private open spaces go in relation to indoor living areas, how close to trees, neighbors, and streets you will build, etc.

From there, you’ll progress to internal layouts (e.g. location and sizes of bedrooms, bathrooms, kitchen, etc.). Then, onto window placements, external materials and colors, and landscape design.

Ensure that the draftsman you use has a lot of experience in multi-townhouse design, so that they understand key aspects like site coverage, garden space requirements, setbacks, etc. A good draftsman should be clear about the parameters you need to design within, as well as the boundaries you can reasonably push to maximise the development potential of the site.

8. Property Development Manager:

Acting as a liaison between your design team and construction crew, a property development manager ensures your project is completed on time and within budget. But what exactly does a property development manager do, and why are they so critical to your project’s success?

To better understand the importance of a property development manager, let’s first consider the potential challenges and pitfalls that may arise during the development process. For example, delays in construction can lead to increased costs, missed deadlines, and even potential legal disputes. Poor communication between team members can result in design flaws, budget overruns, and ultimately, a compromised final product.

A property development manager is an indispensable asset for any property development project. By providing effective communication, coordination, and proactive problem-solving, they can help ensure your project is completed on time, within budget, and to the highest possible standard.

One of the key advantages of working with a property development manager is their ability to foresee potential issues and proactively address them before they escalate. This proactive approach can save you time, money, and stress in the long run. For example, by closely monitoring the construction timeline, a property development manager can identify potential bottlenecks and work to mitigate them before they impact the project’s overall progress.

9. Construction Contractors:

Experienced and reputable construction contractors are responsible for bringing your vision to life (within the confines of local regulatory requirements). Their expertise covers a wide range of areas, from laying the foundation to installing essential services such as plumbing and electricity.

Make sure your chosen contractor has the necessary expertise will save you time and money in the long run, as they will be better equipped to navigate any challenges that may arise during the construction process. Here are some tips to help you make the right choice:

  1. Interview Multiple Builders: Meet with three to four builders in your area and review their past work. Consider their knowledge in construction as well as their familiarity with the local area and community. Ask for references and try to speak with past clients to get their feedback on the builder’s performance.
  2. Contact References: Just like a job interview, ask the construction company for a list of references. Reach out to these references, especially those who had similar projects to yours. Inquire about their experience with the builder, including their satisfaction with the build process, adherence to timelines, accuracy of the budget, and overall communication. This will give you insights into what to expect from the construction company.
  3. Get Estimates: A good construction company will provide an estimate that is clear, easy to understand, and itemised. You should have a clear understanding of the materials that will be used and the specific costs associated with each item.

10. Real Estate Agents:

 Real estate agents are often the unsung heroes of property development projects. Their expertise in the buying and selling stages can be invaluable for developers looking to maximise their profits and manage cash flow effectively.

Real estate agents possess in-depth knowledge of local market trends, which allows them to provide developers with accurate data on property values, buyer preferences, and demographic information. This knowledge enables developers to make informed decisions on the types of properties to develop and the features to include, ensuring a higher return on investment.

One of the primary roles of real estate agents is to secure the best possible prices for both the purchase of development sites and the sale of completed properties. By leveraging their extensive networks and negotiation skills, real estate agents can help developers acquire land at competitive prices and sell finished properties at a premium.

Tips for Successful Collaboration with Real Estate Agents

Clearly define your project goals and expectations: Communicate your vision, budget, and timeline to confirm the agent understands your objectives and can provide accurate advice.

Establish open lines of communication: Regular updates and meetings are essential for maintaining a strong working relationship and staying informed about the progress of your project.

Get in early: Real estate agents can also assist in securing pre-sales or off-the-plan sales, which generate early revenue and can be used to finance ongoing construction costs. These early sales can be particularly beneficial in situations where traditional financing options may be limited or unavailable.

Teamwork Makes the Dream Work: Work with a Property Development Team You Can Trust 

In the high-stakes game of property development, a successful project is the result of a well-coordinated team effort. No single developer possesses all the necessary skills to tackle it alone. Therefore, having the right team by your side can save you from falling into the costly pitfalls that often trap other developers. 

By understanding the roles and responsibilities of each team member, you can create a well-rounded team that will work together to achieve the best results for your project. Don’t be afraid to ask questions and seek expert advice, as this will only contribute to the success of your property development journey.

Property Development Consultants in Melbourne 

I firmly believe that property development is less risky than property investment. As your property investment advisor and buyer’s advocate serving Kew East and all of Melbourne, I can help you find high-value investment properties and development sites that supercharge equity growth and stimulate your investment portfolio.

Interested in speaking to a buyer’s advocate in Melbourne? Ask me how I can help.

A hand changing cubes between the words saving and investing

What Is Rentvesting? Pros and Cons for Investors

What Is Rentvesting? Pros and Cons for Investors 1000 611 Andrew Stone

Rentvesting is an increasingly popular strategy where you rent a home in the area you want to live, and you buy an investment property in a more affordable location.

You can then rent out the investment and make money off it, all while accumulating capital growth.

It sounds good, but is it actually a strategy that serious investors should pursue?

As trusted property investment advisors in Melbourne, here’s our take.

Who Is Rentvesting Suitable for and Why Would They Do It?

Many people can’t afford to buy where they want to live, but they can afford to rent there!

So, rentvestors propose you do this:

Step 1, rent to suit your lifestyle.

Step 2, buy in a location with property prices you can afford so you can climb onto the real estate ladder.

Step 3, rent out that property to offset the cost.

Thanks to rentvesting, you’re now a property investor, and theoretically, you’re paying little to no more than you would just to rent. Your rental income is helping to cover either the investment loan repayments or the rent on the house you’re living in.

With that in mind, the type of person who might want to rentvest includes:

  1. Anyone who wants to live in an area they can’t afford – typically younger people who have been priced out of inner-city lifestyles

  2. Anyone who moves frequently for work or travels for long periods and wants the flexibility of renting

  3. Families who are prioritising a specific location and property type to live in but still want to invest and can’t afford two property purchases

The ideal rentvesting strategy involves selecting a location for your investment property where rental income will outstrip either the mortgage repayments or your own rental expenses.

7 Pros of Rentvesting

The benefits of rentvesting include:

Mini House On Stack Of Coins: Property Investment

1. It’s the Best of Both Worlds

Often touted as one of the biggest advantages of rentvesting. Live in the preferred location for your lifestyle, not just the neighbourhood with property prices you can afford. Meanwhile, get into the property market and purchase a cheaper investment that generates rental income and appreciates in value over time.

2. Enter the Real Estate Market Sooner

Rentvesting allows you to buy now, often with a smaller deposit. If the alternative is continuing to save for your dream house and watching house prices go up, it might be best just to get on the property ladder.

3. Get into Your Dream Home Sooner

Whether it’s through positive cash flow, building equity in your investment, or both, a rentvesting strategy could actually help you save more money so you can buy the home of your dreams.

4. Flexibility

If there’s a change to your lifestyle or finances, it’s much easier to move to a new rental property. There are none of the entry or exit costs associated with home ownership, and you still have your investment property on the side.

5. Wear and Tear Is No Worries

Because you’re living in a rental property, a lot of the big issues and natural wear and tear likely won’t be your responsibility to fix – it will be your landlord’s.

Of course, you are also responsible for upkeep in the property you’re renting out, so choose your tenants wisely!

6. Tax Benefits

As an investment property owner, you’re entitled to claim tax deductions on certain expenses, like loan interest, insurance, and depreciation costs.

If you’re getting less money from your investment than you’re making in rental returns, you can also offset those losses at tax time through negative gearing.

7. Capital Gains

If you have selected your investment property wisely, it will appreciate in value over time and you can sell it for a profit in the future.

7 Cons of Rentvesting

Here are some drawbacks rentvestors should consider:

Sad evicted couple sitting on the floor with moving boxes: Disadvantages of investing

1. More Flexibility Also Means Less Security

As a tenant, you can be asked to vacate the property or open up your home for inspections. Rental prices can also go up, which would require you to re-evaluate your rentvesting equation.

2. Fewer Freedoms and Less Personalisation

There are far more rules around what you can and can’t do with a rental property compared to a home that you own – from painting to pet ownership.

3. Ongoing Home Ownership Costs Still Apply

As we said above, you’ll need to pay the maintenance and repair costs for your investment property as a landlord. You might also need to cover the difference between rental income and mortgage repayments if there’s a deficit, as well as property management costs – to name a few expenses.

4. Time Is Money

Being a tenant and a landlord simultaneously can be time-consuming. If you don’t have the time to manage your investment property, that’s where property managers and those management costs come in!

5.  Capital Gains Tax

So, your investment property increases in value and you choose to sell – that’s great news!

The bad news is that you’ll need to pay capital gains tax (CGT) on those profits.

6. Capital Losses

Capital gains taxes are bad, but capital losses are worse. The typical rentvesting mindset of “buy where you can afford the purchase price” doesn’t necessarily result in strong capital gains. It’s important to choose your investment property carefully because it’s the key to the whole rentvesting strategy.

7. You’re Still Throwing Money into the Rental Pit

They say that “rent money is dead money” because tenants are paying for someone else’s mortgage, not a home of their own. The difference with rentvesting is that you’re offsetting this with your own investment property and the rental income and capital growth that comes with it.

Once again, this is why your investment property MUST perform. You can seek professional advice from our buyers agent serving Ivanhoe, Templestowe, or your target suburb before making any property investment decisions.

What About the First Home Owners Grant (FHOG)?

Rentvesting strategies are often targeted at aspiring first homebuyers, encouraging them to buy an investment property rather than a starter home to live in.

The problem is, this could jeopardise your access to the FHOG when you do want to buy your first family home. This means you could miss out on stamp duty discounts or exemptions, as well as $10,000+ in government grants for purchasing a new-build home.

However, there are ways around this:

  1. To receive the FHOG on your rentvestment property, you must occupy the home for at least 12 months within 12 months of settlement/completion. So, you could rentvest for the first year or so before moving into the property, or you could live in the property for a year before transitioning it to a rental.

  2. There is also a loophole in FHOG eligibility in Victoria where rental property owners can claim the grant on a future owner-occupied home. As long as you buy your home after 1 July 2000 (tick!) and you have never owned AND lived in a property for six months or more, you can still claim the grant, as described in this Domain article.

With All That Said, Is Rentvesting Actually a Serious Investment Strategy?

A hand changing cubes between the words saving and investing

At the end of the day, rentvesting is a compromise for most, and nobody wants to compromise if they don’t have to.

So, if you’re already a property owner, there’s no compelling reason to sell up and switch to rentvesting.

But, if you’re currently renting or looking for a new home, and you also want to invest, then rentvesting could be suitable.

If you’re a first-time property buyer who is prioritising getting into your dream home sooner rather than seriously investing, rentvesting could also be a solid property ownership strategy.

Choose your investment wisely and rentvesting could not only offset your rental payments but also generate modest capital growth/equity in just a few years, helping to fund that dream home.

Just keep in mind that “where you can afford to buy” isn’t always where you will find profitable investment properties, and that’s the big asterisk for rentvesting strategies.

The other drawback of rentvesting is that it’s a passive investment strategy that relies on the market to generate wealth. Serious money comes from active value-adding, i.e., renovating and developing sites to maximise capital growth potential.

What to Do If You DON’T Need to Compromise

If you have the capital and the desire to generate wealth through property, there are much better ways to use your money as an investor.

Property Analytics specialises in securing serious money-making investment properties and development opportunities for time-poor professionals.

From finding and securing high-growth investments to planning approval for keen developers, we do it all. 
For more information about our approach, talk to a buyers advocate working in Doncaster, Thornbury, and all of Melbourne’s most promising suburbs.


How School Zones Affect Property Prices in Melbourne

How School Zones Affect Property Prices in Melbourne 1000 500 Andrew Stone

As data geeks, we regularly build predictive models to determine which suburbs will grow most in value in the coming months and years. We analyse demographics, socioeconomics, infrastructure projects, development activity, transport options, proximity to hospitals and shops, and many other factors…

But in recent years, perhaps the most important predictive variable has been school zones.

Government Secondary Schools are hugely important in determining where house prices will rise most. And Primary Schools play a significant role, too.

So, why are homeowners and investors paying a hefty premium for properties in key school catchments, and how much are buyers willing to pay?

Let’s find out exactly how school zones affect property prices in Melbourne.

What Are School Zones and Why Do They Impact Property Prices?

Australian Road Speed Sign For School Zone With 40km Limit

For investors or homebuyers without school-aged children, it’s easy to overlook the importance of school zones.

But it’s also easy to understand why these school catchments play a role in price growth.

Said simply, school zones are geographical boundaries around State Government Schools that are determined by the Education Department. 

The easiest way to get into a particular state school is to live within that school’s designated zone.

In fact, entry into the local public school is considered a right and is pretty much guaranteed.

If you live outside a school’s designated zone, you can still seek enrolment, and you might even get in. However, there is no guarantee, and there will often need to be special circumstances for a child to secure a spot.

As a parent, you can navigate lengthy waitlists and fork out tens of thousands of dollars a year to send your child to a quality private school. Or you can put that money towards a house that guarantees entry to one of the state’s leading public schools.

Now, your child gets a quality education, and you get a family home in an in-demand area.

And that’s what it’s all about… demand. Many parents want to live in popular school zones, but the neighbourhoods within those zones are invariably well-established. Demand for properties is high, but there’s not a whole lot of spare land available.

The only way to get into the area is to buy an established property, and this demand contributes to higher median price growth compared to properties in other suburbs.

School zones only apply to state schools, but other schools may work in similar ways. For example, Catholic Secondary Schools often prioritise students from nearby Catholic Primary Schools.

School Zones and House Prices: Digging into the Data

Now that we understand the why of school zones, let’s see what the stats say.

We’ve built a database of all secondary schools across Victoria, including data points such as Median VCE Scores, % of VCE Scores 40%+, Education Rankings, and other factors.

Merging this data with House $ Price performance data leads to some interesting analyses.

This graph shows how suburbs with top-performing Government Secondary Schools have performed over the last few years compared to Other Suburbs. 

Change in median house prices - suburbs with and without top government schools

On average, Median $ House Prices grew significantly more in those suburbs with top government secondary schools between January 2013 and May 2015.

However, at several points, the difference in growth rates shrunk, proving that there are many other factors at play.

The data might be a few years old, but the story is the same in today’s market.

Primary Schools Are Playing an Increasingly Important Role

We’ve talked a lot about Secondary School Catchments, but over the last few years, our Melbourne property investment advisors have also been keeping a close eye on public primary schools. 

Now, Domain’s 2023 School Zones Report has named Melbourne the only national capital city where secondary and primary schools have a roughly equal influence on price growth.

As a property investor in Melbourne, in-demand Primary School Catchment Zones should also be on your radar.

Advice for Investors: Should I Buy in a Premium School Zone?

Three wooden blocks with the worlds "Rea; Estate Investor" in front of a wooden house

For investors and developers looking to buy in areas that will outperform the property market in the coming years, targeting preferred school zones may be a good idea.

However, we don’t automatically recommend purchasing in suburbs with top public schools.

Here are the reasons why school zones are important to consider when investing:

  • There is a direct correlation between coveted school catchments and faster median house price growth
  • There can be strong tenant demand from families who want to live in certain school zones but cannot afford to buy
  • Most desirable school zones are in areas where supply is unlikely to increase, which could contribute to strong long-term capital growth and steady performance for rental properties.

However, looking too closely at school zones could be an investor’s downfall:

  • Many suburbs in top school zones have already experienced their highest growth rates and are unlikely to be top performers in the future
  • Investors will need to pay a premium for properties in school zones that have been highly regarded for years
  • School zones change over time, and certain investment properties are at risk of being zoned out of the area in the future – resulting in lower prices for those properties
  • Many families are realising that the hundreds of thousands spent on buying or renting in the ‘right school zone’ can go towards paying private school fees instead
  • Investing in real estate based solely on school zones and nearby school performance is highly risky. Performance is not guaranteed, and without multiple ways to drive demand and property price growth, your investment is vulnerable. 

Final Thoughts

School zones are important to consider, but when thinking of schools, it’s best to think ahead. You want to invest in suburbs with schools that will become Top Performers, not necessarily the ones that are already at the top of their game.

To find these schools, you need to study the trends behind school performance, as opposed to current rankings.

At Property Analytics, we’ve kept a close eye on school performances over several years, and we’ve identified certain schools that are steadily improving but are yet to be widely recognised by savvy homebuyers and investors.

Of course, these suburbs offer more than just an up-and-coming school zone, and the properties that we’re targeting in these areas meet all our investing fundamentals.

If you want to learn how to invest in these suburbs for future capital growth, reach out to Property Analytics for a one-on-one consultation. We’re buyer’s advocates for investors and developers in Melbourne, securing high-value properties in areas like Kew, Thornbury, and throughout the city.

Our proven process for buying investment properties and development sites will set you up for success.


Property Purchasing Dos and Don’ts

Property Purchasing Dos and Don’ts 1000 664 Andrew Stone
Key in an open door with a wooden house keychain

A few years ago, some family friends were looking to buy a home. They were savvy enough to understand how important it was to buy in the right area > suburb > neighbourhood in order to achieve the greatest financial benefits from capital growth.

But boy were they picky.

They were initially unwilling to compromise on any of their parameters: 600 square metres, flat block, 3-bed, 2-bath, single story, brick veneer, within 500m of train stations and shops, within a specific school zone, etc, etc.

On top of that, they were really indecisive when suitable properties came on the market and often talked themselves out of purchasing… Is it the right month to buy, that property down the road sold for less last year, and if we buy now then what does that mean for our holiday plans in 2 months?

Lastly, they were constantly dipping in and out of the market – attending 17 opens one month, then zero the next two months, then 5 the next.

The result? After over 2 years of “looking”, they were forced to increase their budget by 35% due to median price growth. And they got priced out of the area they originally wanted to purchase in, then the next area, and then the next!

As the market moved onwards and upwards, their purchasing power went backwards, dramatically.

This is a prime example of what not to do when buying a house, whether as an investment property or a family home. So, what are some other mistakes to avoid, and what steps should you be taking as a buyer?

Here’s some advice from our property investment advisors in Melbourne.

Dos and Don’ts When Purchasing a Property

DO Consider at Least 2-3 Different Areas

A professional with three different model houses on the desk in front of her

As with most things in real estate, it’s about supply and demand.

If you restrict your search to one specific suburb or neighbourhood, you’re limiting your choices unnecessarily, and a few things will likely happen:

  • you’ll suffer emotionally from continually missing out on properties;
  • you’ll end up having to increase your budget substantially over time to keep up with other buyers;
  • you’ll end up overspending due to frustration; or
  • you’ll eventually get priced out of the area and will have to look elsewhere.

The lesson? Maximise your options from the get-go. Don’t just look where you live, where you grew up, or in other familiar areas. And don’t just choose one so-called hotspot. Widen your net to at least 2 or 3 key areas and consider them equally.

DON’T Get too Emotional (or at least try not to)

Buying property is a huge decision, whether it’s your family home or your big investment. There are always going to be emotions involved, but if you let them override you it could be an expensive mistake.

Be as analytical and objective as you can when considering properties and negotiating purchases. Remember that auctions are popular in Melbourne because they make potential buyers emotional, and don’t fall into the same trap.

Don’t be the sap that pays $100k more than your budget because you got lost in the moment or didn’t do your homework. Moves like that can quickly turn a solid investment into a very shaky one.

DO Crunch the Numbers

Whether you’re a homebuyer or a property investor, you need to determine your budget and stick to it. Get to know the upfront costs (20% deposit, stamp duty, legal & financial costs, etc.) as well as all the holding costs (maintenance costs, loan repayments, insurance, etc).

If you are pursuing a negative gearing strategy, ensure you have the funds to cover the losses, and don’t expect tax offsets to fully reimburse you (because they won’t).

DON’T Shy Away from Negotiations

A real estate agent and client reviewing a contract

There are plenty of moments in the residential property-buying process when you may get the chance to negotiate. When a property has been passed in after an auction, when a house is up for private sale, or during an open home if the vendor and the real estate agent are willing to play ball.

Sometimes you’ll be in a position of power (like when you’ve been handed a particularly concerning pest inspection or building inspection report) and sometimes the playing field will be neutral.

To get a great deal, you will need to become a master of making offers and negotiating. Quote numbers that are fair, justify your position with facts and be firm with your offers. Know when you have the leverage and act accordingly and you’ll be sure to get a great deal.

Remember that as well as discounted sale prices, you can negotiate for certain repairs to be carried out or for the vendor to pay extra closing costs.

DO Your Research and Understand Your Buying Goals

Most buyers (and, because we’re in property-mad Melbourne, a lot of non-buyers) regularly read property sections in newspapers and track sales results. Absolutely do this, but it’s equally important that you actively inspect properties, talk to local agents about trends and transactions, and walk the streets to get an intimate feel of different neighbourhoods. I’m a Data Analyst, so I appreciate the importance of statistics, etc, but there is no substitute for on-the-ground knowledge and contacts.

The research you do should be informed by your property-buying goals, so make sure you understand exactly what you want out of this process.

The first and most obvious distinction is home buying vs investing, but beyond that, you may need to consider:

  • your financial and lifestyle goals
  • positive gearing vs negative gearing
  • capital growth or rental yield (there is a correct balance); and
  • your appetite for future development or renovation, to name a few!

DON’T Be Overly Choosy

With all this talk about target areas, budgets, goal setting, and research, it’s easy to think that you’ll end up like my family friends, never finding the right property.

At times like this, an old saying comes to mind. “Don’t let the perfect get in the way of the good!”

It’s rare to find a property that ticks absolutely all of your boxes, and if one is found, chances are you’ll have to pay a considerable premium due to strong demand from other purchasers. Be realistic with your expectations, rank your priorities, and be willing to compromise. The beautiful thing about real estate is that you can make the improvements needed over time.

DO Consider Value-Add Opportunities

Split screen: A modern house on one side and development plans on the other

The most successful property people I know are enthusiastic about renovating, extending and developing. They recognise that rundown properties can be bought at a discount, whereas you pay a premium for turnkey dream homes. Importantly, it’s about recognising and investigating options to change floor plans, renovate, extend or develop prior to purchase.

Updating an outdated kitchen or maximising a big but underutilised backyard is a gift for owner-occupiers looking to stay in their home or investors hoping to maximise value.

If you’re interested in going a step further and completely redeveloping a block, our property development consultants in Melbourne can find a site with development potential and help you close the deal and put all the plans and permits in place.

Don’t be the buyer that outgrows your house and has to move in a few years due to lack of space. And don’t be the investor who relies solely on the property market for capital growth, with no thoughts for active value-adding.

Look at a property’s full potential and purchase with an eye to the future.

DON’T Overlook Bad Bones

In real estate, you make or lose your money when you buy, not when you sell.

What this means is that you should look for quality properties in carefully selected areas. What this doesn’t mean is getting obsessed with finding a “bargain” to the point where you overlook serious structural issues that become a time and money sink.

A kitchen or bathroom reno is one thing, but bad foundations or an incredibly poor structure and layout can be incredibly costly whether you’re hoping to live in a property or make serious money from it.

Always have properties professionally inspected and tick every other box on your due diligence list along the way. And remember that a carefully considered $900k purchase will almost always be more of a deal than the $500k “bargain” you’ve rushed into.

DO Talk to a Professional

We provide a lot of free professional advice and insights, partly because we love real estate and we’re passionate about sharing our work.

But let’s be serious, we hope that by sharing our stories and research, people will recognise that we know how to succeed in real estate.

If you don’t know where the best suburbs in Melbourne are, what type of property to look for, how to achieve great profits and/or long-term wealth, or what strategies to deploy in negotiation or auction bidding, then reach out to us.

At Property Analytics, we are your buyers agents/buyers advocates across Kew, Doncaster, Thornbury, and MelbourneBut our team doesn’t just find, negotiate, and secure investment properties. We offer a proven process for pursuing high-value investments, including off-market investment and development opportunities, all based on your goals.

Some other professionals you might need on your journey that we can connect you with include mortgage brokers, solicitors, property managers, and accountants, as well as town planners, engineers, architects, and quantity surveyors for development projects.

DON’T Listen to So-Called Experts

Real estate agent showing off a property to a couple

Your mate or your cousin might have bought a successful investment property 5 years ago, but that doesn’t mean they can guide you to the same success, let alone point you in the right direction.

Property marketers will spruik the dream until you sign on the bottom line, but they are all about selling properties and earning commission, not giving you good advice.

And real estate agents… Well, you can’t avoid them. And the idea that they’re also on the buyer’s side remains an all too common misconception. Just because you need to network with them, it doesn’t mean you need to take anything they say at face value. 

DO Get into the Market

Every week, month and year that goes by without purchasing a property, your options become narrower. As much as we recommend being smart, objective, strategic and professional, the reality is that you need to eventually take the plunge to succeed in real estate. Indecision is a lot like procrastination – it keeps you occupied, but it doesn’t get you anywhere.

So, don’t dip in and out of the market or spend all your time looking at properties or price brackets that are purely aspirational. With our advice and proprietary research to back you up, you can enter the property investment market sooner.

DON’T Get Drawn in By Apartments 

This is something we will never stop banging on about. Oversupply and lack of demand result in less property price growth, restricted finance options, and risky business for investors.

Successful property investors stay away from apartments, and you should too.

I’ve Seen a Lot of Property Buyers Make the Same Mistakes

One of the sad realities of property ownership in Australia is that Wage Growth is nowhere near keeping up with House Price growth.

For this simple reason, problems like procrastination and pickiness can be just as costly as emotional or uninformed purchases. You either lose money and opportunities by purchasing a pit or you do nothing and get priced out of good investment opportunities.

But there is another way.

When you have a clear strategy, independent data, and a proven shortlisting, feasibility, and negotiation process, you can enter the market smartly, and sooner than expected. And when this is the way you enter the market, meeting your investment and development goals is easier.

That’s what’s possible when you choose Property Analytics as your buyers agent in Ivanhoe, Templestowe, Brunswick, and the surrounds.

Find out more about our Melbourne Property Services.

View of Melbourne suburbs with CBD skyscrapers in the distance

The Speediest Melbourne Suburbs for Real Estate Sales

The Speediest Melbourne Suburbs for Real Estate Sales 1000 750 Andrew Stone

Articles about “the fastest-selling suburbs” are a dime a dozen. Everyone loves a list, and prospective investors are always interested in new opportunities.

But there is one thing that these articles rarely tell you. What exactly can we read into a list of fastest-selling suburbs? Should we be buying them or running a mile? Is the data significant or just interesting market dynamics at play?

That’s what our Melbourne property investment advisors are here to tell you.

Here are the speediest suburbs for real estate sales in Melbourne and what the data means (if anything).

Let’s Start with the 14 Fastest-Moving Suburbs in Melbourne

How do you determine the fastest-selling suburbs across Melbourne?

In short, you look at all the houses that have sold in each of Greater Melbourne’s 1025 suburbs. Then you determine how many days each property was on the market.

Finally, you put all that data together to determine the suburbs with the fewest Median Days On Market.

All that number crunching gives us this list:

  1. Langwarrin
  2. Kilsyth South
  3. Coolaroo
  4. Doreen
  5. Junction Village
  6. Carrum Downs
  7. Skye
  8. Bayswater North
  9. Blind Bight
  10. The Basin
  11. Cranbourne West
  12. Derrimut
  13. Heathmont
  14. Chelsea Heights

In the graph below, you can see how quickly properties in these areas sell compared to other suburbs in Melbourne.

Median Days on Market for Houses Sold over the Last 12 Months in Melbourne - Fastest to slowest selling

As you can see, properties in the fastest-selling Melbourne suburbs stay on the market for just 17 days, while houses in the slowest-selling suburbs hang around for 64 days, almost four times as long.

When We Look at Our List of 14 Suburbs, the Characteristics Are Reasonably Clear

These 14 Locations Are Primarily Outer Suburbs

From Doreen to Cranbourne West, the fastest-moving suburbs are consistently further from the CBD, with many being located in the outer eastern suburbs.

Average Distance to the Melbourne CBD in Kilometres - Fastest selling to slowest selling properties

On average, the fastest-selling suburbs are twice as far from the City Centre as the slowest-selling suburbs.

Capital Appreciation Is Stable While Median Sale Prices Are Lower

In the fastest-selling Melbourne suburbs, property values are holding up well despite downturns.

% Change in Median House Prices Over the Last 5 Years: Fastest selling suburbs vs Melbourne-wide average

The increase in median house prices in the past 5 years is 31% in the fastest-moving areas compared to the Melbourne-wide average of 21% over 5 years.

However, property prices in our list of 14 suburbs are significantly lower than the Melbourne average.

Median House Price Over the Last 12 Months: Fastest selling suburbs vs Melbourne-wide average

These outer suburbs may offer stability and greater liquidity, but the median price point is almost half a million dollars lower.

Other Key Stats About the Fastest-Selling Suburbs

In Melbourne’s faster-selling suburbs, there is a higher proportion of detached houses. An average of 11% of the properties are townhouses or units compared to 26.4% Melbourne-wide. 

There are also 10% fewer rental properties in the fastest-selling suburbs compared to the Melbourne-wide average. 

Houses listed for sale in Melbourne are down across the board, but there is a greater Year on Year decline in listings across the 14 fastest suburbs.

YoY % Change in Houses Listed for Sale: Fasted selling suburbs vs Melbourne-wide average

Interpreting the Data: Is Fastest Always Best?

Now we know all about the popular suburbs that spend the least average time on market, but what does it all mean?

My take is that the lower median house price of these outer suburbs has helped to keep purchaser demand – and therefore capital appreciation – fairly stable, even during recent downturns.

Many of Melbourne’s fastest-selling suburbs are being snapped up by Aussie buyers looking for fully detached family homes, with third-generation Australians being pretty active in this market.

If you’re looking for something similar as an owner-occupier and any of the above suburbs have been on your radar, there are plenty of opportunities to be had. While the number of listings is down almost 7%, the short average on-market time shows that hungry buyers won’t necessarily have to wait long for a place to call home. 

But for long-term investment and development, faster does not equal better.

These sections of the housing market have lower days on market figures because they are lower-value suburbs in terms of price range, not because savvy investors are snapping up opportunities in an instant.

The properties you want to target for investing and development are not necessarily the fastest-selling homes, but high-value acquisitions with generous land content, value-add opportunities, and proximity to important amenities and infrastructure.

As buyers advocates serving Kew East, Kew, Doncaster, and other in-demand locations, Property Analytics can help you separate interesting market dynamics from statistical gold. Our proven process ensures you only invest in properties and developments with the highest capital growth potential.

Understand Market Conditions with Our Property Investing Experts

Aerial Photo Of Contemporary Houses In Suburban Melbourne

My name is Andrew Stone and my business is high-value property investing and developing.

If you want to leverage the best proprietary data and analysis to help you find a high-value investment, partner with Property Analytics. 

As a buyers agent working in areas like Brunswick, Ivanhoe, and Templestowe, I combine on-the-ground industry knowledge and contacts with historical data and emerging trends.

Want to track down the data that really matters in the Melbourne housing market? Find and secure feasibility-tested investment properties and development sites with Property Analytics. 


How to Assess a Property’s Development Potential

How to Assess a Property’s Development Potential 1436 1122 Andrew Stone
Architect working on development plans

A lot of work goes into finding a good development site.

Our Melbourne property development consultants can help you with a detailed feasibility study, but before you progress to that stage, you’ll want a quick method to rule properties in or out.

So, which sites are viable for further consideration? And is the house you’re living in a property development goldmine?

Here are the resources you can use to find out.

Generate a Free Planning Report from the Victorian Government

The first and most important question to ask is ‘What is Possible on the Block?’

You can largely answer this question with information freely available online.

Let’s assume that you’re searching in the right areas, where near-term capital growth is most likely, and you’ve found a property that might suit.

The online advert features an aerial view of the block, the property looks tired, the copy includes references to development (like STCA or Subject to Council Approval), and the price is in your range.

So, what do you do then?

Head to the Victorian Government’s Property and Parcel Search website and enter the residential address or parcel details. From here, you can download a Planning Report PDF, which contains a lot of the information you need to determine site potential.

Another useful resource is the VicPlan website. Using this website, you can view information on different blocks in map form, letting you quickly swap between nearby development sites of interest. If you’re wondering how two near-identical properties just 3 blocks apart could sell for dramatically different prices, this mapping tool can often provide the answers.

Start By Looking at Zoning 

Your free property report can tell you a lot about zoning and how it pertains to a site’s development potential.

Every council is different in how they apply each Planning Zone, but generally speaking:

  • Neighbourhood Residential Zones (NRZ) are the most restrictive for property development
  • General Residential Zones (GRZ) are more progressive in relation to density, number of dwellings, maximum heights, open space requirements, etc.
  • Residential Growth Zones (RGZ) are areas where apartment and mixed-use developments are encouraged.

As well as your Property Report, The VicPlan website also highlights each residential zone with clickable links. Follow the links to learn more about each residential zone and how it is applied by the local council. 

If you like the Planning Zone, Move on to the Overlays

Extract from Property Analytics Property Report Showing Planning Overlays

Think of Planning Overlays as a second, more detailed layer. Multiple Planning Overlays can exist on a single Planning Zone, and they’re unique to specific neighbourhoods within each zone (e.g. one block within a GRZ1 area may have a Planning Overlay on it, whereas another block up the road within the same GRZ1 may not). There are plenty of Overlays to be mindful of, but a few more prevalent ones that are particularly relevant to development include:

  • Overlays that exist to protect trees and other vegetation. These include Environment Significance Overlays (ESO), Significant Landscape Overlays (SLO), and Vegetation Protection Overlays (VPO). These overlays not only relate to existing landscapes but dictate requirements for future developments (e.g. X number of canopy trees per new dwelling).
  • Overlays that protect individual dwellings or parts of dwellings for historical purposes. These are Heritage Overlays (HO). Expect a lot more time, money, and stress to be involved when you’re developing on sites with HOs!
  • Overlays that encourage denser/higher developments. These are Design and Development Overlays (DDO), Design and Development Part Overlays (DDOPT), and Development Plan Overlays (DPO). You’ll often see DDOs featured prominently in for-sale advertisements.

Once again, you can learn more about planning scheme overlays per council by searching your property on VicPlan and following the links. 

house construction

Finally, Have a Look at Precedent (what has been approved in the past).

If the property you’re considering passes your first few quick tests around Planning Zones and Planning Overlays, I would recommend viewing the property and visiting the neighbourhood.

Carve out 5-10 minutes to walk the streets in search of newly built developments, properties currently under construction, and sites with council advertisement signs in front. Take down the addresses and visit Council Planning Offices to talk specifically about them.

Plans are often available to view, and you can ask whether the local council or VCAT approved the plans. Compare the size and orientation of these blocks with the one you’re considering, and ask if you’re missing anything (e.g. any reason you can’t do this on your block?) Are there any aspects of the design that the Planner would have changed if he had input into the design?

This is a simple way to determine precedent – the likelihood that your development will be approved based on past approvals of similar projects in the same area.

There have been a lot of changes imposed by the state government over the last few years that have affected development opportunities, but logic would suggest that if a similar development has been approved recently, yours can be too! 

If you ultimately purchase the site you’re thinking about, visiting similar development sites will come in handy for other reasons. You can contact the architect, builder, and/or real estate agent to get their insights into the project and potentially strike up some professional relationships!

If in Doubt, Contact the Council Planning Office

It’s very easy to get lost in all the information mentioned above, and that’s before looking at the information mentioned below!

When in doubt, call the Council Planning Office or visit in person to talk directly with a knowledgeable public servant.

You won’t receive much in terms of development advice (e.g., how many units can I put on this block), but these contacts are useful in helping you understand all of the publicly available information.

I always talk in detail with Council prior to purchasing a development site for myself or a client. While I’m pretty knowledgeable about zones, overlays, neighbourhood characteristics, etc, I often attend Council offices in person to get the most information possible.

If I still reckon there’s something in the site after visiting local council and looking at zones, overlays, and surrounding developments for myself, then I will begin a Project Feasibility Study.

Key Characteristics That Make a Good Development Site


So, now you know about Planning Zones, Planning Overlays, and Precedent. But there are many more features that a property developer should consider when choosing a site. I’m not going to run you through the complete feasibility process, but here are some factors to consider.

Size, Shape, and Features of the Block

You need to know the exact dimensions of the site (length x width). Also consider:

  • Is the site flat or sloping?
  • If the site is sloping, does it slope in the direction of drainage and sewerage services?
  • What is the frontage of the block?
  • Is it a corner block? (This is often better for subdivision)
  • What is the orientation of the site and how does this affect the design of the properties you’re developing?
  • Are there trees or power poles to consider on the site, including the nature strip/footpath/crossover?
  • Are utilities (gas, electricity, water, telephone, NBN) connected and do they need to be upgraded?
  • Are there any asbestos issues or other obstacles that could impact the demolition of the existing dwelling?
  • Is the existing dwelling in good enough condition to lease out in the short term?
  • Have you completed title checks to identify covenants and easements that could affect development?

Location, Location, Location

You already know that location is crucial to all development and investment opportunities. We’re assuming that you’ve already chosen the right location for your property development project. If you need help narrowing down your Melbourne development site, you can speak to a buyers advocate serving Brunswick, Kew East and the surrounds.

However, as well as the location fundamentals, there are also other development-specific considerations and concerns. 

  • Can you identify recent nearby developments to act as precedent, as discussed above?
  • What type of properties are already in the neighbourhood, and could their size or position affect your development?
  • Are there any windows directly facing your development site?
  • What is the general condition and character of the neighbourhood? Will upgrades (and contributions) be necessary?
  • Will it be easy or difficult to access the site for construction, based on the width of the street and other factors?

Money, Money, Money

It should go without saying that the best development sites offer excellent Return On Investment and a strong rate of return.

Before you buy a development site, you should determine the estimated value of the dwelling and the land in its current state. If the value of the dwelling exceeds the value of the land, it is already over-capitalised and may not be suitable for development at this time.

If your property has good development potential, it will tick many of the boxes we’ve already discussed. To maximise its value, you need to think about how your site should be subdivided and what type of dwellings you want to build (detached houses, semi-detached townhouse projects, etc.)

One way to get a feel for potential return on investment is to look for similar developments and land parcels in the area that have sold recently. What have they sold for, and can you replicate those results? While there’s more to it than that, this is essentially what’s known as a Comparative Market Analysis.

If you already own the property you want to develop, think of money in terms of equity. Have you paid off your mortgage, do you have a small mortgage, or is your loan still around 80% of the property value?

If you still have a large mortgage but want to take advantage of development potential, you might consider selling your property to a willing developer and pocketing the profits that come from the sale.

If you have little to no mortgage, you can use your equity to fund the property development project. In this case, you might be the ideal candidate to partner with a developer like Property Analytics in a joint venture.

As well as the money you can make, you also need to consider development costs and cash flow, including:

  • Initial development costs: including initial acquisition costs, deposits, stamp duty, legal fees, LMI, Loan to value ratio, construction loan, and projected interest on all loans.
  • Planning costs: Including all documents, permits, applications, drawings, consulting fees, etc.
  • Construction costs: Considering each dwelling including GST
  • Other development costs: Such as subdivision fees and taxes

To learn more about how you can make money from property development, click here.

Case Study 1: Nicky’s Neighbouring Double Blocks in Croydon North

Does your property hold development potential? Let’s take a look at a few examples of potential development sites, starting with Nicky.

Nicky owns two neighbouring double blocks in Croydon North, totalling over 5400 square metres.

The land size is huge, and each block is rectangular. This is great because not too much land will be ‘lost’ during the design phase (think about how unusable the three points of a triangular block are when plotting a house).

The amount of vegetation on the site is a bit of a concern, given that large tree protection areas can impact where new dwellings can sit, and how big they can be built.

There’s also a significant slope across the site, which complicates design and increases build costs.

Additionally, the zoning and overlays are really restrictive. 

  • Neighbourhood Residential Zone (NRZ2) requires subdivided blocks to be at least 864 square metres in size.
  • A Bushfire Management Overlay (BMO) adds a level of design complexity with regard to setbacks, materials, and orientation.
  • Design and Development Overlay (DDO2) places importance on protecting the ridgeline that the properties will sit on, and it restricts the size and type of driveways.
  • Significant Landscape Overlay (SLO3) and Vegetation Protection Overlay (VPO1) make it difficult to remove trees of certain species and sizes.

The location also has pros and cons. 

  • The negative is the lack of proximity to shops, transport and schools.
  • But the positives are that the site itself is in a beautiful pocket of the suburb, with adjacent parklands and panoramic views. Properties in the immediate vicinity are highly sought after, and nearby sales results of large, newly constructed/renovated houses on block sizes about 900 square metres in size are really encouraging – like $1.5m+ encouraging.

Nicky already owns both blocks and has a small mortgage against the property, meaning some of the development finance can be secured against the equity held in the property. This suits me as a Joint Venture partner.

As mentioned above, if Nicky had a larger mortgage, it would make more sense for her to sell to an interested developer who could develop it themselves and keep all the profits.

Despite their challenges, Nicky’s blocks have great potential for a high-end, low-density development of large, detached houses. Projected profits for the development would be around $1.4m in addition to the original market value of $2.2m. 

I was not able to partner with Vicky as she was not in a position to spend 24 months on planning, permissions, and construction. However, I did assess the property on behalf of a suitable developer client who would be willing to buy. This would allow Vicky to move on from the property as desired, and the new owner could enjoy a profitable development project – a win-win!

Case Study 2: Frank in Frankston

Frank approached me about developing his 4600 square metre blocks in Frankston.

The huge, flat blocks have 2 separate frontages and have minimal vegetation to contend with.

The zoning is currently Commercial 1 (C1Z), but Council has approved rezoning to Residential Growth (RGZ1). This will allow for dwellings up to 4 stories in size as opposed to commercial property. There are no Garden Area requirements, and side/rear/front setbacks will be minimal. In short, the proposed rezoning will allow for Medium Density development.

The location is great – within walking distance of shops, transport, and parks/beaches. But, while the immediate surrounds are residential, an industrial area is nearby, which will affect resale values.

Lastly, Frank has very little debt against the property, so the value of the land can go some way to supporting debt attainment, which is appealing to Joint Venture Partners.

The site clearly has good development prospects for multi-level townhouses.

As You Can See, Development Sites Come in all Different Forms

If you think you might be sitting on some potential, or you’re shopping around for development sites, do a bit of research into block size, shape, features, zoning, overlays, location, nearby sales, precedent, and other factors.

Also think about finances, whether that’s the current ownership status (Loan to Value Ratio), or how you’re going to fund all the acquisition, planning, construction, and development costs.

There are no black-and-white rules about what makes for a good development site, so if you think you could be sitting on a development opportunity, please ring me to discuss. Having done this work for 12+ years, I can size up development potential pretty quickly over the phone. I’ll gladly provide some free advice, and if there’s something in it as a Joint Venture development, I’d love to catch up to discuss it further in person. Coffee’s on me!

Alternatively, if you’re looking for a suitable site for profitable property development, that’s exactly what I do as a buyers advocate serving Northcote, Kew and the surrounds. As a property investment advisor in Melbourne, I can help you find properties with future development potential and land that is ideal for developing now, including sites where the plans are already approved!
My name is Andrew Stone from Property Analytics. Click here to learn more about me, and how Property Analytics can help you meet your financial goals through real estate.

Model house on top of a large pile of gold coins

Tips for Successful Real Estate Investing in 2023

Tips for Successful Real Estate Investing in 2023 1000 667 Andrew Stone
Model house on top of a large pile of gold coins

In my 2023 Melbourne Property Market Forecast, I told you what to expect from real estate in 2023. And in my property market trends piece, I identified the key trends that will define the market and what they mean for investors.

Now I’m here to share my tips for investing in real estate in 2023. Some of these tips will reinforce real estate investing fundamentals and others will be specific to what I see happening in this year’s market. But all of these tips are based on my years of experience as a Melbourne buyers advocate, property investment advisor, and real estate analyst, as well as the historical and emerging data that I use to make investment decisions every day.

My name is Andrew Stone from Property Analytics, and here are 10 tips for successful real estate investing in 2023.

1. Understand What Kind of Property Market You’re Walking into in 2023

Successful investors walk into each situation with their eyes wide open, and the 2023 Melbourne real estate market should be no different.

The property market has been incredibly disruptive and unstable for the last 2-3 years, with significant price rises in 2020-21 followed by a historic property price downturn in 2022.

Many experts are promising nothing but doom and gloom in 2023, and while certain changes will be a harsh reality, there are opportunities for investors.

The Melbourne property market in 2023 will be marked by:

  • Lower property prices – including further drops in the rolling 12-month median property price
  • Further interest rate increases
  • Inflating construction costs and further development delays

But this year’s market will also bring:

  • Greater stability in the property market compared to the massive swings we’ve seen in recent years
  • Interest rates will likely stabilise after some rises in the first half of the year. And stable interest rates – no matter the level they stabilise at – is a good sign for house prices
  • Strong demand in buying and rental markets. Expect increased rental demand for townhouses and apartments, and growing buyer demand for turnkey-ready houses and high-yield apartments
  • More investment-grade properties coming on the market – both unfinished developments and quality dwellings
  • Signs of a strong future for Melbourne’s property market, including returns to pre-pandemic migration levels and strong population growth.

See my property market forecast and emerging trends analysis for more information about the 2023 market. 

To summarise, there are many opportunities for real estate investing this year, both for first-time investors and those looking to bolster and diversify their portfolios.

Additionally, many Australians have three times more savings than they did at the start of the pandemic. If this applies to you, now could be the perfect time to act.

2. Audit Your Real Estate Investment Performance for the Last 12 Months

Now that you understand the market, it’s time to understand what you did right – and wrong – in the last 12 months. Consider all the investment opportunities that were open to you in 2022 and the property decisions that you made (or didn’t make).

Where were you successful in 2022 and what situations could have gone better for you?

When reviewing your performance, it’s important not to write off missteps completely or blindly replicate what has worked in the past.

As I just explained, the property market is changing. Your decisions to buy and flip property may have seemed sound when the market climbed by 30% during 2020 and 2021. But you would need to be much more discerning if you made the same decision now.

Similarly, your decision not to make an investment move in 2022 may have proved wise, but inaction in 2023 could be costly. If you’re ready to act, talk to a buyers advocate in Preston or Kew East about the best areas and properties to invest in. Consider making a move now before the market settles and prices start to rise.

3. Recommit or Renew Your Investment Goals for the Coming Year

Telling a real estate investor to set clear goals is investing 101, so I won’t labour the point. But I will tell you to set your goals based on the previous two points – what the market is doing now and what position you find yourself in after the last 12 months of investing.

Essentially, all investors should actively review their investment goals in line with the state of the market and their previous performance, rather than blindly recommitting.

Do you need to generate more passive income? There are opportunities in the 2023 market to secure rental properties that promise steady rental income and strong returns. It might be wise to secure this type of property to stimulate cash flow if you’re investing for the first time, or if you need to diversify your portfolio and alleviate your current debt position.

If you’re doing a bit of damage control, your goal might be to release some debt by selling off assets. If you have purchased properties with strong fundamentals, do what you can to actively add value to your investments before selling in 2023.

I will always tell my clients to keep one eye on long-term capital growth, as this is where you will see the greatest potential for massive wealth generation. Look for properties with a strong land-to-asset ratio that can be developed or renovated to add value. Make sure you pinpoint the perfect areas to buy, looking at factors like proximity to hospitals, universities, and other high-income-producing activity centres. Consider also the huge impact that favourable school zones can have on the future capital growth of real estate, but keep in mind that school catchment areas can and have been rezoned in the past.

4. Research Local Markets Like the Back of Your Hand

The idea of the “Melbourne Property Market” is a bit nebulous. Yes, there are trends and data points to paint a picture of what’s happening across the city, but it’s more important to understand what’s happening on a hyperlocal level.

This year, it will be more critical than ever to look at where your investment properties are located – or where you’re looking to invest – and understand what THAT market is doing.

Things like median house price, median unit price, average rental return and overall demand for housing can swing significantly between outer suburbs and inner suburbs, capital cities and regional towns. Sometimes, whether or not you’re in an attractive suburb, a buyer’s market, or a seller’s market can shift from one postcode to the next.

The deeper your knowledge about local markets, the more successful you can be in 2023.

5. Build Your Professional Network

Man touching a model house on a touchscreen that connects to many different contact points

But how do you build your market knowledge on such a specific, local level? You’re already a busy professional – you might have the means and funds to invest, but you don’t have the time or desire to make it your job.

If you’re stepping into the market in 2023 or you’ve been going it alone in the past, make this the year you build your real estate contacts.

Yes, real estate agents will bug you until your phone explodes. But the more specific information you give them and the better you get to know them, the more likely it is that they will point you towards your next investment opportunity. Just don’t take anything they say as Gospel Truth. They are the seller’s agent after all. 

You can also partner with a buyer’s agent if you’re looking to find a strong investment property or development site. These professionals can do everything from shortlisting properties that match your real estate strategy to helping you negotiate the sale.

The great thing about finding a good buyer’s agent is that they can be the connective tissue between all the other real estate contacts you need – from estate agents to town planners!

I know this because I am a buyer’s agent, and Property Analytics focuses on finding properties specifically for investment and development purposes.

6. Explore Off-Market Opportunities This Year

In 2023, an influx of quality dwellings and development sites will hit the market due to a combination of factors.

Many fixed rates will expire and revert to a much higher rate than investors and owner-occupiers expected. The result is overleveraged and overburdened property owners who will need to sell – many of whom can be considered distressed vendors.

At the same time, many developers have become heavily leveraged both due to changing economic circumstances and the ongoing delays and price hikes in the construction industry. These development projects remain profitable but may not be financially viable for the current owner.

All of this means there are opportunities and bargains to be had in 2023. Secure a middle-ring or inner-city development site, or find a quality investment property that’s ready to rent and appreciate.

To leverage the best available deals, you will need to look at off-market opportunities. Many homeowners, investors, and developers will be looking to unburden their debt quickly and quietly, which means they may want to avoid a full sales campaign wherever possible.

Proactively pursuing off-market sales will help you find and secure the best of these opportunities. You can find off-market deals by partnering with a well-connected buyers advocate in Brunswick, Northcote, and across Melbourne, or by searching for off-market opportunities yourself.

7. Become an Expert Negotiator

In good news for real estate investors, rental income is expected to climb in 2023. This means your source of passive cash flow will be in a strong position if you have made wise rental property investments. Similarly, if you’re looking to enter the market this year, higher rental yield could soften the impact of increasing interest rates. 

On the other side of the coin, the combination of increased rental prices and softening property prices is likely to result in more competition for those who are looking to buy.

Would-be buyers and first-home buyers will see 2023 as the perfect time to ditch the weekly rent and finally enter the housing market as an owner.

As an investor, you’re going to need to master the art of closing the deal to outcompete both owner-occupiers and fellow real estate investors.

This means being able to execute auction bidding strategies and knowing what sort of moves to make during private sales, pre-auction offers, or when a property is passed in.

Vendors understand that rising interest rates, falling property prices, and shaky consumer confidence mean fever-pitch auctions won’t be as reliable as they have been in the past few years. But this just means that vendors and their selling agents will be savvier when handling private offers and negotiations. 

So you need to be savvy too!

Either sharpen your own skillset around bidding, private offers, and negotiations or hire a Melbourne buyers advocate to help secure the assets you need for successful investing in 2023 and beyond.

8. Go Green with Your Development Projects

The trend of sustainability in residential developments is set to stay, so if you’re pursuing development projects in 2023, keep eco-friendly considerations in mind.

Going green with your development projects offers excellent resale value, as future buyers and investors are increasingly looking for features like solar, heat pump heating and cooling, and all-electric homes.

Rebates may also be available when retrofitting homes with energy-efficient appliances and features. This could be an easy way to increase your capital gains and ROI, with the government subsidising the cost of your value add!

9. Value Adding Is a Strong Option in 2023

Renovation Concept: Before and After Apartment Refurbishment

For those who are considering selling or leveraging equity, it is important to stimulate strong capital growth in 2023, and this requires an active approach.

The best way to do this is to make your investment better through either renovation or development.

While the construction sector is hurting, there will be some cost stabilisation in 2023, meaning there are many steps you can take to renovate your property and increase the value of your investment. 

Boost first impressions by rendering and re-working front yard space, creating usable outdoor entertainment areas, and renovating wet areas like kitchens, bathrooms, and laundries. The simple act of ripping up carpet and polishing natural floorboards could be all you need to add value to your investment. 

In a property market that’s trending a bit flatter, now is the time to make these smart improvements.

10. Renovated and New Properties Are Safe as Houses

The current property market is one where you need to understand and respect the fundamentals.

As I said in my 2023 Forecast, you can still expect strong results from new and renovated properties. Conventional blocks, future potential for development and renovation, and residential properties in high-demand areas will also serve you well.

But if you’re targeting oversupplied apartment projects or “character homes” with limited appeal, the market will be less forgiving to you now than ever before.

You should see 2023 as a window of opportunity – especially in the first half of the year while the situation is yet to settle.

Yes, you will still need to pay handsomely for quality homes and rental properties that offer strong yields for investors. But the current state of the market means you might just secure these quality investments for somewhat more affordable property prices.

Most importantly, the right properties will repay you by continuing to pay handsomely in the years to come – both through annual income from rent and long-term capital growth. And you can expect a slight bump in house price growth as soon as interest rates stabilise.

So, it just makes financial sense to get in now. Secure property with good fundamentals and great growth potential while dwelling values remain flat!

Learn more about Property Analytics

My name is Andrew Stone, founder of Property Analytics. Together with my team, I can help you navigate the property market with confidence in 2023.

As buyers advocates, investment advisors, and development consultants in Melbourne, Property Analytics offers an end-to-end buying service. We can shortlist, negotiate, and secure investment properties, and help you put profitable property development plans in place.

To discuss successful real estate investing in 2023, simply pick up the phone. Let’s have a coffee and a chat, and see what your next move might be.

2023 blocks next to model house: Property Forecast

Property Market Trends Investors Should Pay Attention to in 2023

Property Market Trends Investors Should Pay Attention to in 2023 1000 606 Andrew Stone

In my recent Melbourne Property Market Forecast for Investors, I explained the state of play for local real estate in 2023. Essentially, I explained that there will be plenty of opportunities for investors in 2023, and despite what it may look like now, the next 12 months will bring increased stability to the market.

But that’s not all I have to say about the year to come. 

As a buyers advocate in areas like Brunswick, a property development consultant, and a property investment advisor in Melbourne, I can see a few significant trends that will shape the market. All of this is supported by the proprietary data – both historical and emerging – that I have gathered over the past decade as a real estate analyst.

Here are the trends that all property investors should pay attention to in 2023.

Seasoned Investors Will Come Back to the Market This Year

My 2023 Property Market Forecast didn’t always make for fun reading.

I explained that median house prices are dropping, interest rates are rising, and the construction sector has seen better days.

So, why would investors return to the Melbourne housing market in 2023?

To that I say, “just watch them”. 

And my reasoning can be summarised in a quote from 19th-century British Financier, Nathan Rothschild.

Rothschild advised us that “the time to buy is when there’s blood in the streets”, and while that’s a bit violent for my liking, he has a point that applies to the Melbourne property market in 2023.

Here are the signs of “blood on the streets” that will bring seasoned investors back to the housing market.

The End of Fixed Rates

The majority of remaining fixed interest rate loans in the 2-3% range will expire in 2023. These mortgages will roll over to 5-6% variable rates due to all the recent rate hikes, resulting in many overleveraged investors and homeowners.

Most of these mortgage holders will have no option but to sell – and they will be highly motivated to do so.

Distressed vendors in an already flat property market are like music to an investor’s ears. The most experienced real estate investors will understand that this situation is too good not to capitalise on.

This may sound harsh, and in a way, it is a harsh reality of the property market. But for inexperienced investors or overwhelmed homeowners who find themselves needing to sell, being able to offload their debt to a well-prepared investor is also their ticket out of a tricky situation.

The Reality of Unfinished Development Projects

In 2020-21, the construction sector was booming and buyers with development aspirations were snapping up properties.

But the problem for these investors is that the construction boom ended, with prices and delays skyrocketing in 2022. 

Fast forward to today and many of these developments have plans and permits but are no longer commercially viable due to increased construction costs and lower property values.

Similar to rising interest rates, these complications have resulted in inexperienced developers being caught out. Without adequate cash flow or savings, these rookie developers will be forced to sell to more experienced investors and developers.

Seasoned property market veterans know just how valuable development projects can be when they already have plans and permits. Profits might be tighter, but these projects are generally lower risk and can go to market sooner, making them a great quick win for developers.

This is one of the many property development strategies we pursue at Property Analytics, and you can be sure that many other investors and developers will do the same in 2023.

The RBA Will Be The Starting Signal for Experienced Investors

Seasoned investors might be circling in the pit lane at the moment, but they will look to the Reserve Bank of Australia for the perfect time to act.

Interest rates may be going up now, but when the RBA suggests that rate rises are likely to cease, this will signify the beginning of a new market cycle. Property prices will then stabilise, but they won’t necessarily increase… yet.

This change in market conditions will be an inevitability, and the savviest investors will either wait for the RBA signal to act or they will try to pre-empt the announcement to take advantage of the market just before it stabilises and consumer spending increases.

Essentially, smart investors will be listening to the RBA about interest rates, and you should be listening too!

So, in summary, the end of fixed-rate loans, the reality of unfinished development projects, and the inevitability of flattening interest rates will mean more investors on the market, which could result in greater competition for you in 2023.

Rental Yields will Continue to Rise in 2023

"For Lease" sign Melbourne

If you’re an investor looking to generate rental yield, 2023 could be a great year for you.

Of course, you will need to have your fundamentals in order – the right property type in the right location for success.

But if you’ve laid the groundwork, you can expect a fruitful rental market, especially in the middle and inner suburbs of Melbourne.

Once again, I’ve come up with a few reasons why this will be a trend in 2023.

A Return to Immigration

Overseas migration to Australia increased 171% in 2021-22 compared to the previous year (for obvious reasons). This trend will continue in 2023, with immigration numbers returning to normal and an increased focus on skilled migrants and students.

On top of this, internal migration to Victoria will continue, with Melbourne set to become the country’s largest capital city by 2032.

An increase of skilled workers in high-wage growth industries will result in climbing demand for quality rentals, and therefore, increases in rental yield.

The Impact of Diminished New Build Homes

The residential construction sector is struggling, and while we can expect some recovery, this will still have an impact across real estate markets.

One change that will hit Melbourne’s real estate sector is a lack of new builds in 2023. This will lead to a supply/demand imbalance, particularly towards the end of the year, which could be good news for your investment property.

If you own a newer turnkey home, this will achieve surprising price results due to the lower supply levels of new builds to compete with it. As well as higher rental yields, you can expect better results if you choose to sell these types of properties in 2023.

The Trend Towards Less Efficient Planning Departments

Another trend to take note of in Melbourne and other capital cities across the Australian Property Market is the trend towards less efficient council planning departments.

Local councils have become increasingly bureaucratic in recent times, and I foresee this trend continuing in 2023 and beyond. This means dragged-out approval processes for development projects and other capital improvements.

Active value-adding can accelerate the rate of growth of your property, and development is the ultimate way to increase dwelling values. Unfortunately, developers will need greater patience, extra cash flow, and plenty of persistence to weather the many delays thrown at them by local councils.

This lack of efficiency will scare off many smaller developers, so if you have the means to pursue development projects in 2023, you could capitalise where other would-be developers fail.

Just be prepared to rip your hair out dealing with the local council.

Expect an Increase in Off-Market Transactions

The auction market has lost some of its lustre and cost-conscious sellers will be looking for easy and affordable ways to offload their housing stock in 2023. 

With changes in buyer demand and flagging median house prices, vendors will be looking for ways to sell in the Victorian capital. Many of these vendors will look at off-market avenues, so as a potential buyer, you need to keep your eyes open to the entire market.

If you need help finding off-market properties for sale in Melbourne, consider partnering with a buyers advocate in Northcote, Kew East, or near you.

Construction Costs Will Stabilise in 2023

Two architects reviewing plans in an office

The construction industry has had a turbulent 12 months, with material and labour shortages resulting in skyrocketing costs and significant delays.

The lack of new build homes and abandoned development projects mentioned in this article are just a few of the consequences that have been seen in the Victorian capital and across the wider property market.

In 2023, you can expect somewhat of a “Return to Normalcy Scenario” for the construction industry. Labour forces will normalise – in part due to the return of skilled migrant workers – and access to materials and supplies will also improve.

This is good news for investors looking to pursue development projects. While it may not all be smooth sailing, this stabilisation in the construction sector will serve you well when developing or pursuing other value-adding real estate activities.

Talk to a Real Estate Industry Expert

The real estate analysis services available through Property Analytics are designed to explain the property market to buyers, sellers, and landlords. If you’re looking to make a move in the 2023 property market, my team and I can help you shortlist and secure a high-growth investment property as your buyers agents in MelbourneI can also provide high-level property investment and development advice that helps you achieve your real estate goals.

My name is Andrew Stone, and the best way to learn about Property Analytics and how I can help you is to give me a call and have a chat. Reach out for a one-on-one consultation and to discuss your 2023 development and investment goals.

Close up On Businessman Holding A Card That Reads "Negative Gearing"

Negative Gearing Your Investment Property Explained

Negative Gearing Your Investment Property Explained 1000 667 Andrew Stone

We’ve all heard of the pot of gold at the end of the rainbow.

Optimists will tell you that it’s real and that you can realise all your biggest hopes and dreams.

Pessimists will tell you that the pot of gold is the ideal that you will probably never achieve, and that chasing it will only bring you misery.

And property investors will tell you that the pot of gold comes in the form of long-term capital growth.

The average appreciation of houses in Melbourne sits at around 8% annually, and a well-chosen property will appreciate over time.

The problem isn’t whether or not the pot of gold exists. It’s retaining your asset long enough to get to the end of the rainbow.

Sometimes your investment property might be generating profits through rental returns, and at other times, you might be losing money simply by holding an asset. The returns from capital growth may be worth it in the long term, but what do you do while you wait for your property to appreciate?

This is where negative gearing comes in.

What Is Negative Gearing?

Close up On Businessman Holding A Card That Reads "Negative Gearing"

If the costs of owning your investment property are higher than the money it is generating, you can use these losses to lower your personal income tax and save money at tax time. 

This is called negative gearing, and it’s a strategy that many investors pursue – even deliberately – to achieve tax deductions and soften the financial burden of retaining a property that’s losing money.

Why Would Anyone Want To Pursue Negative Gearing On Purpose?

Holding onto an investment property that costs more money than it makes sounds precarious and doing it deliberately just for some tax benefits seems downright reckless.

But like we said, many property investors deliberately pursue this strategy, and it’s often recommended by property investment advisors in Melbourne – including Property Analytics.

I’ve already given you the number one reason – capital growth! Investors aim to retain their investments for longer and eventually sell when house prices rise. The theory is that the capital gains will generate enough wealth to offset the purchase price and any losses that were made along the way, resulting in a tidy profit.

A general principle of property investment in Melbourne is this: negatively geared properties (e.g. properties with lower rental yields) tend to appreciate more in value over time than cashflow neutral/positive properties (e.g. properties with high rental yields). Houses tend to return less rental yield than apartments – the below graph compares house price growth to apartment price growth over the last 20 years.

Negative gearing also takes some of the stress out of rental returns. Investors can offer lower rental prices to attract more stable long-term tenants and attract a higher pool of potential renters to replace an outgoing tenant.

Of course, not everyone deliberately pursues negative gearing. You might unexpectedly end up in a loss position due to lower returns or higher expenses than forecasted, allowing you to take advantage of negative gearing.

So, How Much Money Will I Get Back at Tax Time When Negative Gearing?

Woman Calculating Personal Income Tax with Forms, a Pen, and a Calculator

Negative gearing comes into play when your eligible investment property expenses outstrip your rental income. The difference in these two numbers can then be taken off your income tax for the financial year. Eligible expenses include management fees, maintenance expenses, and mortgage interest payments.

For example, if your property generates $15,000 in rental income but your costs total $20,000, you can reduce your taxable income by $5,000 – that turns $100k in taxable income into $95k.

However, this doesn’t mean you get $5,000 more in tax savings. Rather, you’re saving 32.5% of $5,000, as the marginal tax rate for a $95,000 income is 32.5 cents in the dollar for every dollar over $45,000.

So really, you reduce your tax by $1625 and you still need to cover the other $3375 in property losses yourself.

The savings associated with negative gearing can be compounded if your reduced income pushes you into a lower tax bracket. For example, property losses of $5,000 will reduce a taxable income of $122k down to $117k. This puts you in a lower tax bracket, meaning your entire taxable income is subject to a marginal tax rate of 32.5% rather than the higher bracket of 37%. 

As you can see, negative gearing is not a silver bullet that eliminates property losses. It’s important to consider all your taxable income and chat with tax and investment professionals before jumping into a negative gearing strategy. 

Our buyers advocates serving Kew East, Brunswick, and the surrounds can help you understand how negative gearing will apply to you.

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What About Positive Gearing and Neutral Gearing?

Positive gearing is the opposite of negative gearing. In this case, your rental returns outstrip your combined property expenses. Neutral gearing occurs when your rental income and property expenses more or less cancel each other out, resulting in no significant positive gearing or negative gearing benefits.

The clear benefit of positive gearing is that you are making profits that you can use to continually strengthen your financial position, whether that’s through saving for your next investment property or chipping away at the principal on your investment property loan.

However, positive gearing also increases your taxable income in the same way that negative gearing reduces it. Increases in taxable income could even push you into a higher tax bracket.

Things You Will Need If You Want To Negatively Gear Your Investment

For negative gearing to be successful, you will need:

  • A comprehensive understanding of all your property expenses, from the council taxes to repairs and maintenance.
  • To expect the unexpected, including additional costs to cover major damage and interest rate rises.
  • The cash flow to cover all these expenses until the end of the financial year.
  • Extra funds to absorb costs you can’t claim, like principal loan repayments and the 55%+ of eligible expenses you don’t get back.
  • To choose your investment property carefully to maximise the likelihood of stable long-term growth and maximum return on investment.

It is essential to consider the worst-case scenario and ask yourself if you are financially equipped to handle the situation if disaster does strike.

What if you go from relying on reduced rental income to not being able to fill your rental property at all? 

What happens if you lose your job or you have to sell your investment property before it has the chance to appreciate further?

Are you really in a position where you can afford to retain a money-losing asset for 10, 20, or even 30+ years?

Of course, there are ways to minimise the risks associated with negative gearing.

The most important negative gearing risk management strategy is buying the right investment property. Select a rental property with wide-ranging appeal, such as property close to major amenities and high-income producing activities centres (e.g. hospitals, universities). It’s wise to buy in capital cities and inner suburbs, and you should consider active value-adding opportunities when selecting your asset.

This is the sort of due diligence and consideration that I will apply as your buyers advocate in Northcote and nearby target areas. Property Analytics will test these criteria not just when considering negative gearing possibilities, but your overarching investment goals and the overall viability of each short-listed property.

Other ways to reduce negative gearing risks include careful management of your income, taking out appropriate investment property insurance, and maintaining a balanced portfolio that contains both positively geared and negatively geared assets.

Capital Gains Tax​ and Other Tax Considerations

Two burlap sacks labelled "Gain" and "Loss" on either side of a balanced wooden scale

As well as negative gearing, the other major tax consideration comes when you sell your property investment.

Capital Gains Tax (CGT) applies to any profits you earn from selling your asset. A 50% CGT tax discount applies for investment properties that are retained for 12 months or more.

Also remember that the tax benefits associated with your property investment apply regardless of whether your property is positively geared or negatively geared. A positively geared property will always result in higher taxable income but claiming eligible expenses will reduce the amount of money that’s added. 

Expenses you can claim to reduce your tax liability include:

  • Interest payments on your investment loan
  • Maintenance and repair costs
  • Certain travel expenses, where eligible
  • Depreciation costs, where eligible 
  • Strata and council rates
  • Land tax
  • Insurance costs
  • Other deductible expenses, such as water rates and property management fees

Can I Negatively Gear My Own Home?

As an owner-occupier, your home is not classed as an income-generating asset. This means it cannot be negatively geared, household expenses are not tax-deductible, and you are exempt from capital gains tax when selling.

However, if you no longer intend to live in your home, it can be turned into an investment property. It may also be possible to rent out part of your home and claim tax deductions proportional to the amount of space you are renting out. However, some Capital Gains Tax will also apply when selling.

You will need to talk to your lender to discuss your options, and you should also chat with a property investment consultant and your accountant before making the switch.

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The Controversy of Negative Gearing: Is It Set To Be Phased Out?

There are some topics that will always be discussed in the Australian housing market, from housing supply problems to soaring property prices.

And when either of these topics comes up, negative gearing is sure to follow.

While investors can lower their rental prices for negative gearing purposes, a property may also remain vacant. An investment cannot be left vacant by choice if you want to claim negative gearing benefits, but if you genuinely can’t find a tenant, all your expenses will go towards a tax deduction.

In the eyes of some, negative gearing is a property investment strategy that contributes to a much larger problem. Investors are protected if they can’t find a tenant, but vacant properties still result in less supply, which may result in higher house prices for buyers and greater rental expenses for tenants. 

Detractors believe negative gearing is bad for the property market and want the associated tax write-offs scrapped completely or heavily restricted. 

However, another truth of the Australian property market is that Aussies love property investing. And any policy that removes tax concessions will also lose votes.

Regardless of what you think of negative gearing, it’s most likely here to stay, and if you are pursuing long-term capital gains, it’s a strategy worth considering.

At the very least, this strategy can reduce your tax liability and alleviate some of the stresses associated with collecting weekly rent, advertising for tenants, and covering initial losses while your property increases in value.

My name is Andrew Stone and I’m a Real Estate Analyst, Licensed Buyers Advocate in Melbourne, and Director of Property Analytics. To discuss Property Analytics’ comprehensive, data-driven approach to acquiring high-growth investments in Melbourne, get in touch today.

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