Note: This episode is a re-run of one of our older episodes. It originally aired on 12th November 2015 😊
In today's episode, we dive deep into why the old adage of 'location, location, location' still rings true for property investment. We explore how 80% of your return is determined by where you buy, and only 20% by what you buy.
One of the three filters in our asset selection criteria is scarcity, and today we take a close look at that concept. What exactly do we mean when we refer to scarcity in property investing? Are there certain elements in particular to look out for that will increase your property’s value?
Throughout the episode, we'll also underscore the importance of considering owner occupier appeal in your investments, why developers favour high-density projects, and why smaller investors should hone in on scarcity in top-tier locations.
Get comfy because this bonus episode is all about helping you understand the crucial role of scarcity and how it can ensure your next investment decision is a savvy one!
Free Stuff Mentioned
LISTEN TO THE FIRST 20 EPISODES HERE >>
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FREE MASTERCLASS:
- How to Build a Property Portfolio and Retire on $2,000 a week >>
FREE BEST-SELLING BOOKS:
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Note: This episode is a re-run of one of our older episodes. It originally aired on 12th November 2015 😊
In today's episode, we dive deep into why the old adage of 'location, location, location' still rings true for property investment. We explore how 80% of your return is determined by where you buy, and only 20% by what you buy.
One of the three filters in our asset selection criteria is scarcity, and today we take a close look at that concept. What exactly do we mean when we refer to scarcity in property investing? Are there certain elements in particular to look out for that will increase your property’s value?
Throughout the episode, we'll also underscore the importance of considering owner occupier appeal in your investments, why developers favour high-density projects, and why smaller investors should hone in on scarcity in top-tier locations.
Get comfy because this bonus episode is all about helping you understand the crucial role of scarcity and how it can ensure your next investment decision is a savvy one!
Free Stuff Mentioned
LISTEN TO THE FIRST 20 EPISODES HERE >>
MOORR MONEY MANAGEMENT APP:
👉 Apple: https://apple.co/3ioICGW
👉 Google Play: https://bit.ly/3OT86bW
👉 Web platform: https://www.moorr.com.au/
FREE MASTERCLASS:
- How to Build a Property Portfolio and Retire on $2,000 a week >>
FREE BEST-SELLING BOOKS:
- The Armchair Guide to Property Investing
- Make Money Simple Again
FIND US HERE:
- Website
- Instagram
- Facebook
- Youtube
Hi, folks, welcome back to the Property Couch podcast and have we got something really exciting for you today, folks, ben and I think that there's three critical filters that you need to apply when it comes to investment property. First of all, it's got to be investment grade. Secondly, it's got to have own Rocky Pire appeal and third, it's got to have scarcity. And, folks, we talked about scarcity way back in episode 37 and we think it's that important that we wanted to replay it here, folks. So if you really want to dive in deep to understanding the property market, then this episode is for you.
Speaker 1:And also, if you're currently researching locations that you want to compliment. Okay, I'm looking at the property, but I also want to know what location. We've got a free report. It's new, you can check it out. It is totally free. Folks, if you go to the propertycouchcomau forward slash property report, all okay. So one word you can get access to the amazing information that appears in here that some companies are charging $40, $50 for, and you can get it absolutely free the propertycouchcomau forward slash property report. Check out this episode, folks. It's all about scarcity. I'm pretty confident that you'll get a lot out of it. Let's cut to the conversation. Ben and I had way back in episode 37 on scarcity.
Speaker 2:Welcome to the property couch where, each week, you get to listen to two of Australia's leading property experts as they share with you the insider's guide to property investing.
Speaker 1:Hi folks, you're on the property couch, you're inside us guys, a property investing. I'm Bryce Holtaway, co-host of Location, location, location, australia, on Lifestealth's FoxTel channel or even FoxTel's Lifestyle channel how many times have I do that? And he's Ben Kingsley, the chair of the property investment professionals of Australia and the reigning and current property investment advisor with you. Hello mate, hello buddy, how are you Very, very well, thanks. The tash is looking very spectacular.
Speaker 2:The moustache is coming along. So thank you to those who've reached out and donated. I'm trying to get to $2,000. That's my target. So if you haven't donated, go to the website. If you like the podcast, then give me 10 bucks. That'd be great. It all helps men's health.
Speaker 1:There are two funds to your raising here. One is to afford the hotel room that you have to stay in each night because Jane won't let you inside. The other is to raise money for the wonderful cause.
Speaker 2:I've got a bit of a cough at the moment so I'm in the spare bedroom the last couple of nights so she kicked me out already. Yeah, there's nothing to do with the cough.
Speaker 1:It's everything to do with the tash, so it's been an interesting week in the world of property. It looks like clearance rates here in Melbourne have been down for the third week in a row, which is probably not a bad thing for property investment in general and, as you say, take the speculators out of the market.
Speaker 2:Yeah, supply is up, which is normally we know when supply reaches this sort of spring and coming into early summer season, that it's a good indicator in terms of the interest and the buying depth in the marketplace, and we're starting to see more so in Sydney than Melbourne that that buying depth is not there now. There's still and which is a good segue into what we're going to talk about today there's still good interest in three and four bedroom freestanding houses, because that's where the scarcity is at the moment, but not so much in the apartments and the new stock. So it's a good message and it just goes to show that that's our best leading indicator in terms of what's happening in the good areas around the cities through auctions, especially Melbourne and Sydney.
Speaker 1:Yeah, then, talking to the agents on the ground, it's interesting to understand when you could see this. People can get into a false sense of security that if the market's coming off a bit they go well. The market conditions have changed, but in the areas that we're buying in we're already buying in scarcity areas. So therefore the agents are just saying, instead of having eight bidders, we've got three. But even with three bidders you've still got competition.
Speaker 1:So, it's middle and friend suburbs are going to be affected hugely by that. But the really good stuff, if you've got scarcity in mind, which is the topic of today, will serve you very, very well during these times.
Speaker 2:And so when you are out in the field, guys, and you are saying how much interest is in this property, try and ask the agent if it's own or occupy interest or is it other investors. If you're just constantly fighting against investors, that should be a little bit of a signal to you. That's probably not the area that I need to be, because once the investors go out the market, that's when the corrections will occur Again. We're big on unoccupied appeal, so make sure that you're fighting against unoccupied who want to live there, as opposed to investors who think it's good value for money because it might be good value for money indefinitely Very, very good tip.
Speaker 1:Now, I guess what it means is for the industry as a whole. I think APRA has put in some, I guess some handbrakes to help stall the market, which is a good thing. I think that the interest rates going up is. We talked a couple of weeks ago. You said one interest rate movement and one weekend doesn't tell a story. But I think overall sentiment, from what I can tell on the ground, has been dulled a little bit. I don't think it should discourage people, but it's dulled a little bit.
Speaker 2:It has. And look the media can't have a level playing field in property. They can either have a boom or a bust, so expect to see more negative commentary around the property market, which is obviously going to affect those who don't have the confidence and, to be brutally honest, the less amount of people that are interested in property investment. Because, let's think about it like this remember we've talked about 70% owner acquired, 30% investor, when we're seeing numbers of 40% and 50% investor. That's unsustainable. That means speculators are in the market. So I don't mind it. I think from a sustainable point of view and we do our best buying when there's fear in the marketplace.
Speaker 1:I was going to say I was going to quote a Warren Buffett quote, because no one ever does this today but be fearful when others are greedy and greedy when others are fearful. So I think that, in terms of my focus in Melbourne, I had been less focusing on Melbourne over the last six months because there's been other opportunities, but if the sentiment comes off, continues to come off, mate, we'll be cherry picking big time. The best blue chip assets in Melbourne, because they are short term, is 10 to 15 years.
Speaker 2:Look when I think Sydney will come out in the next 12 to 18 months as well. I think there will be some good buys in that marketplace as well, so all good news.
Speaker 1:Anyone who knows me, ben, knows that I love a good framework. I think that if you can't explain your topic simply, you don't know it well enough. And we always talk about a couple of filters and frameworks and three. That basic filters that we talk about when we're buying property is owner, occupy appeal, investment grade and scarcity. And you're doing a talk today to a bunch of financial planners and you've unpacked the scarcity factor to some detail and it's probably really good to share with our listeners.
Speaker 2:I thought it was just a good message and it's a timely message. So buying property in a slow market and sort of getting long term capital growth out of that particular area, all comes down to supply and demand. So if there's scarce supply there's a greater chance. Factoring in investment grade and obviously owner occupy appeal, you're going to get a good result. So let's get into unpacking it.
Speaker 1:Yeah, far away. It's probably worth mentioning that there's two parts to it, isn't it? There's the scarcity of location and then scarcity of assets, so let's kick it off with location.
Speaker 2:Yeah, and in terms of explaining this there's going to be a bit of crossover and we don't have visual aid, obviously, with this podcast. But we believe that 80% of your return comes from the area you're buying and 20% comes from the property. That's a rough rule of thumb. And then when you get scarcity in the actual property stock so character, home or something that can tweak that so you can actually get some return on the actual physical asset let's start from the top. So I need to explain this first one, because this is the one that's probably the hardest to explain.
Speaker 2:But I want you to think about it like this when the most expensive land all around the world is in the CBD, in locations where there's the ability to build a high rise, because obviously, when we're talking about per square meter of dirt, we know that in Tokyo, london, new York, that land is as an absolute premium because of the value add that they can put on the land.
Speaker 2:So that correlates also to residential property in the sense that if you are in an elite area, an area that has great status and has huge owner-occupier appeal, then what I'm talking about here is what we call backfill. Okay, so it's about sort of saying that there are owner-occupiers who are willing to buy that period property or that grade asset for the land content and even though they're going to pay a premium for the house, they're going to bowl it over and build something else on that land. So that is the pinnacle of the commercial viability of that land. It's saying to them that they'll actually pay extra for the dwelling on top of it, even though they don't want the dwelling. That says that that land comes at an absolute premium. So areas that are close to the CBD but also have beach appeal and proximity are their absolute bees knees in any city and even regional town around the world, and that's where the area focus is our number one interest.
Speaker 1:So, for example, the mansion that Packability and Volkloos in Sydney with his wife Erica, where he bowled over a bunch of houses and built this gargantuan and then recently sold it because the marriage went pear. But, that's a classic example of what you're talking about, isn't it?
Speaker 2:Yeah, it is and there's also the one in two rack recently where there was uproar from the locals. It didn't have an overlay on it, a heritage overlay, so it was a fine house that could have been restored, but it was bought by a Chinese national and they were ugly, so they wanted to build what they wanted to build.
Speaker 1:Well, the challenge with that is they bowled over this mansion that most people in their lifetime would aspire to and never ever be able to step foot into, and here he is going back, just absolutely demolishing the people's dreams.
Speaker 2:It's all relative and we just saw that painting sell for over a hundred million US at Christie's auctions this week. That was an honest buy. Was that you? No, that wasn't me. You know it was a Chinese cab driver, really. Yes, it was a cab driver at New York City. I don't know what other investments he did, but that's probably what he started as. So good luck to him, and if you can afford a naked lady on his wall, which is apparently a pretty risque image, but I don't know where you put that one.
Speaker 1:I've heard of the limo driver who takes the billionaire to where he wants to go every day, taking all the little notes about what I should buy, but I haven't heard of the cab driver doing so.
Speaker 2:Yeah, but that's about scarcity and that is the pinnacle of scarcity, and we talk about it with cars and certain types of elements, when it becomes something that is authentically old and in rare supply. Or that Ferrari, that $12 million Ferrari that was burnt out, the 1972 Ferrari you know what an A&O? 10 of them in the world, I know how many it was, but there you go. Why was it worth $12 million? Because it was rare, and so that's what we're talking about. It's just that rare land in that amazing location. That's the number one area for location areas focus.
Speaker 1:Very good. Next one is proximity to the CBD. For employment reasons, for income reasons, largely.
Speaker 2:Yeah, it is. So, unless you've got a chopper like you know, Lin Fox, like Lindsay Fox, he can jump onto the chopper and fly to his city building and then off to his destination airport down to Sorrento but for the rest of us, mere mortals, proximity to the city is absolutely important.
Speaker 2:For one is that if we want to earn high incomes to be able to afford these properties, we want convenience and the ability of choice of job that allows us to get there. So that's why we congregate closer to that amenity. And inside that city location usually is the arts and the culture stuff that we're also looking for. So you know, the wine bars, the great restaurants, the theater, those types of things that make our lifestyle better.
Speaker 1:We don't want to be traveling an hour and 40 minutes to get into that to enjoy that and I think that an amplification of that is depending on the city combining CBD with something else. So if I'm in Great great call, if I'm in Brisbane, it's not city and beach, because the beach isn't so great, it's just a city and river. If I'm in Perth, well, there's a golden triangle in Perth because it's jammed between the beach, the city and the river. And then if you go to Adelaide, they place a huge value on beach location. So being in between the city and the beach, so if you can amplify that with another driver, that just makes it even more scarce.
Speaker 2:And I think the observation that, if I can make a quick one, is that Adelaide is an example, it's because there's no real congestion yet. So if you can get congestion, then ultimately scarcity closer to that city location becomes more and more important over time. So you've got to think when you're buying not just for the next two years, five years, but factor out 20 years of what you're about to buy. And if you, if there is going to be scarcity, there is going to be population growth. So that's going to create even more congestion and more traffic. So hence the things like rail, light rail, those types of things, easy access to a city location is going to be more and more important.
Speaker 1:Yeah, no, I agree, and I think that a lot of Brisbane people don't necessarily place the same value on a train as you do in Melbourne or Sydney. No, I think, 10 years ahead that'll change?
Speaker 2:Yeah, exactly. The next one down is land fully utilised. So you know, land is obviously the thing that we can't create more of, unless we're knocking down mountains and pushing it down into the ocean, like they do in Hong Kong and even parts of Dubai. But we're not about that. What we're sort of saying here is land is, if it's fully utilised land, then the land becomes scarce. If it's out of suburbs and new subdivision, there's no scarcity in that. So you know, overlay is basically all the land being fully utilized, and if it has, that's a good sign.
Speaker 1:Yeah, no, our good friend Peter Kulizos, the property professor, talks about the three L's location, land and looks, so I think that plays into it very well If you could be in an area where there's no extra land once you've got location right, then there's land scarcity. That's, that's a huge drive. I like those three L's.
Speaker 2:Yeah, pretty good. Yeah, location, land and looks, yeah, so there's that under a Kappai appeal. There's the location and the land. Obviously, land is where the value lives. Yep, sounds great.
Speaker 1:And then when he's and then when you know, you sort of go more if I, even if I'm going to buy a townhouse, well, it's comparing the land component within townhouse.
Speaker 1:And then for me it looks is around context, and I always think that real estate is all about context. I'm looking at this house in isolation. If I could take a step back in in context for the rest of the suburb, how does this one work? So I've got the location right and I've got the land size right, but I might not be. I might be in a street full of period homes, yeah, and this is the only one that's a post wall. Well then, that's very satisfied. Two out of three Love it.
Speaker 2:Love it, strict planning regulations. So what we find is the the neighbors don't like change. So in the really elite areas they don't want high density, they don't want medium density, they actually quite like the street the way it is and they obviously lobby council for, for you know, no change. We've all seen those signs up in front gardens that we you know we we protest against appropriate development or major development. That's the type of stuff that we're talking about here. So I think, from from that point of view is, if those planning guidelines are tight, then that's creating that scarcity, it's putting a limit in terms of what can go into that area. So you know, if that's overlaid in the suburb that you're living in, then that creates that further scarcity.
Speaker 1:Doesn't, bernard Bernard? So I'll call that nimbyism. Not my backyard yes, that's what it is. Not in my backyard yeah, very good. And then you've got a mix of old and new subdivisions, so where you've got the old making way for a bit of the new, but obviously that that means that there's a little bit less land scarcity than the ones prior.
Speaker 2:Yeah, it does. I mean with this one here there's sort of a combination of the two. You can. You can see some areas where it's been industrial be re-designed and that rezoning can create a new level of availability, which is which is good, you know. So we've seen it happen in Richmond where the old was a GTV9, you know sort of subdivision there. They've knocked that over and now building townhouses.
Speaker 2:But don't be fooled when that and that's happening in Botany and Sydney. And it happens, you know, in areas where they want to put more residential. Because in reality, once, once the commercial industrial areas or the industrial areas mainly in the factory areas, once they become inefficient meaning that pulling trucks in and out of the streets and all that because of the congestion then they'll rezone that and those new factories and that new industrial area will be built out where they can connect to the arterials quicker. So that's the sort of thing. So we're seeing here the fish market sorry, the the flour markets and the fruit markets down the sort of Port Melbourne area that all being redone because of exactly that. It's like OK, we're going to build it out in Epping because it's just easier and more convenient to get those to get that distribution happening around the area.
Speaker 1:And the land's too valuable. There's an example in an inner city Melbourne suburb that we like in the inner Western suburbs that has beautiful period homes but it's got a Lego land as part of it. Yeah, and we avoid the Lego land section of it, which is the new part, because we don't think it stacks up. So that's probably the fundamental downside of the mixing older and new subdivisions, because the new stuff that it lacks that scarcity of. Look, if we go back to that, that's real.
Speaker 2:Correct, and you might also see this occurring in middle ring areas where there might have been a large government facility and that government facility is now tied. So in a case would be Bundur and McLeod, there, where there was the Old Mont Park which was a mental hospital, and Kenneth sold it off and it became a development and they've built a thing called Springfield and that is was a high end area near the. You know it was only a 10 minute drive into the into the hospital there, the. I'm just trying to think of the name of the hospital now, the Olivia Newton John cancer clinics there. I think I was actually even born there and I kind of think the Austin hospital just came to me.
Speaker 2:That's, it's been a while. It has been a while 44 years ago. So that's the type of thing that we're sort of talking about there. So you can have properties that were built, you know the old three bedroom, three bedroom, one bath, brick veneer, and now all these new subdivisions are coming in around it and so you'd be buying the older stock to get the drag up value over time as that new subdivisions come through and those new houses are built. So that's, you know, in the scale of things. It's down the end, but there's still some scarcity there, and that's how you can potentially make some money in that area.
Speaker 1:Well, it's been given the choices better than what? Probably the next one, medium density, where you've got usually along busier roads, where you've got maybe four or five level apartments with cafes and everything underneath. We actually don't buy that type of stock, so, which is why it's at the bottom of our scale in terms of location. But we actually rely on that sort of stock, don't we? Because it's part of the strategy is to say well, that will drive. You know, if we think about human interest, human behavior and economic activity, the human interest is largely around what are they gonna do when they're not working? And if there's a wine bar or there's a Chinese restaurant or something nearby that that medium density zoning allows, we rely on that, but we don't buy that sort of stuff.
Speaker 2:Yeah, it is. I mean, that's the tipping point. We're now at the stage where we don't touch this. There's no scarcity in medium and high density stuff. So this is a hint at the bottom of the scale, because but we do love what it brings to an area.
Speaker 1:The challenge for property investors with medium density zoning is it gets the most publicity because the guys that are doing the moving of that get the biggest budgets and therefore they can get to talk to the most people. So it's really the vulnerable space and, as someone who looks at portfolios a lot, you'd see a lot of people with either medium density or high density stuff.
Speaker 2:And or off the plan stuff which has no scarcity at all. So, new subdivision Greenfield Estates absolutely.
Speaker 1:So the last one, on the location scale, is high density zoning. The biggest challenge is it just doesn't have scarcity whatsoever. So if you even think about a developer who's got the last piece of dirt available in a central business district location, there's still no scarcity because they can go as high as the flying regulations are allowed to go. And if you think about Dubai and you think about the Gold Coast, they've got very tall towers with a light on the top so the plane doesn't crack into them. So even if you've got scarcity of land at the bottom, there's no scarcity going into the score.
Speaker 2:Correct, and this is where the developers make their money. So go back to the very first point about the backfill. There'll always be an older building in a city that, if bought well, at $30 million for the building, they can still make money because they can get 60 stories out of it as well as the underground parking. That's gonna be a rent roll. So that's the point for them. But for us humble residential investors who can't raise the 30 mil to buy it and the 200 mil to build it, we don't play in that space. So that's where they make their money. But we as smaller investors, make our money through the scarcity of those better locations.
Speaker 1:We spent most of the time on this podcast talking about location, because it's a very central theme to our podcast. That's, location does 80% of the grunt work for you, or, as we say, the heavy lifting. But in terms of the actual property, I always think that, as Ben does a little cough there with his lurky, I think that there is a sub note to location doing 80% of the heavy lifting and that is if you get the property, you're wrong, you can undo the entire 80%. We've seen that time and time again when someone's actually bought in an investment grade location and they bought down the lower end of that scale that we're talking about the medium density or high density and they just did undid all of the good work in terms of the buying. So it's important now, even though it represents 20% of the cream, you still gotta get it right.
Speaker 2:Absolutely mate, and that's where we move into this property types. So let's sort of pack it from the most to least scarce items the vintage, and that is the period character, handcrafted homes of yesteryear, so the Edwardians, the Victorians and the bungalows. That combination of style, elegance, and when you walk into it, the broader, wider hallways, the 15 foot ceilings, the craftsmanship, everything like that speaks to the majority of the Australian market who wanted to buy that. I mean, if you did a sample test. We talked about mainstream appeal and we talked about this in the podcast before. That's where the mainstream appeal lives.
Speaker 1:Yeah, agreed, it's interesting. I've got a client this week who we're a mutual client of ours, ben, who's asking me to buy him an asset and culturally, being Asian culture, typically would favor contemporary style. But once we started talking about because the budget was a million to buy an investment property, and once we started talking about the beautiful period homes and the locations, he was so excited about what could be at that price point and what he could see. So even culturally, where they favor a certain area, once you see some of these beautiful scarce assets that you can buy in the locations that are closer to the CBD is amazing. So period and character in a freestanding. So whenever we stand out in front of a house it's always freestanding is first, the more land the better, and then you'll go down to OK, if I can't afford freestanding will I go semi-detached and then some totally no common walls in total so you go from period freestanding right through to period with common walls.
Speaker 2:Well, gain across links back into our bias decision quadrant, isn't it? So? Once we understand the area, then we have a budget. That's our budget. We know the area. It's about land size, and so you can get the combination of land size and character. Oh, it's the bee's knees.
Speaker 1:So I guess really at the top of the tree is you're as far back as you can go the Edwardian, the Victorians.
Speaker 2:if we're in Brisbane, the real stately style Queenslander homes, the proper Queenslanders, the ones are just jaw drop.
Speaker 1:Beautiful verandas, take a bet in the beautiful locations. So they're in Nirvana and then a bit later on you had the Californian bungalows being built. So be fair to say that most people nothing wrong bungalows, but most people would probably, if given the choice, would choose the Edwardian, victorian stately Queenslander first, before the bungalow. But personally I really like the bungalows, yeah.
Speaker 2:I agree. I mean I own a Cal bungalow in 1927, brick Cal bungalow, so I have a love affair with them as well. But to be honest with you, I would not back an Edwardian or a.
Speaker 2:Victorian in Middle Park or something like that. That would certainly be one. If I had the checkbook I'd certainly wander down there. And then we go into the post wars. I'd actually still got a bit of minimalistic character to them. I mean, some people might might and say that they've got strong owner Okapai appeal. But what you love about those weather boards and that they're very easy to craft into, you know the, the open area of the back. So the lean to building that out and getting that sort of done so that there's still some interest in that, because usually they're in the better locations. You know this. The post wars aren't out in the 30 kilometers, 40 kilometers out, they're only the 10 or 15 kilometers out, which is when they were built in the 40s and 50s and 60s. That was the end at the edge of the city. So you know they still have some appeal.
Speaker 1:And the beautiful blonde brick sort of 1950s triple front are that you can. But I mean, once you put render on those, you put an extension at the back, usually go up. You've still got the big block of land, like you say. Yep, location, if we go back, is a proximity to CBD is a good thing and then we probably go into the unit space. Yeah, art Deco units probably trump the 60s and 70s style of unit, but for me personally I tend to Favour as an investment. I tend to favour the the 50s to 70s flats over the Deco, for one reason it's because they get around a similar style of rent. But I have to pay a Premium emotional price for a Deco versus a 60s, 70s flat. So purely numbers wise, I favor them for an investment. But for, if I'm from an owner occupy appeal you walk in, you see the one eight fittings, you see the, usually one of six or you know really small the Deco is going to give you that bigger capital growth.
Speaker 2:But again, if your situation is you need better yield with the drag-up growth that you're going to get out of the 60s, 70s flats, that makes sense to me completely. Now one thing for the listeners Don't then go and think that I can go and buy an Art Deco apartment in a Middle-ring suburb. Now some of those areas were around in the sort of 20s, 30s, those suburbs. But you've got to understand that the Art Deco's have got to be brought closer to the city. So come back to overlay it back with your area analysis and in some cases those Art Deco's and even the 50s to 70s flats, they will perform better than buying a house in, say, cranban or somewhere out wide, you know, in a new Greenfield area. So other areas of you know, potentially even Logan, those types of areas which are just still no scarcity and no income story, yeah and so a lot of people think bang for their buck.
Speaker 2:They make this chronic mistake when they think I can go out and buy a four bedroom to bathroom house, bathroom house, add in the burbs for 350, 400 and if it's Sydney, it's my maybe 650 and I or I can buy an Art Deco for 750 in Paddington or or you know sort of some, some area around Kings Cross and that something, trust me, that Art Deco apartment will perform better than that house out in Blackburn or evening like that, blackburn. What am I talking about? Blackburn? Why am I saying blackburn? Which city? Sydney, bankstown, bankstown, sorry, apologies, listeners, you think you're doing mixed metaphor.
Speaker 2:I was as well, I was crazy.
Speaker 1:And then townhouses and villas again. If you, if again, if you're moving down that rung, if you can't afford those others, townhouses and villas means you move a bit further out. You start. You still got to stay scarcity in number. So when I buy a townhouse wants to be one of five tops. Oh yeah, absolutely some cases if it's in the right location. Recently we bought one in a Very blue chip suburb of Brisbane, had eight, but because to be in that postcode made a difference. But, all things being equal, you want to stick around that sort of scarcity of number because on the, on the patch of dirt, I want to get as much land attributed to my townhouse as I possibly can rather than a small place.
Speaker 2:Yeah, that one's a really important one for me, bryce. That's about sort of telling the listeners that if you bought a townhouse or a villa in the better location, it's going to do better than buying the house another 15 or 20 kilometers out. Read that's the message for this one. Here. It's like again you've got to overlay townhouse villa into the actual location mix first. Mm-hmm, don't just go out and buy townhouse and villas just anywhere, because it won't work Well this matrix that we're going through is assuming you did location first correct absolutely good, good, re-re iteration of that.
Speaker 1:So then the next one is just your. You know the house that my parents grew up in the 70s to 90s Brick veneer, free standing home on a quarter acre block in suburbia. Again, it's probably interesting for a few of our listeners Even if they're listening to this podcast for the first time today, or any of you that we've talked about Apartments and units and townhouses before we've gone back to a house. So it's interesting that, oh, you know, we always say get the location First, by the property second, and so it's interesting for for some people that might challenge them.
Speaker 2:Yeah, because early 70s that's what our parents wanted to do, even if they worked in the city. The city was a dead zone back in the early 70s. So they got in the car, there was no traffic, they went out and they bought a house in the news suburb block. Because that was all the rage. You know, we were following TV out of America, you know, and they all, everyone, lived out in the suburbs. And then obviously the world's changed density, population, those types of things. So those types of assets are still better than the new stock, but they don't stack up.
Speaker 1:We're still following our TV out of America. So the Gen Y's still want to do what Seinfeld are doing and how I met your mother they want to live in apartments. So it's important to understand the generations. And then we rounded off. There's gonna be no surprise to long-term listeners of our podcast that coming in at second last and last. Second last is medium density apartments and last is high density apartments. So it's no secret that we say the ones that are gonna suffer most in the downturn a high density apartments with high density zoning, no scarcity.
Speaker 2:Simple as that. Nothing more really needs to be added. No, I agree.
Speaker 1:So there you go, folks. We always talk about those three filters of owner-occupy appear. We think we've covered that pretty well. Investment grade We've covered parts of investment grade in this discussion, but it's also about what sort of scarcity. So it's scarcity of land and it's also scarcity of property. So if you're about to go and buy an investment property this week, you're going to auction, you're in the middle of a negotiation. Hopefully that helps you in determining which one you should be buying and don't be overly concerned around the sentiment of the market If you're following the principles that we're talking about today, because Investment property is a very, very good long-term asset if you get it right.
Speaker 2:That's it. No, you said it well. Nothing more for me to add.
Speaker 1:Understanding scarcity and property was what today was all about. So, as per usual, if you, we ask a favor every now and then, if you are Enjoying our podcast and we are getting some tremendous feedback, so we appreciate that if you could just tell one friend Please just let them know to log on and check out our podcast, that'd be great so that we could pass the message around, so that we can stop people doing what Ben said in episode number one, which is people making dumb decisions around property investment. Anything to add to that, mate?
Speaker 2:No, no, I was at the speaking at the Sydney property by show a couple weeks back. Mm-hmm had a couple of clients come up and say good day, some of our Sydney clients, which was lovely of them and and our Spanish couple Well, not Spanish South American, but they obviously speak Spanish over there. So, Margie and Ricardo, this goes out to you. You told me not to just do the adios but to actually do a more deeper meaning than you had a bit of an argument about which was the right way to do it.
Speaker 1:So this makes me really nervous, I guess because it means that now Ben's got some feedback around this sign-off. It's only encouraging and fueling the fire. No.
Speaker 2:We were going to retire at a Christmas time. We are still going to retire at a Christmas time. There's no doubt about that.
Speaker 1:Alright, folks. Well, there you have it, the scarcity factor when it comes to property. As we sign off for the week, we hope you have a great week this week. Until next week, ben. Hasta luego. Hasta luego, Hasta luego oh there you go, Margie and Ricardo.
Speaker 2:Let us know Hopefully you got it right.
Speaker 1:And for the rest of you, spanish folks who want to let us know, if you know that, you're very welcome to do that, but until next week it's hasta luego. And next, for me and you, mate, it's hasta mañana, hasta mañana. See you guys next week. Hey folks, bryce, here again. I just wanted to catch you real quick before you go. If you're new to our community, I want to encourage you to listen to our very first 20 episodes, as the concepts we share in EPS, one through 20, are foundational principles, pillars and frameworks that you need to know for you to get the best value from our content week to week on our show. My little tip is to listen to it at one and a half speed.
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