22 Jun Borderless Investor – Bryce Holdaway
In today’s show Bryce Holdaway, from Lifestyle’s Location Location Location Australia, explains the benefits he sees in being what he calls a borderless investor. He also talks about Sydney market.
Kevin: Bryce Holdaway from Location Location Location Australia on Foxtel joins me once again. He’s also a partner in EmpowerWealth.com.au.
Bryce, talking specifically about the Sydney market, do you think it’s too late to be getting into the Sydney market because it’s so hot?
Bryce: For anyone in particular who is thinking about being a first-time investor under the fear of missing out, I’d certainly suggest Sydney isn’t the place for them to be dipping their toe in the water. They’ve had double-digit growth, above-average annual growth, for the last couple of years, and with over 80% clearance rates, I think there’s a challenge in that it might be well and truly getting to the top end of the cycle.
Back in the boom of 2001 and 2003, Sydney did something similar, but then from 2004 to 2007 it tracked sideways for quite some time. I think that would have been a challenge for the people who were holding real estate that time period.
Kevin: Is Sydney unique in that?
Bryce: No. I guess Australia is not one big marketplace. Perth in particular is in for a bit of a tough time, but it has been going great over the last couple of years. I think if as an investor, you see Australia as not being just one big marketplace but made up of hundreds of submarkets, if you’re prepared to be a borderless investor and move your money around the cities and states that have the best chance of being in the right part of the cycle, over a period of ten years, you can give yourself the best chance of getting the maximum out of the market rather than just staying in your own backyard and waiting for time to just be your friend.
Kevin: It is very comfortable, though, to buy in your own backyard. It’s an area that you know, you’re familiar with it, and therefore you’re minimizing your chances of making a mistake. To become a borderless investor, do you recommend traveling to the area as well as doing your research?
Bryce: If you’re not getting professional advice or professional help, absolutely. Buying property on the Internet I reckon is fraught with danger. I’ve mentioned it to you before. It’s like checking out your friends on Facebook: they only put the good stuff up. You actually need to be on the ground to see what the market conditions are like, talk to the agents, and get a feel for the area for yourself.
But if you’re getting professional advice, I help clients buy interstate and I would say seven out of ten don’t actually see the property before they buy. They well and truly see it afterwards but not before.
Kevin: For someone who wants to become a borderless investor, what are the research steps you have for them, Bryce?
Bryce: First of all, I’d actually suggest that you look at the country from a telescope perspective rather than a microscope perspective. What I’m doing is using history as a precedent. I mentioned before that Sydney in 2001 to 2003 did really well, but in 2004 to 2007, it tracked sideways. If I have a look historically, I can see from that 2004 to 2007 period Brisbane actually went really well. Then after 2007, it dipped down a little bit, and then from 2007 Melbourne started to do really well.
I think that something that we can learn from the past is Brisbane, for example, tends to lag behind the two bigger cities of Melbourne and Sydney historically. That’s the case right now, where Melbourne and Sydney have done well over the last two or three years and Brisbane hasn’t.
I think there’s an opportunity to see that history may repeat itself in that regard and to look to that city before you start getting specific about what suburbs and what types of property you want to buy.
Kevin: Looking at Brisbane for a moment, it may not have performed as well as Sydney and Melbourne in the short-term, but over the long-term it’s a fairly consistent performer, isn’t it?
Bryce: It is, but over the last five years, it has done next to nothing. I’m buying properties now for clients where they are actually buying at not too dissimilar prices to what someone paid back in 2007 and 2008. They’ve been tracking sideways for a little while, but I think the part of the cycle is right and you’re actually getting really good yield in that market, as well.
It’s never a bad idea to hold good quality real estate in Sydney and Melbourne because they’re world cities. They’re major metropolises with plenty of opportunities. Jobs are always at a peak in those two cities.
But right now, I think for those experienced investors who have maybe enjoyed some of the benefits of Sydney and Melbourne over the last couple of years or even someone who is dipping their toe in for the first time, potentially a city like Brisbane might offer them better opportunity for the next couple of years.
Kevin: One of the other lessons you’ve learned, as well, is there is no one market even in Brisbane. You can’t just say that all Brisbane stock is good stock. There are some good areas and some bad ones.
Bryce: I would agree. I would certainly prefer to stay closer in to moving further out, because if Brisbane starts to get a bit of sentiment to where people are moving there, you might get some good movement in the next 12 to 18 months, but long-term, although Brisbane is largely becoming a metropolis where more multinationals want to locate there, they’re still lagging a little bit behind the job opportunities that you can get in Melbourne and Sydney. I would certainly want to stay closer into the CBD rather than getting caught up on being too far out.
Kevin: Always good talking to you. Bryce Holdaway, thank you very much for your time, mate.
Bryce: Pleasure, Kevin. Any time.