{"id":25338,"date":"2017-05-08T03:00:19","date_gmt":"2017-05-07T17:00:19","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=11558"},"modified":"2017-05-08T03:00:19","modified_gmt":"2017-05-07T17:00:19","slug":"why-i-dont-chase-hot-spots-chris-gray-2","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/why-i-dont-chase-hot-spots-chris-gray-2\/","title":{"rendered":"Why I don’t chase hot spots \u2013 Chris Gray"},"content":{"rendered":"

Star of Sky TV\u2019s Your Property Empire, Chris Gray<\/strong> joins us to discuss hot spots and why he is not a great believer.\u00a0 He tells us where he prefers to invest and why.<\/p>\n

Transcript:<\/strong><\/p>\n

Kevin:\u00a0\u00a0<\/b>A question I\u2019m asked all the time is, \u201cIs there really a hotspot?\u201d I guess this comes about because people love to think they\u2019re going to get there before the rest of the crowd. I\u2019m interested to know about this, and it\u2019s a conversation I\u2019ve had a number on a number of occasions with Chris Gray, who is a buyer\u2019s agent from Your Property Empire and also a host of the Sky TV show of the same name,\u00a0Your Property Empire<\/i>.<\/p>\n

I wonder, Chris, does this come up in your dialogue with people, as well?<\/p>\n

Chris:<\/b>\u00a0 You\u2019ve hit the nail on the head there. Everyone wants a bargain, everyone reckons they got it for the cheapest price, and everyone thinks they got into the right area \u2013 the next up-and-coming one \u2013 at the right time.<\/p>\n

Definitely, there are hotspots around Australia and around the world, but it\u2019s like picking stocks; if you really are a genius and you can pick the lows and highs, you can make a fortune probably even if the market is going down if you pick the right kind of properties. But even the experts at Residex, RP Data, and SQM Research, most of those guys say they can understand trends but they can\u2019t pick the peaks and the troughs.<\/p>\n

I\u2019ve been buying property for 20 years \u2013 we buy maybe 50 or 100 per year \u2013 but we don\u2019t try and do that. Most of our clients are generally higher income. They\u2019re not trying to get rich overnight. They know that slow and steady wins the race, so more they\u2019re going for the classic Bondi Beach in Sydney or St. Kilda down in Melbourne, and they\u2019re trying to say, \u201cI want nice consistent growth. If a GFC comes up, I don\u2019t want it to halve in value. I don\u2019t expect it to double, but a nice 5% or 10% forever suits me.\u201d<\/p>\n

Kevin:\u00a0\u00a0<\/b>I remember back, and I\u2019m sure you would too, several years ago when one of the major hotspots was anything around a mining town, and I guess you only have to look at some of those now to realize that while they may have been hotspots in their time, they can also crash as fast as they can go up.<\/p>\n

Chris:\u00a0\u00a0<\/b>That\u2019s the problem. We\u2019ve had lots of clients who have gone to the seminars and gone to the various property expos \u2013 you can always tell what the flavor of the month is by the property expos, whether it\u2019s U.S. property or mining or whatever else \u2013 and they\u2019re saying, \u201cI\u2019ve got 25% yield and X percent growth,\u201d and all the rest of it, but now they\u2019re potentially getting zero yield and suddenly their $800,000 property is only worth $400,000.<\/p>\n

That\u2019s the thing. A lot of the seminar people have all the knowledge and they know what they\u2019re doing and they\u2019re getting in and out at the right time, but unfortunately the average punter on the street quite often is getting in a few years too late and they\u2019re going to miss the boat.<\/p>\n

Kevin:\u00a0\u00a0<\/b>Generally, I find people who are looking for hotspots are really looking to get in and out quickly, as opposed to the strategy you\u2019re talking about there, which is blue-chip, which I guess is buy and hold. Chris, is it?<\/p>\n

Chris:\u00a0\u00a0<\/b>It is. You do a regular radio program, and I do a regular TV program. The hardest thing for me is to try to talk about something new, because in my mind, in my book, nothing has changed for 10 or 20 years, because those suburbs haven\u2019t really changed. We just buy when we have the cash to buy and we hold on.<\/p>\n

It\u2019s not sensationalism; there\u2019s nothing newsy about it. It\u2019s kind of boring. They\u2019re not the most beautiful properties. They\u2019re the ones a block back that are kind of dirty and old, but they\u2019re in the best locations and we can improve them.<\/p>\n

It\u2019s not newsworthy type stuff; it\u2019s the old hare and the tortoise. The tortoise just keeps going, but at the end of the day, it reaches the end. Whereas if you\u2019re the hare, maybe it works out one decade, maybe it doesn\u2019t work the next.<\/p>\n

Kevin:\u00a0\u00a0<\/b>Chris, with blue-chip types of properties that you\u2019re talking about there, are they all necessarily inner-city properties, or do they vary in their location?<\/p>\n

Chris:\u00a0\u00a0<\/b>My philosophy from going to lots of seminars and reading lots of books is that I typically avoid the CBD because there\u2019s no limit of supply \u2013 generally, you can keep building these massive towers \u2013 and there\u2019s limited demand, because not everyone wants to work in the heart of the city, especially when they have families and they want fresh air and everything like that.<\/p>\n

I\u2019m an advocate of going the 5 K to 15K \u2013 or 2K to 15 K in certain suburbs \u2013 to get the area where there are three-story-high limits, so there\u2019s no more supply of property. All the properties are built up next to each other, so you can\u2019t physically build another property. There\u2019s lots of demand from the young professionals, the 25- to 35-year-old suits who will always have jobs\u201d<\/b>\u00a0because they\u2019re young and adaptable. They probably have wealthy parents, as well.<\/p>\n

They might be earning $75,000 to $100,000 each, so you get two people in a unit and they\u2019re earning $200,000 or $300,000. That\u2019s why these young people can afford million-dollar properties and million-dollar rents \u2013 because they\u2019re earning a lot of cash.<\/p>\n

From what I\u2019ve heard from Residex, who has come my show for donkey\u2019s years, he says affordability is a problem around Australia and around the world, but it\u2019s not in these suburbs because these young kids have cash and they have cash to spend.<\/p>\n

Kevin:\u00a0\u00a0<\/b>It\u2019s always good talking to you, Chris Gray. You can catch Chris, of course, on Sky TV.<\/p>\n

Chris:\u00a0\u00a0<\/b>Fridays at 6:30.<\/p>\n

Kevin:\u00a0\u00a0<\/b>It\u2019s called\u00a0Your Property Empire,<\/i>\u00a0Fridays at 6:30. Chris, great\u00a0<\/b>talking to you. Talk to you soon.<\/p>\n

Chris:\u00a0\u00a0<\/b>My pleasure.<\/p>\n","protected":false},"excerpt":{"rendered":"

Star of Sky TV\u2019s Your Property Empire, Chris Gray joins us to discuss hot spots and why he is not a great believer.\u00a0 He tells us where he prefers to invest and why. 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