Real Estate Investing in Australia – If you’re in Australia and you want to know how to invest in real estate, you’re. in the right place. Hey, friends. Stephen Michael Miller here and we keep getting. questions from many of you all across the world that are saying, hey, how do i do real estate in my area? And I’m gonna go ahead and address some of these. I’m. gonna start today with Australia.
A lot of you in Australia want to know how to do real estate the best in Australia and to be honest with you, I’ve never done. real estate in Australia, we’ve done a lot of real estate here in the US but i believe that there are some similar things that you can be looking at, when you’re looking to do real estate in Australia and some things that you can be aware of as you’re taking steps either to do real estate in Australia or to not. As you’re doing your research, things that you want to be aware of. before you take any steps, okay.
Real Estate Investing in Australia
I don’t want to slow anyone down actually, I want to get you going faster and faster towards your financial goals and doing. the right things in real estate but for me, as I got that question, I thought, hmm,. why would I or would I not want to do real estate in Australia? So I’ve got my computer here and I’m just doing some some quick searches to kind of show you. my thought patterns and some of the things that I go through as I am diving. in and doing some research as to maybe why I might want to do some real estate. in a specific area.
So I’m right here on Google, that one website that hopefully. you’ve all heard of before, right? I just went right onto Google, put in Australian. home values and started doing some searches and you can see right here on. my computer, you’ve got several different articles that are coming up,. this one right here says home values across Australia will continue to. diverge in 2019 which means that they are currently diverging here in 2018. What does that mean? Well that means that all across Australia, home values are. going different directions. You’ve got some areas, I’m going to click on this site right now that listed this article and it actually goes through different areas.
In Australia, it shows that in Sydney and in some parts of Melbourne. they’re expected to continue to decline in value so maybe not the best places to. be investing right now and in Australia Sydney and Melbourne but. then you have other areas like Adelaide, Brisbane, Canberra, hopefully I’m. not completely murdering the names of these areas, Hobart.
Real Estate Investment Trust in Australia
These are expected to. see further growth so some areas in Australia and this is not unlike. the US, in the US we have markets that are going up in value, we have other. markets that are declining in value and other markets that are holding steady. so you just want to be aware of which areas that you’re going into that are. experiencing those different types of fluctuations because it’s going to determine what type of real estate you might want to do in those areas. As i did some other search, looking into different property bubbles that have happened in Australia, I know, you know, I looked here on good old Wikipedia and although. Wikipedia is not the end-all be-all, it’s a good source for information.
This one,. this article in particular wasn’t necessarily the most current. Although it. was talking about a property bubble in Australia, a property bubbles or things. that happen in every market all across the world, this isn’t any one country. specific but I looked at the Australian property bubble, it looks like over time. since the 1980’s or even 1990’s, property values in Australia have been increasing. fairly rapidly as a matter of fact, more than a lot of other places around the world.
It talks about, their average growth has been around 6 or so, maybe. even 7% over the last many many years since the early 1990’s and I know that. this article or this information, some of this was was pulled in 2015 and. here we are right now, it’s 2018, not to date this video but you know we’re. experiencing some as we’ve seen some of this you in Australia,. those of you that are there, you’ve experienced a lot of this growth already. What happens with massive growth typically is when growth exceeds the. income levels, right.
Real Estate News in Australia
This is one of the things that it’s been experienced in Australia is the the home markets, the housing market, has grown past the income. growth and right now or at least when this article was written in 2015, you’re. seeing income levels at about, or housing value levels, six. times as much as the annual income level. That just means that people can’t afford. the housing as much right so whenever you get to a point in any market where. housing becomes too expensive for the individuals that are earning there then. you’re creating a bubble that has to be corrected at some point so that more. people can actually purchase property.
We’re seeing a little bit of this, I. actually, I looked to another forecast and you can see here on my screen right. now, this is the Australia house price index and this is over, you know,. the last several years from 2015 which again, we saw in that last. article that those are prices from the 1990’s up to about 2015. Well here you see. from 2015 till today, you’re seeing a general trend southward. Now we’re not seeing a massive decline necessarily but we are seeing a difference from a house. index of 4.7, now we’re down to right now this month or the last. couple months about a – 0.7. Again so this isn’t necessary time to jump. ship or stop doing you know, any type of real estate but it is something you want. to be aware of and this could be indicating a future trend so you want to. be just aware, you want to be looking at it.
Negative Gearing Isn’t Exclusive to Australia
Some other basic things and I want to. kind of maybe go away from these specific articles and just talk about. generals right now. In all of real estate, no matter where you’re buying real. estate, there are some things that you want to make sure that you are keeping. track of, that you’re aware of as you’re looking to get into doing real estate in. your area and one of those things is, can I buy a home that will cash flow? There. are a lot of people that sidestep that really basic rule of getting into a property that will cash flow for you. As a matter of fact, there’s something that. was really big happening in Australia for a long time called negative obviously, negative gearing.
Negative gearing isn’t exclusive to Australia, they just call it a little bit different than we call it America but negative gearing is basically buying a home, going negative on that home, oftentimes giving a interest-only loan, going. negative on that home for a period of time with the hopes or the belief that. the increased property value, right, if it’s growing at six or seven percent a. year that the hope is that that increased property value will make up. for that that period of time where you’re going negative.
Negative gearing is something that a lot of investors have done in Australia which has actually artificially inflated some of those values and so you want to be aware. of some of the things things that are happening and my recommendation would be to never be in a situation where you find yourself in a negative gearing type. of situation and the reason for it is because, if there is a bubble and if that. Bubble is ready to burst, if it’s ready to pop at some point and you’re stuck in. this negative gearing situation where you bought a home, maybe that was worth. more than you bought it for, maybe the monthly payment on it is higher than. you could afford and maybe it’s not being covered by the rents that you’re. renting it out for, if you’re in that situation and the market continues to go. in a downward slope, well then you’re stuck, right?
And those types of situations. you could be stuck in a really bad situation and find yourself losing money on the deal, maybe getting even into a situation where you may get a bad taste in your mouth for real estate in general because of some of the bad decisions you. made so I would recommend never getting into a situation where you’re trapped in. that negative gearing type of scenario so cash flow, cash flow is important, cash. flow is king, cash today can help you to invest in more today as well and so you. want to be aware of that, you want to make sure that you’re getting into homes. that are providing a positive cash flow for you.
Now I know what a lot of people. will say and I bet I’ll have individuals that will say hey, here in Australia, you. can’t find a home that that cash flow is positive and I’ll tell you right now, if. you say that to me, I’ll say two things to you.. Number one, you’re probably wrong. I believe that across the world, no matter where you are, most real estate. runs on a bell curve and what I mean by a bell curve is if you understand. economics, a bell curve just basically illustrates that most homes are going to. be sold in the right space of right if this is the bell curve right. here and you’ve got your normal standard deviations then most homes are gonna. fall right inside of that first standard deviation.
In other words,. they’re gonna be priced at the right price, they’re gonna sell. within the right timeframe and everything is gonna go according to plan. but in any situation and in any area, I would venture to say there are always. homes that are listed too high and there are homes that are listed too low. outside of that first standard deviation, right. That outside of that that initial. bell curve area so those homes that are priced too high, they’re gonna stay on. the market place, they’re gonna stay on the market until either the market. shifts or they shift, right until either the value of the home rises to meet the. price that they put on it or until they’re willing to move their price to. meet the market so those are those homes that are priced too high.
The homes though, the other side of that, those 5% let’s say of homes that are. priced too low, those are those deals that are often snatched up extremely. quickly and whether you’re in Australia or India or UK or America or wherever. you might find yourself, those homes that are priced below the market, those are. the homes that I suggest you look for and having a belief, first of all, that. those homes are even in existence, well first of all, fuel your ability to find. them so believe that they’re there and then start looking for them and as. you’re looking for them, again, you’re looking for homes that these these are. good homes, these are homes that aren’t necessarily your fixer-uppers, these are. homes that people just price below market for whatever reason and there are. a lot of reasons for that, right.
Sometimes it’s divorce, sometimes it’s. is people getting a job, sometimes people need to leave the country for whatever. reasons and sometimes people are, you know, maybe it’s a family dispute. I mean,. who knows what it is, right? But there are reasons that cause people to price their. home below market value because they want to get out of it. quickly or they want to get their money fast maybe for a different reason or a. different investment and so those homes do come up so be aware of those. homes because when you can get those homes, you’re more likely to cash flow.
So that cash flow is really important and cash flow really mix. I’ve kind of. cover two things in one.. Cash flow mixed with getting a home at a discount are. two things that I would almost always recommend when doing real estate no. matter where you are so I’ll say this.. If you’re in a situation right now, let’s. just say that you’re living in Sydney and Sydney’s home values are decreasing. and you want to go buy a home in Perth or something like that, maybe where the. value of the homes are going up right now.
You can absolutely do that but maybe. even ask yourself this question, do I need to be doing real estate where I. live? Is it important for me to do real estate here in Australia if this is. where I live right now or are there things that I can plug into?. Are there systems that I can plug into? Are there people that I could. potentially partner with that could help bring my investing outside of my general. area, right? Can I invest in Europe or can I invest in America? Does. that make sense and how do I do that? So that’s what I would look into.
Australian Real Estate Growth
There are. a lot of different articles that you can go online, again, just going on to Google. and typing in things like, you know, Australian home prices, Australian market. fluctuations, Australian real estate growth, you know, different things like. that, you can just plug in to Google and you’ll see different things. You see. right here a home price guide for Australia, you see a blog right here, this. was written actually in April of 2018 of this year, it says Australia home prices. fall for seventh month, okay.
Led by big city so looks like we’ve had some prices. falling. Actually I’ll click on that on that real quick, that’s like this was put out by Bloomberg.com, pretty reputable source right there and if you look at. this article, it just says, you know, home values are, they’re going down and. they’ve been falling, not tons, right. Says national housing prices fell 0.1% in. April from March so this isn’t a massive decrease necessarily but it’s something. to be aware of. You see some different charts so do some research, figure out.
I think one of the biggest things that keeps people at bay from investing. either in their home town or anywhere for that matter. we get this analysis paralysis, you know. You’ve probably heard that before. We get. so caught up in all the information that we don’t know that we’re afraid to make. any move forward and if you do a quick search, I mean I literally jumped on. for five minutes or so, did a couple searches, found a few articles, some old,. some new and I feel like I’ve got a decent taste for what’s going on right. now in Australia and now granted, I’ve got a lot of experience in America and. and I’ve been able to maybe take some of that experience and apply it to what I’m. learning right now but in my mind, there are some areas in Australia that can. make a lot of sense to invest in right now, areas that are increasing and improving.
One of the things that I would do to dig a little deeper would be to. look at the economies in those specific areas because even though a real estate. area or a real estate market may be declining in a specific area, if the. economy in that area is increasing, if people are moving into it and businesses. is improving, you know, if population is growing, that. can be some great indicators that although it may be declining right now,. it will probably bounce back up, right. So there’s things that you want to be aware. of so my recommendation would be, do some research, get in where you can, find out. what markets you’re in and I think more than all anything, regardless of what the markets are doing, if you get into a property and it has a good equity. position and if you get into a property in cash flow starting day one, you’re. already building in some great fail-safes that can keep you above the market even if the market declines a little bit that can keep you safe even.
When things are turbulent a little bit around you so that would be my big. recommendation is, do some research, get moving, take some steps and get outside. the box. Maybe after your research you realized, man, I want to do some real. estate in America. Come on, there are so many people that are doing real estate. in America from other countries, it’s crazy to me to see how many people are. reaching out to us from all around the world right now saying, hey, we want to. get involved in real estate in your backyard and I say, hey, if that’s what. you want to do, if that’s what you feel is your next step,. then come and come enjoy this, alright.
Go and find out how that could. work for you and I will say this, you know, if. you are interested in finding out from our team what that might look like then. you know click the link here or in the in the description below, click the link. and talk to one of our team, see if there’s something that we can do to help. you start doing real estate today, get outside of the fear of what’s may be. it in real estate so with that everyone have a fantastic day. We’ll see you later.