Troyson Bassani says to be successful when investing in Australian regional property you must study the marketplace, avoid biases and seek expert advice.
Troyson is the Founder and Head of Research at Life Buyers Agency, which has secured over $150 million dollars worth of property across the central Queensland region for intrastate, interstate and international buyers.
He joined KnowHow’s Bushy Martin on Property Hub’s Get Invested podcast to talk about the strategy and mindset investors need to adopt when purchasing property in regional areas.
Mistake 1: Investing without studying the marketplace
Troyson said many investors will mistakenly invest in regional locations before becoming a ‘student of the marketplace’.
“They don’t spend time learning about the market – the good, the bad and the ugly – before they go in and spend their hard-earned money. People want to spend their hard-earned money and they want to try and build wealth, yet they don’t even know what the median house price growth has been in that suburb for the last five years, or what the compound growth has been over the last ten years, or what the vacancy rate trend has been for the last few years, or what the socioeconomic makeup of that suburb is,” he explained.
“It’s all those little things, so I think people need to become students of the marketplace before they invest in it, because that’s going to help mitigate a lot of the downside risk at the same time as maximising upside potential.”
Mistake 2: The herd mentality
Investors have a tendency to ‘follow the herd’, especially when buying in regional markets.
“I find investors will listen to mainstream property experts and mainstream publications. But what I find with those is that there’s conflict in a lot of that information because they’ve often had access to that six, seven months ago to the general public, and they’ll release that suburb to the masses after they’ve already bought 30, 40, 50 properties there for their clientele. So I’ve found that a lot of those people that release these hotspot locations and suburbs have a vested interest in it because they want them to go there and prop everything up and to inject the marketplace with additional demand. So that’s one of the biggest mistakes that I’m seeing on the ground in regional Queensland,” Troyson said.
Mistake 3: Focusing on your own perspective
Investors can be misguided when making decisions solely based on their own biases, assumptions and interests.
“From an asset selection point of view, mostly what I see is that a lot of people look at the asset and are selecting from their own perspective, not from the perspective place of the marketplace they’re investing in. Because I think a lot of investors forget that with the property you buy, there is a local market that props it up from a capital growth point of view and there’s a local market that actually rents the property and creates the necessary cash flow you need to service the debt that you have against it,” Troyson said.
“So when you don’t look at the property from their perspective and what’s desirable to them and what’s a good fit for them, I think you end up coming to the marketplace with your own biases, and what might be a good property in the capital city might not be a good property in regional Australia.”
Mistake 4: Avoiding external help
Investors should always consider the pros and cons of receiving professional help and knowledge from regional property experts, such as a buyer’s agent.
“Why I think someone should use a buyer’s agent is if they are experiencing some sort of buying pain in the marketplace. So if you’re someone that wants to invest in, let’s say an area that I specialise in like regional Queensland, if you’re unsure about one of the better suburbs, one of the better streets, one of the better quality assets in that marketplace, then landing on someone that has that level of expertise will fulfil the need that you lack. Then I believe that’s where a good buyer’s agent can come in and add value,” Troyson said.
“But if you’re someone that has an understanding of the marketplace, have lived and breathed some of these areas that you’re investing in, then by all means maybe it’s not the right fit for you.”
Listen to the full interview here.
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