We are all used to self-measure, often take it for granted that we like it, others will also like it. Therefore, many real estate investment novice will use their own standards to choose investment housing.
In general, people tend to choose familiar areas, which is undeniable. For example, we will know where to buy necessities of life, where there are delicious restaurants, which road is safe for running. Even if people in other areas do not understand, but familiarity with the sense of security, we believe in and rely on their feelings.
However, these feelings have a great one-sided nature.
There is a psychological concept called confirmation bias (: Confirmation bias),) is a one-sided interpretation of individual selective recollections, collecting favorable details and ignoring unprofitable or contradictory information to support one's existing ideas.
With this mindset, you may be more and more fond of where you live, but you will also be less and less aware of other people's opinions and preferences.
But it doesn't matter where and what type of property you want to live in if you want to buy a long-held investment property. The important thing is how many other people will live in this area.
It is two different concepts to live here, and like to live here.
You might say that the area I choose, in the proximity to work, in a good community environment, with plenty of entertainment facilities, or a good school district in the vicinity, is a hard indicator, and the tenants will definitely like it.
The criteria that most people agree with, and take this as your investment criterion, can only be said to be following the stream and earning the same returns as the big market, but if you don't outperform the big market, that's not a successful investment.
Nathan Birch, Australia's youngest home-grown real estate tycoon, started investing at the age of 17 and is said to own as many as 200 homes this year, with a net positive cash flow of five hundred thousand a year (it is unclear how leveraged he is). But the Mt Druitt area where he started was a real "rotten area" in the eyes of the Chinese.
Located in 11 males west of BLACKTOWN, Mt Druitt is a settlement of Southeast and South Asian, Middle Eastern, and African descent. It is the legendary shoot, looting and other high-rise areas, the streets covered with graffiti, is a mixture of fish and lakes.
Why did 17-year-old Mr. Birch start here? The initial reason was simple: it was easy to get started, a 17-year-old 8-year-old saved to get the first payment, not in downtown or other good areas.
But as you continue to understand, you'll find that real estate markets like Mt Bruitt have investment opportunities that can upend your perception:
There are plenty of opportunities here to buy real estate at a low price.
This has something to do with the effectiveness of the social welfare mechanism: low-income people living in "rotten areas" basically have no savings. In case of unemployment or other accidents, the first thing they think about is looking for government to reach out and fail to pay the mortgage. Forced auctions by banks often allow buyers to get to the auction house for 10% to 20% below the market price.
And good district residents, will be relatively rigorous family income and expenditure budget, ensure the stability of the family. Then there are relatively few houses released in the first good areas, and this kind of forced auction is even more rare; in the event of a real estate being released from the market, the price will immediately be raised to a normal level.
The "rotten area" house is easy to be damaged by the tenants. This sounds like a marijuana annoyance, but in the eyes of those who are interested, it is also an opportunity to buy a house at a low price, with more room to add value through renovation than a house in a good area.
"rotten zones" tend to yield better rates of return than good ones, because prices are low, and the relationship between rent and house prices is not strictly proportional to the market as a whole. In contrast, good areas are often high house prices, rent is not proportional to the corresponding level.
The threshold of "rotten area" is low, satisfying the most rigid demand crowd. As soon as economic conditions improved, the group would leave, so the house was back on the market.
"here, it has revealed a secret that only veteran real estate insiders know:" rotten zone "real estate transactions are more frequent; and only frequently traded markets, more opportunities to invest, more room for value-added!
It is difficult to find these investment opportunities from all kinds of negative perceptions from the point of view of personal feelings. The difference between mature investors and homebuyers is that they can dig deeper into the market with a sensible eye. They are always able to spin off their needs and motivations, and choose where to invest in areas that do not seem to be suitable for themselves to live in. You may find their choices unreasonable, but in the end, they tend to reap real estate with higher-than-average capital growth rates.