Q & A: Entering/Exiting Markets, Buyers Agents, Suburb Selection and More

Question 1: What data should investors look at when entering or exiting a market

At a high level, Jeremy frames this as a straightforward comparison: the cost of exiting a market (capital gains tax, agent commission, legal fees) plus the cost of re-entering elsewhere (stamp duty, legal fees, possibly a buyers agent fee), collectively called "recycling costs," weighed against the opportunity cost of holding an underperforming property instead of reallocating to a better-performing one. If opportunity cost exceeds recycling cost, the case favours selling and reallocating; if recycling cost exceeds opportunity cost, the case favours holding.

Damien notes many investors fall into a sunk-cost mindset, continuing to hold an underperforming property simply because of the time and money already invested, without properly weighing what might be achievable elsewhere. Jeremy adds that this needs to be assessed case by case, since a property that's underperformed for a decade could still be on the cusp of a genuine upswing, and recommends asking for the underlying data whenever someone advises simply holding regardless. He notes that while holding long-term does tend to smooth out a poor initial selection, it also means growth is likely to converge toward the long-term national average, rather than genuinely outperforming it.

Question 2: Is it better to avoid an overly competitive suburb?

Responding to a listener who'd missed out on several purchases in shortlisted suburbs due to properties receiving 20+ offers and selling $50,000+ over asking price, Jeremy explains this pattern is typical of a genuinely hot market, one where demand is clearly outpacing supply. His suggested reframe: consider the alternative of a "cold," uncompetitive market, which would typically indicate falling prices and a disaster for capital growth. He argues that paying above perceived fair value in a hot market is, definitionally, what capital growth looks like in its early stages, and that he'd rather pay $50,000 over fair value in a market that looks like a bargain six months later, than pay under value in a market that looks like a mistake six months later.

His practical advice: broaden the shortlist, rather than fixating on two or three suburbs, consider ten or more, potentially spread across multiple cities or states, to increase the chances of successfully transacting somewhere. He also stresses the need to move quickly in hot markets, since properties can be listed and under offer on the same day, and to gauge how competitive offers need to be (price, and how condition-free) based on how the specific market is behaving.

Question 3: Is it worth using a buyers agent?

A listener questions whether a buyers agent's fee (cited as around $16,000) is worth it, expressing skepticism toward "financial freedom" style sales pitches and describing themselves as experiencing analysis paralysis.

Jeremy's view is that the right buyers agent is genuinely worth it, particularly in a hot market, since an established agent's industry contacts can secure access that an individual investor might otherwise miss out on. He cautions, however, against "old school" buyers agents who default to buying only in expensive, already-popular "blue chip" suburbs close to a CBD, calling this a lazy approach that avoids genuinely competitive research. He compares the choice to picking a good versus mediocre accountant, broker, or other professional, and stresses the importance of avoiding a high-volume "burn and churn" agent focused on turnover rather than outcomes, given a property purchase is one of the largest financial decisions most people make. Ultimately, he frames the decision as a genuine question of the value of an investor's own time and research ability, noting that with the right data, an individual can perform just as well independently, but that takes real time and effort to develop.

Question 4: How do you select a suburb for high growth, cash flow, and low risk?

Jeremy breaks this down by his three key criteria: for growth, he consults the DSR (or DSR Plus at the time of recording, DSR3 upon the new platform's release); for cash flow, he looks at vacancy rate and yield; and for risk, he looks at the statistical reliability of the underlying data, alongside "infill risk," proximity to vacant land or future supply, which can be checked using tools like Google Street View or ABS data. Once a shortlist of suburbs is identified, Jeremy also looks at typical block sizes within those suburbs, favouring larger blocks for a higher land-to-asset ratio, and potential future subdivision opportunities depending on zoning.

Question 5: What about duplexes, townhouses, or units as more affordable alternatives?

Responding to a question about alternative property types given rising house prices, Jeremy notes that, based on historical data, houses outperform units overall, so choosing a unit purely for affordability involves a real trade-off. Duplexes and townhouses are less of a concern in his view, provided bedroom count is comparable to typical houses in the same area. He stresses that affordability doesn't need to come at the cost of performance if investors take a broader, borderless view of the market rather than restricting themselves to the most obvious (and often already expensive) locations. He also cautions that newer duplexes, townhouses, or low-density apartments can carry a real price premium over older, larger established houses in the same area, and that newer property generally comes with faster depreciation, a further reason to be cautious about defaulting to new builds purely for affordability.

Question 6: Should you buy now with a low deposit and LMI, or wait and save a larger deposit?

A listener in their early twenties, having recently finished their degree and saved a deposit while planning to purchase an owner-occupied home a few years later, asks whether it's better to buy an investment property sooner using a smaller deposit and lenders mortgage insurance (LMI), or wait and save a larger deposit to avoid LMI altogether.

Damien models both scenarios using a $400,000 example property. At 88% LVR, the deposit required is around $68,000, with an ROI of around 20% (driven substantially by capital growth), against an estimated annual after-tax cash flow shortfall of around $500 a month. At a full 20% deposit (no LMI), the required cash rises to around $100,000, and the resulting ROI drops to around 15%, since a larger share of the investor's own capital is being used to generate a similar dollar return. Both Damien and Jeremy lean toward entering sooner using LMI, given the stronger return on investment and the benefit of getting into a rising market earlier rather than continuing to wait.

On the separate question of whether to prioritise saving for an investment property or a future home purchase, Jeremy raises rentvesting as a serious option, renting in the location the investor eventually wants to live, while directing investment capital toward wherever the data points to the strongest opportunity, since it's unlikely those two things are the same location. Damien offers a complementary, more personal framing: a principal home isn't purely a financial decision, and if homeownership within a few years is a genuine personal priority, it may be worth targeting that first (and sizing any interim investment property's price point accordingly) rather than over-leveraging into an investment purchase that could limit borrowing capacity when it's time to buy a home. Both agree the right approach depends heavily on how much the listener personally values stability and lifestyle versus pure financial optimisation.

Question 7: What about buying property through a self-managed super fund (SMSF)?

Damien notes rising interest in SMSF property lending, and cautions that some buyers agents lead prospective clients toward this option prematurely, before confirming it's genuinely suitable. Jeremy defers on the technical specifics, noting this isn't his area of expertise, while Damien shares a cautionary example from years ago: a client with only around $100,000 in their SMSF found themselves with limited flexibility and unexpected lending complications on a new build, ultimately needing to inject personal cash outside the fund to resolve it. His rule of thumb is to have a stronger starting balance, around $200,000 as a minimum, before considering this path, and to involve both a financial planner and accountant early. He also notes SMSF lending criteria vary by bank, with super contributions, guaranteed employer contributions, and rental income all potentially counted toward serviceability, and flags capital gains tax treatment within super (generally a discounted rate compared to holding a property personally, and potentially nil during the retirement pension phase) as a meaningful, though situation-specific, benefit worth exploring with a specialist. Both stress diversification within super remains important, rather than committing the fund's full balance to property alone.

Question 8: What counts as a good rental yield?

Using Sydney units as an example (national average gross yield around 4.33%, Sydney units specifically around 4.04% at the time of recording), Jeremy explains that a "good" yield is relative to individual goals, chasing yield in isolation (say, 10%) without considering capital growth potential can lead to a property that costs little to hold but delivers little wealth-building benefit either. He notes it's rare, though not impossible, for a market to sustain both high yield and strong growth simultaneously for long, since a market where owning is cheaper than renting tends to convert renters into owners, correcting the imbalance over time (citing itinerant-worker markets like mining towns as a partial exception). As a rough benchmark, he suggests yields around one standard deviation above average (roughly 6%) represent an already exceptional range, and that healthy, growing markets often show yields in the 5–6% range rather than requiring double-digit yields to be worthwhile.

Jeremy also cautions that gross yield doesn't scale proportionally into net yield, since costs like council rates, insurance, repairs, maintenance, and property management fees make up a larger share of a high-yield property's value, meaning a property advertised at a much higher gross yield may only modestly outperform a lower-yield property once genuinely netted out, and strata fees in particular can meaningfully affect units specifically.

Question 9: What's the best strategy for investing a lump sum of cash without needing to borrow?

Responding to a question about investors who don't need lending (for example, following an inheritance or a large cash windfall), Jeremy models the impact of leverage directly: at a standard 20% deposit, an example property might return an estimated 18% ROI over the long term, largely due to leverage; paying entirely in cash (0% LVR) on the same property drops that estimated return to around 7%, below what a diversified index fund might achieve over the same period (roughly 9–10%, combining income and growth).

Jeremy's suggested approach for someone in this position (using $700,000 as an example) would generally be to use leverage to spread that capital across two or three properties in different markets (gaining exposure to roughly $2 million in property overall) rather than paying cash for a single property, both for the leverage benefit and for the diversification of holding assets across multiple markets rather than concentrating risk in one location, provided lending serviceability allows for it. For someone unable to fully service a loan (for example, working reduced hours), Jeremy would still look to use as much lending as serviceability allows while preserving a larger personal cash buffer, rather than defaulting to a fully cash-funded purchase.

An Update from the Hosts

Before wrapping up, Damien shares that the podcast recently reached 1,000 subscribers, and voices some personal frustration about a recent guest appearance on another podcast being placed on a secondary channel rather than the main channel, without naming the show involved, before both move on to a brief update on the upcoming Suburb Data platform (the new DSR3 algorithm and website), noting the DSR Plus algorithm remains fully usable in the meantime while development continues.

Closing Thoughts

Damien and Jeremy close by inviting listeners to keep sending in questions via email or the comments section, and encourage likes, subscriptions, and shares for anyone who might benefit from the content.