SSI - Development
What is the SSI - Develop?
SSI stands for Strategy Suitability Index. The SSI is a set of indexes used to gauge a market's suitability to a specific property investment strategy, for example:
- Renovate and sell (aka reno flip)
- Buy and hold
- High cash flow
- Buy off the plan
- Buy at discount
- Low risk
Each strategy has its own unique requirements in terms of the nature of the market for success. The SSI scores each market based on the statistics that are most important to the type of strategy.
For example, the SSI - High cash flow is highly dependent on low vacancy rates and high yields. The SSI - Reno flip on the other hand is dependent on a quick sale for success. So a low days on market is very important for a reno flip.
Each statistic is given a different level of importance for each strategy.
The SSI - Develop is a score out of 100 for the suitability of a market to an investor looking to develop. The higher the score is, the better the chances of finding a suitable property.
How does the SSI - Develop work?
All SSI scores are derived using a number of statistics. A development strategy prioritises the following statistics:
- Stock on Market (SOM)
There must be ample stock on market in order to find a block to develop. Not all properties for sale are developable.
Oversupply from other developers competing in the same market will ruin this strategy so investors must check for a low percentage of stock on market.
- Proportion of renters
If you buy into a multiple dwelling development, your property will become available to rent with all the other similar properties at the same time. You don't want to be competing with other landlords over tenants so a low proportion of landlord owned properties is a must have.
You don't want to buy a property you can't rent. A healthy vacancy rate at the time of purchase might not be so healthy at the time of settlement. All the more reason to have a very low vacancy rate at the time of purchase.
The Holy Grail for off-the-plan investors is strong capital growth during the build period. Entering the market at the wrong time could reverse that so a good MCT is needed.
You don't want to enter a market with high demand and low supply that is about to run out of puff. Timing the entry into the market is vital. A good MCT score helps here.
Healthy potential for the ripple effect to benefit the market can reduce the risk.
Good rental growth is an indicator that tenants are starting to find the location desirable.
You can gauge potential interest from would-be buyers be checking the number of people searching for properties online versus the number of properties available. You will need a healthy number looking to sell to once the project is complete.
Why is the SSI - Develop important?
If your investment strategy for your next property is to develop, then an index to gauge suitability for a specific market for that strategy is an absolute must-have.
You can examine the SSI statistics from the SSI tab in the
if you have an appropriate membership.
Not all members have access to the DSR+ or SSI tabs.
A list of memberships and what privileges they come with can be seen on the
To change your membership, use the
Is the SSI - Develop reliable?
Yes, the SSI - Develop considers a number of statistics rather than just one. It is unlikely that all statistics or even half of them are subject to anomalies at the same time. One statistic can be out of whack, without affecting the overall score significantly.