As the booming property markets are replaced by a period of slower property price growth, what is an investor supposed to do?
BY MICHAEL YARDNEY
With the prospect of some properties falling in value, I know some beginning investors are worried about their recent purchase while others who were contemplating getting into the market are waiting to see the market ‘bottom’.
Firstly, if you bought a property recently with the intent of owning it for a while, you probably have little to fear. We all know that the property market is cyclical. It has its flat periods and times of small dips but in the long term well-located properties continue to rise in value.
If, on the other hand, you were hoping to get rich quick or hoped to renovate or develop your property and on-sell it for a quick buck, you may be in for a bit of a shock.
In these flat property markets there is little chance of a quick anything when it comes to property.
However if you are looking to buy a property with a long-term perspective, now could be the time to take advantage of what has turned into a buyers market. Especially at this time of the year when you’ll find some motivated sellers who are keen to move on before the end of the year.
Now could be a good time to make cheeky offers and take advantage of these motivated sellers.
Sure, the markets may fall a little further – but you’re not ‘buying the market’. I suggest you buy a good property at the type of price that even if the market falls a bit further, you’ve bought well.
But as always, you shouldn’t just buy any property – buy the best property you can, as when the market turns, it will be the better properties – ‘A class’ properties – that will increase in value first as they are the type of property that’s always in strong demand.
So…
1. Do your research.
Look for areas that will have long-term capital growth and will continue that way.
2. Find motivated vendors that will sell you their properties below intrinsic value price.
3. And in particular look for properties where you can add value. This is the best strategy in the current property market.
If you’re in the real estate market for the long term you have little to fear. In fact it’s a great time to buy the type of property that you would have to pay more for earlier in the year.
Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia’s leading experts in wealth creation through property. Subscribe to his e-magazine at www.propertyupdate.com.au. For more information about Michael visit www.metropole.com.au.
