Mistakes To Avoid In Property Investment As We Enter The Colder Months
In general, we put a lot of focus on purchasing property at the 'right time' of the year. Given the size of the investment being made, it's understandable that buyers are always looking for any possible advantage. Simon Cohen outlines the mistakes to avoid in property investment as we enter the colder months.
In general, we put a lot of focus on purchasing property at the ‘right time’ of the year. Given the size of the investment being made, it’s understandable that buyers are always looking for any possible advantage. For many, the popularity in terms of listing numbers and fellow buyers during the warmer months brings a sense of comfort and reassurance that they are choosing from the right pool of options.
However, while spring and summer are widely renowned as the primary property seasons, many buyers write off the advantages of purchasing property in late autumn or winter with far too much ease.
By doing so, it’s easy to fall into some of the following traps:
For the majority of buyers, property investment is not a fast game. It’s one that requires significant research, understanding and time-investment. By focussing your purchasing decision on a particular time of year, you automatically limit your options and put increased pressure on yourself to find a property. Many people also don’t realise that their fellows Australians tend to chase the sun and head on holidays during winter, resulting in less competition.
While it’s important to have everything you need in place to allow you to move quickly when you’ve found the right property, it’s equally important that you don’t rush your decision. If the right property isn’t available at the time, it doesn’t mean that something won’t come up in the following weeks or months. Patience helps to take the emotion out of the purchase process and ensures you are making the decision for the right reasons.
In fact, by slowing down and playing a patient property game, you automatically increase your chances of success. Maximising your return-on-investment comes from knowing that you’ve found a property that is exactly what you are looking for – not one that kind-of-sort-of resembles what you’re looking for.
Playing “the market”
The Australian property market is tumultuous. Each week we see varying reports of ups and downs, bubbles or busts. As an investor it’s important to have an understanding of the market – speaking to professional buyers in the industry may help – but also to understand that the market is always on the move.
Over the years the property pendulum has swung back and forth between buyers and sellers; there are advantages to making decisions based on market sentiment, but waiting for the market to “correct” can mean that you miss out on potential investment opportunities.
It’s more important to focus your decision on localised information. Factoring rental potential or demand, infrastructure growth and the potential for investment growth into your decision will ultimately help you to realise your real estate goals faster than making decisions for market sake.
Forgetting about tax benefits
Focussing on purchasing a property in the later-half of the year means you’ll wait longer to claim on the tax benefits of your purchase. Whether you’re financing improvements to the property or simply purchasing a depreciating asset for the property, doing so in autumn or winter will allow you to see a return on your investment sooner than you would in the warmer months of the year.
In terms of property purchase, savvy buyers may be able to pick up a property – apartments in particular – at a lower asking price in the lead up to the end of financial year, as sellers look to offload assets for tax purposes.
There’s really no right or wrong time of the year to purchase a property. While there are advantages to waiting until the warmer months of the year to select from a larger pool of available property, there are equal advantages to competing with fewer buyers in the colder months. The important thing is not to write-off late-autumn or winter as potential purchase periods. By keeping an open mind and considering all options, you’ll be able to guarantee you’re making the smartest property decision possible.