Darwon's Theory | Saving for a Rainy Day
This week's Darwon's Theory is a quick one, written on the fly! It's my wedding week and, as I'm sure many of you know from first-hand experience, it's a very busy time. For us, the biggest challenge we now face is the likelihood of thunderstorms over our wedding destination this Saturday.
An adaptable mindset has proven time and time again to be a great measure against change, and - in the process of hastily putting our contingency plan into place - I've been incredibly thankful for my wife-to-be's impressive ability to tap into this. We'll make the most of the weather conditions, enjoy the 'good luck' it brings and get a 'gram-worthy shot in the rain. This got me thinking about the importance of adaptability for us all.
The property-world equivalent would be making the most of current market conditions. The survivors (in our case, the property owners who come out the other side of this market slump better off than they went into it) are the ones that are able to adapt and adjust best to the changing environment in which we find ourselves. However, amidst all the mixed market commentary, very few commentators are talking about how to make the most of the conditions to buy or sell.
For investors, now is the time to rationalise portfolios. The stats show there are more properties on the market now than any time since 2012. The rate of absorption is quite low, due to scarcity of buyers (caused by tightening of credit rules and market uncertainty, amongst other things). The truth is, the market is resetting and savvy investors are making a move to grow their portfolios or to alter their mix of properties.
That may mean selling an underperforming asset and buying one where they can add value to by undertaking a renovation or subdivision. Or it may mean offloading a certain type of dwelling for a better one in the same location. In market resets, we generally start to see rents increasing because there are more people renting than buying. This is good news for cash flow and for serviceability.
Buyer's markets like this are the perfect time to make a move, because everyone else is so distracted by the economic noise that they miss the opportunities right there in front of them. Take 138 Terrace Street, for example. I've just listed this townhouse - a fantastic, easy to take care of rental property in the heart of New Farm. Interested? Come along to the open home tomorrow at 12:50pm to 1:30pm, or on Saturday at 12:45pm to 1:15pm.
Charles Darwin was the inspiration behind my weekly email newsletter's name, so it's pretty fitting that the theme of his theory of biological evolution (that all species of organisms arise and develop through the natural selection of small, inherited variations that increase the individual's ability to compete, survive, and reproduce) ties in so nicely with my wedding week!
Cheers,
S.D.