Is now the time to buy an investment property?

Is now the time to buy an investment property?

Market indicators are important to understand

It's understandable that with interest rates rising every month, inflation at our doorstep, and most capital city houses dropping in price, there are a lot of people scared of jumping into the property market now. However, while 99% of markets are dropping or not performing across Australia, there is still 1% of markets that are performing now if you know how and where to look.

It's no doubt these are scary times, but if you're thinking of buying your first investment property or growing your portfolio - now might just be the time to do it.

Do rich or wealthy people wait for a discount?

The answer is no. They don't wait for a discount, they find the market that is going up, do their due diligence and buy. And if you're thinking that's easier said than done - it's not. It just takes a bit of research.

This is why all these courses that offer you the chance to find distressed properties are a load of BS. You're not going to find a house that's half-price because the owners are desperate. It doesn't work like that. Further just because you find a house with a 30k less than market value, what if that market doesn't perform for the next 10 years? You'll be stuck with a dud property and you would have been better off just waiting it out.

Wealthy or Rich people don't look for a discount, they look for an opportunity. This is why treating property like a business is so important. You have to understand what the market is doing, and where it's heading and make a decision based on that - not on emotions. While you can find areas that are absolutely performing, you can still find the reasons why people are selling.

Discounts are not how you build a portfolio!

Some people are just lazy and don't want to do their research, so they'll take any deal that comes along. Others might have life circumstances that change such as a relationship break-up or a job transfer. This is where you can find some good deals. But even if you don't find any of those, there are still some good deals to be had if you know where to look.

Group buying or Membership is a form of discount buying

Group buying and membership-type buying programs are when you team up with other investors to buy a property or are offered multiple new properties from developers because you pay a yearly membership. This is usually done through new buying new properties and the companies that normally offer group buying or membership programs get a commission from the developers also. If there getting a cut from the developers then they are sales agents and not investment advisers. This also means they are not in your best interest of you and are you really getting a discount?

What the Market is Doing Now

Across Australia, house prices are softening with many people worried about what will happen next. With news headlines such as "House prices drop for the tenth month in a row", it's no wonder people are concerned about buying property now. However, while it's true that most markets are dropping or not performing, there are still some pockets of growth if you know where to look.

Should I wait?

This is a common question we get asked, and the answer is quite simple. It depends on where and why you are buying.

If you're buying an investment property to live in and take advantage of the current low prices, then it may be worth waiting a little longer. However, if you're buying an investment property to grow your portfolio or take advantage of regional markets that are still performing well, then now is the time to act. Remember this depends on the market you are buying in.

A Common mistake people make is thinking capital cities are the best place to invest and this has caused a lot of fear from property investors across Australia. We've seen this happen because of Melbourne, Brisbane and Sydney. These are not places to invest ATM. It's time to look outside the big smoke for your next property purchase.

Rents Are Growing Quickly

But Not Keeping Up With Inflation

One reason why now might be a good time to invest in property is that rents are growing quickly due to the lack of investors in the market. Due to the crazy prices, people were offering through covid, 1/4 of investors sold out of the market which has led to high demand and low supply for rental properties.

This is good news for investors as it means your rental income will be going up, but it's important to remember that this won't last forever. In fact, rental growth is currently outpacing wage growth - meaning that more and more people are being forced into renting rather than owning their own homes. While this is bad news for tenants, it presents a golden opportunity for savvy investors who can take advantage of rising rents by purchasing an investment property now. Keep in mind, however, that rental growth is not keeping up with inflation or interest rates - so although it might appear as though your rental income is increasing, in real terms it is decreasing. This is something to keep in mind when considering an investment property purchase now.

The Time to Invest Is Now - But Don't DIY!

If you're thinking about buying an investment property but don't know whether now is the right time, remember this - the time to invest is always when you have the money ready and available. As they say, timing is everything in life - and this rings true when it comes to investing in property too.

However, while the timing might be everything, it's also important not to get caught up in trying to time the market perfectly. If you wait too long chasing elusive bargain prices, you could miss out altogether as prices begin to rebound. This is why it's important not to use current market conditions as an excuse not to invest but rather as a motivation to get started sooner rather than later. And when it comes time to purchase your investment property don't try and DIY - seek professional help from an experienced Property advisor who can help you navigate today's complex market and make sure you buy in a growth suburb and pay a fair price for your new asset!?

Who is the best professional to help you buy now?

Every day we see people choosing the wrong professional to help with sourcing their 1st or next property. Just because someone is a proclaimed property expert it doesn't mean they know how to find investment properties yet build a portfolio. Just because someone says they can find an investment property, it doesn't mean they have any idea how to research suburbs or find these properties.

Time and time again, we see investors choosing buyers agents because they "say" they help investors or are cheap. The price of professionals in real estate does reflect the quality of work, unfortunately. In this industry, you really do get what you pay for, and if you're not careful, you could easily end up with a dud agent who doesn't know what they're doing - costing you time, money, and stress in the long run.

A big misconception is that you want to invest in a certain state, so you engage a local agent in that state. That's not how it works! Remember if they only buy in a certain area, this is because they don't have the capabilities, network or confidence to buy anywhere else. Data is Data, and generally, all the sources are across every state and the only time you wouldn't buy interstate is if you don't have the capacity and knowledge on how to. If someone says I only buy in Perth or in a certain region then these are major RED FLAGS.

Off-Market Does not mean better

Don't get tricked that Off-market means you are getting a better deal. In today's day and age, you need to remember nobody wants to sell their house lower than market value. If a sales agent produces to us a property off-market, unless the vendor has the motivation to sell (life-changing event etc) then, generally speaking, you are paying a higher price for that particular property.

When we see an off-market listing, we will do our due diligence on what the real value is and if it's BELOW market value, then we pounce! If it's not, then we will walk away and find a property that is.

What do you need to look out for when selecting your professionals:

1. They buy across Australia and are not limited to 1 or 2 states or certain regions. Also, don't get fooled by thinking there the expert of a region because they walk in it. Walking in a suburb does not make you an expert in that suburb whatsoever.
2. They use multiple streams of data, trends, and statistics.
3. The team doesn't just include property acquisition but also solicitors, accountants, mortgage brokers, property managers and more.
4. Their own portfolio needs to reflect what they're offering. How are they gonna get you to financial freedom if they haven't achieved it themselves? How are they gonna help you reach your goals in 5 years if they couldn't even achieve their own? Just because they have a portfolio if they have taken 20 years to build it. Are you prepared to wait that long for any type of results?
5. They offer Mentorship, remember a mentor is someone who has achieved your goals. Your local hairdresser that has done a 1 week's course in real estate, may not be the best person to get investment advice from.

Now more than ever is a great time to buy an investment property. With the current market conditions, you can find some great deals on quality properties. However, it's important to choose the right professional to help you with your purchase. Make sure you do your research and ask around for recommendations before making your final decision. An experienced Property advisor can help you navigate today's complex market and make sure you buy in a growth suburb and pay a fair price for your new asset!

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