Property Market Boom - Get Involved Now or Wait..?

I want to address something.

I received a comment on one of my social posts that I feel I need to respond to…

The post was about a recent property flip that I did that made ￡83,000 profit.

Now, just for reference, that’s not the only flip we’re working on.

This was just a great example of what is possible in today’s market.

I’ll dig into that deal shortly but the point of this article is to address the comment that I received when I was talking about this flip.

The comment said…

Just wait until next year and all these idiots paying over the odds for houses are repossessing their house. You’ll be flipping plenty of properties for an even bigger profit. Anybody who buys a house right now, I feel sorry for them.”

So, let’s have a little chat about this…

I get these types of comments all the time and that’s perfectly fine but what I don’t want, is for others to see those comments and be put off the property market right now.

So let’s address a few points in this comment.

He’s referring to people who are paying over market value for property and calling them idiots.

Now, investors or aspiring investors like those following me on social media or reading this email, they are NOT buying over market value.

Investors are always buying property regardless of the property market conditions. They have the right strategies to implement when the market is going up, in a plateau or crashing.

Now we all know that when the market is crashing, that is the best time to invest in property because you can pick up some great deals.

But you need to understand that even when the market is going up like it is right now and property prices are at an all time high, the investors are still doing deals.

So when this person is referring to those that are buying properties over market value and calling them idiots, you need to know that these people are not investors. They’re often first time buys who have put enough away to allow them to pay over market value for their home.?

They’re not looking to utilise that property as an asset, they’re buying a home for their future and therefore, if they wish to buy over market value, that has little impact on them compared to investors who would buy to rent out or to sell for a profit.

They are not a residential buyer, they will know how to negotiate and they will rarely buy over market value.

Now, let’s address the part about repossession.?

In the last downturn in 2008, those that got repossessed were often those that paid over market value but not all who were repossessed did. Those were often those that took sub-prime mortgages such as 125% loan to value mortgages where you could borrow an extra 25% of the value of the property on top. That was not responsible lending.

Lending today is very different to what it was back then.?

With that in mind, we will see less repossessions this time round. Of course there will still be some but nothing like it was back then, and it doesn’t mean that because you paid over market value, that it will happen.?

So comparing residential buyers and investors here is a bit like comparing apples to oranges. Those paying over, will rarely be professional investors.

Next up, let’s address the part about buying property next year and making even more profit on flips.

Honestly, it doesn’t matter if it’s this time of year or later, this year or next, because when someone invests in property to flip, they’re looking for cash on cash return on their investment and that means they’ll only pay the price they have to pay for to make a healthy profit. The professional investor knows exactly how much that will be taking into account refurb and all other costs.?

That is how a property developer looks at a property and that’s how they buy intelligently.

For those that might be reading this and thinking...

“But where are those types of deals?”

I get it. With the way the market is right now, many people think that it's just impossible to find below market value deals. Many people are wrong.

They’re looking for these deals in the wrong way - usually through online search portals like Rightmove. The professional knows that the real deals are found when you go direct to the seller. That’s how you’re able to find the great deals.

Now the person who made this comment has also made an assumption that property prices are going to drop next year, and let me tell you, that’s unlikely to be the case.

With the supply and demand issue we have right now, sellers are often able to charge over the odds for their property because there are just so many people looking for one.

That is unlikely to change any time soon. Property prices take a long time to drop down in value. The property market is not as volatile as markets for other investment vehicles.

If you know what to look for, you cannot be caught out like with other investments.

So with all that said, I get it. There’s many people out there with this opinion on the market and that’s fine but please, if you’re looking to invest in property, please do not allow comments like these to put you off getting involved.

It’s all about thinking like an investor, knowing your numbers, knowing where to source a property and more importantly, making sure you have a property business that is not cycle dependent by knowing the strategies that work in all market conditions.?

If you know how to play this game right, you’ll do well regardless of the market.?

Hope you found this article helpful.?

If you know someone else that might, please share it with them.

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