3 reasons waiting for “perfect” property market conditions will cost you
Many people ask me: “When is the best time to buy an investment property?”
Is it when you’ve completely paid off your own mortgage? Or before you’ve paid off your own home, when you’re still many decades from retirement?
If buying your dream home is already out of your budget, do you hope the market falls or do you rentvest to get a foot in now?
Should you buy when the market is going through a growth phase so you can gain quick equity? Or wait till the market cools and you can negotiate a better deal?
But if you wait, is there the chance that prices could rise and you’ll be priced out of the market?
I can understand the confusion. Because all of the above can be true.
As a property investor, the right time for you to buy will depend on so many things beyond what the market is doing. There is just as much weighing on your individual circumstances including your income, your age, your life stage, your appetite for risk and your wealth goals.
There is one thing that I do know to be true, and it’s the answer I always give to the question I posed at the beginning of the article.
The best time to buy is when you are willing and able.
Property investing is a long-term strategy. As a large asset it takes time for the investment to grow even though it’s grown so rapidly in recent months. Many people wished they invested 20-years ago or 5-years ago, but if they didn’t, the next best time is now.
With property prices so high, many people are worried about investing in property because they want to wait until the market cools. Alternatively, they think that prices have boomed and they’ve “missed their chance”.
We only need to look at historical price growth to see that well-located, central, good quality properties will always be in demand, and they will always grow in value. So while property prices have soared in recent years, they still have further to grow.
If you’re interested in getting into the property market and your fear of making a mistake, paying too much or buying the wrong type of asset are holding you back, there are a few things I want to share about delaying the decision, which could cost you in the long run:
- Every day counts.
Every day you’re not in the market is a day of potential profits lost. There is a growing trend in Australia where people are waiting too long to do something to secure their financial retirement. Many are waiting too long for what is perceived to be the “perfect market”, when the reality is, getting into the market is the key.
The time you get into the market isn’t as important as the time you’re in the market. It’s better to get in and wait, than to wait and wait… and before you know it, years and years and many opportunities have passed.
- Long term growth is the goal.
Don’t get me wrong – short-term property price booms are great. They allow you to build equity, which you can use to invest in more properties, or renovate your home. But no one should be investing in property with a goal of making a short-term profit, so they can sell and move on.
Property is, by nature, a long-term asset class. The transaction costs to get in and out are substantial: stamp duty, real estate commission, legal fees, lenders mortgage insurance and capital gains tax can amount to tens of thousands of dollars – sometimes even six figures. With a long-term view, you can afford to ride out the ups and downs over time, while a tenant pays off your mortgage for you.
- Waiting rarely pays off.
This is the really important thing to remember. I know many people who waited in 2020 for property prices to fall before they wanted to take action and buy property. When prices didn’t fall – and instead, they boomed by up to 30 in some areas – the same people then waited again.
Now, they are starting to say: “We’ll wait for 2022, prices will fall then, and that’s when we’ll buy.”
Economists are adjusting their expectations and most still believe property markets will grow next year, by 5-10.
But even if that growth doesn’t happen… what are you waiting for? Really?
When you know:
- What type of property to buy for strong ongoing growth
- What type of property to avoid, so you’re not stuck with a low-growth asset
- Where specifically to buy, to ensure lasting tenant demand, and
- How to leverage your investments, so your tenant helps pays off your mortgage for you…
When you know all of this, you can optimise your success and ride out the waves of ups and downs, growth and plateaus. This is where our team’s expertise lies: in finding the best quality property asset to suit an individuals budget, income and wealth goals.
Property is a long-term investment, after all. If you look ahead 20 years, when you won’t care if you paid $700,000 or $750,000 or even $1m for an investment property. You’ll just care that you bought it – because by then, it’ll be worth a whole lot more.
If you would like help structuring your property and wealth goals and putting together a plan that helps you get from where you are now to where you want be, contact us today.