Property investors who decide to wait out the current boom before purchasing will just end up paying a lot more for the same assets, according to our very own buyer’s agent Alex Dutt. In a recent fantastic webinar he gave Alex says that given the general predictions that prices will continue to grow in the next year or two, he wouldn’t recommend investors try to wait out the boom. Alex goes on to say that those who bought in 2020 had already enjoyed significant price growth and those who buy the right property in the right location now should also reap the same rewards. Alex said that investors need to look at least a the ten-year cycle when it comes to investment property, as the trick for success was time spent in the market.
Buy now and reap the rewards but don’t “rush in with gay abandon”
“I’m saying tread carefully, but mostly think about it rationally and what property is going to do over time.” Alex said investors should be particularly careful in a hot market to ensure they are buying in the right area. “One of the mistakes that people make, which I see all the time, is choosing the wrong area and making the assumption that because of the boom, everything and everywhere is okay. I still think you need to be very, very selective about where you buy. It creates a bit of a false narrative that you’ve got this safety net because everything’s booming, that you don’t need to be as careful about where you buy.”
Areas that are heavily reliant on tourism or agriculture can be tempting in the current market but it’s important to check what other industries and fundamentals those locations have to support that. In true Adviseable style he also warns against buying house and land packages “in the middle of nowhere” because they seem like good buy. “I’ve had an increasing number of people come to me and say, ‘I want to buy an established property, but someone was showing me this new package, what do you think?’ “I’m not saying that house and land is a dead set No. But you need to be very, very careful and very, very selective about it. The vast majority are not going to work.” He explains that
When the market is booming a lot of spruikers start recommending property types that are not suited for genuine price growth
and that is one of the most dangerous mistakes investors make. “What I see all the time is investors buying the wrong property type for the area, so they might’ve got the area right but not the right property type for the resale market,” he says. “When you’re buying, you’ve absolutely got to think about that resale market. The other mistake I see, and this probably comes most often from Sydneysiders or Melbourne buyers, is looking at how the values have increased in their own backyard and applying the same logic to where they’re buying.” He says cheaper doesn’t necessarily mean it is a good investment. With the market moving so quickly, many investors are trying to assess values using out-of-date sale prices. “You need to look at actual, genuine sales, not using online marketing tools,” he says. “I don’t rate them very highly. In a lot of cases, they’re way out of whack.” The best resource for obtaining up-to-date sales data -s the sold section of realestate.com.au, he says. “When we’re buying, the ability to accurately determine market value is absolutely essential. “It’s really important that you’re understanding what prices are today.” Investors also are often unprepared and under-estimate how quickly they need to move to get a deal done in a boom market.
That’s why it’s essential to build your team before you start looking. This includes a buyer’s agent, finance broker, solicitor, accountant, building & pest inspector and a property manager. It’s also very important that you have your contract reviewed by a solicitor very early in the buying process.