to buy or not to buy

[mark]

that is the question,
i'm looking to buy an IP this year, i was looking to buy asap, but many ppl have told me to wait a year. could i get some input from some ppl on this matter. will a war impact on IP ?

[Sunstone]

Dear Mark,

There are always reasons NOT to buy. Typically these are said by people who will only ever own at most one property.

When you invest according to fundamentals ANYTIME is the right time to buy and it is all about your goals and finding the deals that are going to work for you.

Have you read Jan's "More Wealth from residential property?".

Cheers,

Sunstone.

[adrian_see]

Although I knew nothing about property investing and the state of the market at the time, the same was said before the Sydney Olympics wasn't it? Don't buy now, prices will fall.....

Who are the people who have been telling you to wait a year?

Regards

Adrian See

[Jas]

It depends. If you're planning on holding forever, a few bumps on the graph either way will be smoothed over in the long run.

if you're planning a quick sale in a year or two, you might want to think a bit for closely about which property you're going to get.

Jas

[john doe]

My brother in law is an arrogant sod who thinks he knows everything there is to know about property. He only has one IP and it took him 5 years to buy it (in sydney). He kept pointing up his nose at every opportunity, saying everything he saw was way overpriced and he should wait a while, wait a while, wait a while. He totally didn't understand the fundamentals of investing and let many a golden opportunity pass him by. In the end, I reckon he was always too scared to just make a deal and follow through with it. (And hey, making your first IP purchase is scary)

What I learned from watching him is that if you just follow the fundamentals you should be fine, and have some courage, particularly if you are a long term investor.

John

[Marina]

According to a lot of negative people who do not invest in Property- never is a right time to buy.

What if you can't find a tenant?
what if property prices fall?
What if you lose your Job?
what if interest rates go up?
what if you buy the wrong property?
what if you get sick and can't work?

What what what and more negativity!!

All I can say is don't listen. Knowledge to how property investing works is the answer. Do not be afraid of investing and do not be afraid of good debt. Reading and talking to positive people that have multiple properties will inspire you to take action today.

Spend your time on finding solutions to all of the above questions and you will become more confident in entering the property market.

Good luck
Marina.

[XBenX]

if your plan is to hold property long term the important thing is not timing the market but time in the market...

i think that is my fav cliche

[craigc]

I'm very much into the buy and hold flavour. That being the case, if you ask me when the best time to buy is, the answer is always the same. The best time to buy is now. (regardless of when now is) Due dilligence is always of utmost import. My *opinion* only.
craig

[gailh]

Hi everyone,

Well, just for some diversity, I am gunna say wait. Ok, if you are stalling because of fear, that is a different issue. But declining to purchase at the height of a boom is a valid strategy. I'm just not sure that the answers you have so far recognise this as a valid approach.

Robert Kyosaki talks about buying into a falling market as the best time to buy. He says that he waited 2-3 years to start buying when he first hatched his plan. The property market has always been cyclical. There is nothing wrong with trying to work within a cycle.

It also depends somewhat on the place. Melbourne, for example, is typically very cyclical. After the last large boom, it took 5 years for prices to reach the point they were at at the height of the boom. Given that you would almost certainly be negatively geared, that's called going backwards. Yes, you would catch up eventually, but as I said, I think trying to work within the cycles is perfectly valid. Assuming you would only do this because of procrastination is not right.

Anyway, I'm waiting until its a buyers market in Melbourne again. I believe there will eventually be a fall out from such a protracted boom. Eventually the market will fall into a slump again (I remember going to auctions 5 years ago and there would be noone there), and when it happens......I'll be ready.

Good luck everyone.

Gail

[crusty]

I think you should read Jan Somers' book 101 stories it talks about the old guy who was told to sell his ips and every time he was told this he bought again. Food for thought!!!!!
His family loves him now because he never sold and consitently kept on buying!!!!


Crusty:D :D

[mitch]

But what if the hot water service blows up? If you wait another year or so it may well have been replaced! Thats a pretty good reason not to buy.(This comment was made in jest)

[geoffw]

But it with a blown up water service!

You could probably buy it at a discount double the value of replacing it!

[gailh]

Hi

Well, despite everyone saying buy, buy, buy, I would still say be careful. This boom has seen many novice investors enter the market, buying inflated properties along the way. If the market slumps, there will be many investors bailing out when they realise that they have holding costs of $5,000 to $10,000 a year and their property is falling in value. You don't want to be one of them.

Look, if you can find a bargain well and good. But it has been a seller's market in many places for the last year or so. A year ago, we had this debate on the forum, and many very seasoned investors were saying hold off a bit - you make your money when you buy (one of my fav cliches). Some were even selling stock because of the ridiculously inflated prices. I can remember the last boom in Melbourne and I can remember the fallout - property prices do fall and the boom we are in now has been the longest since the war. If prices grow in the next couple of years (in Melbourne anyway), it will be a virtually unparalelled development. Sure, it might happen, but there is nothing wrong with planning around the likely scenario.

Anyway, I just feel that Mark was looking for some balanced advice, and people who completely (and sarcastically) rubbished any suggestion of ever waiting are being a bit unfair to what is a very valid strategy.

(Sorry about the long post - this thread got me a bit worked up!)

Good luck Mark

Gail

[XBenX]

all vaild points, dont take opposite points of view too seriously, a lot of the time it can just be bait anyhow :)

i dont think any of them were directed.

re negative price growth, I think this will only occur (if it occurs) in areas where investors hold a high % of stock and supply issues are prevelant

just my thoughts.....

[WillG]

Hi Mark,

All you can do is keep an eye on properties in the areas you think have potential and do the sums.

In my opinion ...
If you can get yourself a quality cashflow+ property then grab it.

I know a lot of people will say 'but there are no CF+ quality IP's available at the moment'; don't waste you time listening to those people. Get out there and look at as many properties as it takes.

Keep your strategy simple and stick to it

[NIF]

Deja Vu !

I remember reading very similar comments about holding off, the market will fall etc on this forum in late 2000.

So I did.

And the houses I was looking at in Dee Why/ Nth Curl Curl, that were in the low $400s, are now in the mid-$600s to $700s.

Maybe those thinking the market has peaked will be right this time around. And maybe they won't.

Residex were the only forecasters who predicted the market would continue to rise in 2001 (although they way under predicted the rise %).

And they are currently tipping Sydney houses to continue to grow in price at a respectable rate.

[the_captain]

Hey WillG,

Nice to see you on the forum

I agree with you..........have a strategy and stick to it, but be prepared to make minor adjustments/tweaks along the way as necessary.

I also agree with gailh.......maybe now is a good time to hold off....but don't stop looking.

But if you look at the numbers/fundamentals and just keep looking then you will find a property that matches your strategy/goals. Admittedly now it's going to be harder.....maybe look at areas where many people don't.

Just my $0.02

[Jerry Maguire]

What is it that you are waiting for???
Christmas or New Year before you will start to buy your property???
What are those people telling you to wait for???
have you ever ask them?
if they say that the market is going to crush and go straight down from 500K down to 400K!!!
you know that this is not going to happen unless you are F in the head and you actually are stupid enough to listen to them.
if you got a brain you won't listen to them at all.

i bought some OTP for 650K each and some investor ask me to wait cos they say that the price will drop and they are still waiting but my 650K apartment have gone from 650K to about 2 mil each right now.
valuation done by NAB in dec 2002

if i'm stupid enough to listen to them and WAIT WAIT & WAIT...
i would have to pay 2 mil each for those apartments that i have right now instead of 650K.

if you were to buy and hold you can't lose out so you don't have to wait at all.

if they tell you to wait just ask them
how many properties have you got?
when is the last time they bought a property?

Regards
Jerry

[john doe]

Hi Jerry,

Well said. This is probably being a bit nosey but you've got me very curious....where and when did you buy those 2 apartments? Must be in Sydney.

Cheers

John

[handyandy]

Hi All

Personally I would never advise anybody not to buy. My advice is to be sure of the figure and factor in an increased interest rate to make sure those figures work even when the interest rate doubles.

I would state that I am not buying right now as the criteria that I look for is not readily available.

So my vote goes with Gail and I seem to even share some strategies with her.


Cheers

[brains]

Every post on this thread suggests that its one market that is good or bad to buy in.

I wouldnt buy in Sydney right now but i sure would buy not far from Sydney or interstate.

I think its not just a case of "Should i buy or not now?" but
"Should i buy in this particular area now?" And if you do your research on that area, you'll come up with the correct answer.

And id love to know where an OTP apartment can go from $650k to $2 million? Even in Sydney! Seems a bit of a porkie to me.

[john doe]

I'm with you brains. Where the hell does one get an OTP that gains from $650k to $2million? Sydney prices have gone gang-busters, but that's really out there.

John

[Jas]

send jerry a PM if you're really interested. He's more liekly to let you know privately than over a public forum like this.

Jas

[Aceyducey]

Personally I don't think a war will really affect the desire of people to live in houses - and if they are chosing not to buy a PPOR due to the war then they'll be looking for rental accomodation.

It's always the right time to buy property - somewhere. You just need to do the research to find where that is :)

I used to work with someone who was very worried when I started to buy property. They were concerned (for my sake) that property was priced too high, that interest rates would go up, that the bottom would fall out of the property market. I found it amusing - the person concerned owns no property, no shares, has no other investments of any kind, was constantly borrowing money and purchasing expensive dinners, trips, jacuzzis and her sole 'asset' was her car....She earnt north of $150K PA but didn't even have any savings. Her money managed her, not the other way round and she lived in constant fear of losing her income.

When someone tells you that your investment choice is a bad one, look at their investment habits and consider whether the advice is considered or merely heartfelt.

Cheers,

Aceyducey

[dtraeger2k]

Hehe.

Some ppl have warned me about R/E saying that the values are going to plummet soon. I usually reply with "I hope so". This totally confuses them until I explain that my small deposit would enable me to buy 2 properties instead of 1 if prices were lower. Also, the rent doesn't come in much slower.

[brains]

Originally posted by Jas
send jerry a PM if you're really interested. He's more liekly to let you know privately than over a public forum like this.

Jas

It was more of a rhetorical question, sort of thinking out loud.

[brains]

Originally posted by Aceyducey
Personally I don't think a war will really affect the desire of people to live in houses - and if they are chosing not to buy a PPOR due to the war then they'll be looking for rental accomodation.

It's always the right time to buy property - somewhere. You just need to do the research to find where that is :)

I used to work with someone who was very worried when I started to buy property. They were concerned (for my sake) that property was priced too high, that interest rates would go up, that the bottom would fall out of the property market. I found it amusing - the person concerned owns no property, no shares, has no other investments of any kind, was constantly borrowing money and purchasing expensive dinners, trips, jacuzzis and her sole 'asset' was her car....She earnt north of $150K PA but didn't even have any savings. Her money managed her, not the other way round and she lived in constant fear of losing her income.

When someone tells you that your investment choice is a bad one, look at their investment habits and consider whether the advice is considered or merely heartfelt.

Cheers,

Aceyducey

What youre saying is right Acey, but dont forget people have lost money on real estate and there have been property price collapses where people have lost a LOT of money.

[tonyd]

Originally posted by Aceyducey
I found it amusing - the person concerned owns no property, no shares, has no other investments of any kind, was constantly borrowing money and purchasing expensive dinners, trips, jacuzzis and her sole 'asset' was her car....She earnt north of $150K PA...



Is she married? :D

[see_change]

gee

wouldn't it be boring if we were all the same

see change

[Kenkoh2000]

1. I am an novice investor from Singapore and have previously acquired 2 investment properties in QLD.

2. I first acquired my first property(a 4-bedroom double garage waterfront house) for A$184,900 in 1993 from Villaworld Ltd through a Singapore-based agent in the then fast-rising property market. I was subsequently able to purchase the second property(non-water-fron and a 3 bedroom double garge house) in 1994 directly from the same developer at A$134,000, using the increased equity available in the first property, without having to pay any further cash deposit upfront. Unfortunately, the interest rate was "suddenly" increased by RBA in 1994 and since then, our 2 properties have been in a neqative home equity situation till 2002 when we manage to sell off the first property for A$276,100 during the Oct-Nov 2002 period on the advice from our sale agent. We were advised then that the Goldcoast property market would be peaking in December 2002 period soon and will be correcting downwards fast soon, if we fail to sell it off.

3. Because of this negative home equity situation and our so-lled "bad" experiences, we did not dare to further acquire any more Australian property in the meantime from 1994-2001 period.

4. I understand that that Qld/GoldCoast property market has already peaked in December 2002 as advised by our sale agent, or is it still "peaking" further in 2003?... When is the best time to sell off our second property if we decide to pro-actively exploit the property cycle and adopt the "buy low and sell high into the market'strength" as advocated by Leonard Barnes and Steve Narva, instead of the usual "buy and hold" investment strategy, as advocated by Jan Somers? Could the more experienced investors and forummers please provide the expert/informed views on the 2 different investment strategies as well as to help confirm/disconfirm the advice given (and views held) by the sale agent.

5. Will we likely to be similarly be caught in a subsequent negative home equity situation in 2004, as per our previous experience in 1993-1994 period, if we choose to invest in the same Goldcoast market in 2003 now? Beside ensuring that we buy cost-effectively into positive-cashflow investment properties and use of independent buyer agent/advocate services, what are the other ways we can use to avoid being caught in the same negative home equity situation again in our future property investment again?

6. One way to minimise our investment risk, we think, is to diversify into investing inter-state into the Perth property market, which is presently in its initial upswing stage, aswe have been told;- although the Perth market may not rise as fast and as high a boom as that in the Goldcoast, Melbourne or Sdyney property markets. Does this make more investment sense? Will be experienced investors/forummers, please comment.

7. Can the more experienced investors and forumers, please also comment about having to choose between investing in a new 5 year old 90% owner-occupied suburb growing at a low 5.1% long term annual growth rate and a A$241,390 median house sale price and median weekly rental rate of A$230 per week at Canningvale (15 km east of Perth CBD) vis-a-vis investing in a 30-years- old outer ocean-front Rockingham suburb (40km south of Perth CDB) with 70% occupied ownership and median sale price of A$133,000 and median weekly rental rate of A$120 per week, which is fast-changing/developing. Its 2001/2002 annual capital growth rate was reported to be 17.2% in one single year;-. Whereas its long term annual capital appreciation rate has been increased to 10.7% since 2001 onwards, from its previous long term 7.4 annual growth rate since 1971, 6.4.% annual growth rate since 1981 and 4.3% annual growth rate since 1991, as shown by REIWA data.

8. Thank you very much.


Kenkoh2000