I heard the classic Byrds song "Turn , Turn , Turn" on the radio today and it made me crystalise some of my thoughts about property investing .
For those of you who arn't familiar with the song the first verse and chorus go like this
To everything turn, turn, turn
There is a season turn, turn, turn
And a time to every purpose
Under heaven
A time to be born, a time to die
A time to plant, a time to reap
A time to kill, a time to heal
A time to laugh, a time to wep
As has been said in another recent post there are lots of different ways to invest in property , but one thing people seem to ignore , is that in different parts of the cycle , maybe there are better ways of optimising your return....
We've just been through the period of maximal growth ( still there if you're in rockhampton ...
) but for most areas that phase is over.
So what would be the best way to make money during that period?
To my way of thinking the best thing to do is to gear up as far as you feel comfortable and go along with the ride. At this stage of the market prices are going up overnight , and to spend time organising reno's , developments could have the potential of distracting you from the main way that money will be made at this stage. Obviously if you don't have enough funds to do this to a level you feel happy with , then reno's , flipping , trades maybe a way of generating money to help your cause.
Ok , so once the market slows down , what should be your priority ? We gone through a phase of rapid capital growth, so we're unlikely to have any major systemic capital growth , to my way of thinking at this stage I'd be aiming to maximise my cash flow.
I'd be putting my time toward getting the maximal return from the properties I have. I'd be organising reno's , maybe even selling a couple of properties in areas that I thought were prone to falling donw, or getting rid of the one that had turned out to be a lemon in terms of not attracting good tenants to cut down by monthly repayements. I'd also be revaluing my properties so i have as much equity available as possible.
The main thing I'd be aiming is to get some serious cash flow out of my portfolio.
Why ?
Well sooner or later property investing is not going to be the flavour of the month. Interest rates have gone up , and the people who bought at the peak of the market are getting frustrated at paying out each month for their negatively geared properties that arn't going up in value ( and heaven forbid, may have actually gone done in value ...).
At this stage you go back to where the cycle all begins . The centre of sydney. Yo may pick up some distressed inner city unit sales which, with you cash flow you can afford to hold until the market picks up. With your new found negotiating skills you can look around for the bargains ( if acey , or investor havn't got thier first.. ) or a unit in the Cross ( if Paul Zag hasn't beaten you to that ..) . You might buy a semi in mosman and then do a reno and get the place revalued and buy another using your new equity and existing cash flow to pay for them.
Once these start picking up then its off in to the main part of the cycle. Watching as areas start moving, buying, revaluing and then buying more. While the market is moving slowly it could be the time to do more renovations, subdivisions and developments.
All these generate more equity so when you get to the stage of rapid growth , you're ready to gear up and go along for the ride again.
I'm not saying this is "the way " , but it's a few thoughts that have occured to me over the last couple of years.
Now, how would you guys approach the property market from a "seasonal " approach ??
See Change
For those of you who arn't familiar with the song the first verse and chorus go like this
To everything turn, turn, turn
There is a season turn, turn, turn
And a time to every purpose
Under heaven
A time to be born, a time to die
A time to plant, a time to reap
A time to kill, a time to heal
A time to laugh, a time to wep
As has been said in another recent post there are lots of different ways to invest in property , but one thing people seem to ignore , is that in different parts of the cycle , maybe there are better ways of optimising your return....
We've just been through the period of maximal growth ( still there if you're in rockhampton ...
) but for most areas that phase is over.So what would be the best way to make money during that period?
To my way of thinking the best thing to do is to gear up as far as you feel comfortable and go along with the ride. At this stage of the market prices are going up overnight , and to spend time organising reno's , developments could have the potential of distracting you from the main way that money will be made at this stage. Obviously if you don't have enough funds to do this to a level you feel happy with , then reno's , flipping , trades maybe a way of generating money to help your cause.
Ok , so once the market slows down , what should be your priority ? We gone through a phase of rapid capital growth, so we're unlikely to have any major systemic capital growth , to my way of thinking at this stage I'd be aiming to maximise my cash flow.
I'd be putting my time toward getting the maximal return from the properties I have. I'd be organising reno's , maybe even selling a couple of properties in areas that I thought were prone to falling donw, or getting rid of the one that had turned out to be a lemon in terms of not attracting good tenants to cut down by monthly repayements. I'd also be revaluing my properties so i have as much equity available as possible.
The main thing I'd be aiming is to get some serious cash flow out of my portfolio.
Why ?
Well sooner or later property investing is not going to be the flavour of the month. Interest rates have gone up , and the people who bought at the peak of the market are getting frustrated at paying out each month for their negatively geared properties that arn't going up in value ( and heaven forbid, may have actually gone done in value ...).
At this stage you go back to where the cycle all begins . The centre of sydney. Yo may pick up some distressed inner city unit sales which, with you cash flow you can afford to hold until the market picks up. With your new found negotiating skills you can look around for the bargains ( if acey , or investor havn't got thier first..
) or a unit in the Cross ( if Paul Zag hasn't beaten you to that ..) . You might buy a semi in mosman and then do a reno and get the place revalued and buy another using your new equity and existing cash flow to pay for them. Once these start picking up then its off in to the main part of the cycle. Watching as areas start moving, buying, revaluing and then buying more. While the market is moving slowly it could be the time to do more renovations, subdivisions and developments.
All these generate more equity so when you get to the stage of rapid growth , you're ready to gear up and go along for the ride again.
I'm not saying this is "the way " , but it's a few thoughts that have occured to me over the last couple of years.
Now, how would you guys approach the property market from a "seasonal " approach ??
See Change
