Is this the best time to invest?
- Thread starter komstak
- Start date
To quote an old addage: "The best time to buy was yesterday, the second best time is today and tomorrow is too late"
Lets say you buy a property today for $300K and lets say it drops 10% to $270K over the next 2 years before doubling over the ensuing 8 years so that it is worth $600K at the 10 year mark.
10 years from now, are you going to be crying that you made $300K in CG or will you be crying that you "lost" $30K 8 years ago? Or will you still be researching to decide when the best time to get into the market will be? and crying that property is so expensive to get into now at $600K?
Something to think about.
Aimy
I guess the main thing to consider are your own personal circumstances. If you have the capacity to support a purchase and have allowed for higher interest rates, then the federal election and immediate rate rise won't be too relevant to you!
I think it is always easier to find reasons not to invest - and to keep putting the process off!
The difference between a good and a bad haircut is a couple of days. The difference between a good and a bad property deal could take longer.
The question here is are you prepared to take a chance based on your current knowledge/experience in property investing?
I go to a hairdresser who has consistantly given me a good haircut. So based on that logic you could do some due diegence and educate youself on what makes a good investment and then you will be better equipped to recognise consistantly good real estate deals.
Simon
Wrong question. The right question would be 'What can I afford to buy now that I can continue to hold even in the worse case scenario'?
There is NEVER a good time (much less the best time) to buy property except in hindsight, and by then it's too late.
Alex
I wonder what would happen if the banks reverted to the good ole days of 60% LVRs, 5-6% margins, 5 years savings history... etc.. Wonder if properties will continue to double every 7-10 years then....
Their business would not grow either and we would all stagnate in the potato patch of apathy, chasing the illusive dream that "cash is king"
Simon
Plus the neg gearing costs plus the lost opportunity costs. Why buy an asset that has negative income return AND negative cap growth return.
Doesnt make sense to me.
Doesnt make sense to me.
As others have mentioned - it depends on your personal situation.
BUT
- The election will be over before you even have chance to settle on a property, and in the bigger picture - Labor and Liberal are not that hugely different, so in my opinion, would not even slightly influence my IP investing.
- Interst rates are still relatively low when you look at historical figures. If you wait for them to drop, you could be waiting 2yrs, and that's 2yrs you could have had a property increasing in value.
If you can afford an IP at current interest rates - ensure you can sustain an increase of at least 2% or more. Once you have satified yourself you can, I'd lock them up anyway. I believe it's better to have certainty with your investment, than gamble on rates going down and trying to save a few bucks.
- Who says there is a 'best time' to invest in property? For starters, there are a thousand markets, all different. Plus, you don't need to get a 'bargain' for property to do well for you. I've arguably paid a bit too much for 2 of my current properties according to market figures - but will that matter in a years time - no. Plus I can guarantee you it sure won't matter in 5yrs!
BUT
- The election will be over before you even have chance to settle on a property, and in the bigger picture - Labor and Liberal are not that hugely different, so in my opinion, would not even slightly influence my IP investing.
- Interst rates are still relatively low when you look at historical figures. If you wait for them to drop, you could be waiting 2yrs, and that's 2yrs you could have had a property increasing in value.
If you can afford an IP at current interest rates - ensure you can sustain an increase of at least 2% or more. Once you have satified yourself you can, I'd lock them up anyway. I believe it's better to have certainty with your investment, than gamble on rates going down and trying to save a few bucks.
- Who says there is a 'best time' to invest in property? For starters, there are a thousand markets, all different. Plus, you don't need to get a 'bargain' for property to do well for you. I've arguably paid a bit too much for 2 of my current properties according to market figures - but will that matter in a years time - no. Plus I can guarantee you it sure won't matter in 5yrs!
You have to consider opportunity cost though.
Just buying because your holding long term is not great advice. If you are confident prices will fall over the short term, then putting your deposit into shares might be a better option. Even putting it in the bank is a better option that putting it into an asset that is going to decline in value.
In two years time, you have a larger deposit, you might have a higher wage, you could be in a much stronger position ready to take advantage of immediate gains.
You can never sure obviously but research and advice will help you increase your odds.
Just buying because your holding long term is not great advice. If you are confident prices will fall over the short term, then putting your deposit into shares might be a better option. Even putting it in the bank is a better option that putting it into an asset that is going to decline in value.
In two years time, you have a larger deposit, you might have a higher wage, you could be in a much stronger position ready to take advantage of immediate gains.
You can never sure obviously but research and advice will help you increase your odds.
True. Also, to be fair, whilst my general comments were based on the general market, more specifically I focus my attention on Adelaide.
So the question "is now the best time to invest" - my answer is 'yes' when refering to the market I know, or Melbourne, Brisbane etc. I'm told. But the general question of whether an election/interest rates etc. would affect me - no, they would'nt, I would buy regardless.
Having said that, in a more general view - if I wanted to invest in property and thought the market I was interested in was going to fall, then I would invest in IP's in another market, or another asset class (as you said). Having said that, I don't think I'd be very confident on picking a market drop where I'd be able to buy cheaper in 2yrs time. Also, as a side note, I don't think even one city would behave the same over the whole market - so I may just avoid one area I think will fall, in favour of another area I believe is going to rise.
The only market I'd probably be able to call 'the bottom' of, would be if the area has just had a major boom and was (IMO) due to settle back a bit eg. Perth. But even then - 2yrs is quite a long time, and I would risk missing getting back in. (That's also the beauty of development which I'm looking more towards at the moment - it takes a lot more of the edge off the market as you create your own equity even if prices do slide somewhat)
hmmm I've waffled again...
So the question "is now the best time to invest" - my answer is 'yes' when refering to the market I know, or Melbourne, Brisbane etc. I'm told. But the general question of whether an election/interest rates etc. would affect me - no, they would'nt, I would buy regardless.
Having said that, in a more general view - if I wanted to invest in property and thought the market I was interested in was going to fall, then I would invest in IP's in another market, or another asset class (as you said). Having said that, I don't think I'd be very confident on picking a market drop where I'd be able to buy cheaper in 2yrs time. Also, as a side note, I don't think even one city would behave the same over the whole market - so I may just avoid one area I think will fall, in favour of another area I believe is going to rise.
The only market I'd probably be able to call 'the bottom' of, would be if the area has just had a major boom and was (IMO) due to settle back a bit eg. Perth. But even then - 2yrs is quite a long time, and I would risk missing getting back in. (That's also the beauty of development which I'm looking more towards at the moment - it takes a lot more of the edge off the market as you create your own equity even if prices do slide somewhat)
hmmm I've waffled again...
Depends which area you buy into. But then that has very little to do with outside factors. Unless transportation gets better, eg the gov builds a highway or railway to your suburb.
Some suburbs increase in value at a faster rate than other suburbs. You want to buy in those faster increasing suburbs. They hard part is research your market.
cheers
quoll
