From: Nigel Kibel
The posting "Read anything, read this" made for interesting reading and was an excellent catalyst to have us all seriously consider our strategies and goals before jumping in and investing.
Unfortunately, it also had the affect of scaring newbies into a heightened state of inaction. Doing nothing, waiting for the impending "crash" is far worse than investing wisely now. Procrastination through fear only shows a lack of knowledge - nothing else.
If there is an impending crash (which I believe will not happen, the rate of growth will certainly slow at some stage in the future, but a crash - I don't think so), then rather than do nothing, we only need to consider other strategies.
Firstly, trying to buy at auction against all the other lemmings is totally the wrong way to purchase in a hot market. You must be far more creative in finding the deals - and believe me they are out there.
We source property every day of the week, and have three full-time people researching, sourcing, looking and negotiating. With hard work and creativity, good deals are everywhere, even in this hot market. To give some heart, two recent examples:
Example 1
We sourced and negotiated 2 townhouses in an inner-Melbourne suburb and our clients purchased them $40,000 below sworn valuation, on-sold them within 3 weeks for $50,000 more than they paid for them.
Example 2
We sourced and negotiated 6 townhouses in a middle ring Melbourne suburb, each of which was $ 30,000 below sworn valuation. Some clients have decided to hold them, others have already sold theirs for a handsome profit.
Just two examples of how to make money in a hot market. I do not agree that it's not possible to make money right now, given the market conditions.
What about risk? Consider an alternative strategy. "Lease Options" are a fantastic way to eliminate risk and make excellent money in a hot market. With an option to purchase, you negotiate the right to buy a property at a set price at some date in the future. You have the right, but not the obligation to purchase, but if you decide to purchase, the vendor has to sell.
Pay a low option fee, negotiate an acceptable price, negotiate an acceptable rental, put in a tenant to cover your payments to the vendor, and sit back and wait for capital growth to do it's stuff. If your option period is say, 2 years, you have 2 years of capital growth to make you money - on a very small outlay.
If the market turns, or you don't get the growth - you can simply walk away from the deal at the end of the option period. If you choose to walk away, you didn't need a bank, you didn't need finance, and conducted the whole arrangement with virtually no risk.
Using this type of strategy, with a well negotiated option agreement, it is totally possible to make 2,000% return on your capital invested if the property grows at 10% per annum for the two years.
There are lot's and lot's of other strategies that can be employed to make money now, so please don't let hearsay of an impending crash stop you from investing.
Learn, read books, speak to people who are out there doing this right now, network, go to meetings of like-minded investors and be receptive to alternative strategies. Waiting will get you absolutely nowhere.
Certainly be careful, certainly plan for the worst, totally analyse every possible risk and implement a strategy to minimise each risk, and if you do all this, you greatly increase your chances of success.
So much of being successful is what goes on in your head. I for one don't want to wait before investing, I want to capitalise on a rising market right now. Everyday I see people making money in property, and I admire those immensely that have taken the time to learn and minimise their risk and exposure.
Doom and gloom - not for me. Just an opportunity of fine tuning strategies and going for it.
Nigel Kibel
The Investment Institute
The posting "Read anything, read this" made for interesting reading and was an excellent catalyst to have us all seriously consider our strategies and goals before jumping in and investing.
Unfortunately, it also had the affect of scaring newbies into a heightened state of inaction. Doing nothing, waiting for the impending "crash" is far worse than investing wisely now. Procrastination through fear only shows a lack of knowledge - nothing else.
If there is an impending crash (which I believe will not happen, the rate of growth will certainly slow at some stage in the future, but a crash - I don't think so), then rather than do nothing, we only need to consider other strategies.
Firstly, trying to buy at auction against all the other lemmings is totally the wrong way to purchase in a hot market. You must be far more creative in finding the deals - and believe me they are out there.
We source property every day of the week, and have three full-time people researching, sourcing, looking and negotiating. With hard work and creativity, good deals are everywhere, even in this hot market. To give some heart, two recent examples:
Example 1
We sourced and negotiated 2 townhouses in an inner-Melbourne suburb and our clients purchased them $40,000 below sworn valuation, on-sold them within 3 weeks for $50,000 more than they paid for them.
Example 2
We sourced and negotiated 6 townhouses in a middle ring Melbourne suburb, each of which was $ 30,000 below sworn valuation. Some clients have decided to hold them, others have already sold theirs for a handsome profit.
Just two examples of how to make money in a hot market. I do not agree that it's not possible to make money right now, given the market conditions.
What about risk? Consider an alternative strategy. "Lease Options" are a fantastic way to eliminate risk and make excellent money in a hot market. With an option to purchase, you negotiate the right to buy a property at a set price at some date in the future. You have the right, but not the obligation to purchase, but if you decide to purchase, the vendor has to sell.
Pay a low option fee, negotiate an acceptable price, negotiate an acceptable rental, put in a tenant to cover your payments to the vendor, and sit back and wait for capital growth to do it's stuff. If your option period is say, 2 years, you have 2 years of capital growth to make you money - on a very small outlay.
If the market turns, or you don't get the growth - you can simply walk away from the deal at the end of the option period. If you choose to walk away, you didn't need a bank, you didn't need finance, and conducted the whole arrangement with virtually no risk.
Using this type of strategy, with a well negotiated option agreement, it is totally possible to make 2,000% return on your capital invested if the property grows at 10% per annum for the two years.
There are lot's and lot's of other strategies that can be employed to make money now, so please don't let hearsay of an impending crash stop you from investing.
Learn, read books, speak to people who are out there doing this right now, network, go to meetings of like-minded investors and be receptive to alternative strategies. Waiting will get you absolutely nowhere.
Certainly be careful, certainly plan for the worst, totally analyse every possible risk and implement a strategy to minimise each risk, and if you do all this, you greatly increase your chances of success.
So much of being successful is what goes on in your head. I for one don't want to wait before investing, I want to capitalise on a rising market right now. Everyday I see people making money in property, and I admire those immensely that have taken the time to learn and minimise their risk and exposure.
Doom and gloom - not for me. Just an opportunity of fine tuning strategies and going for it.
Nigel Kibel
The Investment Institute
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