Are you a smart investor? Or do you follow the herd of sheep – or maybe you are a fish mindlessly swimming along with the current? I want you to start thinking like a shark, going against the current, being the top predator and ruling the ocean, or in this case the property market.
When the market changes the smart investor will look at opportunity. They see gold where the other investors see dirt. Where other investors pull out of the market, by fear, new regulations, the media, so called experts, all creating a monster. Now is the property market ever going to completely disappear? I don’t think so. But buying an off the plan unit in Sydney at this point in time might not be the best option. However buying a property in Sydney where you have the possibility to add a granny flat could be a great investment as you are adding secondary income to help pay for the high purchase price of a house in Sydney.
You still have to do your research with any property investing.
Currently we are seeing the banks and the regulator, trying to stop the fuel of investment lending in Australia by enforcing regulations in regards to investment loans. They are forcing the loans to be principle and interest repayments over interest only repayments and they are also making the loan to value ratios (LVR) higher for investment loans so you need larger deposits. They have increased serviceability so on the banks calculators you need to earn more income to purchase an investment property. What does that mean for the investor?
By slowing down investing – this provides opportunities as there are less investors in the market which in turn will see rents increase as there will be less investor supply. Remember we need about 150,000 new dwellings a year to be built to keep up with the demand and the population growth and usually they all want to live in cities. So if you are still in the position to be able to invest then the best time to do so is when everyone else is backing off. The smart investor will take advantage of this down turn by realising that not only will there be more stock available to purchase but they are going to get higher rental returns.
Other opportunities might be better terms to purchase such as longer settlements, where you could gain early access to the property to do renovations or add value even before settling on the property. Vendors might offer vendor terms such as 10% vendor finance on the property or the builder might feel the pinch and offer better prices or supply better fixtures and fittings in the house at the same cost. There are definitely some benefits offsetting these bank limitations out there if you do your research.
As always if you are looking for an advance strategy deal, which is generally what the smart investor will look for; such as a duplex or dual occupancy property, small lot subdivision, strata title of a unit block, or building of a granny flat on the property; these are all going to add either equity uplift, capital growth, rental return or all.
So, become the smart investor and swim against the current and make your property portfolio sing! If you are confused about your investing and don’t know where to start call Blue Wave Property Strategies on 07 5443 8773 or drop us an email HERE and arrange a free Property Check-up.