With so much doom and gloom being reported almost daily about all classes of investment lately, many people are wondering if now is a good time to invest, or if the best option is to sit tight and wait and see what happens in the property and share markets.
While it may be a volatile time to invest in some respects, many experts believe those willing to stomach some financial pain in the short term may just pick up a bargain, and we most definitely agree.
As we always say, it is important to remember that property investment is a long-term investment strategy. When you stop looking to make a quick buck, investing becomes much easier and can be relatively stress-free. As a general rule, if you purchased property in Perth twenty years ago, you would be in a far greater financial position today than if you didn’t, with most properties being worth hundreds of thousands of dollars more today than their purchase prices two decades ago. But, if you think back over those twenty years, you will recall periods of significant market fluctuation and times when property values slumped, including a recession and the GFC. The smart investors know that the market is cyclical, but the property market has trended upwards over the longer-term. Without reservation, most (if not all) investors who have held property for the long term are more than happy that they did so.
When the market is depressed, it can be a great time to buy and hold assets – with interest rates low and purchase prices down, it can be the perfect time to pick up a carefully selected asset that will perform for you over the long term.
So what should you look for when purchasing property in a slumped market?
Property investment is a numbers game, and ideally you want your investment proposition to be as close to neutral (or even positive) cash-flow as possible. This means that when you consider all of the outgoings (mortgage, rates, rental expenses etc) and your income (rent, tax refunds, benefits of off-setting and increased cash flow), your net monthly financial position is either improved or remains the same. This principle applies in any market, but with interest rates currently low it is a great time to buy and hold assets for a very low cost.
We always recommend having any proposed property investment assessed by a professional who has the tools, software and market knowledge to accurately analyse the investment and its effect on your overall financial position. Any investment can be like shooting fish in a barrel without the right advice and guidance , and property investment is no different.
If you’d like to know more about buying property in a slumped market, we’d love for you to get in touch.
* Our blog posts are general in nature and are not intended to be relied upon for any purpose whatsoever. This article does not constitute financial advice.