How smart property buyers can succeed in 2021

For most of 2020, ‘experts’ suggested that our property market was going to implode and a major bank went as far as to predict house values were going to decline by 30 percent.

Needless to say, that didn’t happen and theses so called experts don’t really know any better that an average lay person.

What we experienced instead was a period of slower growth while social distancing was imposed by governments before prices moving upwards again due to limited listings and increased competition among buyers as FOMO set in.

One of the most important lessons to remember is, never get too carried away when the market is booming nor too disenchanted during property slumps. Letting your emotions drive your purchase decision is a sure-fire way to disaster.

Our property markets is predominately driven by Australians sense of economic security and each downturn sets us up for the next boom. This means that even as you take advantage of our strong real estate markets, be prepared for the property cycle to change if economic uncertainty hits home.

Always remember, real estate is a long-term proposition and Warren Buffet said it right when he explained that: “Wealth is the transfer of money from the impatient to the patient.”

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Property investing is really a game of finance with some real estate thrown in the middle. Successful investing is essentially buying time with sufficient financial buffers to ride the ups and downs of the market while your asset base grows in value.

Follow a system

Strategic investors follow a system to take the emotion out of their decisions and ensure they don’t speculate. Let’s be honest, almost anyone can make money during a strong property market because the market covers up mistakes, but many investors without a system found themselves in financial trouble when the market turned in the past.

If you prefer to have consistent profits and reduced risk, follow a proven system. Make your investing boring, so the rest of your life can be exciting.

It’s about Location

Over the long-term, around 80% of the performance of your investment will be due to its location and around 20% will be related to the property you purchase in that location.

Yet during the last boom many investors forgot the age-old fundamental of buying the best property they could afford in a proven location. Instead, they got side-tracked by chasing the next “hot spot” and got caught out when the pandemic hit.

Or they bought “cheap” properties in secondary locations or chased cash flow in low socioeconomic areas and now they feel they’ve lost out as the property boom in our capital cities passed them by.

Strategic buyers do it differently…

They make educated investment decisions based on research and buy a property in an area that has experienced above average long term capital growth and will continue to do so because of the demographics of the people living in the area.

Then these smart investors “manufacture” capital growth by adding value through renovations or redevelopment and hold on to their properties as a long-term investment.

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This article via Property Update does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.