If there is one question I get asked more than any other, it’s ‘when should I buy?’
Tongue in cheek, the answer is usually ‘yesterday.’ The property market has outpaced wage growth for at least 40 years, so every bet against it has been a losing trade. But I understand that answer is not very helpful and not the direction the asker is looking for.
The truth is there’s no one-size-fits-all answer to the question of when is the right time to invest in property. The best time to invest varies depending on everyone’s individual circumstances and goals.
There are, however, some general factors to consider when making this decision.
- Your financial situation:
Are you in a good financial situation? There are costs associated with buying a property, and while we will show you that an investment may be almost cost-neutral after tax deductions and the ability to use negative gearing, you still need a stable income and savings to be able to show the bank you’re a good borrower and can cover the costs month-to-month before tax time.
- Market conditions:
Are market conditions right for investing in property? Are prices rising or falling? Is there a lot of demand for property in the area you’re interested in? Not all markets in Australia are the same, so it’s important to consider the relevant property cycle in the market that you are looking to invest in.
- Your investment goals:
What are your investment goals? These can differ depending on where you are on your investment journey. Are you looking to generate a monthly income through rental payments, or are you looking for long-term growth?
- The property itself:
Is the property a good investment? Is it in a good location? A property should be well suited to the demographics of the suburb and ideally should be located in an area or have features that give it scarcity and drive demand.
- The risks involved:
You’ve heard the saying, ‘no investment is without risk,’ so you need to consider what type of character you are. Are you happy to let your investment sit to give it time to grow, or are you the type to check the market weekly to look at incremental increases in comparable properties that have sold? If you’re the latter, you might not be ready, as property investment is playing a long game.
- Your exit strategy:
What is your exit strategy for this property? For well-located property in a premium location, the answer for when the best time to sell is usually ‘never’! But we may have to account for unexpected changes that occur in life, and it’s usually easier to sell a property that is easy for people to get finance for and is in high demand for people looking in that suburb.
The decision of when to invest in property is a personal one. There is no right or wrong answer, and the best time for you may not be the best time for someone else.
That’s not very helpful, right? That doesn’t tell you when to invest, which is actually the title of this blog.
So, when my friends ask, I tell them the right time to invest is as soon as they’re ready. Once your financial situation means you can afford to reach out to us and we’ll work with you on your investment goals, help you choose the best property in the current market and run all your numbers to make sure you’re happy with the risk versus potential reward.