Positive Momentum Continues | Ballarat Bargain | Avoiding Property Investment Regrets
Welcome to the November 2019 edition of the Adviseable newsletter!
Property buyer activity on both the investor and owner occupier front continues to snowball driven by drastically improved confidence and access to cheap credit. I appreciate that this has been a repetitious theme within our newsletters over the past months but this sharp upwards turn is being felt strongly in the property markets across Australia.
Although we’re not quite at stampede status just yet, it does seem tougher than ever to secure good buys courtesy of lingering low levels of new property listings. There are a number of theories as to why stock levels remain so suppressed, with many believing that sellers are holding out for a bigger payday as prices maintain an upward trend. Whatever the reason, the combination of cashed-up hungry buyers and not enough listings to go around is unsurprisingly equating to some serious competition within certain markets.
This is of course good news for those lucky enough to own property in these hot markets, but it does mean that the buying conditions within are no longer viable for the astute investor. On this basis, we’ve been focusing much of our time ‘in the lab’ identifying some very interesting emerging markets that are not on everyone else’s radar. In fact, Kate’s roaming the country scouting areas as we speak. Watch this space…!
Recently Purchased : 18A Morgan St. Sebastopol VIC
For those looking to invest in VIC, Ballarat maintains its position as a popular and much more affordable alternative to Melbourne. This 3 bed, 2 bath, double lock-up garage 2004 vintage home is a prime example, which the Adviseable team bought for $340,000. The key to securing this gem at this great price was being able to offer the sellers a lease-back arrangement (enabling them to stay put in the property so that their daughter could complete her HSC without disruption). This lateral thinking and flexibility provided us with an edge as investors competing with owner occupier buyers. Standard rent for this one was appraised at $320-$330 per week.
Ballarat region highlights:
- Australia’s fourth fastest growing city
- 110km north-west of Melbourne
- Strategically positioned amongst major freight, tourism, and commuter routes
- $6B road & rail upgrades, $950M wind farm project, $460M hospital upgrade
- 1.5% vacancy rate (Sebastopol)
Question of the month:
I’m just starting out with property investment, and I’m really nervous about making a wrong move and regretting it down the track. Any reassuring pearls of wisdom?
A: Having worked with many seasoned investors over the years, I’ve certainly noted some recurring themes as they reminisce about their property investment journeys and ponder how they could’ve done things differently. Here are some of the most frequently aired of these “regrets”:
Regret No.1: ‘I should have started investing in property sooner’.
Sadly, many folks learn the importance of investing for their future/retirement as it’s bordering on the ‘too late’ stage and are left to compromise as crunch time nears. Ironically, many also underestimate just how simple and attainable property investment can be, only to realise that it had been well within their reach for many years before they finally took the leap of faith and bought one. Solution: Don’t wait until it’s too late to invest or put it in the ‘too hard basket’ – Get involved ASAP!
Regret No.2: ‘I should never have sold that property’.
Whilst selling an investment property and ‘cashing in’ on the capital growth along the way can be a key component of a successful property investment strategy, I would suggest that it’s the ‘what happens next’ that is the real root of the abovementioned regret. What I’m getting at is that this regret is fundamentally about lost opportunity as reaping the benefit of a rising market is cut short by the sale of the underlying asset. Solution: When selling an investment property make sure that the profit is put to effective use and if possible replace the investment asset to maintain market exposure
Regret No.3: ‘I should never have bought that ‘niche’ property’.
Let me start off by saying that I’m not necessarily condemning ‘niche’ properties (i.e. serviced apartments, hotel rooms, student accommodation, holiday let homes, etc). I’m sure that many investors have made these types of investments work well for them. However, based on my experience I would say that many investors who buy these types of properties do so unaware of the specific risks involved. In addition, ‘niche’ properties are often coupled with promises of high returns which can be difficult for the uninitiated to ignore. Solution: Take the time to conduct adequate research and assess whether ‘niche’ properties are right for your individual circumstances
Regret No.4: ‘I should have gone with my gut and not listened to person X’.
I’ll be the first to admit that investing in property takes guts (I was going to refer to another body part here, but I digress…). On that note, when taking the plunge to invest in property it’s easy to lose confidence and be swayed one way or another by those with good intentions who are all too willing to share their opinion on exactly what, where, and when to buy. These well-meaning folk could be friends, family, or even a trusted professional which can make it difficult to overlook their advice. Solution: Trust your own instincts and don’t be afraid to second-guess the opinions shared by anyone (no matter how much you may love them!) – Alex