This is a really important step when it comes to looking at your investing strategy because we’ll always recommend investing for the long term rather than the short.
- Property markets go through cycles. There will always be peaks and troughs where if you sell to reap the rewards of the peak, you will lose out on potential future capital growth, or if you panic and sell, you could lose money while the market is in a downturn. Keep your eye on the end goal – not the movements in between.
- The costs of buying property. You need to consider the additional costs of buying property, such as stamp duty and legal fees. These costs, when balanced out over 10 years or so are minimal. If you only hold the property for a couple of years, then you must make sure the purchasing costs are taken into account when looking at the potential profit you’ve made.
- Figures show that time is the greatest influencer of a positive or negative return on your investment. Last month we saw the plumber who sold a 64 sqm double garage in Albert Park, Melbourne for $645,500. That was $245,500 over reserve. He bought it in 1984 for $8000 to store his plumbing equipment. That’s a long time to hold a property and a massive profit, but it’s indicative of the longer you hold a property, the better the return.
Australia’s leading researcher, CoreLogic, published stats in their Pain and Gain Report that showed the average investor in the Melbourne property market who held their property for 4.7 years sold for a loss, while properties held for an average of 8.7 years sold for a profit. (figures from December 2018)
The difference in the return on their investment was simply time.
Don’t be impatient with your investment and expect massive returns in short periods. But if you buy well, the chances are high that you will get strong returns in time.
Our Property Highlight this month is in the Sydney market… an area we don’t recommend often due to affordability, but this is a good one. And affordable! Check it out below.
If you want to discuss your plans and goals, please get in touch.
0416 049 226