Getting an accurate read on the property market can be difficult. The messages pushed through the media by vested interest often contradicts. Many forecasts, projections and trends are used to justify ones case high or low. One day it seems there is a severe shortage of dwellings and then the next we are warned of oversupply.
The banks and the property industry are issuing reports and research that suggest prices are sustainable if interest rates stay at the current record low levels. That’s a huge ‘if” when you consider that the term of a mortgage is 25 years.
When buying, it’s crucial that you accept prices can go up AND down. The market is experiencing very strong price growth that makes current selling conditions very favourable. Real estate is a great investment long term. It is not a great investment if you overpay when rates are low and THEN forced to sell in a falling market.
Just because a suburb has experienced strong growth in the past 12 months does not mean that growth will be repeated. Savvy investors know this is a great environment to sell rather than buy.
The rental market has softened in recent times. Therefore, selecting the right tenant for your property is crucial. Whilst the agent has a right to offer a view on the respective applicants, ensure that the final approval rests with you as the landlord.
When you are selling, attaining the highest possible price is the only game in town. However, when you are leasing your investment out, there are a number of factors to consider aside from price to ensure that you secure the right tenant.
Find out as much as you can upfront about the tenants that apply for your property. In many cases, a share household may offer more than a couple or family. However, your property may not work well or suit three or four independent parties who are sharing. Even though the income may be lower with a couple, the fit may be better for all concerned. If the Brady Bunch intend on leasing your studio apartment, you know it’s an unsustainable circumstance, so don’t enter into it in the first place.
Buying real estate is a massive financial commitment for most. It is a decision that brings excitement and fear in one. To work excessive hours all week, year in and year out, to fund the property purchase means that the home represents far more than bricks and mortar. Securing the right home can provide decades of enjoyment and comfort. Although, many buyers who finally secure a property suffer buyer’s remorse.
Buyer’s remorse often arises when a property purchase is rash or ill thought out. A symptom of buyer’s remorse usually involves questioning the wisdom of the purchase. Buyer’s remorse can be alleviated if the tough questions are asked in advance of the property purchase. You may not always like the answers to the five tough questions that follow, but they are best confronted pre-purchase. Asking them post purchase will just cause worry and sleepless nights.
What if interest rates go up?
Interest rates probably won’t rise in the short term. But what if they did? It’s crucial that you recognise we are at historically low interest rates. And yes, they may go lower before they go higher. Given the average time of property ownership is seven years, it’s fair to expect we will see higher rates at some time in the next seven years. If you budget for higher interest rates that never come, you are well in front. If you budget for a continuation of record low rates and you get hit with rate increases, the dream home can quickly become the nightmare mortgage.
When you are interviewing agents to sell your home, many will make appealing claims and promises. It may be the promise of a high price or the claim of superior customer service.
‘If you run the right advertising campaign we could get…’
‘We could sell this in two weeks!’
‘There will be no problems selling this one!’
Consumers often experience a large gap between the promises made by sales people and the actual service provided. If you sign with an agent on the basis of certain claims they make, it’s only fair that you can hold that agent to account in the event they fail to deliver.