Is property investment all about timing?
Plenty of people come through the doors of Reventon with dreams of buying an investment property when the market is low, and selling when prices hit their peak, to maximise their profits. It’s a simple strategy, and one that relies on playing the property market cycle to perfection. However, new research shows that, for most buyers, the risks may not outweigh the benefits of this kind of strategy. So, what’s the theory behind the research, and what kind of strategies should property investors take?
A risky businesses
Most buyers will not have the experience, knowledge, or resources to be able to track and respond to the market with as much detail as they’d like. Even if they did, it’s not certain that their predictions and estimates will come to fruition. This, along with the high transactional costs of buying and selling property – for example, stamp duty and capital gains tax – often mean that people who are looking to quickly enter and exit the property market might be left with less profit than they’d hoped.
Adapting property markets
Property markets are continually changing and, as we often remind our readers, even one city will have a number of different markets that are continually shifting and adapting to changing conditions, infrastructure investment, and price trends. This makes it even more difficult for most investors to come in and out of the market quickly, with occasionally negative results. For example, in the new research study, investors who tried to time the market but bought in the wrong place were over $100,000 out of pocket after a five-year period.
Of course, all is not lost. There is a way to circumvent these risks and create a secure strategy that is more predictable, more manageable, and less hassle. That is, implementing a long-term strategy – or what we like to call a “time in the market” strategy – to keep your investment for longer and let the market do what it does best: grow. Think about the housing market ten, fifteen, twenty, even fifty years ago. Small bumps and dips in the market don’t mean much when a house that was purchased in 1990 is now selling for triple the price.
It’s all about conducting proper market research, finding a location that is headed for high growth – and we mean long-term, secure growth – and ensuring you get the right kind of property for your potential tenants. With this mix and some time, your investment is much more likely to do well. Figures in the study back up this theory, with “time in market” investors reaping significant capital growth.
Get professional investment advice
It’s important when you’re considering a property investment to have people around you that understand the market, and can give you financial guidance and support along the way. That’s what you get with Reventon – someone one your side who can help you to navigate your investment decisions to help you determine the right path to a successful property investment. What’s more, you can get a free advice session with one of our experienced team – we’ll even visit you at home.