“The economic experts might be at loggerheads over Australia’s current cloud of economic insecurity, but how can the average Australian weather the storm and take control of their future financial security despite their gloomy prognosis?”
Lately, the news is full of doom, gloom, and division, with opinions from all sides leaving most scratching their heads. Is property booming – or is the market on the cusp of a downturn that could affect millions?
There’s no way to know, of course. Without a crystal ball giving out reassuring answers, the Australian public has been left paralysed by uncertainty and an unwillingness to gamble.
That’s not surprising; that’s just how most of us react when there’s too much doubt – it’s better to do nothing than risk it all on the throw of a dice. However, what if this is simply a media-fuelled babble bubble that is preventing people from seriously looking into their own future?
Let me explain: the media thrives on bad news, conflict, and sensationalism. Like it or not, it’s what gets them viewers, readers, and subscriptions, so they’re simply giving us what we want. But at the same time, the lens that the media looks through isn’t necessarily honest. If you’re looking to invest in property as a vehicle to pay off your mortgage while building a passive income through rent on a property asset, then the idea of buying now may make you feel a bit queasy.
That’s understandable! But ask any property investor today how they deal with rocky markets. They’ll tell you that it’s not the market which matters; it’s your ability to handle eventualities as well as look at the story the numbers are telling you.
And, they’ll almost always tell you that any time is a good time to invest. Yes, even when the market is amid correction after endless correction! If you’re looking to squeeze out debt, then this can feel like insanity – but is it?
Property Is Long-Term; Why Focus on The Short?
When is the best time to buy property, then?
Surely not now?
You might think the best thing to do is sit out the current market and wait for better conditions. That seems prudent on the face of it – but you’re running a risk of missing property buying opportunities on a market that could roar back into life in the blink of an eye.
Traditional property indicators are reliable – and the story they tell is that in the next three to five years, many areas that are currently stagnating are likely to undergo a booming renaissance.
By waiting, you have every chance to miss out on that.
The outlook today may be bleak, but as the famous stock market saying goes, “the time to buy is when there’s blood on the streets, even if the blood is your own.” Like the stock market, property is an investment vehicle that follows a circular pattern.
Let’s return to the question: When is the best time to purchase an investment property?
When it comes to investment properties, the answer is as soon as you can – the market will recover.
Property isn’t a risk-free investment, of course: your property may never grow – or even plummet in value. With such expensive pitfalls, it’s not surprising so many would-be property investors are gingerly staying on the fence, waiting for a more positive outlook.
Waiting to See Can Cost You More in The Long Run
You may be one of these hawk-eyed market watchers waiting for the opportunity to pounce – but each passing week that you wait, you’re missing out.
Let’s take estates and apartment complexes, some of the most popular property investment vehicles in Australia today. It goes without saying that the best picks will be snapped up early, leaving the remaining stock open to you.
The remaining stock is often simply not as attractive to would-be tenants, which means you then face a secondary problem: you’re not getting the tenants you need to make your property work for you.
Beyond the tenancy issue, you face another problem: as the market finally blooms and property prices climb up, you may enter the scene a little too late. Not only are the best property pickings gone, but you’re also now going to be slugging it out with other investors.
Even if you do eventually get your property, your yield would be impacted – you’ve missed the rental increase correlated with the property value increase, after all. Worse, those extra hundreds of thousands you spent on this property impact your ability to grow your portfolio quicker.
If you’re looking at property investment as a way to tackle your mortgage debt, then waiting may actually not be as prudent as it felt; the hidden costs of a booming market add up!
What Should a New Property Investor Do?
Ultimately, this is a question only you can answer for yourself. As you can see, I clearly believe that property market downturns are a golden opportunity for anyone who can afford it.
In addition to that, I believe that all investors should have a strategy of consistently adding to their personal portfolio despite the market conditions at that time. Remember, property is a long-term game, and over time, your average property purchase improves in any case, despite the fluctuations of the market in the short-term.
Despite what those experts say when they shake their heads at the present instability of the market, they rarely look towards the bigger picture; and, as a property investor, this is just one of the many eventualities you need to consider.
Can Buying Property Now Help as a Debt Reduction Strategy?
Any good property investment strategy has debt reduction built into it as one of its key mechanisms – after all, the only way you can expand your portfolio is to keep your debt as comfortable as possible.
Banks typically lend you $5 for every $1 of equity you own (subject to terms and conditions) – which means reducing your total mortgage debt actually increases your leverage to buy more property through leverage.
As you can see, debt reduction is crucial for building a property empire – and here’s where an economic downturn allies with you again. Banks and financial institutions will cut interest rates, which in turn makes it easier to put more funds into repaying debt – and increasing your ability to borrow on your current equity.
And, don’t forget, with tenants in your investment property, you’re effectively boosting your income power to drive down your debt further.
But what about when interest rates climb?
It’s wise to know just how high an interest rate can go before the pressure starts building; preparation is key because you will need to start looking at your budget and spending habits to start cutting your expenditure.
Knowing the likely highest range of the interest rate gives you the knowledge of exactly how much you’ll need to cut to continue paying off your mortgage, which can reduce a lot of stress simply from being prepared.
No property investor enjoys high interest rates – but you can also use this knowledge to make extra repayments while interest rates are low. This sacrifice boosts your equity in your properties, which gives you more net worth and cash flow, further funding your debt repayment efforts to give you more breathing room during times of high interest rates.
Remember: the markets predictably turn in cycles, which means you can use this to your advantage – even when it might not appear so at first glance.
The Best Time to Buy Property in Australia?
Clearly, the best time to start investing in property is sooner rather than later. Your first property opens up a powerful debt reduction strategy that can help you to pay off your mortgage while building a stable financial future.
More than that, it puts you on the ladder to make other steps forward: you might not want to build a huge property empire, and that’s fine. Property investments build up your equity and your ability to acquire yet more property, which in turn gives you a passive income that gifts you with a brave new world of financial freedom, far from the grind of the 9-5 routine.
What’s important here is that you have a clear idea of what you want – and a strategy to execute that. A good property investor may enjoy a little extra money at the end of the month – a great one can achieve what they set out to do.
No matter what the experts might say, property investment combined with debt reduction is one of the most powerful tools open to the average Australian today. Not only can you start to start breaking down your mortgage, but you are also putting yourself in the driving seat to a property portfolio that gives you the keys to the lifestyle you dream of tomorrow.
