The real estate market has seen better days. Prices are dropping all over the place. Does this mean that you should run for the hills away from investing in the property market? Not exactly, in fact, this is actually a great time for you to seize the opportunity and increase your own portfolio.
When you invest in the real estate market, it makes no difference what state it is in, unless of course you are planning to sell in the short term. If you are holding your properties for the long term, then you are able to accept the fluctuations in the market. Whenever possible, you can get some of the best deals by purchasing your investment properties during the golden hours when the market cycle hits a low period.
Buy Low And Hold
When the market is in the middle of a major downturn, you need to be buying up all of the bargains you can find. You will be able to take advantage of rock bottom prices on some really great finds. However, it is important to stick to positive gearing, or you could find yourself in real trouble as an investor if you become too negatively geared. Ensure that the income from your rental properties meets or exceeds the amount that you must pay in outgoing expenses, including any mortgage payments.
If you have income coming in from an additional source, then you may be able to handle another hundred dollars or more each month, but avoid doing so whenever possible. Negative gearing is not all bad; it is all right if you have a tax problem and an exceptional income.
When prices in the real estate market were on the rise, investors had the comfort of knowing that the value of their properties was also on the rise. Now in a slower, declining market, property investors need to hold on to those investments longer.
Property Options Australia
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Hi Sean,
Buy and hold is a strategy I’m comfortable with. Any time you can buy properties cheap and then hold them until the real estate market is in better shape; you’re onto a winner.
I think most property investors know that a slowing economy actually means great opportunities ahead.
It makes sense to leave yourself a safety margin to help buffer you from these fluctuations in the real estate market. Sudden increases in interest rates always sinks a lot of ships.