It’s often said that timing is everything when investing, with majority of real estate experts and media claiming that investors should ‘time’ their purchase based on the best market conditions. But is this the right advice?
— The median house price in Sydney in 1980 was $65,000 and it is now around $1M. So the median price has risen roughly 15 times in 36 years. It doesn’t take a mathematician to work out that you’d be a wealthy person today if you bought and held onto a few properties since then, and the main reason is time in the market, not timing.
Some believe that understanding the recurring relationship between the different stages in the market cycle is critical to maximising the returns on investment dollars. But others disagree. In fact, the list is long of successful Australian property investors who acted while others were busy pondering during what was considered a remarkably poor time.
Take Zaki Ameer who understood little about market cycles when he first began investing, but went on to build himself a portfolio of 10 properties totalling $3 million in a few short years.
Zaki purchased a house in Port Macquarie for $80,000 in 2008 after the GFC; when investors were shying away from the market entirely.
Banks had pulled the plug on any type of lending, especially for the kind Zaki had his eye on. The property was a completely burnt down three-bedder requiring major reparations, but after three months investing time and effort into finding the right contractor to renovate it, Zaki’s property was valued at $280,000, making a $100,000 profit post reno cost.
Today Zaki is a real estate author and Founder of Dream Design Property (DDP Property), where he and his team guide others through the property investment process to help them become self-sufficient property investors.
Zaki says, “Now is always the best time to buy. The greatest cost of investing is the cost of not doing anything. People spend so much time agonising or being stuck in ‘analysis paralysis’, trying to buy a property and often waiting and waiting for some magical, ‘perfect’ deal, when they could have easily bought one or more great properties that would have risen in value over time as the market rose.“
Here Mr. Ameer offers advice on why investors should act now, not later:
1. In areas where new infrastructure has been planned, invest before infrastructure is completed and prices increase. Infrastructure such as new schools, hospitals and shopping centres attract area growth.
2. There is so much data and research available to investors today meaning that investors can get it right at any ‘time’. Comprehensive data on rising markets, high rental return opportunities and information regarding future infrastructure changes and progress will make it so much easier to identify potential opportunities all over Australia.
3. The median house price has been projected to be as high as $6.4M in 2050 so people should look to buy investment properties as early as possible in life, so that time in the market is on their side. Once properties have been purchased, owners should be patient with them and aim to hold them for the long term.
4. Interest rates are at historic lows giving investors another incentive to plough their cash into real estate, which in turn will likely push up house prices in the hottest markets.
5. The dollar value of capital growth over time is typically far in excess of a small change in the purchase price. And this ‘cost’ is compounded and multiplied the longer the time period considered and the more properties that are bought.
6. Time heals all buying mistakes so even if you do make a ‘mistake’, eventually this will be corrected by the rising market. When you take into account a successful property portfolio is typically a 10 to 20 year plan in the making, short term fluctuations are not something to panic about.
Zaki Ameer is the Founder of Dream Design Property (DDP Property ), a unique wealth creation program that is designed to help Australians gain financial freedom, offering each client an ongoing service catering to their changing circumstances and needs. DDP has recently launched Kickstart, the first affordable program designed specifically to help Gen Ys take their first step into the property market.
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