How to NOT invest!

Buying BMV

 

Hey all

Being a REA I am sure when a potential renter walks in the door that client is shown the stock meeting their needs regardless of who owns the property

Clients will always come first I am sure☺

 

It's important to keep in mind not just diversity, but competition. If a person, for example, has invested in off-the-plan apartments in an overcrowded CBD, they are at just as much risk because assets in oversupply may be on the wrong side of any shift if demand. Some assets, like quality family homes, will always be in demand. Others, like tiny apartments, homes in one-industry regional towns etc, are vulnerable especially when you consider that demand right now is unusually high (especially from the investment-driven demand side, which often proves fragile in a correction).

I think it shows, too, there's a vast difference in investor skills. From what I've seen most investors on this site are prepping for a likely downturn, because they know markets move in cycles. I've seen a lot of diversifying, looking into other asset classes, real consideration of quality over quantity. Many recent, inexperienced investors just don't do that. They've seen people do well and they think all it takes is buying something, anything, and then they expect it to be a set and forget road to instant wealth.

The lady in the article is unfortunately not the exception, but the norm. Most recent investors are like this woman. I've met people stretching themselves to buy the worst outer-suburban fringe assets, ten apartments in towns like Port Macquarie (with nothing else in their portfolios), snapping up one-bedders as if investing is about buying as many assets as you can as quickly as possible, financed by as much debt as a bank will give you. Many get together some money and buy into the most overcrowded portions of the market because that's where it's cheaper, and yet also where it's still far too pricey in value terms, in portions of the market that have grown by speculation and where they will not be able to compete if developers start to discount.

I think the majority of people on this site are going to find a correction separates the wheat from the chaff, but I feel pretty confident most people here are the wheat, and well aware investment is a difficult, full-time game requiring a lot more than just buying some properties and expecting to get insta-rich.

 

Its not a guarantee but being surrounded by investors and property related people you should have a better idea......

It seems odd that an agent behaves likr a novice first time investor

 

It would be interesting to see what strategy seasoned investors are doing in terms of portfolio on the assumption a slump or plateau or even a correction was guaranteed?

Eg will they stop buying? Will they start selling the duds? Or will they sell to reduce to debt?

I have been selling some of mine because i feel rates will rise. Land tax. And cashfloe is going to kill me especialy since my income isnt high.

Also i dont feel my regionals will do much in terms of growth but they go in cycles too. So i may regret it

 

I'm not sure a slump is guaranteed, but we're certainly overdue for one. I think the main reason markets cycle is the rise and fall are so interconnected. The bigger prices grow, the higher the pressure from debts, the greater the risk grows, the worse oversupply tends to get, the fewer new home owners are able to buy in etc, which creates downward pressure. So I think a correction at least is coming eventually, especially as rates go up. I think doing well in that sort of market is just a different game. It's about choosing quality and looking more towards positively geared assets in good areas, that will grow in any market. I think sometimes people are too slow to offload duds, too. Being willing to let some underperforming assets go is never a setback.

 

Diversification is key...and also understanding that markets work in cycles...the experienced get emotional and don't understand that at some point even the larger cities will experience a correction.

I have always made it a point to put all my eggs in one basket.......when some markets stops..others continue to perform.

 

It makes her very angry? At who? Herself hopefully. Pretty dumb decision...

 

Don't you mean to not put all your eggs in one basket?

 

yes thatcis right

 

For us its pretty simple. Buy in high demand markets or strongly growing demand markets, stock catered to the right demographic at good value prices at approx 7-9 o'clock of a cycle and able to add value in some way.

So I guess to us what NOT to do would be the opposite of that. That's worked for us to date.

 

Just seems very common behaviour these days that if somethinf doesnt go your way. Then you have the right or entitlement to be angry at someone or shift the blame

 

I find being able to recognise a dud and accept responsibility is a common predictor of who is or isn't a decent investor. Good investors tend to know duds happen all the time and are just part of the life-long process. Good investors know managing a portfolio takes a lot of time and effort, and tough decisions, like I don't know... pruning a tree.

Bad investors blame everyone else for their poor asset choices and I find seem to be a lot less willing to sell when an asset has poor prospects. I don't know this lady but many inexperienced investors seem to both buy too many often identical assets expecting instant, easy money, and then dig in her heels after the market turns because they're unwilling to let go of that expectation. It's as if some feel 'entitled' to the money they expected, even if that expectation had little to support it.

 

YIP Magazine told her it was how to invest.

 

Anywher at 7-9 o'clock of cycle now?

 

Certain markets in Brisbane.

 

Thought you were going to say Sydney considering how much you have been living in denial on here

 

Living in denial? Where have I said to buy in Sydney? I've said the exact opposite more than once.

 

here's one talk about downfalls and statistics while pretending to own property

 

I believe timing is very important if you want to have above average return. Look at Moranbah priperty now. Someone who bought in 2016 to 2017 would have made good return. There is a fallacy about time in market. People say that no one has crystal ball. Thats true. But there are always some signs of market direction visible. As investor, its our job to read it with greater confidence.