What to do in a FOMO stampede?

We had one for a short time at Gagebrook. Again, this was very early on, but we made decent money out of it before selling it for many times the price we paid.

 

That's right prices should be relative at the end of the day.

Casing point - my in laws upgraded from a poorly built house on a small block backing onto a petrol station (sold for $500k) to a newish build on a larger block and in a much nicer pocket a few streets down that was double its size for $800k a couple of years ago.

Now their current place is probably worth $1.2-1.3m and a place next to their old "B grade" joint just sold for $800k. Pretty similar results % wise.

Timing, scarcity and desirability of the suburb did most of the heavy lifting.

 

You've done really well with regionals as well. I've been a bit of a woos and stuck to major cities generally within 10km of the cbd except for Sydney where I've invested upto 40km from cbd. But definitely money to be made in regionals.

As for mining towns, doesn't fit my risk criteria. Also it's not the homes you need to monitor but the mining . Not my thing.

 

Agree, I think that's the key.

 

Not much scares me.....but not touching mining towns.

 

Me either. Never interested me. Those who manage to do well with them, good on em.

 

Well timing the market worked well for Martin North and buyers agent and commentator Catherine Cashmore who in september said property " apocalypse" was coming and just about every other commentator agreed. I paid top dollar to secure my first property it halved after 3 years did it matter, No, I wasnt selling , yeild went up because people couldnt get loans and bank selling crashed prices increasing rent made it harder to save, was actually able to buy more from motivated sellers, at above market price with vendor finance.. 3 years later prices doubled and have continued doing so. Price is not that important, Property is about finance, it is about what you can borrow against . you need income for that. The value of a property is in how much you can leverage from it . Doest matter at all now wether I got a 5% yeild in 1989, or 11% 1992.

 

I love this, great post.

Reminds me of “price is what you pay, value is what you get”

 

I think you're over-analyzing the term "investment grade". Don't think of it as a binary thing, but rather a continuum. To me it simply means applying due diligence and being selective based on a range of criteria, and that criteria could be different for different people as you suggest here. This can make the difference between good, great, average, or poor returns over the long run. What is investment grade to me (an expat living o/s) is totally different to a local builder who plans to renovate for example.

 

No, 'investment grade' is sprouted by certain 'gurus' as a way to sell books, meetings and certain services.

 

You also need to look at the incentive of the person making this claim. A lot of participants in the real estate market are paid commission as a percentage of purchase price. It's not hard to see why a buyers agent for example might be more keen for higher value transactions, given they will be paid a larger commission for basically the same amount of work.

 

Yep, there's that as well.

 

I can’t see the value in investing while prices are high and buyers are competing feverishly to secure a property. I think it’s madness.
You still have to borrow the money and do your maths to work out that the rent you will receive minus maintenance makes the investment viable,

 

To be fair....not everyone has to borrow money.

 

Yes that’s quite possible, however you still have to then fork out more of your own cash which may or may not affect future investing decisions, if that matters off course.

 

Yep..as above. Stick to the fundamentals, patience and long term view. Let time do its magic. Always has, always will.

 

So true. Being green in 2016 I personally listened to these types of people. Namely metropole. As what they said on the surface made sense to me but looking back I’ve probably cost myself an extra property and maybe $300-$400k in equity since then because I wouldn’t step outside of the “investment grade” suburbs.

I could’ve easily picked up properties around Oxley, daisy hill, or select suburbs north of Brisbane that are now up $100k in the last 12 months. Frustrating lol

I remember saying to Brett Warren, I could pick up a couple properties around the $380-$400k mark in Oxley. He almost laughed and said no you need to spend $700k in the likes of Holland park. Whilst Holland park has lifted and done well, these 2 properties in Oxley are over $600k now.

 

Most people make 1 mistake and run for the hills. Because you've chosen to treat that 300-400k loss as a lesson rather than a reason to flee, it'll return you many times that over your lifetime.

 

Simply personal experience. I've found my best properties are run of the mill, solid homes in good locations (nothing flash and can include units) - properties that a section of people want to "move up to" when times are good, and another section "move down to" when times are bad

Don't be distracted by bling

 

Unless you are the one selling & you can add some bling for little cost.