There is an old army expression that cautions us to “Hurry up and Wait”, meaning be prepared to leap into action at the drop of a hat, whilst exercising patience just sitting around and waiting for that moment to come.
Only to do the same thing all over again as the cycle of waiting, then proceeding very quickly, then waiting some more, continues.
This expression is very apt for those who want to achieve long-term wealth through real estate or in fact any other asset class.
While it is necessary to be proactive as to the strategy you take onto the bricks-and-mortar battleground, there are many times when the best thing to do is nothing at all and simply wait for the right time to proceed and for the power of leverage and compounding to work its magic.
And yes, you guessed it, this too will follow a cycle of intensive moments of action and activity followed by a hibernation period, where you wait for the value of the property you bought to grow in order to fund the next investment.
The property cycle
If you’ve been involved in property for a while you’d know the market moves in cycles.
After each period of strong property growth, as we experienced in 2020 and 2021, prices drop a little and then flatten out and once again begin to rise.
Just another instance of “Hurry up and Wait” isn’t it?
Strategic property investors know how to use this cycle to their advantage
If you think about it, there are many markets around Australia so the bottom of the cycle isn't one day, or one week or even one month.
But it is very clear that the cycle bottomed earlier this year and we're now in the upturn phase of the next property cycle.
Rather than waiting for the times when all the good news has already happened and is then being reported in the media, strategic investors “hurry up” and buy their investments counter-cyclically somewhere near the bottom of the cycle (because you can't really pick the bottom) taking advantage of the times when everyone else is waiting.
They then recognise the right thing to do is wait until they have built up enough capital to refinance and use the equity in their investment to make the next purchase…and so on.
The power of this is that if you buy the right type of property, one that will be in continuous strong demand by a wide range of owner-occupiers, regardless of the housing cycle’s ups and downs the value of your property is likely to double every eight to ten years.
Of course, you can speed this up by buying well, purchasing a property in a location that outperforms the averages, choosing a special property with unique features that will give it a scarcity factor and “manufacturing” capital growth through renovations or redevelopment.
This minimises your risks and maximises your upside.
Each strand represents a way of making money from property and combining all four is a powerful way of putting the odds in your favour.
Patience equals profits
The trick to getting the cycle working to your advantage as you build a long-term, wealth-generating residential property portfolio, is to be patient.
Warren Buffet famously said that “Wealth is the transfer of money from the impatient to the patient,” and this is very true in property.
I’ve seen so many investors so keen to do something, in fact so keen to do anything, that they make mistakes that they then regret for years.
Some buy cheap properties because they can’t afford to buy good properties.
They buy in secondary locations or in new estates where capital growth languishes or in small regional towns and then find they’ve bought a lemon.
Others don’t wait to save enough of a deposit so they speculate and buy off the plan lured by the developer’s flashy promise of profits before they settle their purchase.
Unfortunately many find that on completion the value of their property falls short of their contract price and rather than making a profit they’ve lost out.
Then there are the inexperienced investors who attend a webinar or seminar and walk away with unrealistic dreams of putting down a dollar (or less) and getting their foot in the property door and walking away rich in just a few years.
Yet others look for excitement in their property ventures and get involved in speculative endeavours or property development before they’ve cut their teeth on traditional investments.
Instead, I suggest they should look for their excitement elsewhere….
Go bungy jumping! Go trail bike riding!
Your property investments should be boring so the rest of your life can be exciting.
Sometimes, as boring as it might seem, the best thing you can do is to wait and do nothing!
- Also read:The Boom and Bust of our Property Cycles: A Journey Through the Investor’s Mind
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:This week’s Australian Property Market Update – Latest Data, State by State April 16th 2024
- Also read:Melbourne property market forecast for 2024
- Also read:Brisbane’s property market forecast for 2024
In fact, over the years I’ve made more money by saying “no” to deals than “yes” to so-called opportunities.
Sometimes the best thing you can do is to wait for the time to be right - for you
Wait until you have enough deposit or sufficient serviceability for a loan to buy the right property in the right location.
Or wait until that right property comes along and then wait out the negotiation process to get the best possible deal.
The take-home lesson is that just like being in the military, investing in property is not a fast-paced world of non-stop, go-go-go action.
In order to prosper in property, you must be content to sit and do nothing for long periods of time, often years, while you allow the market to do the work for you.
It might not be exciting in the beginning, but when you see the fruits of your initial labours and the periods of hibernation starting to build, you’ll think patience is indeed a very valuable virtue!
But now is not the right time to wait!
Currently, I see a window of opportunity for property investors with a long-term focus.
As I said, we're in the upturn on phase of a new property cycle.
An opportunity like this, to get set at the beginning of a cycle doesn't happen often.
Not that I suggest you try and time the market- this is just too difficult, and in truth, you’ve missed the bottom which occurred in early 2023.
But if the market hand you an opportunity like this why not take advantage of it.
Taking advantage of the upturn stage of a new property has created significant wealth for investors in the past.
Moving forward, demand is going to outstrip supply for some time to come as we experience record levels of immigration at a time when we’re not building anywhere as many properties as we require.
At the same time the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price,
Of course in due course consumer sentiment will rebound when it becomes clear that inflation continues to fall and interest rates have peaked.
At that time pent-up demand will be released as greed (FOMO) overtakes fear (FOBE - Fear of buying early), as it always does as the property cycle moves on.
We are also going to be experiencing a prolonged period of strong rental growth - the rental crisis will only worsen further, with no end in sight.
We saw an opportunity like this in late 2018 - early 2019 when fear of the upcoming Federal election stopped buyers from entering the market.
And look what's happened to property prices since then.
I saw similar opportunities at the end of the Global Financial Crisis in 2002 and also in 2002 after the tech wreck.
History has a way of repeating itself.
You see...poor consumer sentiment when most other economic fundamentals are strong simply means it's a cloud covering the sun.
Spring will follow Winter, and Summer will follow Spring - this too shall pass by and the long-term upward trend of the value of well-located properties will continue.
So my recommendation is that if you're in a financially sound position, you should consider buying while others are sitting on the sidelines
Now is the time to get your ducks in a row.
It would be a shame if you missed this opportunity so why not click here now and organise a time to have a Complimentary Clarity Consultation with my team at Metropole and discuss your options.
