How to be successful in your property buying journey

Just about all property experts agree, property market can be unpredictable even with all the best research in the world.

How would you feel if you sold your Sydney property between April and September 2020 only to learn that the market has experienced over 20% in capital growth since then?

Over the last decade, very capital city has experienced different property cycles of growth and decline, yet median house prices have still maintained long-term growth, even though it has not been linear growth year after year.

How can property buyers ride market fluctuations and come out on top?

Diversity in location

Basically, don’t put all your eggs in one basket. Buy property with geographic diversity for exposure to different markets and property cycles at any one time. It is tempting to buy where you know and repeat your success.

However, when the cycle goes up, you are on a high, and when the cycle starts to go down, you go into a panic. Holding these properties for many years without growth, with low yields and high vacancy rates can cause stress to any investor.

A diverse portfolio in different states and markets has properties in the up cycle to balance those that may be in a sluggish or decline cycle in another area.

Long-term goals

Buyers, whose goal is to build a property portfolio for long-term passive income can manage to ride out the ups and downs because they understand property cycles are not linear.

They do not panic or sell off when the market slows as they are in for the long haul. Instead, they ride out the bumps by balancing their portfolio and they hold their nerve until the next cycle starts the demand and growth over again.

Diversity of property type

Having a diversity of properties, with quality tenant appeal and cushioned by tax benefits to stay cashflow positive, can help ride the ups and downs of the market.

Buying a variety of houses, townhouses and apartments gives you exposure to different demographics and demand in the different markets. Demographics in Australia are changing to smaller household sizes, and a rise in the demand for apartment and townhouse living cannot be denied.

Houses may be preferred as an investment, but affordability of apartments and townhouses, combined with the demand, can make these a smart investment for riding the ups and downs in the future.

Summary

Investing in property does have its ups and downs. Riding the roller coaster can be an exciting journey to achieve your long-term goals for financial independence and a secure passive income.

Understanding property cycles and following investment strategies used by experienced investors may make your ride a lot more comfortable and enjoyable. Learn from their mistakes so that your property journey is successful.

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This article via Ian Richards does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.