what the?
hear me out...
For all you savvy real estate investors out there, this is the time to take action! Interest rates may be high right now, but don't let that fool you into thinking it's not a smart move to buy. Contrary to popular opinion, investing in real estate with current market conditions is actually an excellent idea - and here’s why.
The current market conditions are showing that the current interest rate cycle has peaked, in fact not only has it peaked the Interbank Cash Rate Futures are showing the market pricing in interest rate decreases month on month from mid 2023 and into 2024.
So why is this a good time to buy?
At the moment, with interest rates as they are there are many people out there priced out of the market due to borrowing capacity limitations with the Bank or are simply just sitting on the sidelines 'waiting' to pick up bargains for those that may need to sell in distress.
Basically what this means is, right now there is less competition out there when it comes to bidding or purchasing a particular property and this means the current market conditions are favorable toward the buyer and not the seller as it once was recently. So when you have less competition (i.e. less demand) you then have a better opportunity to find a good deal that is reasonably priced, everyone talks about finding below market value and whilst it is possible, its quite difficult for the average investor to find - so that's why I say find a deal at a reasonable price, meaning if you had to sell it within 12 months you wouldn't be out of pocket (much).
But what about the high interest rates I hear you say? Fair call, however this is where not only buying below market value comes into play but also buying a property that has strong cash flow. Whilst you might not be making money hand over fist each month, the idea being you aren't hemorrhaging money each month so you can at least hold the property without impacting your current lifestyle too much, ideally not at all. Because when rates start to drop, you will then see a positive cash flow situation, and hey - who doesn't want more money in their pocket at the end of each month?
Lastly when looking for your first or next property, it is important to buy in an area that shows strong signs of growth in the future. These signs can be found by looking at population growth figures, what kind of employment options are in the area, government and private sector investment are all good indicators on future growth potential, lastly the supply in the area, are there many dwellings available with low demand? if so avoid, avoid, avoid!
The remainder of 2023 is going to be an interesting ride, and quite honestly I think this is a time period where those with assets are going to see significant wealth creation due to the current market conditions and inflation.
Which side of history do you want to be on?
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