Should You Buy Even If You Know The Price Is Going Down?
The question really comes down to what is your long term goal and what are you looking for?
It all depends on you. Do your research, look at the fundamentals.
Talk to our team, know the right strategy and we can help you make the right decision.
Hey guys, Brett’s Property Rants. Should you be buying property now even if you know the price may be going down soon or should you wait? Now, the reality is if you’re talking mathematics you would think that yes, wait until it gets to the bottom and buy exactly at the bottom, exactly that precise moment and just do it. Now, the challenge of that is, in the property you can’t predict that. I’ve seen people predict consistently year after year for eight years straight, this is one of my mates who knows everything about the property and actually still doesn’t own one, consistently that price is going to drop and he’s going to wait until they drop and he’s never bought.
Still hasn’t bought eight years later and every single year those prices have gone up and up and up. Now he’s at a point where he’s not looked any more, he’s mentioned that he’s missed the boat and therefore he can’t get in. It’s ridiculous, but anyway, should you buy now or should you wait? The question really comes down to what’s your long term goal and what are you looking for? Now, I’ve got friends right now and they’re looking to buy their own home. Now so I’ve talked to them about potential prices dropping, Brexit, blah, blah, blah, all these sorts of things and you know what?
What we come to the conclusion was they don’t really care, they’re not buying, they’re buying it to live in, they’re buying it as a home. Obviously, I always tell them, if they buy the best there is then it becomes an investment that will help them get onto the investment. The interesting thing is, for them they’re going to move forward but what I’ve said is, try and go in with a ridiculous offer. The problem is they’ve got all the emotional sort of stuff so the ridiculous offer is going to be hard when they find the right property but I have spoken to them about how best to do that and getting me along to do viewings, things like that.
This is in Australia by the way, so slightly different because their house prices are dropping right now and potentially could be dropping a lot more, but the reality is they’re approaching their home in a very methodical and logical manner. For them it’s not so much about getting the best price, it’s about finding the right property. The first thing it comes down to is their motivation. The second thing is do you really think they’re going to drop, do you think they’re going to continue to grow, you can’t be right. The third thing is, what I find a lot is that people that buy in the market and what actually happens is the market then drops.
What happens then, the market comes back and within two or three years they’re back where they were and even above that. A lot of times it doesn’t matter. You’ve probably got a year to 18 months to ride out where the prices come off. Normally if you can lead into it, you can negotiate a decent thing so you can actually buy some buffer and that’s great but the reality is it depends on you. It’s not a case of don’t buy and for me, I’d much rather see someone get involved than not get involved. My mate, who eight years now he’s been saying it’s going to drop, it’s going to drop, going to drop, at the end of the day unfortunately for him it’s continued to go up and up and up and up.
Okay, it’s come off a little bit I think, in the sort of London area where he’s looking to buy but other guys, they own their own home in Australia, prices are dropping. They’re in Melbourne, prices have dropped about 20 percent, 10/20 percent-ish, but for them will they drop another 10/20 percent? I don’t know but they’re a different motivation. It’s all about motivation but it’s also about your long term view. If you’re looking to get in and get out then certainly don’t buy. If you’re looking for the long term, which I suggest you all do, buy and hold because I can tell you the number of guys I know that buy and sell, buy and sell, buy and sell, yes they’re cashed up and they can have a great lifestyle, but long term buying and holding pays massive dividends.
That doesn’t mean you can’t work both strategies. You can have a property trading strategy and you can have a property, you can have a capital growth strategy and income strategy so you can work different strategies. Just don’t work them all at once. Start with one and then get to know the rules of the game, get to know everything about that, apply it, become successful in that, then look to add another. Then become really, really good at that and then bring another one in. Don’t try and do too much at once. Shotgun approach doesn’t work, get specific, get detailed and realistically read the warning signs in the market and insulate yourself against that with a really good cash flow that allows for losses, things like mortgage cost averaging.
If you don’t know what that is, grab my three plus one plan book. It’s free and get a copy and read it. It will explain exactly how to do a proper cash flow. I mean my company, we still have one of the best cashflows in the market. In fact, I’ve not seen another cashflow that even comes close to when it comes to purchasing and holding a property because it incorporates everything that you could possibly think of. You need to do that level of detail. If you don’t do that level of detail then you’ll suffer. Hopefully, that gives you a bit of an idea because a lot of people are thinking about should I hang back, should I get involved?
Brexit doesn’t seem to be as bad as they thought it was. Maybe house prices will start going up when we sort it out. Certainly, I’m robust on the market but I’m not stupid enough to think that it can’t go the other way as well. I think there’s been a lot of damage done in the market. I mean, it’s the largest ever, I think, thing of self-harm that I’ve ever seen and it’s continued self-harm. Even though we know it’s harming us, we still keep doing it but that’s our politicians without any leadership in that direction, vision and all those sorts of lovely words you use in management and leadership, which it seems none of our politicians has and has no interest in getting either.
Anyway, that’s my opinion and that’s separate of this video. All right guys, have a great day, live with passion. See you.