Investment Finance

Great opportunities for savvy property investors

Friday, October 17th, 2008

Be a Winner

Every major event creates winners and losers, the global financial meltdown is no different. The winners will be those in a solid financial position, secure income, access to finance and the street smarts to exploit the opportunities provided by the losers.

Both the Government and the Regulators are providing every possible resource for those who can, the ‘winners’, to move into the market and take full advantage of the opportunities.

The RBA shocked the market with a rate cut of a full 100 points (1%) bringing the best rates down to around 7.85% after most banks passed on about 80 points – fantastic news for property investors. In the past few days, almost as surprisingly, a number of the banks have slashed their rates by up to .25% bringing the best rates down to around 7.62%.

The Federal Government’s stimulus package gave families and pensioners extra cash to spend, doubled and tripled the first home buyers grant and guaranteed bank deposits.

Fortune favours the brave

So, what does this mean for property prices?

Well the short answer is, broadly, nothing… yet! Auction clearance rates are still well down.

But it’s a very different story for the savviest property investors who are starting to creep quietly back into the market, picking up some of the best bargains in a decade. I’ve already started to see evidence with a number of clients uncovering great deals in the past few weeks.

The first picked up a brilliant flat with little competition while another found a great little one-bedder yielding an amazing 5½% and another found a similar one-bedder yielding 5 1/4% – when was the last time you saw Inner Melbourne returns like that? 2001! The fourth client picked up a great 3 bedder $150K under 2007 prices, again in an inner Melbourne suburb.

Get ahead of the market

So, what does this mean for you?

Along with my panel of property experts I am convinced there is every chance that those who bite the bullet, (and the window of opportunity is closing), will get a rare chance to pick up properties at near decade best value and then ride the crest of the wave as prices start to surge as investors pour back into the market chasing the rapidly rising rents caused by historically low vacancies.

Spurred on by higher rents and lower interest rates, I expect momentum to build with the first home buyers followed by the “real price-drivers”, owner occupiers buying on emotion, to push prices higher again which could draw the investors with “herd mentality” into the market to create even greater competition and generate stronger price growth.

Now this is not going happen overnight I believe it will take some time for prices to really kick, but I believe the biggest gains will be seen when confidence starts to build, probably when positive trends are detected in world financial markets.

Get Quality Advice

Needless to say this action is not right for everyone; you need consider your circumstances; for example, the security of your employment, your cashflow, your equity position and your capacity to manage another property.

A word of caution; even in these times, good buying is not universal. Before buying get good “independent” advice to ensure your buying is prudent, responsible and really does represent good value. A recent example was a client who was persuaded by the promoters of ‘positive cash flow’ properties to buy “under-valued” houses in south west Sydney and “cash in on the growth to come”. Sadly, real growth isn’t predicted for years as the number of foreclosures in this mortgage-belt continues to mount.

As always, successful investing is dependent upon good buying decisions and good buying decisions are dependent on good advice/support.

Free Consultation

For your free 45 minute consultation, call Financial Architect, Andrew Gardner 03 9509 8911, he has assisted hundreds of investors make very sound, prudent investment decisions over many years, he can help you too.