“Serious property investors don’t buy on potential. They buy on fact and sell on potential because they know that potential = emotion = inflated prices.”
I have to say I don’t totally agree with this statement.
After all, nobody can know for sure – even with tons of fact – whether there will be growth or not. Or whether an IP will stay rented out or not. Or if the town will suddenly go bust or not.
Its all about taking a calculated risk on the potential of an IP utilising the facts available.
But it basically is still – potential.
Comments ?
I agree with it. I also agree with this one.
“Profit is made when you buy not when you sell”
bennido,
I don’t know what a “serious property investor” is.. but I know people bandy the term about… just as they do about “savvy” and “sophisticated” investors. I think those terms are all a bit [baaa] and are intended to divide. I think all investors can make mistakes, even the “serious” ones.
As to buying on potential… well, yeah, I agree with you. Many of us buy on the thought that property doubles every 7-10 years, so we do buy with that in mind. I am thinking here of regular buy and hold, (potential for) growth deals.
I still work on the “tenant and tax dept and me pay the property off”. It’s an old adage, but it keeps my expectations realistic (for me). Everyone has different expectations, but growth to me has always been a bonus. I’m happy to buy and one day own the property- that will be enough.
I agree with you that we can’t determine growth. We can however, read reports on expected population growth etc. There are many reports on, for example, population and demographic predictions for Sydney. I don’t believe these reports are merely speculative- many of them are done based upon projections on the International student market and are done in consultation with Universities and Councils, for example. These Institutions have Corporate plans that are made for years ahead.
My basic belief is that population and natural features determine growth. But I guess a few more RE cycles will determine if growth for my properties will occur or not.
Re your comment about towns going bust… a town can decline in population and become a “ghost town”- yeah, it’s happened, and people leave some rural areas to get more employment and training opportunities- that’s been a trend for decades. Then again, another trend is sea-change. So young people may leave the area to get a job, whilst older people move to the area. In cities- like capital cities, it is not likely they will “go bust”.
Location location… I still think it’s the key. But I agree that growth is, for the most part, about “potential”. Noone can predict the future.
kay henry
Hi Bennido,
‘potential’ is much better than ‘no potential'[biggrin]
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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