I would suggest it depends on your time horizon and the quality of the property/location over the long run. Warren Buffett is fond of saying he looks for a great company at a fair price rather than a fair company at a great price. Then hang on forever. If that’s a good enough strategy to make $80 billion, then there’s probably some truth in it for us regular investors as well.
Another favourite is from Jodie Foster in the movie Inside Man – “When there’s blood on the streets, buy property.” Not sure how true that is, but a catchy quote all the same.
One strategy Mark Rolton mentions in his video is ‘Strata Titling’ and ‘Renovating’.
The reason this works really well in a ‘Down Market’ is because you can bring a product to the market that is 30-40% cheaper than everything else.
- Example Block of 5 Units:
Purchase Price $470,000
Stamp Duty $15,980 (3.4%)
Strata Titling $11,270 (2.4%)
Basic Renovation $46,700 (9.9%)Total: $543,950
Gross Realisation
5 x $155,000 = $775,000
Less Commission = $23,875 (3.1%)
Less Total Costs = $543,950Total Profit: $207,715
P.S. The above is obtaining control of the property via an ‘Option’, then ‘subdividing’ and ‘renovating’ the blocks of units before the expiry
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