Hello, first post.
Looking to buy a first (investment) property, investigating the options of either a reno and sell, or subdivide and sell block or existing house.
Both options require selling, and am concerned that the market I am looking may be at peak (I have no crystal ball). (Melbourne). Given the time of year and tradies don’t like to work over Jan, that is a good 4 or 5 months or more, and the chances of a change in market in that period I suggest might be more risky than I would like.
My thoughts have turned to what a plan B might look like, and that would be hold and rent if necessary.
So my question is, is there a historical trend regarding rent in a downswing? Of course I realise no-one has a crystal ball either, but seeking to know if rent would usually be considered more stable, or it follows the market down at a later point, or just follows the market in unison?
I feel I have already waited too long, and am conflicted whether I have cold feet or am being sensible in waiting a little more… :( Trying to assess my risk realistically…
Any thoughts welcome. Or suggestions of books etc that I could learn from on this topic.
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This topic was modified 8 years, 6 months ago by
jojo.
Hi @melbjo,
Usually in Sydney when the GFC strikes or during the Interest Rate increase, many people afraid to buy hence renting which in turns drive up the rental rate in some suburbs.
When it is like now low interest rate and easy money before APRA change on September, people tends to buy rather than rent hence the yield is dropping.
Therefore it may need to wait approximately 3-6 months before you can see it in effect on your portfolio.
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This reply was modified 8 years, 6 months ago by SiteManager.
SiteManager
Investing for a better future
Rental values are generally a product of the supply and demand equation. As a roof over your head is essential, even in times of downturn there isn’t strong enough fall off in demand to create a reduction in rent. As SiteManager has mentioned aboove, of all things a negative outlook can lead to increased rental demand pushing prices UP.
This works both ways, if there’s a strong increase in supply during a boom economy – rent’s can very well crash.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Awesome. That both makes logical sense, and is an answer I wanted to hear… :)
Essentially means if I have to go with plan B, the prospects are pretty good.
Thankyou so much for answering.
My thoughts have turned to what a plan B might look like, and that would be hold and rent if necessary.
Nothing wrong with this approach. It’s not easy making money from short-term property transactions – wealth (IMO) is generally created over the long term with property.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie :) It’s a good reminder for me.
Yes that was my original plan, buy and hold, but after doing a lot of reading/researching etc I realise if I could reno and sell 2-3 houses at even low to medium success before getting a buy and hold, my financial situation would be greatly enhanced.
Nevertheless, if I need to hold my potential renovated house, it certainly won’t be the end of the world, especially if the rent can hold its value.
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This topic was modified 8 years, 6 months ago by
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