One of the big traps for investors is getting sucked in to investing at the peak of a market.
Real estate, like all markets, have peaks and troughs.
And timing … is everything.
The market rises quickly, then slows down, sometimes even goes sideways or drops slightly, then takes off again.
And this repeats every 7 years or so.
The best time to invest of course is just before it starts moving up. This way you get all the equity as it goes up in value.
And the worst time to invest is at the peak. This is because its next move is probably going to be sideways for a few years, and this won’t help you at all.
The reason this is important is because of equity.
Or more to the point, what the equity will do for you.
Owning a property isn’t going to make you wealthy. You need it to go up in value.
As it does, the amount of equity (how much more its worth than how much you owe on it) goes up too.
And you’re going to use this equity as a deposit on your next property.
The Sooner You Get Equity, The Sooner You Invest Again
This is why you should never invest at the peak of a market .
But how do you know when it’s the peak?
One way of course is to work with us because we never, ever allow our clients to invest in a market near its peak. And doing this could cut years off your journey.
If you’re curious about how we can help you, you can fill in the form below.
If you’re doing it on your own, there are some tell-tale signs.
One is the area you’re looking at is frequently on the ‘hot lists’ in the media.
By the time the media wakes up to an area, it’s already moving. And you’ve missed the boat.
Another way to spot a peak is that demand is getting hotter and hotter.
Demand drives prices, so if demand is already high, it’s already moving.
And the hotter the demand, the more you’ll want to steer clear.
Here’s a perfect example.
I read about a house in Perth a few months ago where demand was so out of control, there was a dead mouse in the living room, needles in the bathroom and the backyard stank with rubbish.
And yet there were 30 people crammed in there inspecting it, plus interstate buyers on the phone.
And get this.
It sold before sunset!
Now, this is an extreme example, but it’s an extreme example of what happens when markets are out of control.
It’s what we call a seller’s market where the seller, not the buyer is in control.
When the market is at its peak, it’s great for sellers but not for buyers like us.
And I’m convinced the purchaser of this house is heading for a world of pain.
This Is How You Make Money Faster, From Real Estate
You don’t need to rush in and buy where everyone else is buying so you don’t miss out.
After all, the difference between salad and compost is timing.
And the difference between a great investment and a dud is … also timing.
You see, Australia isn’t a single housing market.
It’s very fragmented by state, by city and town and even by suburbs within those cities.
Take Perth for example. Even though I told you about a house which has disaster written all over it, we have clients in other parts of Perth.
And their houses are continuing to climb brilliantly in value.
Can You Time The Market To Perfection?
Of course, the last thing you want to do is buy at the peak.
Ideally you want to buy at the bottom of the cycle, and ride it to the top.
The trouble with buying at the peak these markets are more likely to go sideways, not up.
And no matter how good they might be over the next 10 – 20 years, we don’t want equity in a decade or two.
We want it now!
That’s because you use the equity in your property as a deposit for your next one. And if you buy near the top, there won’t be a lot of capital growth any time soon.
And you have to wait until the next cycle to make those gains.
Finding The Next Upcoming Hotspot … In Advance
The best investment (of course) is a suburb which is about to boom spectacularly, but hasn’t started yet.
It’s the dream of every investor.
However, it’s not that simple to do because for a start, you have to identify a suburb which has enormous potential.
And which is yet to realise this potential.
One thing to look at is the fundamentals.
Things like plenty of infrastructure (think schools, public transport, roads, medical centres and so on) and new industry coming in.
And this isn’t that hard to spot.
The other part which is more difficult is to look at the numbers.
Numbers which, admittedly, are hard to obtain.
These include how much demand there is based on inspection numbers, time on the market and auction clearance rates.
Also, how much new supply is coming in. If there’s lots of demand, but also lots of new houses they somewhat cancel each other out.
Other factors include vacancy rates (the lower the better) and strong growth in the rental market.
Low unemployment which is getting lower is a good sign, as are household wages going up.
Areas Like These Aren’t Common But They’re Out There
Our research team has access to the data which lets us identify these.
It’s a painstaking search, but it’s worth it.
Speaking of Perth, our team identified Wanneroo back in 2023.
And in the first 12 months, our clients who purchased there enjoyed 27.6% capital growth with rents also soaring 14%.
We’re still strong on holding these properties, despite what’s going on in other parts of Perth.
Wanneroo is, after all, almost 60k away from it. And the fundamentals are extremely strong there.
Mind you, I wouldn’t buy there now because it’s well into its cycle, and you want to be in closer to the start.
However I’d definitely hold if you have one. There’s plenty more capital growth to come.
We also have areas in Victoria which are poised to skyrocket. And other areas we wouldn’t touch with a barge pole.
Where To Invest Now?
The million dollar question now is … where to invest today?
And as you’ve probably figured out, these areas change over time.
If you want to know, you’re invited to spend some time on a zoom call with one of our senior wealth planners to show you.
They’ll help determine your ability to replace your income by investing in real estate.
They’ll map out an overview of what you should do, and when.
And of course answer any questions you have.
They’ll also show you where our clients are investing now in order to secure high capital growth and rental gains.
There’s no cost for this either.
We do it in the hopeful expectation that if you decide to invest, you’ll ask us how we can help you.
No obligation, no pressure.
First things first.
Enter your details below, and we’ll contact you to book in a time.