Is now the right time to purchase an investment property?

Buy, sell, or hold? John Pidgeon from Solvere Wealth shares his perspective on the current market conditions and provides tips on how to firm up your strategy before purchasing.

The question on every keen investor’s lips right now is what move should I be making in the property market and is the time right to buy?

The first thing to consider is whether you were planning on buying property before the current health Pandemic, Coronavirus took over.

If you were, then you should be pushing through with your planned purchase as long as you have a strategy that’s firm and concise and you know what you’re looking for.

If you’re being emotionally driven, and you’re in it just because you think you’re going to get the next bargain, then now is not the right time. This is when bad decisions are made and mistakes happen. You must always stick to your strategy and have the long-term game in mind, not be too focused on if Coronavirus will affect property prices.

Be in it for the long game

We know that property, like most asset classes we should be investing in, are worth staying in for 10, 15 and 20 years. Be patient and let them do their thing. In my opinion, whether you buy this year, or next year, I don’t believe there’s going to be a massive difference. Slow down if you are feeling rushed. If there is a significant difference in the market, remember your strategy and it is a long term play. Historically speaking, trying to pick the market rarely works.

If investing in property is right for you, compare investment home loans.

Consider what conditions are at hand

Interest Rates are at an all time low. If buying is part of your strategy, and was before recent events unfolded, make sure you take advantage of that in these times. Long term, it can be expected that interest rates will be hovering around that six or seven percent as an average. These low-interest rates aren’t going to stay around forever.

In most cases at present, buying an investment property with a 4% gross yield or higher (which is quite common) will give you a positive cashflow position after tax. Furthermore, if you used cash as your deposit, there is every chance you can even factor in paying the principal if you choose too. This was unheard of five to ten years ago and may not be repeated for years to come, if ever.

There’s also a housing shortage in the country right now, and that gap is widening, so there’s opportunity in many states of Australia. Simply put, construction rates are not where they need to be to keep up with the demand of the population. You need to put in the time to research and acquire the knowledge you need to be able to take action.

Another consideration is that there are fewer buyers in the market now. The fear and emotion around the uncertainty of what is happening in the next three, six, nine, twelve months, and forward mean there could be less competition.

Think strategically, not emotionally

Emotional decision making may affect people’s lives forever. That’s where the savvy property investors come in. With their strategy in place and their clear foundations set, they can really take advantage of the markets over the next year or two.

You don’t want to be the one sitting back thinking, “if only I acted when I should have”.

Lowest interest rates for 1-year fixed home loans

The comparison table below display some of the 1 year fixed rate investment home loan products on Canstar’s database with links to lenders’ websites available for a loan amount of $350,000 at 80% LVR in NSW, and available for Principal and Interest repayments. The results are sorted by ‘current rate’ (lowest to highest), then by provider name (alphabetically).

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

Lowest interest rates for 3-year fixed home loans

The comparison table below displays some of the 3 year fixed rate investment home loan products on Canstar’s database with links to lenders’ websites available for a loan amount of $350,000 at 80% LVR in NSW, and available for Principal and Interest repayments. The results are sorted by ‘current rate’ (lowest to highest), then by provider name (alphabetically).

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

Lowest interest rates for 5-year fixed home loans

The comparison tables below display some of the 5 year fixed rate investment home loan products on Canstar’s database with links to lenders’ websites available for a loan amount of $350,000 at 80% LVR in NSW, and available for Principal and Interest repayments. The results are sorted by ‘current rate’ (lowest to highest), then by provider name (alphabetically).

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.


About John Pidgeon

Male John Pidgeon is speaking into a radio microphoneJohn Pidgeon is the Director and Head Property, Finance, and Business Educator of Solvere Wealth and Co-host of My Millennial Money podcast. John is also the creator of the Solvere Online Academy, which aims to educate investors at every stage of their financial journey. He has a Bachelor of Arts and Teaching, Health and Physical Education and Fitness at University of Ballarat.

Follow him on LinkedIn.

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