The next bubble
Property investors can sometimes be categorised as those who do their research (or employ someone to do it) and those that do little or no research and rely on what they are told by third parties who they do not pay for the advice. This second scenario is playing out time and time again across the Australian landscape every day at an alarming rate.
Blogger: Scott McGeever, managing partner, Property Searchers
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What I mean is that people are blindly being led into investing in property by borrowing and buying within their self-managed super fund (SMSF). While there is nothing wrong with the general concept of this, it is what is bought and the way it is structured particular to your age and circumstance.
In general, many of the properties being bought in SMSF will not see solid short to medium term capital appreciation. While the statistics sound good that several hundred ‘off the plan’ units sold during the last quarter in Brisbane, the underlying issue of who will be the secondary market for those units when investors want to off load them is never questioned.
Previously I have made the comment that buying off the plan is not necessarily a bad thing. It is what you buy that makes the difference between good and bad. The single biggest thing to keep in mind when buying off the plan is uniqueness with wide market appeal.
What I mean is the property (and development) needs to have elements and attributes that others in the general vicinity do not have, but it also needs to appeal to the general or wider section of the market. Buying in large complexes above retail where there can be many properties that are alike, on the market at the same time, is not desired. Buying in a smaller more boutique complex that is well positioned within short walking distance to shopping and transport is a desired thing by the wider section of the market. The former tends to attract more of those looking to rent and the latter tends to attract both those looking to buy and rent. The owner occupiers are typically the buyers who drive growth through their needs and wants.
With many people choosing to buy investment properties in ‘off the plan’ new developments, including unit complexes or housing estates, through their SMSF I think there is a market segment bubble being created. This will only be realised when investors want to sell and it becomes apparent that although the property has been rented the whole time, in the majority of cases the capital growth has been poor.
The bottom line is that if you are wanting to buy in your SMSF seek advice on how to do it and what to buy. It could save and/or make you tens of thousands of dollars!
About Scott McGeever
Scott founded Property Searchers in mid 2000 and it was set up to work as a buyer's agent servicing the needs of property buyers in Southeast Queensland and Northern New South Wales, assisting them in the search, evaluation and negotiation of property.
Scott is the founding Director of the company and since inception he has acted as a successful buyer’s representative, purchasing hundreds of properties in all market segments on behalf of local, interstate and overseas clients. The company has purchased many residential, commercial and industrial properties for owners and investors.
Scott is a pioneer of Buyer’s Agency in Queensland being one of the first agencies and the first registered property valuer to offer a full buyer’s agency service to the market place. Thus he has virtually written the book on buyer’s agency in Queensland. Property Searchers has grown from its starting point with two people part time to presently employing three full time staff, one part time and two consultants. The company has found a sound balance in being a market leader in the industry while still remaining a boutique agency and offering unparalleled customer service.
Scott's vast experience in the property industry since 1988 has seen him involved in varied fields including valuation, development and leasing. He is a registered property valuer in Queensland and New South Wales and a licensed real estate agent in Queensland and New South Wales.
A founding member and Chairman of the Buyer’s Agent Interest Group (Part of REIQ), Scott has also served as the President and Vice President of the Real Estate Buyers Agents Association (REBAA) and he has been the Queensland state representative of REBAA for 2012/2013. Through these appointments Scott plays an active role in promoting public awareness about buyer’s agency and lobbying Government for tightening of consumer protection laws and regulation of the industry.