Can you trust your agent’s advice?
It can be hard to trust the advice of property professionals when they make their income from transactions. How do you know when it’s really a good time to buy?
Smart Property Investment’s Phil Tarrant knows how to ask the hard-hitting questions. In an episode of Investing Insights with Right Property Group, Mr Tarrant warned investment expert Steve Waters: “People are going to say: ‘Steve, you’re in the business of helping people buy property – so of course you’re going to paint a picture that it’s a good time to buy.”
It’s a concern that weighs on the minds of many Australian investors. Many property professionals, including Steve Waters and Victor Kumar, are asserting that now is an ideal time to purchase property.
Mr Waters even stated: “I don’t think in history – certainly not in our 24 years doing this – that we’ve had this many components come together at the one time.”
But if real estate agents and buyer’s agents have a vested interest in encouraging property sales, many sceptics wonder whether all this talk of market buoyancy is exaggerated.
In the words of Mr Kumar, the trick is to ask where it is a good time to buy property, not when.
“A lot of people say: ‘Okay, when do I get started investing?’” said Mr Kumar. “It’s more like where do I get started – based on my circumstances, finance, capital available, what’s happening in life.”
No matter how strong or weak a market is, Mr Kumar argued that a property journey cannot end in success unless an investor has an accurate gauge of their financial position. After all, affordability is relative to an individual’s circumstances.
Mr Kumar and Mr Waters acknowledged that many investment experts are reluctant to dissuade clients from buying altogether, but stressed that professionals can help identify which local markets are best to buy in and which are best to avoid.
Mr Kumar said: “When we are starting out, often we try and emulate the success stories we’ve seen on Facebook, in the media, and so on. Let’s say the article you read was on someone that has made really good progress in a Sydney market – but that may not even apply to you because you may not have that much of a slippage in terms of the earning capacity and holding capacity that you’ve got.”
This does not mean that buying is off the cards completely. Instead, it just means that an investor should pivot their focus to a different area.
“That would mean you’re out of Sydney,” Mr Kumar continued. “Therefore, you’re looking at a different market, and the areas that you’re investing in, the types of properties you’re investing in, is very different to someone earning double your income.”
At the end of the day, an investor should have a good understanding of where they are in their own investment life cycle, and how effectively their position dovetails with the property markets in which they are looking to buy.
“It’s about life cycles – don’t buy in some markets, buy in these markets,” said Mr Tarrant.
Listen to the full conversation with Right Property Group here.
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