Property is not like shares: A CEO’s insider advice for buyers

Here are the CEO’s seven golden rules for purchasing property:

1. Take your time

According to Mr McGrath, property investment is fundamentally a long-term game.

He hearkened back to the old query: “When is the best time to get into property? The answer is 20 years ago. When is the next best time? Well, it’s probably today, because you have to take a long-term view.”

Most importantly, Mr McGrath warned investors to think about property investment in decades, not in years.

“Don’t think about property like shares,” the CEO advised. “This should be a minimum of five, preferably 10-year horizon as an investor.”

2. Stick with what you know

Today, there is a plethora of commentary about where in Australia the best investment properties can be found. But for investors feeling swayed by those who are singing the praises of Brisbane or Perth, Mr McGrath has an important warning.

“Stick to areas that you have a solid understanding of,” the exec advised.

“If you’re a Sydneysider, you don’t necessarily have to go to Muswellbrook to buy,” he said. “There should be good options in Sydney. If you’re in Muswellbrook, there should be good options in the Hunter region.”

3. Make the most of the tools on offer

The world of property has changed a lot since Mr McGrath first started out almost four decades ago. Some might be wary of up-and-coming innovations, but the CEO recommended buyers to make the most of all the options that are available.

“Do your homework, use all the technology that’s out there,” Mr McGrath said.

“Some buyers now are even using buyer’s agents,” he said. “I think that can make a lot of sense, having an expert help you select and negotiate the right property. I think there are more tools and services available for investors than ever before.”

4. Go to auctions

To get a finger on the pulse of the market, Mr McGrath said that attending auctions is key.

“Go to many auctions before you find the one that you want to go to,” he said. “Get used to the environment, because an auction is often a great place to buy property.”

Knowing that auctions can be intimidating for the uninitiated, Mr McGrath advised prospective buyers to bring along someone in the know.

“It could be an agent, could be a solicitor, could be an accountant, could be just a friend that’s commercially experienced,” he suggested. “Take someone that’s experienced with you.”

5. Never buy above budget

“Know what you can afford and what you can’t, and don’t go over your limit,” said Mr McGrath.

In his opinion, there is “nothing worse than buying a property and then wondering whether you can afford it.”

Knowing exactly what you can afford and refusing to go beyond your means will prevent you from “worrying about the mortgage payment” every month and living the next years of your life under stress.

6. Don’t squabble over details

While budget-consciousness is important, Mr McGrath warned that attention to price detail can sometimes go too far.

“Don’t try and over-finesse the price,” he said. “I’ve had people come to me and say, ‘Oh, they want $1.32 million and I’ve offered $1.31 million, I won’t go another cent.’ And I say, ‘Seriously, if it makes sense at $1.31, it probably should make sense at $1.32.’”

“If you really love it and it ticks the boxes and it’s got natural light and it’s in a good location and it’s got some growth profile, don’t try to overthink the market to a few per cent,” he advised.

“No one really knows the value of property.”

7. Honesty is the best policy

Finally, when dealing with real estate agents, Mr McGrath stated that it can be possible to keep your cards too close to your chest.

“You don’t have to tell them every last cent you’ve got to spend, but if you like a property they’re representing, tell them,” he said.

“I’ve had people ring me up and say – I couldn’t believe it – ‘I went to a property and I really fell in love with this property. I went back the next Saturday, and it was gone’.”

When the CEO asked them whether they had told the agent they were interested, they replied to him: “I didn’t want to give it away.”

“You’ve defeated yourself by trying to be a bit too tricky and too clandestine in your searching,” he said.

“Be open and honest, and I think you will quickly identify the agents that are honest, transparent and realistic in their representation.”

Listen to the full conversation with Mr McGrath here.

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