There’s no substitute for both independent research and the advice of experienced property market professionals if you want to avoid financial flops, writes Richard Sheppard.
Property market investors are fond of telling people their success stories, but arguably there is more to learn from their biggest mistakes.
I speak from experience. Buying my first property just over 20 years ago, I made all the classic errors. I didn’t do any independent research. I bought in the wrong state at the wrong time. I didn’t seek insights from experienced professionals who understood market cycles. Like many beginners, I listened to family and friends who had limited knowledge of the property sector and poured my money into an apartment that I assumed would be a great investment. I ended up selling that Sunshine Coast property about four years later for little or no profit, while during the same period the Sydney market had been booming and informed investors had enjoyed considerable growth.
The error of my ways cost me about $200,000 – more than I could have saved in about 10 years – and set me back years in terms of missing out on capital growth that I could have gained by investing equity from a smarter purchase.
Once bitten, I decided to educate myself about property investment through seminars and courses so I could not only have sound knowledge myself, but also help others avoid making the same mistakes. Obtaining quality independent research was also crucial. Two decades on, Newcastle and Southeast Queensland (including Brisbane, Springfield and the Gold and Sunshine Coasts) are now clearly the best investment locations in the coming years. In fact, Brisbane is forecast to grow four to eight times more than the Sydney market in the next decade on the back of developments such as the $3 billion Queen’s Wharf casino and the $800 million West Village at West End that will drive up inner-city apartment prices. It would be hard to pick a better time to target Newcastle and Brisbane for completed properties, especially given that many developers are offering rent and valuation guarantees, depreciation schedules and relatively low purchase prices.
So, while it’s a great idea to listen to your parents about family matters, it’s best not to blindly follow their advice when it comes to property investments! Educate yourself and seek professional advice.
Richard Sheppard is the Managing Director of inSynergy Property Wealth Advisory. inSynergy provides professional property investment advice, property market research, specialised mortgage broking services and is an accredited investment property buyers’ agent. Visit www.insynergy.net.au or phone 1300 425 595.
Important Note and Warning: This information is general in nature and should not be considered personal tax advice. We highly recommend you discuss these concepts with your accountant, property investment adviser and investment finance mortgage broker jointly to ensure any considered concepts are suitable for your personal financial situation, as one effect of the concept may negatively impact another part of your plan.