Timing the market for best results

Expert Advice with Lindy Lear. 27/09/2018

If you want to be a successful investor, you need to be able to identify the known drivers of capital growth, and make predictions about future growth prospects based on their strength in any given area.

One mistake that inexperienced investors often make is to base their investment decisions on recent past performance.  They want to see it before they believe it.  This would be great if property growth were linear, but unfortunately it isn’t. 

Any doubling period tends to consist of a few short years of strong growth, with the remaining years being much more subdued.  So, if you buy in areas that have been doing really well for a while, you may have jumped in too late.  You want the growth to be in front of you, not behind.

In last month’s column I wrote about 3 areas that I had recommended to investors back in 2014, 2015 and 2016.  Those who took our recommendation and purchased in these areas have  done very well, enjoying at least $100,000 in capital growth in that time.  However, for the reasons outlined above, we are now focused on new areas that are yet to experience this kind of growth.

One phenomenon that experienced investors often look out for, is what we call ‘the ripple effect’.  As certain areas enter a strong growth cycle and over time become less affordable, it is often possible to identify areas a little further out that have not experienced the same level of growth.  These areas start to look ‘cheap’ by comparison, and prices inevitably start to rise.

For example, in 2014 we were recommending Werribee, in Melbourne’s western growth corridor.  As prices in this area rose over time (as we had expected!) we shifted our focus to Geelong, a little further out.  And now that we have seen the growth that we were expecting in Geelong, we have shifted our focus a little further out again for our investors who are ready to enter the market now.  The city we have in mind has a good-sized population, plenty of economic drivers, population growth and affordability.  It will be the next cab off the rank.  But you need to get in sooner rather than later.

Another area that has caught my eye is northern NSW.  Whilst I have yet to complete detailed due diligence, one area in particular seems to have potential, and my researchers are busy putting together some reports which will indicate whether or not we go ahead.  If you are a ‘due diligence’ nut, jump online, and let me know if you can spot the town.

To stay ahead of the game, you need to stay ahead of the property cycle.  The more growth you experience early on in your investment, the less time it will take to reach your long term financial goals.  So, don’t be tempted by areas that have already done well, but instead focus on those areas that have potential and are poised to take off.


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Lindy Lear is a successful property investor who had a late start into investing, yet she built a portfolio of eight properties in just three years. She is a qualified property advisor and general manager of Rocket Property Group, and she won the Reader’s Choice Award in 2009, 2012 & 2013 for Property Investment Advisor of the Year. Lindy is passionate about helping others realise their goals through investing in property, and can be contacted on Ph: 1300 850 038 or visit www.rocketpropertygroup.com.au

 

To read more Expert Advice articles by Lindy, click here

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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