How to Play The Property Cycles For Maximum Profit

Information supplied by We Buy Houses

People are asking me if they should invest in property now. Some tell me they’re trying to “time” the market. The media gives the impression nationally that Australia is a seller’s market. And parts of it are. Currently it’s still a seller’s market in Sydney, Melbourne and Canberra, yet conditons continue to vary significantly from region to region. Across capital cities, it’s leaning towards a seller’s market, while regional housing markets are flat or trending downwards.

I believe it’s anyone’s guess what happens next. It could be a matter of days, months, or years before prices plummet, ushering in the return of the down cycle.  

With this lesson in mind, the Governor of the Reserve Bank of Australia, Glenn Stevens, is now warning Aussies that the good times experienced in Australia’s real estate market will not continue forever. In one of his recent speeches, he reminded everyone that the rise of house prices to historic levels is usually followed by a devastating fall.

But don’t panic! This is not the end of the good times, yet.

As I’ve always told my students, the property market follows a cycle of ups and downs.

Now that house prices are at their record peak in some areas, it’s inevitable that this growth will slow down. Rather than worry about things that you have absolutely no control over, the best thing that you can do right now is to find ways to protect your property from any price drop when the time comes.

In my opinion, property investors and home buyers should always take a long term view when investing and over the course of time prepare for all three market conditions, namely rising, falling, and flat, during the length of time you hold your property.

The current state of the real estate market is reflected by the perception of a rising property market. A lot of property investors and home buyers are gaining back confidence in the real estate market after years of hiatus, because of the impressive price growth of houses within the past few months. Everybody wants to make money out of property again!

On the flip side, banks no longer give out loans as easily as they did before the global financial crisis. Aside from that, the chance of getting a new bank loan has become more difficult as previous negative credit history may come back to haunt loan applicants due to the implementation of the New Credit Act which took effect on March 12, 2014.  This makes it easier for credit providers and credit reporting bodies to make more information available to lenders, than they had previously.

So how can you safeguard your property against all 3 market conditions?

By using seller finance. There are many variations of seller finance. In it’s simplest form, this is where the seller of a property offers easy payment terms to the buyer. So instead of the buyer paying the full amount up-front, they can pay the property off in a number of instalments over time.
Time is the key. It allows buyers to save up more money to apply to their property purchase and for bad credit to drop off. At the same time, many retirees may prefer to have an income instream, which occurrs when the buyers pay them each month.

There is a place for seller finance in the market place. It can be tailored individually to each property transaction to create a mutually benefical outcome for both the buyer and seller.

Seller finance is a stepping stone for home buyers, it provides the bridge between where someone starts off and where they want to be. Plus it helps seller’s lock in the sales price of their property, even if they may have had difficulty selling previously.

Flexibility is the key to surviving growth, falling and flat markets. Instead of entering the market with only one plan in mind, you can still make a profit out of these properties with the help of seller finance strategies.

If you’re interested in buying or selling a house through seller finance strategies, you can click here for a free information pack on my creative strategies.

Australian property investment specialist and best selling author, Rick Otton, has been investing and teaching his innovative real estate strategies for 23 years. As the founder and Director of We Buy Houses Pty Ltd, his goal is to empower people with knowledge through his cutting edge investment strategies.

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

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