3 Investing Essentials - #1 Timing

Timing is key to when to invest in a market. Too many B & C grade investors are buying too late in the cycle. Knowing when to buy is the vital to getting the best start to your portfolio.

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Transcription

Hi, I'm Phil Anderson from LifeCorp, the home of street smart property investors. Without a doubt, time in the market- being a buy and hold property investor- can produce some pretty amazing results. But today, A-grade property investors are expecting even more. It's not just about time in the market, it's now also about how to we time the market, how do we time when to buy property in any property cycle around Australia? Picking great timing can produce very fast equity growth, allowing you to buy more property sooner. Today we're gonna have a look at it together.

So, how do we pick the best timing, the best time to buy an investment property, in a property market around Australia? Well, I've been watching property cycles for more than 20 years- almost 25 years- all over Australia, and I've noticed some pretty incredible things. Basically, one of the biggest things that I learned some years ago- I wish I had learned it right at the start- but, maybe 15 years ago, I observed that most cycles around Australia, from the peak of the cycle through to the peak of a cycle, around about 2/3 of the cycle, not much happens. 2/3, it's pretty flat. And 1/3 of the cycle, very commonly, all of this growth seems to happen.

Now, everyone's becoming much more familiar with a property clock. 12 o'clock at the top of the cycle, as it starts to settle and go through its winter period where not much is happening. Eventually, it hits 6 o'clock, and it can be a very subdued market, very slow sales, not a lot of interest, doesn't effect a lot of the home owners too much unless they're trying to sell, cuz they'll just choose to buy whenever they really want to. But as an investor, I'd even be careful of investing at 6 o'clock. And some property educators encourage you to buy at 6 o'clock. I would say don't, because 6 o'clock could be through here. It might hit 6 o'clock here and need 3 or 4 years to pick up and go into what I call 7 o'clock.

7 o'clock is where I would suggest that, as a property investor, you need to be buying property. This is where A-grade investors target to buy. Of course, what they're looking for is drivers that will drive the property market and create the next growth curve, or this 1/3 of a cycle, this big growth stage to this local property cycle. Now, most people don't realize this has happened. Most people don't have those indicators. I've narrowed it down to 7 key elements that drive this market, and that's a great topic for another video blog. But as far as timing goes, 7 o'clock in the market is the ideal buying time, the perfect time to buy a property to pick up all of the growth in 1/3 of the time. Even if you get it slightly wrong- none of us have got a crystal ball- even if you've picked the best half of a cycle, it's much better than buying too early and having to go five or six years or whatever half of a cycle may be, before you see the growth. So, this is the ideal time to buy. Unfortunately, at 7 o'clock, very few people know it's 7 o'clock. Most people are too distracted, and too busy with life, and don't really have their finger on the pulse.

But at around about 9 o'clock, I notice that most B-grade investors- usually quite smart people, can quite often be an academic person that's just got a busy life or whatever- quite smart people that are noticing things are moving, and really wanna start taking action. This is about where the numbers start picking up, at around about 9 o'clock, there'll be a new level of interest coming in. Of course, an A-grade investor's already made money. And this is why we would wanna buy here. And by 9 o'clock, an A-grade investor's starting to go, "I don't think I need to pay those sorts of prices." But the B-grade investors will come in. By about 9 o'clock, 10 o'clock, somewhere in here, you'll even see the property magazines saying, "Wow, watch this particular market, it's a growth market, we're tipping it as a hot spot."

And of course, with that sort of publicity, it makes it, unfortunately, great markets for property spruikers to come into, promoting, "Come to Gladstone!" or whatever those markets are that are growing at the time, showing a history of growth. And unfortunately, when they've got proof, when they can stand on the timeline at 11 o'clock or whatever, and look back and say, "Look at the growth we're experiencing," the C-grade investors start rolling in. And unfortunately, most C-grade investors are buying very high in the cycle- 12 o'clock or even after the peak at 1 o'clock. This is where auction numbers are highest, this is where prices are being really inflated, and unfortunately, this is where most property sales happen.

Now, as an A-grade investor, of course, you wouldn't be buying here. And, preferably, we wouldn't even be selling here. Preferably, we'd be getting to this part of the market looking at the equity we've created, this equity we've created, and tapping into that equity to take that equity and go back to other 7 o'clock markets where we can buy multiple properties- hopefully at least one, but maybe two properties in 7 o'clock markets that are gonna experience this in the near term as well.

So, that's an insight into timing. That's an insight as to how to buy late during a cycle at the start of a growth part of a cycle. If you buy here, the A-grade investor that is watching people buying here is often thinking, "Unfortunately, this person's probably gonna have their property settle a little bit, it may come down in value slightly. And then, they could be over here, as far as where it's now positioned, it could now go through this long period before it gets to another growth cycle." So, for this person, they may have a little dip off, and they they may have 6, 7, 8 years before they experience the next growth part to a cycle. C-grade investors, unfortunately, are the majority. A-grade investors are, obviously, the minority. But if you can develop this system, if you can get unemotional and develop a recipe for buying, it's one of the fundamental keys to being a great property investor today. I actually believe there are three keys.

Timing is a big one. Definitely timing is a big one. But the three key elements I believe you need to be looking for is timing, affordability- making sure that the properties are at the right prices, the yields are correct, the holding costs are very low- affordability's a big one, but the third one is safety. I've actually put together an infographic, a chart that may be a great reference for you. It's a free gift if you wanna click on the link below. Please, grab it, it's a free gift from me to you. it'll have some great content in it, showing you what I believe are the three key elements, giving you a great insight into what the three key elements are to safe and effective property investing in the Australian property market today. But definitely one of them is all about timing.

And don't forget- if you're gonna buy one of these properties, if you are gonna buy, regardless if you're gonna buy at that stage of the market, it's not everything. I believe affordability and safety are very important. And as I always say, if you're gonna buy a property, if you can't buy it with your lunch money, don't buy it.

Comments

  1. Tom Miletic says:

    Thanks for the info

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