Growth Drivers - What is the Number 1 indicator for growth?

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There are so many different stories around about what drives the property market and when you will see growth in your properties. It can be confusing. There is one key indicator for growth that you absolutely must know about and in this video, you'll find out what it is.

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Transcription

Phil:

Hi. I'm Phil Anderson from LifeCorp, the home of street-smart property investors. For more than twenty years, I've had an absolute fascination with property cycles. Today, we're going to talk about one of the key things that I look for that's a major game changer of property markets around Australia, causing what I call a 7 o’clock Market. Let's have a look at it together.

Let's first make sure we're all on the same page when it comes to a property clock. If we looked at a property cycle, and we used the clock as the way that we communicate what stage a cycle is at, we would know that 12 o’clock is the peak of a cycle. Obviously, as it goes past the peak, we got 1, 2, 3, 4, 5, and eventually the bottom of the cycle, 6 o’clock. It's at this side of the clock that it becomes really, really interesting for property investors: 7 o’clock, the start of the next growth stage of the cycle, 8, 9, 10, and 11 o’clock in a cycle. Communicating between property investors about these different stages of the property cycle becomes very, very important.

If you look at it on a timeline, if you look at it this way, what we've noticed is as I watched hundreds of cycles around Australia, many cycles stay very flat. They get to 6 o’clock and basically stay flat. They look like they're going to go and they bobble a little bit, but predominantly stay flat for as much as 2/3 of many property cycles around Australia. Eventually, it will turn. Eventually there are certain things that are going to create what I call turning points in a property cycle, growth stages of a property cycle, and create that all-important 7 o’clock stage within a property cycle. Of course, this is where we want to target.

Unfortunately for a lot of investors, they won't notice this has happened. 8 o’clock will cut in, 9, 10, 11, and eventually 12 o’clock in the cycle, and as this growth comes and as the local community awareness goes with it as well, so too does the market tier-ing. A lot of the property spruikers and property marketers will use these examples of timelines for proof of what's happened underneath the cycle to say, "Wow. This is a great place to buy. Come to Gladstone," or whatever that market may be at that stage. "Look at the growth you can have, a great investment area." Of course, for an A-grade investor, the money's already in somebody else's pocket. The growth is already, the majority of it is already too late to take advantage of.

For us, we're not looking for stages like this. What we're looking to do is we're looking to buy, obviously, here. We're looking to target turning markets, 7 o’clock markets, the markets that are positioned to put all the growth under our properties, all the equity created in our pockets. What drives these markets? What drives these markets and creates these 7 o’clock stages in cycles? What allows us to read these indicators? There are 7 key indicators that I use. I teach this inside of my program, 7 key things that I like to see. We typically see 5 or 6 of these in every one of the markets that we target. Hopefully, we see 7, but at least 5 or 6 of them. There is 1 driver that really stands out, 1 driver I want to talk to you about today.

The 1 major driver that may have multiples of effects under a property market, the 1 driver that really catches my attention is infrastructure changes. We're not talking about a little new $3 Million Bunnings store being added to the town or whatever the case may be. We're talking about hundreds of millions of dollars going into new infrastructure. Hopefully, billions of dollars going into infrastructure. That sort of change, that sort of investment, short-term jobs, long-term jobs, big changes to local markets really do put a big driving effect, a big growth curve under the local property cycles. That's one of the key things I look for, is infrastructure, but there are 7 key indicators in total.

For example, infrastructure alone wouldn't matter if you already had an over-supply of stock, so supply is another one. Number 1, like I said, infrastructure changes, and there are 7 key indicators that all what we'd be looking for before I'd even go into a market to then apply other lists to help me determine the property type and a whole range of other things. That gives you a little bit of an idea into property cycles, how we look for 7 o’clock markets, 7 key indicators of change and drive and really get our attention as to why we would want to go into a market, and the number 1 driver I look for is massive, massive infrastructure changes. Guys, this is all great, but remember the Golden Rule: if you can't buy a property with your lunch money, don't buy it.

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