Unit Trap

"The Unit Trap"
April 1st, 2016 - Phil Anderson

 

In all honesty, what I am about to share with you could be one of the most important things you read this year...

I know that's a big call as we're only in March, but that's how much of a Game Changer I think this Big Property Shift will be in our National Property Market.

What I'm talking about is a seemingly strange phenomena that has kicked investors in the guts for years, and I'm here to tell you that THOUSANDS more Mum & Dad investors are on the brink of getting hit in their hip pocket yet again by this exact same trap.

So please take note, and make sure this doesn't happen to you!

Have you ever wondered why a particular property type seems to do fantastically well, while another type does not... even in the exact same location?

Well guys, PLEASE listen to me when I say it's going to keep on happening to those who don't know how to look for it.

I'm going to go on record, right here / right now, and say precisely where this is going to happen AND how you can avoid it. So don't say I didn't warn you!

As I type, I'm on a plane travelling to Sydney, where I've been asked to educate investors about this issue and how to avoid it. It's such a big problem that I'm actually speaking up to 4 times a month about it all over the country, as we need to protect ourselves from what I am calling "The Unit Trap".

Now, what exactly is "The Unit Trap" you ask? Well let me paint you a picture...

Meet investor Joe. Joe is your average Mum & Dad investor; works hard for his money and is a good family man. Joe desperately wants to get some security for his family's future, so he's looking to get his hands on a property or two so that his money can go to work for him, not the other way around!

Joe believes Units in the CBD are the safest investments, because who wouldn't want to live in the CBD, right?!

In his search for the perfect property, Joe comes across a brand spanking new unit development in the heart of the CBD... and believe me, it's gorgeous! The brochure is glossy and sleek and it has all the ammenities; Swimming pool, a gym, a roof top terrace, all the trimmings.

And the best thing for Joe (or so he thinks) is that he just has to put down an initial deposit, but doesn't have to settle for another 18 months! Joe is now going to bed dreaming about all the capital growth that his off-the-plan, CBD unit will receive in that time now that he has locked in the price

Joe is excited. He forks out his deposit and buys that 2 bedroom unit overlooking the pool for $650,000. But here's what wasn't in that sexy marketing brochure.

Joe's high rise unit development wasn't the only one going up in the area. Council has hastily green lite at least 10 other inner city developments within 5km radius of Joe's project. They all begin construction and completion at the same time.

This is bad news for Joe, because in the blink of an eye this will create a massive OVER SUPPLY OF UNITS in the area. And when that over supply kicks in, it will force the price of 2 bedroom units in that area down by at least 20%. So, when it comes time for Joe to settle, the bank will fairly value his property at only $520,000, putting him in a very, very difficult position.

And by the way, Joe's deposit was obviously non refundable, whether he has the ability to settle or not.

I feel for Joe, as his intentions were absolutely in the right place...

But guys, this is EXACTLY what we are seeing happen in the Brisbane Unit Market right now. With Brisbane council already approving huge developments of 500+ units or more, we're seeing vacancy rates already starting to skyrocket in the Brisbane CBD.

And it isn't just me saying this, just in case you were wondering... a little institution called the RBA agrees with me!

The Reserve Bank of Australia, specifically highlighting the unit markets of Melbourne and Brisbane as potentially risky investments, made the below statement;

Scary stuff. In 25 years of property investing I have NEVER heard the RBA warn investors about a specific market. For the Melbourne and Brisbane unit market, I believe the writing is on the wall.

Please note: this is all specific only to the unit markets in these regions, not regular house and land properties.

Now guys, I've been doing this investing thing for a while now (25 years or so), and with more than 700 members and literally hundreds upon hundreds of successful investments on the books I feel I'm pretty well placed to make these kinds of statements about the Brisbane unit market.

And now that my team and I are looking deep into the unit approvals for the coming years, we can see very clearly the tidal wave of units about to hit the Brisbane unit market, set to wash away any potential capital growth.

I'm happy to be your life saver on this one. Brisbane and South East Queensland still have some fantastic opportunities that I'm really excited about... but it's all about choosing the right surf board to ride that wave, and those unit markets just aren't it!

This Big Property Shift in the unit markets of Brisbane and Melbourne will absolutely be front page news in the years to come. I'll be covering this topic and a few other BIG GAME CHANGING topics at some live events I have coming up, so please check out the details below.

Anyway, it's time to land here, so until the next time!

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