Stagnant Property Prices Causing Doubt?

"I bought from the Club in 2009 and according to the local agent it is still worth the same price." - Club Investor

We occasionally get such questions from our members.  We don't control the markets but we can point to history where property prices had doubled every seven to ten years.  Now, with much lower inflation, we are finding this is more likely ten to fourteen years.  So looking at the big picture, what is the exciting news we can impart to the above investor?

It's Time!

The slow time has come to an end and now is the exciting time of the cycle.  All regions of Australia move in different cycles.  The slow cycle gives an investor the opportunity to gather more and more properties in that region without paying higher and higher prices each year.  This was the story when we started the Club in 1994.  Our prediction was that over the next five years there would be little capital growth but rising prices, particularly in Sydney and Melbourne and it would give investors the equity to buy more and more investments in Sydney and Melbourne.

They bought not expecting fantastic gains then but later when the market took off.  This it did right on cue in 1998/99 where our original purchase prices saw a doubling.  We moved to the Gold Coast with our prediction for exactly the same reason.  It had been asleep for six years. The result? We saw a doubling in the next four years and then a doubling again up to 2007.

What are we comparing our property returns to?

Look at the share market.  As I predicted back in 2011, the share market crash came at Christmas, and in two weeks $100 billion was wiped off your shares.  Even now, look at Fortescue Metals, just over a year ago they were heading to $9 and now they are worth $2.20.  That's like a property you bought for $450,000 and finding it is now worth $110,000.  You would be worse off if in 2007 had you bought Oz Minerals.  Then you paid $42 and now it's just over $4.  That's akin to buying a $450,000 property in 2007 and finding it is now worth $45,000.  If you bought Bluescope Steel you would have lost even more.

Why I love property?

It's safe bricks and mortar and investors who have followed the conservative advice of the Club have avoided the regionals and mining towns.  The once darlings of the popular media are now “on the nose” and the Young Investor of the Year 2012 is facing bankruptcy, I saw on TV recently.

So, back to the original investor.  What is the advice to him and all investors here? I am sure he took the advice of his Property Mentor at the time of investing and invested in a number of regions across Australia.  The knowledge to safely invest outside of your own area is only available in the Club.  So yes, he picked a slow area and that's wise investing.  He would have balanced it with investments in other areas.  This is called diversification.  This diversification gives you the luxury of examining your portfolio and looking at your "ugly duckling" in a more positive light - that it is simply not its time in the cycle yet. It may even be an opportunity for you to have a FIDO done and see if it's worthwhile adding stock in this slow area to reap a greater return later.

"Property is not a risk free investment!" This is a quote from the RBA governor some years ago.  We know that our Super is only a substitute for a $325 per week pension.  You know you have to do something to make your own wealth.  You know property is the only relatively safe method.

What are the traps?

Talk to your Property Mentor about the problems we foresee, and there are lots of them; such as lightweight construction - who knows what this is and how to find out if your proposed investment is lightweight?  How do you establish rental demand for the type of property you are buying? Will it be a money pit, hard to rent and even harder to maintain the mortgage? How does it compare with the thirteen vital investment factors that your Property Mentor uses to gauge and evaluate the prospective investment and how it fits into your needs?

Successful investors regularly review their investments to keep pace with changing markets.  Others have to pay a large sum annually to financial planners to achieve this.  You are lucky, Property Club charges you nothing.  So, your Property Mentor is standing by with all the software programs to keep you up to date with the latest changes in property, financing, the law and estate planning.

No, there is no $6000 plus fee to pay.  It is totally free today, and totally free forever.  So if you want to avoid the poverty pension of $325 per week, take action now to help yourself.

Recently a gentleman came to me and said "I am sixty one, I will be retired in four years and my wife and I have worked out that our Super will only last us a further four years before we are on the pension!"

There was fear in his eyes. They both should have thought of this many, many years ago.  Are you like them and put it off until tomorrow? Will you, like them, be looking down the barrel of $325 a week to live on?

We create more millionaires than all the rest combined.  We are out to create ninety thousand millionaires.  We want you and your partner to be one of them.

Happy Investing!

Kevin Young Founder & Director | Property Club