Location, Location, Location
People always ask me where to buy? It’s the multi-million dollar question which everybody seems to get wrong. For me, every time I see someone buying the house next door, It’s such a big face-palm moment. It’s interesting to see some of the looks I get when I tell people that I haven’t even seen what some of my properties look like. The reality is, just because you buy a property in the same neighbourhood or even in the same state, doesn’t mean that it’s a good investment.
The big secret is to buy where it’s booming!
So how do you pick a booming location? I always refer to a sophisticated yet simple Property Investment analysis method which I call “The Property Clock”.
When a property market area is at Twelve oclock it’s at the top of the clock. This is the peak of the market and Six o’clock is at the bottom.
The property investment sweetspot is 7’oclock on the property clock. When you can regognise that a city or state property market is at 7’oclock and buy a property there and then, that’s when you can get the biggest return on your investment with the growth in your property going up all the way til it hits 12 o’clock.
What most uneducated investors do is buy at 10 or 11 o’clock. This is when an area has had great success and is now being featured in the media. The problem with this strategy is by the time an area is in the media and being talked about around the BBQ, its already too late. You’re paying a premium to get into this market and there isn’t much time left for your property to grow before it hits the peak of the market.
Then we have the down turn on the other side of the clock between 1-6. These are the houses that have had their run and now are moving through the downward cycle. The people who buy on this side of the clock will have to wait around for the market to pick up again and this can set you back drastically as it may be several years or more before you have room to move and expand your portfolio. You really need the right growth to be able to expand, especially when you first start investing in property. You really need to make sure you get into a 7’oclock market.
The reality about property is, no matter where and when you buy, your property is always going to go up eventually. In the end however, the smart and educated investor knows how to leverage their money and make the property work for them so that it doesn’t impact on their lifestyle and so that they can squeeze out the maximum amount of growth that they possibly can, furthering their investment opportunities for a positive cash flow property portfolio.