As Nathan Birch explained in last week’s post, the next 12 to 18 months will mark a period of stagnation across the Australian property market.
This means that 2018 is the perfect time to buy property.
But how can buyers get into the market before prices start to rise again?
We picked Nathan’s brain to find out how to buy property in 2018.
While he is not a financial advisor, and cannot offer financial advice, he dished up plenty of food for thought to consider.
Staying ahead of the trends.
“We are entering into a different marketplace,” Nathan says.
“I’ve always stayed ahead of the market,” he says, “and I’ve always tried new strategies on my own property portfolio before I talk about them to the public.”
Nathan believes there is a massive financial shift coming in the future, in which assets will be worth more than money.
He says the dollar is being eroded by inflation.
Cryptocurrencies are potentially paving a different future and more and more people are wanting to “unplug themselves” from the existing system.
So, what should buyers keep in mind during 2018?
Keep taking action.
Although the media may tell a sad story, this is the time to take action and buy.
While most people make the mistake of buying when prices are high, the successful investor always buys when properties are “on sale”.
In fact, Nathan started building his foundation portfolio during a time when Sydney property prices were going sideways.
Save, save and save some more.
The first step towards buying a property is to raise a deposit.
Raising a deposit can be a much quicker process if you restrict spending on luxury items.
This year is no different – the fundamentals of saving and taking action will always be essential for buying property.
Access your equity.
Nathan says, Australia is not in a US style housing bubble.
Lending is actually very tight at the moment. In fact, Nathan believes the APRA restrictions have gone too far in stopping people from buying properties.
It is unclear how this will play out, however those who don’t take action now may find themselves locked out from getting finance.
If you already own a few properties, you may have a nice chunk of equity that you can use for your next purchase.
To find out whether you have equity available, speak with your mortgage broker/finance strategist.
It may be possible for you to release equity so that it is there, ready and waiting to be utilised when opportunity calls.
Investigate alternative ways to raise a deposit.
Cryptocurrencies may hold the answer for those who have savings but can’t get a loan.
By investing in a cryptocurrency, it is possible to raise enough money to buy a property in cash or with very little finance.
At the moment, Nathan is trying this out for himself. He plans to share some strategies involving cryptocurrencies with Binvested clients during the year.
Since this is a new form of technology that is having rapid growth, there are big risks as well as big gains to consider. Not many financial advisors know much about cryptocurrencies yet, however, there are some within the Binvested Group who can offer advice.
Markets to buy in.
Sydney and metropolitan Queensland markets are still favourites for Nathan.
“Sydney is the doormat of Australia,” he says.
Migrants tend to enter the country through Sydney, which means the population is always growing.
Sydney is also the “financial hub” of Australia, making it one of the most desired (and expensive) locations to live in.
Metro Queensland is a great place to invest in because it is undervalued in terms of lifestyle.
“Queensland is the Miami of Australia,” he says.
“People move there for lifestyle.”
He says, Sydneysiders who have made a couple of million after selling their house should be able to afford a waterfront property in Queensland outright – and have half a million or so left over.
Strategies to adopt.
Building a foundation portfolio of buy-and-hold properties is still a strategy that Nathan favours.
In order to achieve this in today’s lending environment, it may be necessary to incorporate a couple of complementary strategies on the side.
A buy and build development can be used to raise capital. Building in a cost effective way on wholesale land can generate a nice profit upon selling.
This can be redeployed into building or paying down your foundation portfolio.
Another strategy is to use cryptocurrency to invest in property.
In any case, it is important to speak with experts who can give sound advice on your strategy.
Binvested has a number of experts who can help with property investing, lending and financial advice.