There are a lot of people out there that get caught up in emotions and end up buying through FOMO, but without having the ability to step back and look at the big picture.
If markets are on the rise and tripling in value, you need to ask yourself what value there is in participating in such a market and contributing to pushing prices up further for people already invested there.
Been there, done that, reaping the rewards
A good example is the Gold Coast market. As b Invested founder Nathan Birch notes, there was a period of seven or eight years where he was regularly buying properties for himself and clients in that market and people were questioning him because they thought values never improved there. But Nathan believed that as soon as interest rates came down, that market would rise. And since, he has seen growth from a base as low as $150,000 for a property, all the way up to $500,000.One client had a property triple in value to be worth over $600,000.
That’s not when to get in
With FOMO, people see growth like that and want to rush to buy into that market. However, the time to score value has already passed. The growth has happened and all of a sudden there’s a downside risk if you try to purchase now. The opportunity for growth lies in something that is undervalued now. In a market that people are shunning because they think it’s no good.
So where are the opportunities?
There are a number of markets that have been too hot to offer value in recent years, but now, all of a sudden, there’s a bit of fear in them and Nathan can look for good value buys for clients in those areas. The same people that want to buy in rising markets because of FOMO are looking to sell or hide when markets are falling because they are worried they will fall further.
What’s your position?
If you’d been smart, strategic and diligent in recent years, you’d be in a position now where your rents are increasing, the property you’ve got is way below what you could rebuild it for, it’s got good upside for growth and it’s going up in value even though we are facing a recession. Yes interest rates are going up, but you can cover that and still come out in front as long as you’ve factored in risk while building wealth.