Too many people will fail to act in the real estate market in the next 12 months. Consumed by fear most people will do nothing. They will wait in hope for something will happen. A lightbulb moment where the course forward will become obvious. Guess what. The world doesn’t work like that. So how do you make good real estate decisions in 2023?
Fear and greed drive markets and fear will soon take hold. Investors will both pass on good deals consumed by the fear that they are making a bad decision. Making a bad decision may have a short-term consequence. But, failing to act will be much more costly in the long run for most people.
You are not going to call the Bottom of the Market – so how do you make good real estate decisions?
Anyone who tells you they know what is going to happen or how much prices will fall is delusional. No one knows. The reality is you will not be able to call the bottom of the market and act at that point.
The reason is simple, real estate markets don’t work like that. The real estate market is not like the stock market – there is no such thing as “real-time” data. Anything you read or hear in the news is out of date. Most transactional data at least 10 – 12 weeks old. You will find out about the bottom of the market about 3 months after it happens.
Inaction is a Decision Too
People who sit on the fence waiting for the perfect deal or opportunity are making a decision too. They are deciding that the perfect opportunity or timing will present itself. And when it does they will be there ready willing and able to act.
That might happen it might not.
Fear is the Best Negotiating Tool you Have
Markets behave based on what might happen in the future. The greater the unknow the greater the fear the more leverage. Prices might go down along way, or a small amount – no one knows. Sellers have the same fears too.
You will have the greatest amount of leverage when the greatest amount is unknown. You will also have less buyer competition. Because others will also be consumed by fear and will also do nothing. Sellers will have less options and will be forced to engage with those who are in the market. You will lose your leverage if you wait for risk to subside and buy with the herd.
Its better to make aggressive offers which are not accepted than not have an opportunity. Your not in the deal if your not in the room.
There is Risk in all Real Estate Decisions
What people won’t tell you is there is risk with all real estate decisions. Regardless of market conditions. The best real estate decisions are informed decisions. Do your research and consider the following.
Yield indicates a measure of risk
People get too fixated with yield when they buy property – it is not the only measure of performance. Remember that yield is a risk indicator. The market prices yield based on perceived risk. The higher the yield of a property the more risk you are accepting. Economic turbulence means high yield property have even more risk.
Soft points in the market is a better time to buy better quality lower yielding high growth property. It is generally under-priced. Property portfolios are built by leveraging capital appreciation not through leveraging excess income.
Having a plan will make investment decisions easier
It will be impossible to make a good investment decision if you don’t have a plan. If you don’t know what you are looking to achieve how will you know if an investment meets your objectives?
If you have a long-term plan, you will find it much easier to make decisions.
Losses are only Realised when you Sell
If you buy a property and its value goes down in the short-term you will only realise a loss if you sell. Most property investments look much better several years on.
Du Val Global
Du Val Global is a perfect example of how PropTech is changing real estate.
Our real estate investment software helps investors make better decisions. Good decisions are not possible without complete information. Du Val Global has the tools required for success.
- Our property data software allows investors to research markets in real-time. Users can see local market incomes, rents, and property values.
- Our property analysis tool allows investors to build sophisticate financial models in seconds. Making like for like property comparison on an after-tax basis possible. Users can even compare properties in different countries.
- Du Val Dynamic Pricing™ creates economies of scale for small investors. We sell property from the world’s leading developers at discounts up to 15%.
- Our property portfolio planning tool helps investors create long-term wealth. Effective monitoring, management, and benchmarking is critical to long-term portfolio performance.
Interested in giving our platform a go? Start your free trial today at Du Val Global.
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