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Buying Expensive Properties

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Transcript

Buying expensive properties. Often when we look at the property examples of oh, that person’s got 10 properties or maybe they’ve got 15 or six or seven. The first question we say is look quantity doesn’t matter, right? Isn’t quality important? That’s usually the first thing that we’d ask or say. And we very much assumed that quality is measured by price. Now I beg to differ. Quality and price are two worlds apart. They should not be considered the same thing. Just because someone has eight or nine or ten. You can’t bring that property example down only because they’re not priced expensive. Or if someone has two properties and they may be one and a half mil each, you can’t suddenly say I have a more quality portfolio.

As investors rate of return or return on investment is what’s most important. Let’s take Tasmania for example. In Tasmania 2019 has brought on the first million dollar suburb in [Hobart 00:01:22]. Now just think of that for a moment. That fastest growing city in the country for many years now has been Hobart. And one of the top three performing cities in the country over the last 20 years and 25 years has been Hobart. 

A place where there’s now only one $1 million and above and that’s Battery Point. So if you think that 2019 has brought along it’s first over $1 million suburb once we have many, many $1 million plus suburbs in different capital cities. What does that say? That tells me buying expensive doesn’t always mean good because if one of the top performing cities in the country has been fantastic for return on investment or the rate of return that you’re getting on money then it shouldn’t matter if you got 30 properties or you’ve got two. Because you cannot compare and say that one’s more quality than the others just by the end value. 

Let’s take Sydney for example. At the moment, some high value properties are dropping close to 20%, 30% and more than 30% in some parts of the country. If you’re thinking of that in these excessive over $1 million properties, yes, that’s a lot of money. Now you might bring up long term trends and show the rises. That’s great too and it can happen as we all know. Property has its ups and downs but when your considering investing don’t go in thinking, well, if I buy more I get more. And if I buy more it will grow more. 

That’s not always the case and Tasmania and Hobart in particular is the perfect example. So once again if you’re looking to invest, rate of return, affordability. Don’t look down on these things just because they’re not as expensive and don’t look down on these things just because someone said, well, property numbers don’t matter. They don’t and either does expensive properties. They don’t matter either. 

So in terms of property investing when you’re looking at it. Focus on the rate of return or the return on your investment. That’s it for us here at Investorkit, the Experts in Wealth Creation. Helping you take action.