It can be scary to purchase an investment property when the market is unstable. During periods of economic uncertainty like where we are today, real estate prices tend to be more volatile and many inexperienced investors often make impulsive decisions.
While you shouldn’t rush into buying an investment property during times like this, it can also be beneficial when you do it right. As unstable as a market can be, you can still buy a property that can profit you.
Here are a few tips for buying an investment property during an unstable market:
1. Follow experienced investors.
There’s a saying that you shouldn’t follow the herd, but instead follow the one who leads the herd. When buying an investment property, look for the insights of experienced investors and professionals when it comes to the real estate industry. There will be many voices telling you what to do or what to buy, but choose to listen to only those who are credible and trustworthy to give you advice.
Experienced buyer’s agents can help give you market insights and advice on what type of property can profit you during an unstable market. They have surveyed many properties in your local area and keep up with market trends almost every day.
2. Find a location with a strong local economy.
A good property location doesn’t necessarily need to be near the Perth CBD. Accessibility is definitely an advantage when investing in a property but another thing that you can check to know if a location is worth investing in is its local economy.
A location with a strong local economy will have a higher resale value in the long run. If there are thriving industries within the community, there will be a higher demand for properties. However, you should still do your research on the area’s economy. Since the market is currently unstable, will this thriving economy last until after several years? Consult your experienced buyer’s agent as they can help you with researching your target location.
3. Look for areas with room for development.
Aside from the current local economy, one more thing that you should look for in an area is its room for development. Are there government infrastructures that are planned to be developed? Are there new businesses that will be built? New infrastructures like hospitals and schools will create a demand for workers.
An area with a thriving community and which supports job growth is a good investment choice as it will help increase the value of the property.
4. Be aware of additional costs.
When purchasing a property, proper financial planning is essential to ensure that you are ready to make this investment. Buyers are always advised to save up for a deposit and have a regular income to finance the mortgage. However, the deposit payment and monthly mortgage aren’t the only costs that buyers should take into consideration.
One thing that most investors overlook is the additional costs that come with purchasing a property. Buying a home requires different transactions with various professionals. Hence, these entail additional fees such as lender’s fee, settlement costs, and upgrades. Make sure to be aware of these expenses so you can factor these into your budget. When planning your finances, make sure to have enough savings buffer so these unexpected costs won’t derail your budget especially during an unstable market.
5. Think long-term
When buying a property during an unstable market, you might be tempted to buy something that seems profitable today, but will be useless in five to 10 years. For example, today, because of the global pandemic, we see many people buying properties in isolated areas. When things get back to normal, will these properties still be valuable?
Just like we’ve mentioned earlier, learn to keep up with market insights and look at properties in areas where there is a lot of room for development and growth.
Plan carefully before you buy during an unstable market, learn to manage your risks and to assess your risk-to-profit ratio. Don’t be afraid to ask advice from real estate experts on what type of property will profit you the most in the long run.
Contacting an experienced buyer’s agent is essential as they will have greater insights into the market, a wide base of contacts with agents, and other marketing avenues that they have built up over decades in the real estate industry. Buying Perth Real Estate has decades of experience in the Perth real estate market and has a recognised reputation of delivering positive results for all their buyers. Get a free consultation from us today.