The current state of the market might have you believe the market is going crap and the banks are going to cripple loans, but as long as you have your finances in check, you should be fine.
I was speaking with my buyer’s agent Steve Waters, as I usually do, and I asked him if there’s any concerns about moving over to P&I from interest-only loans. It can be a scary proposition for property investors. But if you’re savvy enough, it shouldn’t really be a concern for you.
Steve was saying that there’s a pretty obvious date when the IO loan is going to expire, so the smart property investors should be getting ready for that; getting your cash flow and buffers in place, as well as making sure you play it a few moves ahead so you’re not penalised when it rolls over.
Now with our portfolio, I like to think we’ve got a pretty good handle on what’s going on. I’m a bit of a numbers man. I run businesses, and this portfolio is like a business too, so that helps me out to have a pretty good idea of what’s going on with it and what hazards are on the horizon.
I’m not in a rush here either to add to our portfolio, and Steve tells me that’s a good thing – that there should never be a rush. If you want to add to your portfolio, you need to have a plan for your portfolio, and to do that, there needs to be capital and the cashflow to be able to help support the next addition.
But we don't even have a pre-approval, so the buying intent is not there at the moment, especially in today’s market – and I’m satisfied with that position.
Some opportunities are likely to show up in the future and we’ll take them as they come. We don’t really know when they’ll come, but they will. To do that, we’re keeping abreast of what the media is banging on about these days.
Apparently, it would appear that property markets are going to fall through the floor and everyone’s going to go bust, that things are going to go broke because our financial system is backed and very much based on the the major banks lending mortgages.
So when property goes down 30, 40 per cent, that means all of the banks are going to start trying to get their money back, which is going to cripple loans, cripple property prices – everyone is going to be impacted by it (including the banks themselves). If you believe what you hear and read, anyway. I really don’t.
For now, things are pretty good with our portfolio and I don’t expect that to change anytime soon.