Investor stories: When is the right time to invest in the property market?

As part of his long-term strategy, Mr Gray has purchased most of his investment in what he refers to as “blue-chip, medium-price, secondhand markets”, or areas within five to 15 kilometres of the central business districts.

According to him, these blue-chip property markets typically offer consistently strong yields and steady, long-term capital growth brought about by several growth drivers such as population growth, infrastructure and government investment, employment opportunities and diversity.

He explained: “Most Australians don’t want to live in a tower. So I’m going to that five to 10, maybe 15, kilometres from the CBD, focusing on properties within the three-story height limit. There’s not too much supply of property there and that’s where all the young professionals that earn $100,000 to $200,000 would want to live because of all the good lifestyle stuff.”

As major CBDs such as Sydney and Melbourne are witnessing consistent declines over the past months, a lot of investors are understandably reluctant to enter or stay in the property market, but Mr Gray believes that there remains significant wealth-creation opportunities in these areas.

Instead of waiting for the property market to bottom out, only to strike when it’s on the way up again, the investor encouraged his peers to take advantage of opportunities as soon as they can afford them.

Otherwise, they could easily miss out on an affordable entry to premier markets.

Mr Gray said: “Now you can buy a 10/10 property for a reasonable price. When the market goes up – it could be six, nine, 12 or 18 months… who knows? – suddenly, you’re going to be getting an 8/10 and paying 10 to 20 per cent premium.”

“Everyone wants to hit right at the bottom, but there is no bottom really… The difference between the end of the decline and the uptick will be instantaneous. Suddenly, everyone’s in the market and you have missed out.”

When to buy

For Mr Gray, the right time to buy investment properties is simply when he can afford it.

After all, throughout the years that he has spent creating wealth through real estate, he found that the ultimate secret to becoming wealthy is simply taking action.

“I just buy when I’ve got the money… If you postpone the purchase because you think prices will drop in three months, but you can’t borrow then due to changes in serviceability or other policies, you’re screwed. So, if you’ve got the ability to buy, just go and do it.”

“The wealthy ones take action, they make a valued and educated decision and then they live by that decision. If it’s a mistake, it’s a mistake and they adapt,” the investor highlighted.

Even during moments of fluctuations in the market, those who choose to take action instead of sitting on their hands are the ones that get ahead as they continue to take advantage of opportunities and capitalise on the remaining potential for growth in the market.

According to Mr Gray: “I always say that there are five things people are waiting for to make a decision: they want high capital growth, they want high rental yield, they want low interest rates, they want easy-to-borrow money from the bank and easy-to-buy property. In my 25 years, I’ve never seen those five things. You’re never going to get them all at once.

“At the moment, we’ve got low interest rates, but we’ve got no growth. Borrowing is 60/40 easy, but it’s significantly easier to buy properties now.”

“The main thing is just try something. Just get out there and get involved. You’re never going to have a hundred percent knowledge but you just give it a go. It’s not that bad once you actually do something.”

In fact, during the global financial crisis between mid-2007 and early 2009, Mr Gray was able to buy half of the properties that make up his $15 million-portfolio today.

“For one of the properties, I was paying 10.5 per cent interest rates. I had to buy commercial because when you buy over three units in a block, they treat it as commercial. I made a million dollars doing a renovation in 3.5 months. That’s what people don’t get – it’s all about what your net profit is, not what you pay.”

As his portfolio naturally continues to grow in value, Mr Gray now spends a part of his time building a buffer that will allow him to hold his properties moving forward, while also giving him the option to buy more assets should he want to.

“I can afford to carry on. If I earn zero money for the next two years, I can fund my lifestyle, I can fund my business and I can fund my property portfolio… Should an opportunity arise, I can move really quickly because I’m cashed up and ready to go,” he concluded.

Tune in to Chris Gray's episode on The Smart Property Investment Show to know more about the secrets to succeeding in today's property markets.