Property market review 2018: 5 secrets to success for investors

2018 saw unpredictable market movements as Sydney and Melbourne come off the top and start to experience consistent declines, but through it all, some investors thrived and ultimately succeeded in growing their portfolio. Find out how they weathered the ‘stormy market cycle’ this year:

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Considering all the changes that the Australian property market has gone through in the past 12 months, from the tightening of the lending environment to the softening of once-premier markets, there are five simple strategies that worked best for investors, according to Right Property Group’s Steve Waters and Victor Kumar.

One of them is cash flow management and liquidity, Mr Waters said.

“Investors have taken it seriously and they've been able to track their portfolio through it. They've sought the right advice but they've also been investing time into their own numbers.”

“Whether they've come up with it by themselves or whether they've taken counsel, they've kept their cash flow clean and lean, they've got adequate buffers in place in terms of cash flow and capital and they are patiently waiting or the next opportunity,” the property expert said.

Borderless investors have also taken the spotlight this year as they seek opportunities across emerging markets instead of staying safe in their own backyard or following trends.

The rise of technology in the property investment landscape allows investors to educate themselves better and ultimately consider opportunities further away from their hometown or areas where they have always been investing.

According to Mr Kumar: “That's the pro of social media—it’s an education platform that helps investors avoid educating themselves by books that may become out of date really quickly or get pigeonholed into a particular strategy.”

Easier access to education has helped investors be more confident about making smarter decisions for the growth of their portfolio.

“Our scope and our ability to invest has improved because the mindset and the education [of investors] has changed. A lot more investors are getting into multiple property ownership without compromising their lifestyle.”

Apart from cash flow management and borderless investing, one of the best strategies implemented by successful investors this year is ‘sit and wait’, according to Mr Waters.

As major property markets soften, it turned out to be the smarter option for some investors to sit on the sidelines instead of actively buying—a strategy that takes as much confidence and sophistication as other active investment strategies.

“This is sort of connected with having good cash flow management and knowing their situation. They don't feel obliged or pressured to buy when they don't think it's the right time to buy because they're not pegging themselves against other investors. Some of the best investors I've seen have had the confidence to make that decision.”

Ultimately, amid a changing property market, investors who are able to adjust strategies accordingly based on their personal circumstance and the movements of the market have won the game in 2018.

Mr Kumar highlighted the importance of creating value that will serve to protect the deposit no matter the movements of the market. If the cash flow is stable and secured and the necessary buffers are in place, investors are provided the flexibility to adjust their strategies and make decisions that are in tune with the market, all without having to compromise a comfortable lifestyle.

Investors in 2018 have started to go with more non-traditional strategies, such as purchasing renovator’s delight properties instead of pristine properties and buying through self-managed super funds (SMSF), in order to continue their wealth-creation journey in the changing market.

“It's all coming back to education and better awareness to maximise opportunities,” Mr Kumar highlighted.

Finally, the best investors of 2018 were able to think forward instead of being stuck worrying about the softening of the property market. For them, the current movements of the market are part of a normal cycle—it’s all 'business as usual'.

Above all the unpredictabilities, it’s important for them to take control of their future by working towards becoming financially free, Mr Waters said.

“They're actually wanting to take control of their own future and not being reliant upon the government or the small amount of super that they have,”

“They want to actually want to take control, whether through property shares or property. They want to do something for themselves rather than just be sitting back and waiting for something to happen,” he concluded.

 

Tune in to the first episode of the third season of Investing Insights with Right Property Group to know more about the highlights across the property investment landscape in 2018.

 

 

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