Getting The Timing Right When Investing

As a fellow Canberran, I always watch the local property market with avid interest. I like to see how media reports reconcile with what I am hearing and what I actually see going on. Sometimes the media reports seem on the money, while at other times, I think there is a little bit of ‘wishful thinking’ and trying to bolster the sentiment in the market. Either way, its all just opinion.

I think one of the issues that many people thinking about real estate investing are really fixated with is ‘when is it the right time to buy a property?’. When you work hard to earn your money, the last thing you want to do is over pay, or buy into a market that has hit its top.

The first comment I’d make is that it is really important to take a medium to long term view of investing in real estate. If you are ‘trading real estate’ then I completely understand the perspective that timing in the market is important. This strategy, however, is more speculative and falls outside of my definition of property investing, which is really buying an appreciating asset for long term gains.

One of the most exciting things about Australian real estate and why it is so attractive to many overseas investors is that it is relatively stable. The history of the Australian property market is that it moves in cycles. That is, you see a period of growth, followed by a slowing, perhaps a period of flatness or minor decline, followed by more growth.

The critical factor in assessing a market for opportunity is more to do with its potential growth over the long term. Research and analysis of opportunities should take in a number of factors, and people who are good at this are able to identify markets that are set for a big surge in growth. Having said that, regardless of what a good market is doing, the question is, how can you exploit it?

Trying to figure out when you can snare a bargain, or whether you think you will be overpaying is obviously a consideration, but in my opinion, not necessarily a deal breaker. Property investing in any market should be based on evidence that over the long term, the property will be highly sought after and therefore will grow in value. It is about trying to understand and look at the trend of the supply and demand.

For example, in a soft or stagnant market, savvy investors will be looking for opportunities to snap up properties that are being sold at a discount, or where they can quickly add value to manufacture profit. They aren’t scared off by what the market is doing right now. They are looking into the future.

What I keep hearing from people I know who are renowned as having amassed great fortunes through real estate investing is that the single biggest factor to success in property investing is not about getting the timing 100% correct. It is time in the market.

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