2008 was certainly a time of change for the financial and property markets and also for many individuals and businesses.
In these times whilst fortunes can be lost, fortunes are also made and ‘favour the brave'.
Let’s take a look at some of the opportunities for property buyers in 2009.
We wish you a Merry Christmas and a prosperous 2009!
___________________________________________________________
The old adage "cash flow is king" certainly rings true in the current climate.
With mortgage rates in the low 5%'s (and dropping) and residential property rental yields at 5% and rising, the opportunity for property buyers to have your property return a positive cash flow has not been this good in decades.
And of course commercial property net yields are now 8% - 9% meaning that property buyers have a difference of about 2 - 3% between their mortgage rate and their rental return or $10,000 - $15,000 positive cash flow on a $500,000 commercial property investment. Add some depreciation to these numbers and the cash flow increases by even more.
Forget about chasing positive cash flow property in remote areas or mining towns when you can find them in the nation’s capitals and major cities. We are now seeing fixed 3 year interest rates at 4.99% and this is likely to fall further by Easter 2009.
In times like this where we have a gap in expectation between property buyers and sellers, those sellers who need to sell (or are forced to) are reducing their prices accordingly to meet the buyers.
Making Money in 2009
In 2009 finding the truly motivated sellers is the key to buying well and making money in property. It is really a numbers game – the more offers you make, the more likely you will find a motivated vendor that will say yes to your offer.
Most types of properties are negotiable at the moment and in most areas. People are generally cautious at present and worried about job security and are therefore holding off with their purchasing decisions. There are fewer property buyers in the market, so vendors looking to sell have to compete for these willing buyers and reduce their prices accordingly. And of course the property buyers that are in the market and not in a hurry and are being very selective with the property and price.
In the residential market, the below $500,000 range is offering property investor's 5%+ rental yields and we believe this area of the market stands a good chance of achieving capital growth over the next couple of years. This price range is still affordable to investors and first home buyers and with increased activity since the government increased the first home owners grant the number of sales in this range has increased.
So be very selective, ensure that the property ticks most of the boxes and make offers…. If you have the right information and enough time you can even buy under the property’s valuation price.
Negotiating tips for property buyers
The first tip of negotiation for property buyers is to find out what motivates the other party (the vendor or seller). Is it price or maybe a quick settlement? Successful negotiation is all about creating a win/win outcome.
Whilst you may not be able to offer the seller the price that they want, you may be able to offer them an efficient settlement (say 30 – 40 days). Some important questions to ask before negotiating.
• How long has the property been on the market?
• Is the vendor keen to consider offers or will they just wait for their price?
• What settlement timeframe would they like?
• Have there been other offers?
• My maximum budget is $........ - Is it worth me submitting an offer on this property?
When you are buying an investment property, do your numbers and set a maximum price that you will pay for the property.
Ask the questions above. If the vendor is not negotiable then quickly move on to another opportunity. However, diarise to revisit this property in say a month or so as time on the market tends to soften vendors expectations. We often have had offers accepted many months after our initial offer.
It is a buyers market so you are in the driver’s seat.
Serious Property Buyers have a good opportunity to capitalise on current market conditions.
The key for property buyers is to sift through the opportunities available and find the gems that are out there. This is a window of opportunity which buyers have not experienced in recent years.
__________________________________________________________
All the best for Christmas and the New Year
Prosper Group are the leading property buyers agent in Sydney and Brisbane.
Prosper Group are:
• Your Sydney Buyers Agent
• Your Brisbane Buyers Agent
• Your Commercial Buyers Agent
• Your Commercial Property Managers
