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Hi Team,

 

I feel it's time to take a left turn and go back to a topic that I really love and is an intrinsic part of who I am, real estate.

 

A couple of years ago I wrote a series of emails about financial intelligence (# 19 through to # 31) where I covered topics such as money management, taxation, superannuation, and property investment. (If you have recently come on board and you missed reading these previous Weekly Emails, I highly recommend doing so).  But the current hot topic (other than vaccinations) is real estate!

 

"There is something permanent and something extremely profound in owning a home." Kenny Guinn

 

Right now it feels like we are in the "perfect storm of real estate" and Maryanne and I are living it day to day.

As previously mentioned, we are currently in the process of selling our St Kilda house. We are two weeks into the campaign and the amount of online publicity and attention the property is getting is quite amazing. For example, there are two different videos that have already been viewed over six and a half thousand times and four free feature articles have been released across numerous online platforms.

But more importantly, both of our adult children and their partners are currently trying to buy apartments. To say that they are experiencing significant challenges and fierce competition is unfortunately an understatement.

 

From my analysis the key factors that are creating the current perfect storm of real estate are,

1, Record low interest rates and no sign of them increasing.

2, 12 months of pent up demand, due to last year’s Covid shutdowns.

3, An intense local focus because no one can travel overseas, everyone is holidaying locally and trying to create their ideal lifestyle.

4, Working from home has greatly increased the meaning and personal value of your home and your surroundings.

5, Short term buyer confidence from the government's economic stimulus packages.

 

"Find out where people are going and buy the land before they get there." William Penn Adair

 

Maryanne and I have bought and sold approx. 30 properties over the last 37 years and I feel that I have learnt a bit about how to succeed in the property game (even though I am still surprisingly bad at Monopoly). So, I feel that the best bits of parental advice I can pass on to my children and to my readers are my "Pearls of wisdom about real estate”.

1. You make your money when you buy, not when you sell. (This concept takes a bit to get your head around and could be a good future email topic)

2. Land appreciates in value over time, but buildings depreciate in value. (Unless it is a period building with significant features)

3. Always buy a property with some obvious room for improvement.

4. Always buy a property you would be very happy to live in yourself, even if it is purely an investment.

5. Only buy into small apartment blocks, (i.e., a maximum of 15 or 20 apartments, but ideally less).

6. Never buy "off the plan".

"Real estate cannot be lost or stolen, nor can it be carried away." Franklin D Roosevelt

 

Thanks for reading,

Stay safe and secure,

David.