I am looking to purchase an investment property in WA that is listed at $240,000. There is a lot of speculation that the housing market will crash due to mass unemployment in the mining sector.
Currently its a buyers market and I feel the power negotiation is on my side. However, if speculation is right and the market is set to bottom out in 12 months how can I protect myself whilst still pursuing this opportunity.
What is both a safe and reasonable % of the list price I should offer in a potentially dangerous market?
If you’re thinking the market is sliding, why not wait out until this eventual collapse? Else you may find you buy well but have any ‘profit’ eroded.
Obviously if you had the property purchased for an exceptional discount (20%+) that would likely insulate from any issues, but the chances of success are going to be a lot lower than lowballing in an already declined market.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Best to offer what YOU believe it’s worth rather than what it’s listed at.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Sam,
Like Corey, I’d say “Don’t try to catch a falling knife!” Let it get all the way down to the ground, THEN pick it up – it is safer that way.You didn’t say WHERE in WA – if the one you are looking at is in one of the mining towns, be VERY aware that a decision from YESTERDAY has Banks reducing the LVR of a loan for some particular postcodes. Nothing new there, except that the CBD’s of the major cities are “black-listed”, as are several MINING TOWNS. So, if you are looking at buying in one of them, you MIGHT have to come up with a 30% deposit !!
If looking elsewhere though, just run the numbers as you would for any IP. If the numbers say “Good deal”, then it is worth pursuing. The more info you can add (without giving the game away) the better the answers can be.
Benny
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