There are two kinds of bargains in this world and the editor of Australian Property Investor Magazine explains it well. “One is the kind that’s so cheap it’s difficult to resist, even though it’s destined to be a dud. The other is the kind that’s such a good deal, it puts you ahead from day one.
It’s important to know the difference when it comes to real estate, because getting it wrong can have serious financial consequences. The golden rule to remember is this: just because it’s cheap doesn’t mean it’s a good bargain!
There are plenty of investors who have been burned by the wrong kind of bargain; the kind that was so dirt-cheap it seemed too good to be true (and it usually is). A lack of infrastructure, services and amenities, a poor location and a dwelling in serious disrepair (in other words, a money pit) are some of the reasons why a cheap property can be a ‘bad’ bargain, because these factors hold it back from appreciating in value and can leave you out of pocket. But there are also plenty of investors who have been elevated to the next level of wealth on the back of a genuinely good buy; where they were able to acquire an asset for below market value and achieve instant equity with the prospect of capital growth.
Once you understand the difference between a good bargain and a bad one, the next step is to learn how to find the good ones. It’s here the oft-quoted property phrase ‘you make your money when you buy’ becomes a reality.
To get you started, this month’s cover story on page 38 offers 11 easy-to-follow tips that will give you the confidence to score yourself a hot property investment in today’s slowing market, where opportunities for great buying abound. We’ll also tell you where sellers are discounting their sale price by hundreds of thousands of dollars and more!
While some folks hold a negative view of a cooling market, contrarian investors know the opposite is true and will take advantage of today’s conditions. Remember, when the market gets stronger (as it inevitably will as we move through the property cycle), so too will competition.” Extract from the API Magazine newsletter written by Eynas Brodie, Editor, API magazine.