This means that the strategy we ' ve been following over the last few years of only buying properties in new developments must change . The savvy investor must adapt to the current economic climate , as one would with any investment portfolio .
“ You always want to have properties you can refinance in your portfolio to take advantage of OPM , that ’ s Other People ' s Money .”
Unfortunately , at this moment , all refinance-type properties ( new development properties ) will probably be cash flow negative . We must now be wise and alternate our purchases between positive cash flow ( provider-type ) properties and refinance-type ( high capital growth ) properties .
A change in strategy is not bad news ; some parts of our country still have strong buyer ' s markets , so good value buys are available if you have the right team looking for the right deal for your needs . The higher interest rate will also put some people under further financial stress , which will allow the investor to buy more distressed properties at bargain prices .
I think investors should consider buying one or two " provider-type " properties before buying another " refinance-type " property , at least until the market conditions have changed again .
If you are looking at expanding the positive cash flow properties in your portfolio or if you require an analysis of your current properties , please get in touch with us .
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SA Real Estate Investor Magazine DECEMBER 2022 / JANUARY 2023 69