How to break into the property market in a downturn
How to break into the property market in a downturn
CARLO MARIANI Founder - The Property Coach
The real estate market is going through one of the toughest periods post Covid , what is the most essential things right now that an inexperienced investor needs to know to break into the market now ?
Answer from Carlo Mariani of The Property Coach : Most people feel that the residential real estate market is going through a tough period simply because they focus the majority of their attention ( if not all their attention ) on house price growth . And that ’ s surely not doing that well for the last few months and quite likely for the rest of 2023 at least . But we must not forget that the health of the real estate market must be judged also by long-term property investors on the basis of rental growth . In actual fact rental growth is as important if not more important than house price growth to drive the profitability of the buy-to-rent model that is at the core of wealth creation using property .
And after two tough years since the inception of Covid , the rental market is showing some encouraging signs of an upswing . Recent data highlighted how vacancies are now at historically very low levels ; this will further support in the next 12-24 months robust growth in achieved residential market rents . And that ’ s great news .
That takes me to the first essential step that any investor need to take to start their property journey on the right foot in this market and in any market : a solid knowledge of the rental market in its supply and demand fundamentals in the specific geographical area and for the specific type of property investment you are looking to make . Do not even start to shop around for deals until you have an accurate picture of the rental market that you will be dealing with once you have purchased a property .
Secondly , an inexperience investor should be looking at making gradual steps into the property market . I am terrified when I see inexperienced investors wanting to get into complex and risky niches of the property market , like new developments and multi-let ; it ’ s like your first running race is the Comrades … good luck with that . Start small and be gradual in your approach . While you do not need to make all the mistakes ( especially if you seek the guidance and support of those that have been doing this for more than a decade ), you will inevitably make some mistakes . Keep those mistakes small
13 JUNE / JULY 2023 SA Real Estate Investor Magazine