Have you been thinking about buying a residential property?
Are you wondering what the rules are that other people seem to know which you don’t about making an investment work for you.
Let us look at some advice which was given to my Father by the 1923 President of the Real Estate Institute of W.A. who was his employer.
 

“Nobody ever went broke making a profit”.
The dressed up, wordy, modern approach to this would be;
When you buy an investment, decide how much return you would be happy with, then don’t become greedy once your return passes this figure. Be prepared to sell at that price or above, a bit like placing a sell order on a share once it reaches a certain value.
 

“Leave something for the next bloke.”
Don’t try to get the last ounce of juice out of the orange. I have seen many owners continually buy their property back from the buying public because they insisted they could pick the top and the bottom of a market. They NEVER do. One of Perth’s best known valuers told buyers to stay out of the market in 2004. It ran on for 2 more years at least. If he can’t pick it how can you.
 

“Get in to real estate son, they’re not making any more of it.”
I was told about blocks of land my Father could have bought in Applecross for 48 quid (pounds) or (96 dollars) just after WW2.
 

How about some advice from the owner of one of W.A.’s franchises of the past?
He has never sold any property he has bought UNLESS he bought the property to redevelop and even then, if he built three units he would probably retain one.
By the way this relates closely to the policy of Warren Buffett.
 

So what about my own experience in 25 years of studying investment in residential real estate?
First, a broad statement which for some of you may seem too simplistic.
Successful investment of all types is the ability to hold assets over time.
This is true for real estate, shares, diamonds, gold, paintings, etc.

The most successful investors in real estate…..
Buy when everyone else is selling.
Sell when everyone else is buying.
If they get out of step they wait.
 

How long?
For as long as it takes as they have chosen their investment carefully and know that their investment will increase in value in time.
 

Always has, always will.
How long should the ordinary buyer plan to hold a property to ensure they make money? If it was me I would plan for a minimum of 7 years which is usually enough time to ensure we have come through a long enough cycle to ensure a happy result.
 

Can you get in and out more quickly?
Yes, but recognize that you are now speculating and not investing.
The returns are probably better for speculators in investments other than real estate
 

Ross Cutten Director Noble Real Estate