Tuesday, 9th September 2008

The biggest property market dilemma!

Written by George Traganidas Topics: Property Investing

I have spoken to a lot of people about the property market in the UK and most of them seem to be caught in the eternal dilemma of buying or waiting for things to get better. Of course, the funny thing is they all say that this is not the right time to buy. They say that all the time. If the market is going up they wait for it to go down. If the market is going down they wait for it to go even further down. I think that what they lack is the gut to act and the knowledge on how to invest.

People wait for property to get cheaper and then they will buy. They wait for the prices to hit the bottom and then the great opportunity will appear. The fact is that they will never know where the bottom is. Usually they miss it and they start to buy when prices start to increase again. After a few months, you hear them say “I should have bought earlier”. Yes, you should.

I think that any time is a good time to buy. The reason is that you need to know what you are looking for. What I look for is a property where the numbers make sense. I can find this kind of property when the market is going up or when it is going down. I do not care what the market is doing. When I find the deal that makes financial sense I will buy it. Then I will wait and wait and wait. And I will make money by releasing equity.

There is one big point here that might help people who are worried about the market going down. Who is affected by the market going down? Think about it. The people who are affected are the people who want to sell. If the market is going down they will sell for less than what they bought and they risk of getting in negative equity and not covering their mortgage. So, if you do not sell, why would you care if the market is going down? You bought a nice property that makes you a bit of money each month. You just wait till the market goes up and then you make more money by releasing equity every year.

So, as long as the property makes sense financially buy it regardless of what the market is doing. Buy it and wait. It will make you money and it will keep rising in value. To paraphrase what Warren Buffett said “If you buy a burger today for 1 dollar and tomorrow the burgers are 0.80 dollars will you feel bad about it? No, you buy more burgers tomorrow.”

In following posts, I will go into more detail about what I mean when I say that property must make financial sense.

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