Too many investors are ‘following the herd’ and failing to identify the real up and coming growth locations, according to a Sydney-based buyer’s agent.
Todd Hunter, director of wHeregroup, said this trend wasn’t exclusive to novice investors.
“Investors in general tend to follow the herd when choosing a location to buy,” he said.
“Market timing is everything – you need to find great areas that are not currently performing due to where they are in their property cycle. Buying in a property trough or emerging market means you have little or no competition and many desperate vendors need to sell their properties for whatever they can get.”
Mr Hunter said too many investors seek out suburbs that are already on the rise. Instead, he said, he seeks out areas which have been declining in median value for three to five years and searches for evidence that this trend is about to change.
Investors then also need to know how to identify the right properties, vendors and estate agents to approach, he said.
“I look at a whole bunch of suitable properties that I would consider purchasing,” he said.
“Then, say I was potentially interested in 10 properties, I would put in low offers on all 10 of them. And the best way for me to buy below value is by really low-balling. Then you wait for the real estate agent to come back and say 'Look, the vendor won’t take your offer but let’s negotiate'. And that way you know you’re going to be buying well below market because they’re a desperate vendor who needs to liquidate and get out.”