_{1.25 – Dave opens the episode with a cautionary tale, a great listener question}

_{4.15 – Mike dares to ask if it can be assumed that houses will continue to outperform apartments}

_{10.32 – Long term hold is a key part of many successful investor’s strategies. Mike elaborates on this, and Dave sheds light on the value of selling/buying simultaneously}

_{16.40 – Is rent-vesting an option for Daniella’s family?}

_{22.40 – Next week’s teaser… The May monthly market update: what are the investor numbers telling us about the various states and territories?}

_{28.20 – Mike shares some interesting ABS stats about rental stock figures in various states, and the relevance it has to rent-vesting}

_{36.46 – Gold Nuggets}

Dave opens our episode with a cautionary tale. We are grateful to our listener, Daniela who wrote to us about a challenging experience she and her husband had with a purchase she described as a “lemon.”

After having bought a house and land package in Perth that delivered underwhelming capital growth performance for nine years, Daniela and her husband chose to sell the asset when moving to Melbourne for work. Sadly their timing wasn’t great and they feel they missed the full cycle (home, upgrade, downsize). Now they find themselves with $110,000 in savings, a limited array of property options that appeal to them, a student son living with them, and a dilemma on their hands. Do they buy a house in the outer suburbs or consider apartments? And if they can afford two apartments instead of a house, will this help them gain a better financial position?

Mike and Cate tackle the houses vs apartment outperformance question. Cate steps back to the heart of the listener question and suggests that finding a suitable home should be the primary focus at this stage, (as opposed to their appetite for capital growth outperformance).

Four unfortunate headwinds have compounded the issue for the couple now, namely;

• their timing with the Perth market was unfortunate
• markets are cyclical and managing market cycle risk is always a challenge when buy and hold timeframes are short
• house and land packages are notorious for underperformance due to the lower Land to Asset Ratio
• Melbourne’s broad property value is still greater than Perth

“Over the previous ten years, Melbourne prices grew 96 percent, yet Perth prices in the same timeframe only delivered eight percent.”

From managing simultaneous sales/purchases to strategising a surprise interstate move, Dave touches on some of the important elements for buyers to consider.

Daniela and her husband sold the house in Perth, but could have they had a better long term outlook if they’d held onto Perth? And should they be buying in Melbourne now that they have moved there? There are a lot of questions that the Trio bring up for our listener couple to think about.

Daniela has nominated two options that she feels could be feasible, but why does Cate suggest that she could be on the wrong track? And what other options could be viable? Tune in to find out…

Stage of life is very important when it comes to determining a property plan. The Trio discuss the next items for Daniela and her husband to canvas in relation to their strategy.

“If they are focusing on Melbourne as their forever place, there is a silver lining. The market has stood still for them”, says Cate.

…. and our gold nuggets!

Mike Mortlock’s gold nugget: “Avoid perverting the course of what you are trying to achieve with dual ambitions.” Having a clear strategy on a primary requirement can mitigate this risk.

Cate Bakos’s gold nugget: Only once you trigger a sale event is when a result is crystallised. Cate recommends buyers seek professional advice before triggering a loss or a gain.

Resources:

We have some articles and blogs relating to this episode below.

The Perils of Timing the Real Estate Market in Australia

The Hidden Risks of House and Land Packages and Off-the-Plan Purchases

Buying and selling a home at the same time

If you enjoyed this episode, you may also enjoy these:

• 12 – Property Cycle Management – why now is always the best time to buy if it suits your personal economy and you have a long-term property plan
• 13 – How age and stage of life can impact your property plan and selection
• 19 – Time in the market vs Timing the market
• 37 – Needing to sell property too soon – No. 7 of the top 7 Critical Mistakes
• 58 – Off the plan purchases – Everything you need to know. Part 1: purchase through to settlement
• 59 – Off the plan purchases – Everything you need to know. Part 2: The financial drivers
• 174 – Listener Questions – Bought off the plan- my situation, rates & the market is worse, I need the FHOG, but moved in with my partner, help! Is it a good time to subdivide? Suburb analysis and more