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The Time Value of Money

Its always better to buy the property today than waiting for perfect time in the cycle. It can make better financial sense.

Author: Rich Harvey

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In my previous articles I have raised the theme of property cycles and trends and the paradox of why so many investors leave their run too late and only buy when the market is high. Smart investors know how to make money at any stage of the property cycle. While buying the right type of property in the right areas is essential, the role of timing in your purchase can also make a big difference to your bottom line.

During a property slump, there are generally less investors competing with you. At the same time there may be fewer properties available to buy on the market which can tend to help hold up prices. In the Sydney and Melbourne residential property markets, home buyers have been the dominant source of sales in the last 2 years, although investors are now starting to re-appear as they are encouraged by the low vacancy rates which is pushing up rents.

Let’s consider for the moment the concept of “Opportunity Cost”. The definition of opportunity cost is the value of the next best alternative forgone. What does this mean I hear you say?......Well it simply means that if you do not make a decision to take a particular course of action, then you will suffer the loss of opportunity.

While some believe that opportunity only knocks once, I personally believe that you have to get out there and create your own opportunities! Knock on lots of doors and the opportunities will come flooding in! Don’t expect the dream deal, dream job or dream person to land in your lap without doing anything. There are specific steps you need to take to make it happen. Employing a buyers’ agent to leverage your time, money and negotiating ability is an excellent first step. When purchasing property, you will need to get your finance pre-approved, target your research areas, develop a shortlist……in fact there are 14 key steps you must take to succeed in optimising the outcome of your property purchase (for a home or investment property). A buyers agent can make this process simpler and clearer for you.

Buying an investment property now (particularly during a downturn) can make excellent financial sense.

The capital growth rates but could mirror what has happened over the last 2 years with low growth rates in Sydney and Melbourne. However, if the capital growth rates for the first few years started to rise due to significant shortages in construction starts or extremely low vacancy rates (as is the case now), then the opportunity cost would be much higher.

While the actual figures are very important, developing the mindset of a successful investor is also crucial.

So take action today and buy a well positioned property than wait for the perfect time in the cycle. The opportunity cost if you wait is too high. Consider refinancing and releasing the “dead equity” you may have in your existing home or investment properties to safely leverage and get your money working harder for you.

About Author

Rich Harvey, the Managing Director of Propertybuyers help people in buying property in Sydney Property and act as buyers representative. For more information consult the

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The Time Value of Money