Don’t Get Wiped Out on Wave Two…
Our winter solstice is behind us and it’s all downhill from here, right!? Days should start getting longer and while we are still feeling it getting colder, it’s the light at the end of the tunnel of winter, right?
Our favourite pandemic though, seems to be the gift that just keeps giving. Northerners or Westerners reading this email better be careful, it comes from Victoria, Australia’s Coronavirus hot spot! 😉
Anyhow, I digress…
While we are seeing lockdowns releasing in the US, and even here in Australia (except for Vic) the ‘second wave’ panic is already starting to set in, both here in Oz and in the US. Once again, we are seeing supermarkets in Victoria set purchase limits on products such as toilet paper, rice, long life milk etc…
In the US, while restrictions are easing, the economy is so highly stimulated, it appears to be difficult to actually get anyone back to work… With almost $900 per week coming from state and federal governments as an unemployment benefit, it seems a lot of workers are electing to stay home rather than return to work and earn less.
Lenders, particularly private equity funders are bleeding, with the government giving borrows a ‘holiday’ on their mortgages (this includes private equity mortgages) but the private equity firms are still expected to pay their investors their returns, while their borrows don’t pay their payments… ouch! Liquidity in the market has completely dried up.
From a property standpoint, there really appears to be in trading terms, a bear trap appearing. For those not familiar with the term in trading, this is where a market falsely exhibits a rise or fall to lure unsuspecting traders into a certain position (either long or short) and then quickly reverse.
In this case, investors need to be careful not to be lured into bidding wars and paying over and above list prices just to get a property, but pay too much in the interim.
I still feel, after the stimulus packages run out, and the life support for both our economy and the US economy is switched off, there is going to be some pain.
Patience and dedication to a sound investment strategy is key here. Don’t allow an ‘auction’ mentality to draw you into paying more than you expected for properties. Hold firm to your strategy, and keep looking. Frustration at not being able to snatch a deal right now, will be replaced in a few months’ time, with deals being thrown at you…
While we seem to be stuck in an episode of The Twilight Zone (for those that don’t know my reference there, ask your parents) with the economy’s so high on stimulus right now, this will come to an end.
In the meantime, there has never been a better time to get yourself set up, learn all you can, get your team on the ground in place and be ready to pounce…
Timing will be critical, so be careful not to be caught short, scrambling when the deals are really there – preparation is the key!
You got this!
Happy Investing all and have a great weekend!!