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PHILOSOPHIES
* Investments in Cities vs Coasts
* Below market value investments
* Below market value today vs future
* Buyers and sellers markets
* Compound capital growth
* Fees vs Commission
* Finance vs Growth
* Power of finance
* Growth vs Discount
* Location, Location, Location
* Rental market oversupply
* Speed vs Caution when investing

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Property Investment Philosophies


Which is better - buying BMV today v future potential BMV?


We're talking about price and locked up potential in a market for price growth.

Is it better to buy in a market today, perhaps with a discount, that is growing nicely but may slow down ... or buy at a good price in a market that has a lot of potential for future growth?

Buying, at a good price, in a market that is already growing is a low risk option that will provide good returns. Relative to the market you will be able to find good deals and still get good growth.

However, if one can identify a property market that has a lot of growth potential (for whatever reason) stored up in it but most people haven't realised (ie principally other buyers and sellers) it yet, this can be a great way of achieving high returns. You just have to have faith in your analysis of the market and be prepared to be patient for the growth to come.

In a market where prices haven't yet taken off but affordability is high you will still be able to get very good prices from the sellers and as the market takes off enjoy the growth on your investment.

This often requires a lot of good timing. A market may have a lot of potential but if no growth comes for several years then there is no point having your money in the market. The lowest risk approach to this strategy is to wait until the very beginning of the take-off period, where good deals can still be had, but you know that the growth is starting to happen.

Essentially this is value investing.

An example of where people can get this wrong is the German property market currently.

Yes property in Germany is cheap, especially compared to most other European countries, but there are very good reasons for this (high tax, high unemployment, low confidence, poor economic growth, high regulations etc). Thus after 10 years of decline the German property market will at some stage pick up, but it could be another year or 5 years before this happens until that time i'd stay well clear of it.
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