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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


Does a discount matter in a high growth market?


Obviously its better to get buy a property with both a discount and in a high growth market.

But given the choice between the two which one should you give the most importance to?

Well it partly depends on your investment strategy and just how big the discount is and much the market is growing.

In the initial stages of an investment a discount is important because whatever happens to the market you are more likely to be able to get your money back from your investment if you bought at a good price in the first place.

The medium to longer term in any reasonable high growth property market the real money will be made by the market growth and not so much by the amount of discount you achieve.

If a market is growing at 2% per month and you have the possibility of buying a property with a 3% discount but you decide to wait another month for a property with a 4% discount ... by the time you achieve your higher discount of 1% the market will have moved 2% and thus you are worse off.

If you compare two properties, one with no discount and one with a small discount such as 3% but the first property is in a market with 2% higher growth then shortly after the first year of ownership the first property will provide the investor higher returns. This effect is particularly magnified with the use of higher LTV finance.

Whether the discount you achieve is indeed a real one is another issue.

One of the best ways to super charge your investment returns is to achieve both a real discount in a high growth market.

Please download an example spreadsheet which shows the returns made with different growth / discount combinations.
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