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Surviving West Sydney’s Real Estate Cycle

It’s been a long time that Philippine community identity in Sydney Mr Joselito “Lito” Cruz had been aching to impart to Filipino real estate buyers his “pain” of seeing a number of friends literally burnt out in their investments because of the business cycle

Mrs. Cruz had been a long time building inspector in Western Sydney and had seen the change of investment tides in the area’s time of booms and busts since the 1980s’.  On a number of  occasion, he tried to publish his brotherly advice to some kababayan, not merelyas investment advice, but in his words some common sense to  follow.

He thus wrote to me: “Thanks you very much if you can give me the opportunity to publish my humble contribution to the community. The  aim of this publication is to avoid disaster in the residential property investment. consequently bad history will not repeat itself. .

If the  Australian Filipino community can profit from this article, we can do more charity. The Filipinos in our beloved homeland can benefit more. More power to your successful newspaper!!!!  Jo Cruz

Jo Cruz article follows:

PROPERTY INVESTMENT !!!  – During the last property boom sometime in early 2000 a lot of Filipinos made a lot of money but at the same time there were  also a lot  who lost a lot of money from that housing boom.  Some became bankrupt though they invested during that property boom. These happened due to emotional decisions and some fundamentals neglected. Surprisingly, most of these people who lost in property investment are professional academics and “scholastically intelligent.”

I am NOT AN EXPERT OR LICENSED in property investment. However, I could share my observations and experiences in property investments  especially to the investors with small capital.

There are a lot of systems or many ways of making money in property investments which are not being discussed here. In my opinion if one follows this guide below, one is on the safer side.

However, in my opinion to minimize or avoid loses and most probably make good profit, the following things below must be considered. Get a professional advice from experience successful professionals before investing.

1)      Be logical. Buy property investment logically rather than solely on emotion. One must also have a) Knowledge about property in the market, b) Plan & Strategy, and c) Finance.  Be logical also when unloading your investment.

2)      Good value. Buy a bargain residential investment or good value investment with good potential. Know why the house owner is in distress and the house being sold below market value.  Properties sometimes are sold lower than its market value for a lot of reasons. (When buying, good value house in distress, the ugly house as a rule can make more money than a pretty house.).

3)      Maxi-Mini. Maximize the use of the house and the land.  Subdivide the land or maximize the house rent by house partitioning or adding a room or convert the house into different use. Minimize or economize the renovation expenses & minimize extent of renovation. Do not over capitalize. Sometimes one can create a manufactured capital growth.

4)      Cycle & Ripple effect. Know the residential property market cycle compared to a clock. Know when the property market is near the bust. Contrary to ordinary belief that no one really knows when the boom cycle will finish there will be indication. However, note that it is important to know that money can be made in property in any cycle. ”Ripple effect” – property booms in one city then follows regional areas and interstate.

5)      Advice. Get an independent advice from someone who’s got good hands-or experience in property investments. Get advice from a practicing licensed solicitor, a practicing licensed accountant and Building Consultant. These professionals must all well verse & successful in property investments.

6)      Way out. When you enter the property investment you must know a good way out or way to sustain the property investment in case of financial trouble like if you lose your job. One must manage the portfolio well.

7)      Positively geared. Most of the time it is good to have a positively geared property. During financial crisis you may be able to hold the property. Consult an independent accountant who has no vested interest. Some accountants get sales commission.

8)      Financial position. Know your financial position so you know what you can afford. Note that sometimes “the house can pay by itself”. Minimize the loan repayments. Do not buy what you can’t afford but surprisingly with right investment attitude we can afford what we think we cannot afford.

9)      Money is not everything but try to live without money. What is money and its importance? Why do you want money? Maybe we can do more charity? To those who have not invested what are your obstacles why you hesitate in property investments?

10)   Good purpose in life, raise the comfort zone (more positive action needed) and good discipline. The investor must have those traits.       I think it was the wise King Solomon who said “You must look into the matter well”. The bible has topics on how to be successful in life.

Take care and good luck!  I can say “If all my friends, relatives & acquaintances have listened to me before they would have extra million dollars or some could have been saved some from big loses and bankruptcy.  Hehehe! Sorry bato bato sa langit tamaan wag magagalit!   Joe Cruz