~ Originally published in the Sunday Business Post, 11 November 2012
Earlier this week, I was delighted to attend my first investor forum since 2008 – Horizon Speakers. Over the last few years, support has been offered to struggling homeowners or distressed landlords as they waged battle with developers, or even for developers as they waged battle with the mighty NAMA, but nowhere during those years did I see support forums for investors looking to get involved in the property market. There was not a huge crowd in the room, less than 50 people, all with money to invest. Either through pension funds or cash lump sums, each person in the room had money and fear – some in greater quantities than others.
There was initial discussion as to the various assets classes, with precious metals, stocks and shares, businesses and property being considered. It was pointed out that when it comes to money, leaving it in the bank or failing to make it work for you is actually a decision, arguably not a wise decision but a decision nonetheless. What amazed me about the gathering is that, through an impromptu show of hands, it became clear that many of the investors present had taken a hit with property in recent years – some even winced as they raised their arms and glanced sideways in solidarity. But they turned up to this event. They want to get back into the market and they feel now is the time. What has changed for them is they no longer have the over confidence that fuelled speculation throughout the boom years. Both home buyers and investors now seem to understand the importance of buying well. There is no longer the assumption of easy capital appreciation to mask bad buys. Yes, it is somewhat therapeutic to blame the government and the bankers, even the mortgage pushers and estate agents for the crash but the reality is, buyers bought and speculators speculated. Mistakes were made and paid for, albeit not by the same people… But the market moves on and those driving it forward now will be the well-meaning first-time buyers caught up in the rush to avail of the remaining mortgage interest relief until the end of the year and investors returning to the market. Those returning will have learned a lot. The power of teams in this sphere has never been so important and buyers realise it.
I have always been an advocate of teams when it comes to either buying or investing in property. For home buyers, particularly first-time buyers, the right team will provide a professional sounding board and enable inexperienced buyers to make the right decisions quickly. For investors, teams are a more vital component in the eventual deal. Few investors have escaped the effects of the recession entirely but many who acknowledged the changing environment early, found ways to adapt by minimising exposure and managing the losses. Irrespective of the level of experience that a buyer may have, the market has changed dramatically over the past decade and it continues to change on a weekly and monthly basis. Up to date knowledge, industry insights and access to the right information and advice helps buyers to navigate the buying process effectively.
The team is merely a reference the circle of advisors that a buyers will need at this time. There are no group meetings or formal set-up. This will vary from one buyer to the next, depending upon their experience in the market, knowledge of the industry, levels of capability and expectations from the property. It is not necessary that the various professionals know each other or are in contact with each other; however, sometimes one will be referred by the other and a good working relationship between them might actually benefit the buyer further. The professionals that comprise a buyer’s team might be a financial advisor or mortgage broker, a house hunter or deal maker, in some cases an architect, an engineer or building surveyor, perhaps a building contractor, who has access to the various tradesmen that might be required, and a conveyancing solicitor. Having a good working relationship with all of these property specialists will make the negotiations more successful, and the whole transaction more efficient for the buyer. It should also save the buyer money by accessing off-market properties, receiving practical market advice, avoiding the classic mistakes and benefiting from the teams suppliers and trade contacts.
The new reality of the market means that buyers cannot afford to sit back and let the purchase happen; they must take responsibility for the investment they are making in their new property and that is equally true for home buyers. Finally, friends and family who have purchased property in recent years will be in a great position to share experiences, give first hand advice and refer property services. A sensible strategy for buyers is to take the advice, listen to what is being said and then make the decision that is right for them at that particular time.