How to Lose Money in Real Estate [Parody]

8 November 2021

If you are sick and tired of making money from real estate and seeing constant success stories all through the media. What to learn how you can lose money in real estate? There are certain steps that you can take to ensure that you lose money. Sydney property prices have had a strong thirty-year surge and it’s quite difficult to lose money when the whole market rises. However if you follow all these steps there is a good chance that you could end up in the red.

Step 1 – Buying

An important part of the losing money process is made at the beginning when you initially buy your property. Now, it’s easy to say just to pay more at the start but that is not in keeping with the spirit of this piece. Let’s elaborate on what moves you can make to improve your chances.

Buying a property that is identical to another. High-rise developments with over one hundred units in the block are ideal as there is typically high turnover throughout the year and apartments compete to sell. There is also more accurate comparability between these apartments. So it’s difficult to justify large gaps between prices especially when everything else is the same.

Buying a property that no one wants. Sometimes there will be a property that has been on the market for so long. It has had so many price reductions that it has gone completely stale. There are no other buyers looking to purchase it. Perfect! These are bargains for a reason. Buying a property with no competition ensures that when you sell it, no one will want it.

Don’t use a Buyers’ Agent! Remember no one knows the market better than you.

Step 2 – Selling

Ownership is generally the longest part of buying and then selling process. It’s important you keep the property as it is and general maintenance to a low. Over the course of ownership, which can be from years to decades. People’s immediate housing needs change From seventy years ago from working at the factory to now working from home. Technology and improved building techniques influence how homeowners can utilise a small space to maximise its utility and amenity to the fullest. This is something that any homeowner with means should choose to ignore.

A key aspect of any property purchase is making mortgage repayments. It’s not as easy as you think to be able to borrow as much as you would like to place yourself under financial stress as lending institutions must ensure that you are able to make the repayments. After you have secured the loan. Overspending on things you don’t need is a sure-fire way to ensure that any change in income or interest rate movements will place undue pressure on you in your ability to make these repayments. Which could force you to sell your property at an optimum slump period in the market.

Selling right after buying is a great way to lose money. There have been recent stories in the media of couples and families making huge sums of profits buying and selling in a matter of weeks. These are extraordinary one-off examples in a vendor’s market. These stories do fail to include the frictional costs of buying and selling property which include transfer duty, buyers’ agent commission, sales agent commission, mortgage break fee, marketing costs, moving-in costs and legal costs etc. They also tend to neglect that by the completion of the transaction, they are still without a home and with less money than what Channel 9 televised that would have and could already be priced out of what you are looking for in a market that has experienced exponential growth.

Holding on to the property for a long period of time is a way not to make any capital loss at all, as the market naturally progresses higher year by year. Buying and selling quickly is a great way to ensure the government gets its taxes, the lawyers get their fees and the agents get their commissions leaving very little capital gain left.

Step 3 – Avoid Claiming the Principal Place of Residence Exemption

The final piece of the puzzle lies in the selling. You only lose money in real estate when you sell. A lower value on paper does not mean a loss. If you completed the previous steps, most of the hard part is done and now to bring it through with a poorly planned sales process.

Marketing photos on a 2013 Nokia then posted to Gum Tree, is a good start to quell buyer interest. Quote unreasonably high, to scare any other interested parties. Remember, we need to sell, a failed campaign does not work. The marketing should be focusing on targeting a very niche part of the market with very few buyers rather than a group that would drive competition amongst the parties. Finally, accept any offer immediately without consulting other buyers, a quick sale is always a good sale.

This piece was written as a parody and should be treated as such.

P.S. There are plenty of other ways to lose money in real estate

Alexander Gibson

Have you lost money in real estate?

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