Balancing Supply and Demand for Profitable Long-Term Property Investment Choices
What other real estate would you want to buy aside from scarce rare earth? These are the final parcels of land that exist in regions where demand for property far outweighs (current and future) supply.
Renowned Sydney-based investment advisor Tim Murphy offers four key pieces of advice to help property investors across Australia below.
• Understand what scarce rare earth real estate is.
• Achieve a balanced analysis of supply AND demand.
• Identify an ‘Enduring Competitive Advantage’.
• Get paid (from day 1) to buy scarce rare earth real estate.
Two Simple Economic Concepts You Need to Understand
All price movement is governed by two remarkably simple economic concepts.
Real estate groups feel they need to show you complicated formulas to justify their fiduciary position. The simple formula you need to adhere to is this:
“If the supply is fixed and demand increases, the price has to go up” – Tim Murphy
Simple is very, very effective.
“Let me explain – When we purchase real estate, we try to peer into the future. The question is, ‘what can we control?’ We need to place equal importance on supply and demand. Most groups place the majority of their focus on demand and neglect supply.”
More Certainty in Future Supply Than Future Demand
If you think about it, you can have a strong conviction on the future demand side. But you can have even more conviction on the future supply side. In other words, it is easier to control (predict) future supply than future demand.
“They Are Not Making Any More of it”
Scarce rare earth real estate provides that control. You may have heard the saying in real estate – ‘they are not making any more of it’, insinuating that all land is rare, and prices must shift higher. However, most groups are selling real estate where there is land as far as the eye can see right next door. In this case, the council is making more of it therefore supply is catered for.
4 Pieces of Key Advice for Investing in Scarce Rare Earth
1. Is it Genuine?
Real estate agents are the first people to tell you about the pros of a particular property and may mention the term ‘rare earth.’ To be genuine, it must be:
• Hard to find anything comparable in the area.
• In demand with no or little supply.
2. What Supply is Coming Into That Particular Pocket?
Has other vacant land been zoned for residential? Is there a fast turnover of real estate in the area? As mentioned above, there must be a balanced analysis of supply and demand. On average, Australians hold properties for 10.6 years before selling. This varies from region to region so is worth investigating. Zoning and other plans from local councils can also be insightful(*3).
3. Does It Have an Enduring and Competitive Advantage?
Does this location have the edge over others that will still be there when you eventually hand your property down to your kids? This is part of future-proofing the investment.
Again you do not have to overcomplicate things. Not all real estate is created equal and an easy way to sort weak real estate from real estate that becomes the gift that keeps on giving is by identifying the Enduring competitive advantage. If you can’t identify it, don’t buy it.
4. Time the Purchase to Get Paid for Buying
Time the purchase in a way that you will get paid to buy that real estate if you understand the markets. There is a window of time where you can get paid to buy, which varies by location and region.
It is going to become your super-charged savings account whilst the land underneath continues to grow to help your family for literally generations to come.
Add scarce rare earth to your portfolio under the guidance of property investment advisor Tim Murphy.
Phone: 1300 765 811.
References *1. Murphy, T. Property Investment for the family - Rare Earth Real Estate. Mentor1 Property. Sydney, NSW. YouTube video. 2022 *3. NSW Government. ePlanning Spatial Viewer. N.d.