High income, low debt, what are you waiting for?

Yesterday, my business partner Ben Sum and I had our usual multiple daily catch-ups on mostly life and a bit of business, when we started discussing the shifts we are seeing in client behaviour.

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It became clear that we have seen upgraders return, but not entirely, and it is a trickle, not a flood. 

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But more interesting was the move we have seen from longer-term clients with growing borrowing capacity in recent years due to their income growth and the equity in their homes, which are popping up in our inbox. 

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Instead of considering upgrading again where they do not want or need to, they're choosing to take advantage of their strong financial position to invest. 

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This makes sense; these clients are keen to act as confidence around rates builds.

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However, our discussion went deeper, and we chatted about all our other clients in similar positions, not just these clients who are moving. 

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The clients who have a home they are happy with longer-term and are on top of the mortgage, but have rightly been fearful over the past few years due to higher rates and what that might do to the property market and their ability to service mortgages.

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Now that confidence is slowly returning, we asked if they will regret sitting on the sidelines and waiting until confidence returns completely before they mentally decide to come back to us to consider further investing?

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As rates fall and rents likely keep increasing, the shortfall in holding an investment property reduces, and it isn't as high as just a few months ago. 

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And if rates continue to fall, the situation will likely be much better in 6 to 18 months.

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This will undoubtedly improve property confidence, which raises the question of whether the opportunity cost will come back to bite. 

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Will they look back in 12 months and wish they'd acted rather than wait until after the market moves? 

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Then, investing will be harder to digest as markets will be more expensive, and the opportunity will not appear as attractive at higher prices. 

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If you have high equity, substantial income, minimal debt and a home you love, don't get paralysed by "what if" scenarios that may never eventuate.

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What you buy matters the most; we'll cover that in another post. 

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But considering prioritising this in your life now, rather than waiting, could be a decision your future will thank you for.

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