Plans of bearish property investors

[ionapaul]

I've just read this article by Robert Kiyosaki of 'Rich Dad, Poor Dad' fame. I know he comes in for a huge amount of (probably justifiable) stick, seems he fabricated a number of events in his life that he passes off as factual, but it is an interesting read all the same, considering the source (one of the world's great property bulls):

[broken link removed]

Assuming many professional property investors are now bearish on the Irish, and indeed worldwide, property market (in hibernation, as Kiyosaki describes them), what are their plans for when / if the market falls? Do you try to time the market? Do you already have an investment strategy laid out? Are there any property investors staying out of the market at the moment and sitting on investment funds, just waiting for the market to turn and to get some bargains in a few years?

 

[Brendan Burgess]

If you believe that Irish property will fall, then it makes sense to stay out of the market until bargains emerge.

However, if you already own property, you are sort of stuck with it. With 9% stamp duty and around 4% in other costs, the costs of selling and buying back in again lower make it impossible to to profitably. Let's say that prices fall by 20%. If you get the top of the market exactly right and if you get the bottom of the market exactly right, you will make 7% by selling and buying. In reality, you will get both wrong, so it's not worth doing unless you expect property to fall by 50% in which case, you should have sold out a long time ago.

Brendan