Property guru Nichole Lewis on how to navigate a rocky market

Thursday, 18 July 2024

Property investor Nichole Lewis lost almost her entire property portfolio in the GFC, and says many investors today have made the same mistakes she did back in 2008.

Property guru Nichole Lewis knows a thing or two about navigating difficult financial times. She went from bankruptcy in 2008, to becoming an established property investment expert by 2024, all thanks to her property investing nous.

Now, it looks like the market is slowing to a standstill again, and experts say house hunters are in “hibernation” until conditions improve. But The Property Lifestyle founder reckons there is still room to manoeuvre, even in this tight a property market.

“The market's always cyclical, and you've always got to pivot and adapt with every change.

'I'd call this a slow market, as opposed to a low market. There aren't the bargains that there were in the low market. But, people are people. You can find one if there's a motivated vendor.“

Motivated vendors are much more likely to be in the mood to let you negotiate the price down. With prices cooling, less motivated vendors will just take their properties off the market or let them sit for a while.

Property investor and guru Nichole Lewis.

She considers the market slow, rather than low, because it’s become highly “property specific”.

At the top end of the market, the homes in the multi-million dollar bracket are still selling, it’s only the lower priced end that’s touch and go, she says.

Six to eight months ago, Lewis reckons you might have been the only one looking at any given property. You could take your time putting an offer together, even waiting a few weeks for the price to come down a little. That's not always the case now.

'If you've got a property that a developer wants, and the developers will only buy something that's really easy and really straightforward, you'll still get a good price.

It’s always a good idea to work with a mortgage broker when buying, says Nichole Lewis.

“If you've got a property that a trader wants - in other words, a do-up that no homeowner will want - it's going to multi offer.“

The opposite is true for homes that are in good condition or ready to move into. She reckons fully renovated properties, completed new builds, and private homes in good condition are not selling as fast, which means homebuyers have their pick of the listings.

Property guru Nichole Lewis says there’s still room to get into the property market, even in this “slow market”.

That’s borne out by the numbers. According to QV, there has been five months of negative growth in the market, with a 2.6% average home value decline this quarter.

“We know that we have got the highest number of unsold properties in six years, according to Corelogic,” says Lewis. “That’s a fact. I tend to think the cost of living is so high, interest rates are so high that second home buyers are not buying.”

Multi-unit properties are still a good buy for investors in it for the long haul.

Even she got caught with a fully renovated home she couldn’t sell earlier in the year. 'So it's still good for a homebuyer, they can still negotiate a good price.“

While she would urge caution on buying a house to flip or trade - “in my opinion, some of them are overpaying” - investors still have options. Multi-unit investment properties tend to be cashflow positive, and investors are unlikely to be in competition with first-time buyers or developers to buy them.

'They're still relatively easy to find. And in a hot market, they're really, really, really hard to find, and you don't necessarily get a good price.“

It might take four or five months to “buy it right” in the current market.

Traders and flippers need to buy “well enough to renovate it and then sell it at the bottom and still make a profit”, she says.

“The traders I'm noticing that are active, they're going to multi offer, and I think, 'oh gosh, they're paying a lot'. I wonder whether they don't realise they're going to get stuck with it until the market starts to heat up.'

It is still possible to find property worth sticking your neck out for - she has clients who made a $70,000 profit on a renovated property this year - but you will need to be patient.

“It might take you four or five months to buy it right.”

If you’re wanting to mitigate risk even more, Lewis always supports investing in a multi unit property, rather than a stand alone property. That said, you still need to take some things into consideration.

If you’re looking at borrowing 100% of the price because you’re leveraging an existing property, you may have some trouble getting cash positive.

'You need to be tipping in at least a 20% deposit to get it cash positive.'

Whatever you decide, it’s always a good idea to work with a mortgage broker, who can help you tap into the best deals the banks have to offer.

“If you do get a no, don't accept that as gospel. Just move on and find someone else. Sometimes it can feel like, 'oh my gosh, I've missed out again and again. Am I ever going to get there?' Yes, you'll absolutely get there,' says Lewis.

'Remember that knowledge takes the risk out of things. If you want to de-risk, you learn. Read books, join groups, do courses. Eventually you'll get there with property. You've just got to keep going.'