People often use sporting analogies to make a point. Cricket and property investment offer just such an opportunity. During the early part of the summer, we witnessed a wonderful festival – the Cricket World Cup – which ended in an extraordinary final and victory for England.
But while the one-day international form of the game is exciting and adrenalin-inducing, it’s also high risk, rather like property investment.
There are those who during various economic cycles have profited hugely from short-term investment. Players simply place a deposit on a property off-plan and sell at a profit before completion.
This practice has worked incredibly well at various times, probably more so for the high risk speculator. Why stop at one deposit when you can make your fortune by replicating the transaction – it’s just a numbers game right? Hit as many sixes as you can and reap the rewards.
This is not property investment. It’s pure speculation and fraught with difficulties. Firstly, most major lenders will not provide mortgage finance against an assigned contract, thus the end buyer of so-called “flipped contracts” have to be cash buyers.
Secondly, if you jump on the one-day cricket carousel at the wrong time, you cannot get off. The likelihood is you will be required to complete the purchase and either move in or become a five-day Test Match-style investor – digging in for the long haul, scoring slowly. It’s Alistair Cook vs Kevin Peterson. KP is the swashbuckling risk taker who scores runs on good pitches at a ridiculously quick rate, while Cook is the slow, methodical innings builder. Guess which one would have a substantial portfolio of properties by now. It’s little wonder Galliard Homes’ repeat clients are those in it for the long haul. If I was a national selector, I’d pick Cook over KP any day – invest for the long term and create a lasting legacy.