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I admit that at times like this, it’s hard to think of anything else but war, inflation, and the cost of living.
They are all important topics to think about.
And yet, behind it all, the real estate cycle is continuing to turn.
It remains to this day the most important cycle affecting our economic future.
And if you know what you are looking for there are stories aplenty which detail exactly where we are in that cycle.
I noticed this myself the other day. It’s in an article from the Australian Financial Review (AFR).
Source: AFR
You guessed it, it’s the old infrastructure-forces-land-prices-higher trick.
So, what’s the story behind this headline?
Read on, as I examine this and show you a simple yet incredibly lucrative method to replicate such windfalls for yourself.
It’s a story about a tunnel
The story begins with a simple tunnel.
It’s called Westconnex and, as the name suggests, it connects two suburbs in Sydney, Kingsgrove and Homebush, via a 26km-long almost fully underground motorway.
Anyone familiar with Australian government infrastructure projects like this will not be surprised in the slightest that costs have blown out.
This is true of most countries around the world too.
Originally forecasted to cost A$10 billion, costs have increased more than 60 per cent to over $16 billion.
This is not surprising given the amount of land reclamation, network development and operational costs of such a mammoth undertaking.
The only infrastructure project more ambitious than this in Sydney was the iconic Sydney Harbour Bridge.
So, we are talking big money, big disruptions for residents nearby and of course big delays.
Things this big never run smoothly.
But back to our section of this tunnel, a feeder tunnel that links suburban roads into the underground motorway.
As it’s now sold, I can show you the pre-sale picture of a house on Walker Avenue in Haberfield. This western Sydney suburb is approximately 6 kilometres outside the CBD.
Source: AFR
It was listed for auction a total of 12 days before the vendor accepted an off-market offer. So, it never made it to auction.
The auction guide had a range of $2.9 to $3.1 million AUD.
Now, the timing of this auction was no accident.
And this is the part where you can learn from and take advantage yourself.
Just remember the fact that the former buyer bought this house in 2017.
Why work for a living?
In 2017, the construction of this section of the tunnel was about to begin in earnest.
If you have lived near a major arterial road that’s undergoing major renovations you’d appreciate the amount of disruption, noise, and air pollution it produces.
But there is another unintended consequence. And that is the hit that surrounding property prices suffer whilst tunnels like these are under construction.
So there’s our first gem of wisdom.
If you find a compelling buy that could benefit from government spending on infrastructure (say like a tunnel) then timing your buy is important.
McGrath Estate Agents in Leichardt handled the sale and one of their agents were interviewed for the AFR piece.
The agent confirmed that during construction interest in properties around the project plummeted as stock was taken off the market.
This home in Haberfield getting sold was the exception rather than the rule.
This is how the agent explained it.
“There were queries about what was happening with the WestConnex tunnel, road restructuring and the noise barrier. There was a lot of uncertainty around that topic last time around.
A lot of people were concerned about where the tunnel would finish – would it be under the house or under the backyard? The big fear was, what if they move their plan and direction to under my house? That was the big fear last time around.”
Fast forward to today, and residents can see the route the underground tunnel took, the noise reduction barrier isn’t anywhere as big as first thought and most of the most prominent public space escaped destruction.
Suddenly, houses listed for sale or auction now were pounced on.
As stated, it took 12 days for the vendor to secure a sale price of $3.3 million AUD.
That’s $1.2 million dollar profit in 5 years.
Did you earn that much in wages over the last 5 years?
It’s possible that you did, but I’ll wager you worked a lot harder than the owner of this property did in the same period.
So, yet another piece of wisdom. This sale confirms what astute real estate investors already know and take full advantage off.
When major infrastructure projects are completed, there is usually a 12–18-month window as things return to normal where selected properties bank their biggest gains.
Regardless, though, that’s a lot of money to spend right? So, what motivated the buyers this time to submit an off-market offer?
All they wanted to know was the tunnel didn’t go under their backyard, so they can install an in-ground pool.
Yet another terrific way to add value to your property!
They also appreciated the fact that all the former road noise has now migrated underground.
If this is the type of performance you are hoping to gain via investment in property then it is clear you need two things to make it a success.
You need to nail the timing of when you buy and then sell, and you need to carefully select the location in accordance with the 18.6-year Real Estate Cycle.
I’d like you offer you help on both via a membership to the Boom Bust Bulletin (BBB).
It is designed to teach you the history of the 18.6-year Real Estate Cycle, why it repeats over and over again and outline’s the type of opportunities that the cycle presents as it turns.
One of the best ways to take advantage is via the property market.
Like this example, by identifying where and when the government will spend on needed infrastructure, an astute buy in the right area and some patience can deliver outsized gains.
This is a highly successful and scalable method of playing the cycle.
A previous edition of the BBB detailed to members a proven method of investing just like this.
Source: PSE
If this is the type of knowledge you are after right now to turbocharge your own personal investment plan, then now is the time to act.
You can get this level of guidance for just $4USD a month. That’s a takeaway coffee a week. When market timing can help you net over a million dollars in five years, can you afford not to become a subscriber?.
Sign up now.
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.