Stop Letting the RBA Decide When You Invest
Every time the RBA meets, I see the same thing happen.
Rates go up and investors get nervous.
Rates stay unchanged and everyone waits.
Rates come down and suddenly people feel like it's time to buy again.
After more than 25 years working in finance and property, I think that's the wrong way to look at it.
The RBA should influence your numbers. It shouldn't determine your investment strategy.
Interest rates matter. Of course they do.
They affect borrowing capacity, repayments and cash flow. And with the cash rate currently sitting at 4.35%, investors absolutely need to make sure the numbers stack up at today's rates, not rates they hope might exist in 12 months.
But here's the problem.
While everyone is obsessing over what the RBA might do next, they're often paying far less attention to the things that can actually determine how an investment performs over the long term.
Rental demand.
Vacancy rates.
Population growth.
Housing supply.
Employment.
Infrastructure.
Asset quality.
What tenants actually want to live in.
Those are the conversations I'm far more interested in having with investors.
The RBA meets again on 29 September, and there'll inevitably be another wave of headlines, predictions and opinions about what investors should do next.
My advice?
Turn down the noise.
Instead of trying to predict the next interest-rate move, I'd be asking:
Can I comfortably afford this investment at today's rates?
Does the area have genuine rental demand?
Is there enough housing supply coming to change that equation?
Is the local economy supported by diverse employment?
Am I buying a quality asset people will actually want to rent and eventually buy?
And most importantly:
Does this property actually help me achieve my goals?
If the strategy only works because you're assuming rates will fall, I'd be questioning the strategy.
If the numbers work today, you've allowed for some breathing room, the fundamentals stack up and the property fits your long-term strategy, then what the RBA might do at its next meeting becomes a lot less important.
That's the difference between investing and speculating on interest rates.
The next RBA decision will generate plenty of headlines.
It doesn't need to generate your investment strategy.
Property is simply the vehicle. Your goals still come first.
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