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  • Property-a-holics

    How much competition is too much competition?

    Simple question hopefully:  at what stage do you feel there is too much local competition that your investment might be affected negatively?

    And how do you monitor it?

    I've been looking at getting another property in my now very expensive locale, and I've been keeping a weekly rightmove spreadsheet on the properties coming and going this year for rental as well as sales.

    For rentals there is a lot of competition! And with competition you get the odd desperate person that then downs their rent to stand out from the crowd, when usually it is down to the condition/price combo that's the reason the property hasn't let. Or is it? Unfortunately it can then set a precedent.

    I'm getting to the stage where my gut instinct is telling me there's too much competition, plus several EA's have told me it's the investors that have jacked up the prices in the area and normal families are now priced out. That gets my gut instinct churning! Not a good place to be as we all know investors can simply just not purchase if they're not feeling the time/price is right.

    Properties for sale start off high and some sell high as well. A property I was interested in back in Feb has just come back on the market at the same price. I would have jumped at it back then, but 4 months is a long time in property and now I don't feel the need to contact the agent about it with my ongoing research.

    I've invested in this area for nearly 10 years so know it well, but I'm always learning about it and the local market is always changing. Too many damn investors!!!

    So are there several indicators that there's too much competition?

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    I wish there was a better answer than: when it stops making money. If you find one I’d be keen to know. My risk mitigation is to try and offer a better product and to buy with a current cautious view of yield. 

    Perhaps you could try some false door testing? Put up an ad for a property that you might buy and see how much interest you attract?
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