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Posted: 2019-06-17 04:02:15

Worried that you got into the market at the wrong time and want out? There’s a word for that – move over FOMO, say hello to FONGO! 

An unprecedented number of property investors have come down with a case of FONGO since the market downturn.

FONGO (also known as Fear of Not Getting Out) is a new and, until recently, rare affliction that’s struck investors who are concerned they got into the property market at the wrong time and now want out.

According to Frank Valentic, one of Australia’s most experienced buyer’s advocates, inner CBD apartments and development sites bought at the peak seem to be the most contagious areas.

“Over 450,000 properties in Melbourne and Sydney are worth less than what buyers paid in the last few years,” says Valentic, adding that some properties in Melbourne’s inner and middle suburbs have dropped as much as 20 to 30%.

Longer term investors are in the best position. Picture: Getty

Investors who were hoping to sell in the short term would have been in a better position had they sold prior to the downturn, he says, but those playing a more long-term game should have less cause for concern.

However, according to Anthony Brown, CEO of NobleOak Life, growth is not the sole factor contributing to investor FONGO.

“For many Australians, I’d expect that the property downturn has created some uncertainty with regard to their personal financial situation, particularly if they arranged finance when lending practices were a bit more relaxed. That feeling of not being in control of the finances associated with your investment property portfolio can be stressful for any investor,” says Brown.

Both Brown and Valentic agree that investors needn’t panic but instead need to work out if their property is worth holding on to.

“If your property is investment grade, it is worth keeping it in your portfolio for the long term. If not, cash it in and sell it as it’s not worth flogging a dead horse,” says Valentic, who recommends getting independent advice on whether your property is a good investment before making this important decision.

Knowing your loved ones will be protected if something were to happen to you is the best cure for FONGO. Picture: Getty

Investment grade properties are homes that meet specific criteria, making them particularly attractive for growth and resale. Such criteria include location to transport, shops, cafes and other amenities, parking, security, orientation and more.

Once you’ve decided that your property is a worthy investment, Brown says you need to protect yourself financially and secure your ability to make your mortgage repayments by considering Life, TPD or Income Protection insurance.

If you’re seriously ill or injured and can’t work, or worse still, were no longer around, the funds paid through a claim may be used to pay household bills and expenses, maintain the mortgage payments for an ongoing period of time, or possibly help clear large sums of debt altogether.”

Insurance coupled with the knowledge that your property is a worthy investment is all it takes to cure a bad case of FONGO.

Information provided in respect of life insurance has been written in conjunction with NobleOak Life Limited AFSL 247302 ABN 85 087 648 708, the issuer of NobleOak life insurance products. This is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Always read the PDS  – available at www.nobleoak.com.au/rea
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