Forum Replies Created
- AndyDonnelly wrote:How long will this discussion going on ? another year or two or 5 years ?
it's very interesting to see people's view : )
Andy it has taken six years to get nowhere with the bust, so I will take a punt that this thread has another six years to go at least.
Freckle wrote:bardon wrote:Well if the price of that house and its rents are higher now than they were way back when, then they have conformed to the general rule, no ?“No time in history” is a very long time for you to have a comprehensive economic knowledge of.
You talk as if rents and asset prices increase in a linear fashion when they don’t. At times they’ve been up and other times they’ve been down. It’s all timing.
Don’t claim to have ‘comprehensive’ knowledge and history books cover from the year dot until now. You just have to read them.
The Freckle
I never said that.
I am in awe of your economic knowledge and readings.
“Absolute certainty is the privilege of uneducated men and fanatics.” — C.J. Keyser
I have started doing it this way as I used to treat the lump sum refund as a bit of an end of year thing as opposed to getting it as I go. That’s all changed now for me as I have had a terrible year with the ATO, that is not over yet. Anyhow got my accountant do do a variation and now I don’t pay any income tax for the rest of the year. It is best that you get your money off, of them, as soon as you can because if they find a reason to delay giving you a large refund back, it can take a very long time for you to fight tooth and nail for every cent back from them. Even if you get the funds in the end it could tip you over if you were relying on a prompt refund to begin with.
As Paul Hogan said the ATO are like the Taliban.
Dont know if it is true but the fact that you are getting your deduction as you go as opposed to a large lump sum that the ATO may try and hold back there may be a lesser chance of being audited.
Freckle wrote:bardon wrote:the general ruleAnd there in lies the problem in thinking among many investors. What most fail to realise is this is not ‘a general rule’ incident in global financial events.
There has been no time in history that I can recall when virtually every major economy is near collapse simultaneously. Economies like Australia will not be able to weather this impending collapse simply because it has a relatively stronger economy. With $1.3T in debt (something like $600m of that is in housing) Australia will fold like a pack of cards once things start to unravel.
Just about every notable investor on the global stage is not asking how do we make money but how do we preserve our capital and reduce losses.
The Freckle
Well if the price of that house and its rents are higher now than they were way back when, then they have conformed to the general rule, no ?
“No time in history” is a very long time for you to have a comprehensive economic knowledge of.
That is quite an interesting story. But earthquakes aside, the general rule is that in the long term both prices and rents will rise.
As far as when this inflation tsunami will be released. Maybe if Romney gets in, in the US, the economy will start moving again, under utilised resources will get busy, unemployment will drop and people will feel better. Then maybe all the new money will find its way into the system and the velocity of money will go into the fast lane once again.
All you coal town investors aint looking that bad when you look at the long term demand figures. Especially coking coal.
India’s demand for coal set to soar
BY: ROBIN BROMBY From: The Australian April 30, 2012 12:00AM
Increase Text Size
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PrintFORGET coal price forecasts for 2013 in tonnes — think quadrillion British thermal units in 2035.
The nation’s burning need for coal will be a boon for local miners
Andrew_A wrote:Brisbane recorded the strongest monthly growth since December 2009 this month. The +1.49% result in March has Brisbane in the black for the year with 0.33% growth in the index.The turnover has been healthy since December 2011 and not surprised to see this monthly result and the market near balance in prices, the last few weeks have been a little slower but still much better than last year.
Well this should bode well for my upcoming sale.
Freckle wrote:bardon wrote:Out of interest what was the rent achieved back then and what is the current value and rent for that property now ?Have no idea Bardon. I was a spec builder/developer in those days.
The Freckle
So would you say that they would both be higher today ?
Yes build time and cost of loss of rent if the schedule blows out should be addressed. Also builders insurance that covers you if they go bust or have quality issues with their works and an agreed progress payment method for the works that the bank are also happy with.
Freckle wrote:. During the 90’s we saw high inflation high interest rates and then a deflationary crash in RE. My property (NZ) went from $350k to $230k in the space of 8 months.The Freckle
Out of interest what was the rent achieved back then and what is the current value and rent for that property now ?
simple wrote:+1
In simplified form, if you are in debt – inflation is good. That is assuming business, not personal debt.
If you are saver (in fiat currency), inflation is reducing your savings and is bad for you.I have lived thru inflation and hyperinflation in Poland 1990, Russia 1992 and few others. General rule is, as inflation rate increases – more value you loose by holding the fiat over the same period of time. So people/businesses dump currency and buy goods, assets (land, buildings, factories, very large businesses, infrastructure and so on) and start trading barter (in very bad cases, think Greece).
From PI investor with debt point of view, moderate inflation is very welcome. I know as I am and I can count my money well.
The way I look on it the bets way to derive a benefit out of the situation you have described here is that you should get yourself into as much debt as you can safely handle as early as you can and never ever pay it back. From a purist perspective the investment property is merely the method of securing debt, debt that will pay dividends and growth over time.
Freckle wrote:bardon wrote:Inflation always has been a trusty 24/7 servant of a leveraged property investor
You are kidding right! If you aren’t you have no idea of how inflation works or the FIAT currency system.
eroding debt level and increasing asset and rental values.
If your income rises through inflation and your debt stays the same then yes. An asset’s value has to, at the very least, rise at the same rate of inflation just to hold its buying power. Anything less and you are loosing ground. Rents tend to lag inflation and are dominated by market forces.
Inflation is every PI’s enemy.
The Freckle
I did say when it is unleashed which it will be at some point in time. And yes id do know that there need to be increasing debt levels to feed the interest due of Fiat money.
I would also go as far as saying that the reason why property is such a sound investment asset class over time is mostly due to its proven ability for you to take leveraged debt on that is eroded over time.
It’s on tomorrow night assuming no more Labor scandals.
Starts in 18 mins, lets hope it doesn’t get Slippered.
A few nails hit on the head there. One of the low risk situations of the property market is that you are either an owner or a renter. Unlike the stock market you cant leave. So the majority of owners decide not to sell and wait until they get a better price equates to a concrete floor in the market.
Personally speaking I think that due to the unprecedented easing polices of the big boys there is Tsunami of inflation building up. Once unleashed monetary value will be debased overnight, savers and pensioners will be punished, prices and wages will rise. Debt levels will not increase and debt repayments will seem like peanuts in comparison to before inflation hit. Hard assets including houses should also inflate in this scenario. Inflation always has been a trusty 24/7 servant of a leveraged property investor eroding debt level and increasing asset and rental values.
According to Chris Joyce and the RBA set, those long term norms with respect to income to prices are back at trend again after all the creep that we have had with disposable income in recent years.
All that aside, I don’t think that some notional belief that mortgages must be 3 x dads income is some kind of benchmark that has ever really existed or is some kind of Max’s Headroom with respect to house prices. Its more like one of those folklore tales that we all love to tell over the camp-fire with a few beers to the younger set of the group in between slapping mozzies.
Good for you Cg Brumby hope it all works out well for you and the kids.
Now that the drought has broke I cant see anything wrong with it.
