Forum Replies Created
Wow – it’s been a whole year !! One major sticking point that has shown up over the last 12 months is the subject of transmission lines. Think this through now:-
For a grid to work, it must be interconnected. To interconnect a plethora of independent inputs requires a spiders web of interconnections. And copper wire is not cheap. Neither are transmission towers. So, we are accumulating a bunch of separate power inputs (think each and every wind tower, plus each bank of solar panels. In fact, even each bank is made up of separate inputs, so a whole mess of interconnections in one bank. Then again, the solar “farms” appear to be acres of these things, all needing to be interconnected, and then their combined output needs to reach the “grid”. This could conceivably be many kilometres away. And each wind tower and/or solar farm needs a similar interconnection to the “grid”. Thousands of kilometres of copper wire, and even hundreds of kilometres of transmission lines including their towers need to be built. Expensive, much !!
Alternatively, upgrading coal fired stations (where transmission lines already exist) to HELE coal (High Efficiency, Low Emission) sees no need for extra connectivity. And/or, put a nuclear station on the same plot of land as a decommissioning coal power station, and the need for uber expensive connectivity becomes way lower – just hook ’em up to where the coal power station did. A few feet of copper wire, sure, but no way as expensive as the alternative.
Earlier points made (transient supplies can’t supply “base load power”) that show the weakness of wind farms or solar farms also remain valid. Now add BOTH of those major imposts together, and I fail to understand HOW any sane Govt signed up for such a plan in the first place. But then, they doubled down by signing up to time limits on getting rid of coal, AND pushed the usage of electric cars – which will be powered by what overnight????? No solar, for sure. So, we end up with more demand for a transient power source at times when these sources CANNOT work.
What’s next? Have everyone who drives an electric car mount a generator under their desk so they can pedal a few Kw as they sit watching TV or using the computer at night? Or wait – maybe the Govt will have a brainwave and go nuclear after all?
Forgive me if I fail to be convinced Labor will head the way of common sense. They haven’t shown too much of that for mine.
Hi David,
Thanks for such an insightful yet succinct post. I have just the place for such good comment, and have added a link to here in the “Big Picture” topic for those who follow. Well done, and I like your style.
Benny
Does positive cashflow investing work today, in these times of high prices and interest rates?
Someone recently asked the question “Can positive cashflow investing like Steve did in Ballarat work today?” (from the book “0 – 130 properties in 3.5 years”).
In reply, one of our experienced members provided the poster with a brilliant breakdown of how he is investing today, and how a current investment should work to produce a great outcome for himself and others. Here is his post:-
Thank you, David, for the very complete yet succinct breakdown of an investment you are planning. I hope it goes well for you.
Benny
Hi Lin,
That’s a good question. I lived through those years, and have seen a few booms in my time. I recall Steve saying that his “way” was what worked at that time, in that market. Markets change, and Steve changed with them. After Ballarat, Steve moved to another area (was it Latrobe Valley?) then on to New Zealand, then USA, and later on to Commercial properties. I recall other investors too “riding a wave” of cheaper properties from Brisbane on up the Queensland coast back in the early 2000’s.
What works this way today? I have no idea. With house values so high right around Australia, perhaps another country is where this method might work today. Or wait 5 to 10 years, and these times might come again.
I’ve found house values seem to rise like a staircase – a long flat period, then boom and a huge rise in a very short time. Then a flattening out (and even a drop?) and a long period of little movement until the next boom.
Will this work into our futures with values being as high as they are? Again, I don’t know. Major world changes could have an effect. e.g. what if immigrants stopped coming to Australia? Another COVID-type issue may shut down world travel again. What if it lasted years? Would prices fall? I suspect so, but how far?
Meanwhile, perhaps other ways can help. With housing so dear today, some renters have turned to sharing accommodation, and investors have added granny flats (cheap as they don’t need to buy the land again – they already own it). Some investors create houses that cater for multiple renters (a 3bdrm house also has 3 bathrooms, but they share cooking areas, etc). That brings in multiple rents from one property.
i.e. Are there now other ways to invest? Back in Ballarat, Steve did the wraps that helped people end up buying their own homes without paying much more than rental rates. Worked beautifully for a lot of folks. But today, what works now? Investors will find a way I’m sure – keep your ear to the ground and see what can work for you. Good luck,
Benny
Hi John,
You might’ve seen the PM from me, wherein I point you to two places. I am adding it here in case others could do with finding the same info. First place to look (for general info re investing in property) is the Articles in the Training Centre. You’ll find it on the Home page. The articles are broken down into subjects like “Buying” and “Selling” and “Analysing a deal” etc. Have a look, and have a good read in there.
The second place is in my “Big Picture” topic. In there I highlight posts and subjects that helped me, and they cover a very broad range of topics, ranging from Finance and Legal through to Buying, Selling, NOT Buying, and even at times the mindset behind decisions. The Big Picture is a sticky in the General Forum – here:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/
The first post in the link includes an Index of the various posts within, to enable you to seek out the subjects you most want to learn about. I hope it is some help to you and other readers. It runs for 3 pages, so if you finish the first page, keep on……
Benny
Hi Tazzzman,
I’m not sure if you stumbled over an article written by one of Steve’s former right-hand men (Jason Staggers), but it appears to be a useful guide to WA zoning, including a link to the Govt website where you can read more. Here’s the article by Jason – hope it helps:-
https://www.propertyinvesting.com/r-zoning-codes-for-western-australia/
Benny
Hi ILF,
I must say I can only agree with the thought expressed here:-
Considering housing crisis, government can NOT provide more house, Aussies have to live in cars and tents, but council still says people can NOT live in rumpus room…
I guess “back in the day” there may be really good reasons for making 8foot (or 2.4metres) the minimum height of a livable room (e.g. bedroom, living, etc.) Could it be to prevent folks from skinning their knuckles on the ceiling when changing their jumper? I don’t know, but in times when folks are having to live in tents, surely a 2.1 metre high room that is warm and safe is a far better option than a tent or a car……
Why not? I think it passes the pub test. What of others though? Are there other reasons WHY this is NOT a good idea? I’m all ears….
Benny
Well, THIS email I received struck a chord with me. It’s title read thus:-
Save money and get healthy by avoiding the cashless effect
The email referenced a petition to the Govt that attempts to prevent the abolition of cash in our society, and it makes comments that ring true to me. It was all about “the pain of parting with cash keeps you safer and healthier than using a card”.
Makes sense doesn’t it? Here are a couple of extracts from the email:-
When cash is compared to any other payment method, the research data shows consumers spend more when they don’t have to hand over physical notes and coins. The cashless effect works to increase our spending by removing the ‘pain of paying’ – the emotional impact we feel when having to hand over physical money. And paying with cash – with its associated pain – means we are more likely to make better spending choices – and this has direct impact on our physical health.
“Consumers are more likely to buy unhealthy food products when they pay by credit card than when they pay in cash,”
In between, they referred to studies done that show that people spending via a card or “tapless” end up spending far more. Another plus for retaining cash, eh?
paying with cash:
1) Makes budgeting easier – you can only spend what you have in your purse. If you want to spend more you need to go and get more cash. You can set your daily budget in the morning and stick to it.
2) Retains the pain of paying – the emotional feeling you have about losing a tangible and valuable physical banknote – so you’re likely to spend less.
3) Improves your healthy choices – paying with cash means your less likely to make impulsive unhealthy spending choices.
On top of all this, cash helps us retain our privacy, avoid payment surcharges and doesn’t suffer from ‘system outages.’
Here’s the petition, should you wish to add your signature:-
https://www.change.org/p/an-australian-cash-and-banking-guarantee?source_location=tag_
To read the research data mentioned, go here:-
Both are worthy of some minutes of your time. Please do check them out,
Benny
Hi Tempo,
I have no direct answer for you, except to say, try an Insurance Broker in your area. It is their job to know all the “ins and outs” of Insurance, so they should be able to guide your steps in this unfamiliar area.
Benny
Hi BB,
The “numbers” will likely confirm the way to go. Without knowing what you bought these for, my example below may be inaccurate, but use it to add YOUR numbers to see what works best.
Assuming your mortgages are IO, it sounds like a 3.35% increase, but the Interest paid would’ve DOUBLED, so a 100% cost increase. If P&I, it is the Interest portion that doubled, but Principal repayment would be unchanged, so not double, but a significant rise nonetheless. Good to hear that you two can handle the increase anyway, but now to your questions:-
Assumptions:
1. That if selling one property, #1 would likely be the one (largest equity available). Assuming you purchased for $600k(?) based on $500k mortgage at ~80%. Purchase and selling costs (I believe) come off the gain, but a balancing charge may well put some $$ back on too, so let’s say it is a Capital Gain (900 – 600) of $300k. Since you had a Fixed Loan, I assume you have held it over 12 months, so half the gain is added on as Income and CGT paid at your marginal rate (the highest as you are a top earner). So let’s say you’ll pay around $75k in CGT. This leaves $225k to be paid off your PPOR. You could choose to use it to pay down the IP’s mortgages to make them +ve again, but then you lose any Tax benefit that negative gearing gives, AND you continue to pay your PPOR with fully taxed dollars, so little Nett benefit (in my eyes) for paying down an IP mortgage at this time. And even little change to your PPOR payments either – but you will stop paying it some years earlier.
2. You mentioned Qld – I am in Brisbane, and I note that Bne homes median values increased by over 25% in the last year. In that case, a negative income from Interest around 6% is hardly an issue. Of course, that depends on what happens ongoing. Right now, I can’t see much light at the end of the tunnel regarding the current LACK of rentals, thus values and rents will likely continue to climb for some time (years?) to come.
Right off though using IP #1 as a test case – 3.35% extra on Interest is an extra $17k per year (near enough) while the value goes up by $90k if just a 10% increase in value per year. Worth holding on that basis? It is to me.
3. You COULD sell one to buy another more positive geared, but then you do give up the (likely ongoing) rises in value of the current one(s) – “all great properties that go up in value decently each year and rent out very easily”. And, as Terryw mentioned, you then incur more agent fees and Stamp Duties. You also then forgo the Tax benefit of the negative gearing losses (which you can easily afford anyway).
4. Or you could buy another without selling any – if your lender hasn’t already tagged you as “too rent reliant”. And if they have, a good MB can help with that anyway.
So, a few different angles there to consider, BB. For mine, I don’t see a problem holding for now. But then, as Steve often reminds us “You don’t go broke taking a profit” and if that profit can assist your situation in some better way, then why not?
Anyway, over to you – use YOUR numbers to see what they tell you.
Benny
Hi Highview,
I had a chat with Steve this morning – he came up with this link that may be of some use to you re Hebel problems:-
https://hebel.com.au/warranty/#:~:text=Hebel%2020%20year%20product%20warranty
Benny
Hi John,
Train lines can be a drawback for some, but there are ways to ameliorate that issue. e.g. double glazing of windows facing the train line can help – a bit more expense of course. Also, high fences can help to deaden the noise. If these exist (and are wooden, concrete, or composite – not metal) then that could reduce the decibels and some buyer reluctance along with it.
Then again, trains can be useful for some – if commuting daily on a train, the proximity to a train line could be considered a benefit. I’d be checking values of other neighbouring properties to see if the train line affects their vals markedly. Check too how often a train goes by – some lines are actually not in use. Are these short trains (i.e. do they go by in a few seconds, or are they goods trains clacking away for 2 or 3 minutes or more?)
Some might offer a place with a nice loud stereo system or HD TV with a quality sound bar that they can have playing when showing the place – all about disguising the sound of any passing trains.
There are a few ideas – what more can be done? Help me out folks !!
Benny
Well hey, I am now hearing of 6 likely rate cuts starting early in 2024. Oh, wait – that is for the Federal Reserve – i.e. the USA. Did THEY go too far, too fast too? And was our RBA simply following their moves blindly? Hopefully not – but it looks a lot like they may have been…….
So what now? Are we really likely to have 6 x 0.25% drops this year? That would help a lot of people, but I’m afraid it all just makes me rather angry. I think about how many folks might have been forced to sell up, or lose their business, or go live in a tent, or even suicide, or some other drastic measure – just because our “higher-ups” at the RBA weren’t too good at reading the tea-leaves relating to our economy, and they cranked Int Rates way out of sight!
As I said to my wife “Don’t get me started…….” It all just seems too raw, too stupid, and too damned pigheaded of the RBA. I think you already knew MY thoughts (just start at post #1 ;). But what do YOU think of what has transpired over the last 2 years, with a likely partial unwinding yet to come?
Benny
Hi DD81,
Did you hear back from your accountant yet? Were there some useful takeaways from other replies (i.e. vetted by your accountant of course).
In short, how’s it going?
Benny
Hi David,
Ask anyone in Kalgoorlie at the moment about how vulnerable the system can be. No power, no gas, no air con,
I hadn’t heard – what has happened in Kalgoorlie? Sounds major – has someone shut off a tap somewhere?
Later – I went looking – a freak storm took out 200,000 KvA power line towers (which won’t get rebuilt overnight). Not just one either. Seems Kalgoorlie might need a power station of its own. Or a few more diesel Gennies as backup. Anyway, for those interested, here’s the link I found from the ABC
https://www.abc.net.au/news/2024-01-19/kalgoorlie-blackout-explainer/103365870
Benny
I simply don’t like putting so much trust into 3rd party systems especially when it comes to money.
Amen to that comment, Adam. And how much more robust are any “digital dollars” liable to be anyway? Have our systems got more clever, such that hackers, or failing power systems won’t affect them and our use of them?
Meantime, what can we do?
Well, for mine, I’ve made a decision to use cash WAY more than I have previously. Yeah, the Debit Card is handy, but its use is likely trackable and, do I want some “power” to be able to track me? With cash use reportedly dropping like a stone, the only way I can see to push back is to start using the folding stuff more. Let the powers know we aren’t wanting to give up our right to a good old system that works !!
Any other ideas? I’m all for pushing back a bit more….. ;)
Benny
Hi Realist,
It didn’t look all that dark to me, but if it concerns you, first ask an RE agent’s opinion. They look at things like that objectively and, if they think it could help, suss out the cost of fitting a skylight. Could be that it may be money well spent.
And, if you have bought this as a rental, how much does it impact your bottom line to pay off a skylight over time? Would it help to RENT the property, or is it already rented? If the latter is Yes, you may need to hold off on the fitting of a skylight until the next break in tenancy.
Benny
Hi Eliana,
Check out my answer in this topic you started – https://www.propertyinvesting.com/topic/5093458-need-help-13/#post-5093468 – I think you’ll find some interesting thoughts therein….
Benny
Hi Eliana,
When I read this, my very first thought was “Never ask a barber ‘Do I need a haircut?’ as they have a vested interest in having you get that haircut.” That RE agent in Gladstone wants to sell you a property. In fact, RE agents are in business to sell you a property. But OK, let’s take a look at Perth and Gladstone.
I have an advantage in that I was watching as Gladstone went into a huge price jump, followed by a crash. It goes back quite a few years – there was some talk of a new huge venture in Gladstone, so some bought in on the news – but it didn’t eventuate. Developers too, overbuilt in that area as I recall – result, too much stock and not enough buyers – result, prices crashed.
Google “Gladstone median house values over time” and check out what happened. Check out the curve in the median graph, then tie up the year with news reports around those times. Then think about “What is different today?” Is there something ACTUALLY taking place up there that will make properties more valuable? e.g. Will more properties be needed than are currently available?
Oh, and do a similar Google search for Perth and see its trend. Which of the two looks like it has an upward curve right now? That is only the start of course, but having the trend on your side is a good place to start.
Benny
Hi Eliana,
I had a quick look around and found this (re Perth’s values):-
https://www.openagent.com.au/suburb-profiles/perth-property-market
Scroll to roughly the middle of the whole segment and you’ll see a graph showing House price growth over the past 3 decades. It shows Perth pretty much stood still from 2007 until today. That has me thinking good times may well be ahead for Perth.
Oh, and note around 2007 – right there it shows Perth equalled Sydney’s median. I knew it was quite some time back – in the day, I thought Perth’s median actually passed Sydney for a time. But that may have been for just a month or two, so the yearly figure doesn’t show Perth ahead of Sydney on the graph.
