Forum Replies Created
Am also from SE Qld. Not sure about the baby boomer and interstate investment. Several Real Estate agents I know say still very strong demand from both – and they are driving the market in some areas/types of property.
I think property investing is great, but I am loathe to see a lot of Moms & Pops lose their retirement funds by falling into the negative gearing trap (especially right now) or going full on to match Steve & Dave’s numbers (although doing that now, is problematic to say the least – unless you’re investing many clicks past the black stump!).
Cheers[
]Thanks Captain. I agree with you and I’m not suggesting people sit on the sidelines, especially for their PPOR. See above.
Cheers[
]Perhaps I should put my views first, perhaps to stimulate debate.
It seems to me that if you are seeking to get into the +ve cashflow property market for the first time right now, you should tread warily and be prepared to put in a lot of research, both in front of the PC and on the ground.
As the CBDs and suburbs prices have taken off – and as investors scramble into property as a perceived safe haven from the equity markets – the regional centres have also experienced significant, and perhaps unsustainable, property price rises.
The majority of new property investors are still happy to negatively gear their property as that is the ‘established norm’, they stop those b—-s at the ATO getting their hands on some of their hard-earned, and property always goes up doesn’t it?
These are warning signs (plus interest rates etc)that a property bubble is forming, and not just in the major centres.
So if you are not in the market yet, get in, but choose your properties very carefully, be prepared to put in a lot of hard work, don’t expect them to make you rich tomorrow and don’t overcommit yourself financially such that you can’t weather a storm.
If you are young with few responsibilities you can ignore all of the above, because if you ‘do your dough’ you can always rebuild from scratch. Moms & Pops should move more slowly.
My ten cents worth.
Cheers[
]Sounds like the sound of one-hand clapping (see Simpsons for solution to Koan) or the tree falling in the forest with no-one around!
Crashy wouldn’t the tax on Super be 30%, 15% + 15% surcharge as earnings over 100K?
Cheers[
]Not knowing Steve or Dave, Dave may be feeling a bit like the ‘other’ Beatle, Ringo. Gee, that says a lot about my age!
Cheers[
]I agree with your concept Hame. Poster on my wall next to the computer – “Beaten paths are for beaten men.”
Cheers[
]I agree with Crashy that Sydney and Melbourne are not the places to buy right now. Brisbane has been going through a ‘catch-up’ so while prices have risen steeply over the last 24 months, properties are not necessarily overpriced. I don’t know about the other major centres.
The Sunshine and Gold Coasts have also risen sharply as have virtually all sea-change locations.
I think there are still good investment property opportunities out there, they just take far more work to unearth and are not going to make you wealthy in a couple of years.
My 10 cents worth. Cheers[
]I agree. Now that many properties within 30 kms of a major CBD are offering 3-4% gross yields why would you buy rather than rent? 18/24 months ago it was a different story.
FHOG also distorted the market somewhat but that has worked its way through the system. So now you have a situation where the bubble has seemingly expanded close to the point at which it bursts – so either it maintains its integrity and prices plateau or it bursts and prices fall – who can say which.
Many properties are now priced on the greater fool theory – you’ll pay a crazy price if you believe someone else will pay a crazier price. What is there in the market right now that can maintain its momentum? I don’t see it myself.
Opposing views welcomed!
Cheers[
]As they say:
“Those who don’t learn from history are doomed to repeat it.”
What better way to learn than observe the successes and mistakes of others? Hopefully we don’t have to make all the same mistakes ourselves (I said hopefully!).
As a newcomer to the forum I find a lot of the posts very helpful.
I agree about cycles, but there is always someone prepared to tell you “Its different this time.” A lot of equity pundits pooh-poohed the long term Kondratieff wave – until the recent global equity market crash (which is what it was).
Cheers[
]To continue the analogy, if you believe that storms may happen from time to time you need to make sure that you have some crops that are storm resistant (+ve cashflow properties for example).
You can then afford some high-risk crops, which if harvested successfully will give higher returns but are susceptible to storm damage(typically neg. geared properties purchased for capital growth).
If the storm of property price falls does hit then those who have bet the farm on capital growth may find their harvest ruined!
Cheers[
]There’s flood-prone areas and then there’s Whoaaa!
Cheers[
]Its all personal opinion, but most advisers recommend an emergency fund of 6-12 months expenses in a liquid form (cash or easily and quickly converted to cash).
So your provision appears adequate at the very least. Of course your personal circumstances, security of income, appetite for risk etc. all play a role.
Cheers[
]Real life case study.
A good friend of mine is a Real Estate Agent. They sold 3 units to an investor 12 months ago for $80K each. Rental $165 per week each. A good deal for the investor.
The investor is now putting the units back on the market at $190K each and is expected to get close to that. A good deal for the new purchaser – I don’t think so!
Cheers[
]HousesOnly.
I agree with you. People will do almost anything to avoid losing their PPOR, but if they are maxed out on other consumer credit and interest rates rise or employment drops off they, have little choice.
There is some smoothing as a lot of PPOR purchasers will have locked in at low fixed interest rates for the next couple of years.
Unfortunately, in a globalised world, the matrix affect of so many global variables make it harder to make predictions than ever before. What if there are significant terrorist attacks in Europe/USA – will Australia be seen as a safe-haven? What if there was a terrorist attack on an Australian CBD? These are all new variables.
In the end all we can do is make our own best guesstimate of the future and act accordingly. Of course too much info tends to defer a decision – sometimes its better just to take informed action without trying to factor in all the possibilities!
Cheers[
]I purchased the Cashflow game about 5 years ago and played it a lot with my kids, then teenagers. It was good fun and taught the kids a lot about investing in assets rather than spending on depreciating non-essentials.
It also showed them how having kids was an enormous financial drain and impediment to becoming financially free! I don’t know if this was a positive learning point.
I would recommend the game to those who are not financially sophisticated – this includes most bankers, accountants etc!
It was expensive then, and I presume it still is – but we got value out of it. Maybe you could advertise for a second-hand one – there must be lots of near new untouched games sitting in people’s cupboards.
Cheers[
]Hi Guys.
The posts make interesting reading. To me the key issue in property prices is affordability – that is at what point Mr. & Mrs. Average can’t purchase the average house in the average suburb. That’s when prices stall or drop.
I know its a simplification, because issues like international migration to major centres and inter-state migration (especially of greypower) also have an impact.
But when I see first-time home buyers in Sydney paying 500K+ I get concerned. Executive Dinks (double income no kids) are not the norm, so where do Ma & Pa Average live? There is a logistical limit to how far from their work they can live, and there are still plenty of ‘ordinary’ jobs that need to be done in the CBD.
My opinion is that an interest rate rise of 1-2% and some slowing of the economy could have a significant impact on Sydney/Melbourne prices. Brisbane is somewhat different due to inter-state migration of retirees, but would still be affected.
So what about +ve cashflow properties in regional areas? They are better insulated against falls but could turn cashflow negative after interest rises (I’m ignoring wraps). The seemingly mad drive to acquire properties in regional areas by investors does mean that some could come badly short, particularly those with neg. gearing.
I still think there are good deals to be done, but the ‘herd’ mentality is going to see some less astute property investors taking some pain in the next few years.
Where is a good crystal ball when you need one!
Cheers[
]Ultimately everyone’s right! Steve, being an asute businessman, leverages his skills and expertise to produce various income streams and optimise income while spreading risk. The book etc. is part of that.
Anyone who has hit upon a system to make serious money keeps it to themselves until either
a. They have enough money, or
b. The system is no longer as profitable or as applicable as at first.Either way, the best way to profit further is to sell the system to others. This is what Steve has done and good luck to him.
I have learnt a lot from Steve’s book. Yes, I was disappointed that the majority of his properties were wraps – as I am seeking a long-term buy and hold strategy, for income and capital growth – and wraps don’t give you that. But nevertheless the value of the book far exceeded the cost.
And yes – putting the strategy into a best selling book does increase competition for potential properties, but the good news is that 90% of book buyers never read past the first ten pages!.
Cheers[
]Though ‘the thread is dead’ I couldn’t resist getting in on this one.
I too got a lot of encouragement from RK’s early books. He changed my paradigm on wealth creation. Not with practical processes (which often were not valid here) but with a concept.
He was ‘a finger pointing at the moon’. Don’t worry if the finger is crooked or not, it’s the moon thats important.
As for his ethics, as a believer in karma I believe RK, like all of us, will get back all that he puts out, be it good or bad.
To follow anyone’s teachings blindly, without applying the filter of your own logic, reason and research is to fool yourself.
RK added value to my life, for that I thank him and move on. I don’t need to judge him or praise him. Thanks for the lesson.
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]Hi.
I have purchased properties in NZ and Aus while resident in each particular country so I can’t help re. non-resident purchases.
What I can tell you is that the majority of NZ banks are far easier to deal with and much more efficient than the ones in Australia (which is strange given they are virtually all branch operations of Aussie banks). You can get finance decisions in principle within 24 hours and confirmation shortly thereafter (at least you could when I was there a year or two back).
They are hot on where the deposit is funded from however. They don’t want you borrowing that too.PS. No Stamp Duty or Capital Gains Tax in NZ, but not sure of tax position for Aussie Tax Residents.
Good Luck[
]What you were asking your partner to do was give up 16.7% of their share of the property (reduced from 60 to 50) and increase your share by 25% (from 40 to 50). This to be in exchange for your time and effort in managing the property.
But percentages can be confusing. Lets say the current value of the property is $100,000. Then your partner didn’t believe that giving up a 10% share of the property(currently $10,000) was worthwhile for you managing the property.
They probably saw it as effectively giving you $10,000 of their $20,000 deposit.(All based on the fictional $100,000 value, but you get the point).
Often emotion plays more of a role than logic in these decisions. It really is all about the way you package the proposal – maybe you could have retained the 60/40 split and negotiated a $ price for you to manage the property, to be deducted from the gross income (especially if income rather than capital growth was the objective in purchasing).
Hope this helps!
Brianhc[
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