Forum Replies Created
SCAMP,
Very easy to go backwards and forwards with this discussion. The only difference between us is I'm putting actual figures and situations where at the moment yours is mainly theory. Where are you getting these figures of 150K down to 100K down to 75K from. Put the theory into practical figures with proof to substantiate what you are claiming, otherwise your posts have no credibility. BTW the wage I was living on back then was around a 5th of what the price of the house was. My risk of wage 1/5th plus rates of 16 and 24% was very real and high.
Ohricey,
I'm not up to date on requirements for grants etc but if you are in doubt about the legality of your grant then check it out first before doing anything else. As mentioned by others check the cost factors again and I would advise against using all your equity unless you have cash reserves or other items you can off load if you need cash.
GMH454,
Did you notice I wrote one main thing, not the only thing. Australia will always benefit from immigration and could benefit a lot more if the rules were relaxed in certain areas. Australia is still seen as a mecca for many overseas people wanting to migrate to a new country. Even during hard times what we experience in OZ is nothing in reality to what others experience and why it doesn't matter how bleak some may say our economy is there will always be people wanting to come. Where jobs may be lost in some areas during hard economic times increased immigration creates others.
Don't understand why certain people love the phrase ' property doesn't go down' when trying to prove their point. Are these people really so out of touch that they think investors don't understand about property cycles? There are times when values do drop and these critics love to sprout this but why do they always fail to mention that values also rebound and in most cases just as quickly as they had dropped and then proceed to go higher. A key factor to investing is knowing what timing the market is in and invest accordingly not trying to time the market. A good example of above is a property in mid 80s worth 75K went up to 90K late 80's and then back down to 80K late 80's early 90s. The same property slowly rose to 180-200K around mid to late 90's and stayed in this range until early 2000 era when prices started to move and now in 2008 over 300K. For this property to go down in has to go below the original price of 75K. Can't really see this happening but it is debt free so not a problem if it does. would love to know what investments these same critics have that they can get 75K from at the worst possible scenario after having it for 20 years. Did I forget to mention 20 years of positive cash flow and better returns than any bank investment would have done. Maybe not as good as some shares, stocks commodities etc but that's not my forte.
Wobbles,
Better to start at the bottom end and work upwards.
Get some trades people in and get them to quote you on fixing the place up including the time it would take.
This then gives you a ball park figure on what you may need to spend and how much time.Can you find tenants that would move in whilst the rent is cheap and who will also allow you to come every weekend and tidy the place up. You can have an agreement with them to increase the rent by X amount of dollars when it is all finished.
Finally, be careful of what agents tell you in regards to what rents you can get.
Ohricey,
You appear to be thinking in the right direction.
Look at the bottom end of the market that is within your price range.
If property values do drop then it is normally the bottom end that doesn't drop as much in real figures.I don't understand why others are mentioning this figure of 400K when it was stated in the beginning that the bottom end was where this future investor is looking. One of my favorite properties is a 2 BR unit picked up for 72K (2002) situated in not the best part of town. Everyone said I was crazy for buying as tenants were from low socio economic groups and places were frequently trashed. The place was trashed twice and insurance covered everything but that same property now is over 200K and debt free. In the beginning it was costing me around $100 month to help cover costs but now it is all paid for and a nice little cash cow. Same tenant has been there for nearly 4 years.
The point is you don't need to put your self in to financial hardships by over borrowing. Start small and work upwards.
Scamp,
If done the right way there is no reason why investing in property should ruin a life. The key is due diligence and investing wisely. Yes there are some who have tried to jump in the deep end and over borrowed but this appears not to be the case here as we are talking the bottom end of the market. If Ohricey finds something that suits his purpose for around the 150K mark I don't think any major crashes are going to affect him that dramatically. If the market does go up he won't make the big dollars but he will make some and have gained some valuable experience.
You appear to have knowledge in certain areas so why not use that knowledge to help people attain their goals rather than the fear and doom approach. Point out where problems could occur so they can be aware rather than just saying the sky is falling and being negative about property investing. I bought my first property in 86 when interest rates were 16% first loan and 24% bridging. Survived the 89 recession we had to have and the 96-2002 slump. This span of 20 years has seen the property go from approx 75K to over 300K. I could have easily listen to people like yourself who were all doom and gloom about interest rates and done nothing but instead I counted my pennies took the risk and hung on for the ride.
Do you think this place will crash to pre 86 prices and I will be ruined for life?
MACNATT,
You have two properties.
(1) What would be the difference if you sold the other property (if it has equity and put that towards the one you are having problems with now?
(2) Have you checked what refinancing options are available to you? IO, Longer term. Anything that will help lower your payments.
(3) You have identified a cash flow problem and are there any other things you can do to help alleviate this shortage?
One main thing that appears to have been over looked and currently is helping Australia avoid the recession or depression that hit Australia previously is immigration. As we open our doors to more immigrants they create jobs whilst also putting money in to the economy.
Personally, I think it would be better if members tried to give options or suggestions to help the situation rather than focusing on the negatives of the situation and commenting on doom and gloom. This member has stated they are facing difficulties so don't need comments that berate them and belittle them. Some of us here believe things will turn around and some of us here think harder times are ahead but none of that is needed now.
What is needed is solutions, suggestions and ideas and not sprouting for the sake of sprouting.
SCAMP,
I think you need to use another example rather than Japan and can you validate the source of your figures as they appear to be highly over exaggerated. If you can quote the source I can notify them and get them to correct their information.
Remember : In Japan house prices have been DROPPING 70% total value over 10 years.
That's what is about to happen in Australia : House prices dropping EACH year for 10 years long.
You really, REALLY don't want a mortgage of 550.000 AUD for a house worth 100.000 when you could have made 500.000 AUD by investing it in other things ( like banks , after they crashed ).Just to clear up your reference to Japan. Japan had a bubble bust that affected their economy. This had nothing to do with real estate borrowings but on how Japanese financial institutions lend money to each other and their company groups. If a company belong to the same group as the bank goes belly up the debt is just written off. Most banks allow up to 4X the companies worth before any talks take place.
Property values: The reason property values have gone down in Japan and continue to do so is because of the JONES EFFECT. Basically the Japanese prefer items that are new. Properties (Land 100K + House 300K) that are 400K when new are approx 300K 10 years later and 200K 20 years later down to around 150K 30 years later. What actually gets devalued is the house and not the land. the land still has roughly the same 100K value give or take a 1%. the house on the other hand has items 30 years old and the Japanese would prefer something new. What they do next is knock down the house and build another 300K house. The average house costs for building 10 years ago and today are still the same. The same JONES EFFECT can be applied to anything of material value in Japan such as cars, TV's, DVD's etc. Cars that are 10 years old are anywhere between 5-15% of their original value.
Finally, Japan has no regulated financial laws and lenders can charge rates of up to 100% interest. Nearly 12% of the population owe money to non bank lenders which have ties to crime groups. Japan although having the highest saving rate per person also has the highest debt rate per person.
WEALTHYJVD,
Maybe better to start off small and work your way upwards Set your various goals and time frames and aim towards those. I originally wanted to have just a second holiday home and worked towards that but over the years have added a few more. I turned a 2K borrowing back in the mid 80's to just over 2 million in properties and approximately 65-70% equity. If the market was to crash and values dropped 50% I'm still sitting safe. The best advice is not to be too greedy and set your self reasonable achievable goals. It took 20 years to get where I am and it hasn't always been easy but life is what you make of it. Forget all the hype of buying X amount in so many years that you read in papers etc as those times and rates were different to now, so the style of investing also needs to change to meet the current market.
Wealthyjvd,
There is no easy or one answer to your question.
There are various methods that can help you achieve this goal from buying positive cash flow properties only to earning big bucks privately. The important thing most of all is to read and then find the method that you feel comfortable with and try it.I'm old school and prefer the buy and hold positive cash flow method using equity gained too secure more properties. I might not get to financial freedom as quick as some others but I will eventually get there.
alexbigal,
Have you had any luck in finding a mentor?
Your goal although sounding good will depend a lot on what you consider to be financial freedom.
How much do you need to cover those monthly expensive and have a little more?3 Years will be a tall order to achieve this considering the current economic situation and dependent on how your business and current investments are.
hbbehrendorff,
The biggest risk to Australia's future is Australians. If we take the attitude that everything will be doom and gloom and stop investing and spending then we will have a recession. What is needed is responsible investing and spending and not the doom and gloom that some are trying to install in others.
The problem with debt is not those who have it for investments but those who have it to buy depreciating items such as cars, TV's etc. Property values will rise, fall, rise and the cycle will continue. It is how much of each that will determine where the market is in the future. Materialistic possessions comes in all sorts of forms and is not just limited to technologies but to livestock, food and humans as well.
Welcome to the site and OZ.
You may want to compare the rise in property over the next 2 years against the FHOG.
Is it worth the wait? How much will you spend on rent in the meanwhile?
You can apply for exemptions from certain foreign investments rulings.
ummester,
Investing in IP's is not only done to increase ones bank balance.
It is also done to provide financial security for our children and their children.
Aren't they part of society and aren't we giving to them.Having IP's is another form of small business and has just as many risks.
We give back to the community by providing accommodation, that is normally affordable and decent.
Society could easily afford people working only 50% of their life time if managed in a financially and viable way.
Unfortunately there are those that would prefer not to work and only live off hand outs.
There will always be divisions in society financially and it isn't fair to criticize those that have gone without in the past to create financial freedom for themselves today.Dr Spock,
Make your offer about 20% less than you want to pay and work upwards.
Never ever worry about others when making offers.
Most R/E's just want to get the offer stage over and done with plus the higher the offer the more commission for them.
Your money your deposit you decide how much.
If vendor wants to sell they will accept.
Take your time and don't rush. There will always be other deals. Some will be better and maybe some wont.I do think it would be better for you to have your finance and trusts etc all set up first before going any further with the process.
You could hypothetically let them know that you may have paid too much and see if they would give you the money.
Another option is to donate the money to a charity.
Tony,
You haven't mentioned if you owe any money on the vacant land and this needs to be taken into consideration first.
C2
No one company has the best. You need to find a policy that suits your investing needs.
I'm starting to feel sorry for Foundation with all the questions that he has been bombarded with.
The original question asked if property investing is worth it.
Yes it is but a key factor is being dynamic and knowing when to change ones plan or investment strategy.
I'm a big advocate of buy and hold and over the years it has done rather well for me although the late 80's was hard when interest rates were around 15%.
There have been times when commodities and shares have been more productive than property but that is not my forte so I don't delve into that area.
I've mentioned previously on other threads that instead of always looking for the highest return or the best cash on cash return investors should look for something they feel confident about and is within there comfort level. I'm not good on figures and are probably a lazy investor which is why I prefer buy and hold over time rather than sell or renovate.
I don't believe that even blind freddy could have made money over the last few years as bankruptcies have increased amongst home owners and not decreased over the last 5 years.
C2
Property boy,
If the real estate agent buys the deals you are talking about then how does he get a commission to live on.
Most of them go for the instant gratification of % of sale rather than % of investment return.
Would you take an instant $5K sale or wait a year for a property returning $100 / week cash flow?Real estate agents do buy properties for themselves and some of them are quite successful property investors.
C2
Hi Terry,
Thanks for the congratulations.
I know I can get better investment returns from OZ but I'm sort of looking way in to the future when the kids may want to come to Japan etc to live for a few years and somewhere for us to spend a few months of the year. The property is central to Tokyo and the airport on major train lines so suits a few purposes. If a miracle happens and Japan hits another bubble then who knows what the returns could be.
Let me know next time you are coming over so we can catch up.
How's Thailand coming along?
Hi All,
I think you will find that Steve along with his business partner developed a plan of buying properties that were either basically cash flow positive, were bargains that could be easily be resold quickly after minor renos etc.
They used what could be considered a very small deposit by todays standards and both their modest incomes to the best of their advantage.
You will find out that interest rates were quite low and the market was picking up when Steve first started to do this.
Steve has never said his plan was the best or perfect but quite a few people have followed what he said and are now quite successful property wise. People who have attended Steve's seminars etc have received more detailed information regarding his plans and methods.
People read 130 properties and automatically think all these properties much be really expensive etc but you will find that a lot of them were in regional areas, were very cheap but returning good weekly/monthly figures. This coupled with either bank managers who understood what they wanted to do made the process easier for them.
If you read posts from when this site was first set up you will a lot of the information that has covered how Steve did things etc.
My suggestion to those who didn't find the answers they wanted in his book is to start using the search function here and read early posts from when this site was first set up. I've been a member here and haven't bought any of his products etc but have received information from this site and fellow members that has enabled me to become reasonably successful in property investing.
Cheers
Hi Terry,
Long time no chat.
I'm more incline to pay cash.
Land is probably around 75K which should put bottom base price around 100K after about 20 years of depreciation.Eventually will keep one apartment vacant for rellies & and ourselves etc when we want to visit Japan.
BTW expecting the first bub in about 3 weeks.Cheers
C2
