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the only difference is that inflation is not as high, but that is offset against the fact that neither are interest rates.
but, as they say in Tasmania… “it’s all relative”
Originally posted by tony wpb:bankrupt properties dont exist
i missed that final sentence, which proved to be the most laughable statement i’ve seen on this board since i signed up.
have you never heard of Austwide, OST, Heine, Estate Mortgage, Cambridge Credit, Walker Corporation?
did you never see the vacant development projects in the major cities or the empty office buildings in commercial real estate during the early 90’s?
if it wasnt for the likes of Armstrong Jones, IOOF and the government bailing out some of these companies then the real truth behind bankrupties in property would be a hotter topic.
Originally posted by tony wpb:i hate to break it to you but there are no better results than property .
since 1982 only 38% of the asx 100 is still in existance , some have had take outs but a large % have gone bankrupt, that is the best 100 companies in australia
i could be ps 146 in 8 days and have the licence to invest your retirement fund and it would only cost $3800 and that is legal and that is what happens. these so called experts are the ones trading your money?i dont care about comparing apples , no offence chipper , i invest to make money and the word diversify means spread your risk because you are bound to lose. bankrupt properties dont exist
ill try to dissect your 3 main points calmly!
once again i will reiterate that it is an absolute fallacy to suggest that property gives you the greatest returns than any asset class.
while it is true that the sharemarket bounces around wildly and will crash every decade or so, the overall return from Australian and international shares (adding back the tax advantaged dividends) is greater than you get from property.
I accept the arguement that people are more comfortable with property because the agent doesmt stand outside your door every day and tell you what its worth – AND WE ALL KNOW WHAT AGENTS ARE LIKE WITH THEIR VALUATIONS!
As i said earlier, unless the business or economy taking place inside the walls of property is profitable, then the value of the property cannot go up. That is also true for residential property because if the borrower does not have the capacity to repay a mortgage then property prices begin to fall. This will happen when interest rates go up, unemployment figures worsen or that wonderful land tax really starts to bite.
THIS IS CALLED A “PROPERTY MARKET CRASH”.
Getting back to the “graphs” arguement, i suggest you overlay the entire performance of the Australian sharemarket (every stock) since day one, with that of the property market (every state, every sector) and you will see clearly that shares outperform. Now while i may not be able to buy into the new hot suburb for property, let alone buy an exposure to the entire property sector, i can buy an exposure to the entire Australian sharemarket via an Index Fund.
This MASSIVELY reduces my risk if i can tolerate the more apparent and see-through market fluctuations.
Just because the sharemarket might slide 20% in the next 12 months, doesnt stop CBA and Telstra and BHP making billions of profits each year that they pay to me in the form of a fully franked dividend and at a rate that grosses up to be more than my net rental income.
Your comment that only 38% of the top 100 companies from 1982 still exist today needs further research. while that may be true, your assertion that a large percentage have gone bust is ridiculous. I’ve spent the last week researching listed companies that made up the top 200 in 2000 and of those that no longer exist, only a few companies (eg: HIH and Pasminco)went bust. i’m well aware that OneTel and others have gone bust but the greater majority of your “missing” companies have been renamed, taken over, demerged or merged into new entities with the result being an exceptional return for shareholders.
If you can stomach the truth, it is the LISTED PROPERTY TRUSTS than have shrunk to a mere fraction of their pre ‘2000 numbers, primarily due to mismanagement, greedy property managers and the effects of worldwide recession during the early parts of the 21st century, 9/11 & SARS etc whereby fewer people are travelling let alone staying in ritzy expensive hotels or resorts.
In fact the listed property trust indexes have significantly underperformed the All Ords Index over the past 12 months which is usually seen as a prelude to the same thing happening in residential markets.
Your comment about being PS146 compliant in 8 days might well be true, but at least you are required to have some basic education in giving investment advice as opposed to what Real Estate Agents are required to have. I then challenge you to join a company and hand out financial advice with your PS146 accreditation. You will need at least a further 2 years experience before they even licence you.
What is so wrong about our laws here is that Financial Planners are buried in loads of compliance beaurocracy while the real estate agent can spout off at the mouth about how much your property is worth. Remember, the agent is contracted to sell specific properties whereas a financial planner decides what is appropriate then goes out into the market place and purchases it. There are things called “Open ended Managed Funds” whereby new assets are purchased on an ongoing basis ONLY when the money arrives. They dont sit in the display window with a “for sale” sign on them.
A classic example is Australian Capital Reserve who advertise some astronomical guaranteed rate of return for investors, and they clearly target it at older Australians with their fancy “rock solid” sounding name.
The truth is, they are 2 Parramatta based property developers hoping to build and sell property to pay back those guaranteed returns.
Why isn’t that fully disclosed on the TV advertisements?
whats the point of knowing specifically what someone made out of XYZ Street Cityville when i can never buy it?
someone can tell me they made 100% out of AMP shares and i can go buy some on the market if i feel like it.
youre not comparing apples with apples. no matter what someone tells me their property has grown by, i can never buy that specific property.
what utter rubbish your suggestion is that statistics are vague. statistics are facts, not like some unrealistic valuations a real estate agent gives when trying to flog a property. the beauty of the stockmarket is you know exactly what you are going to pay (or receive) when buying or selling shares.
think of it like this, if you buy into a small commercial property, that property can only be profitable and increase in value if the business going on inside the 4 walls is profitable. it is those businesses that we purchase on the stockmarket.
this has been a good debate and if anything has been clarified it is that everyone has an opinion on whether shares are better than property, but i think ive made up my mind.
i dont have the cash to buy another decent property particularly when the market is a bit overheated and with all the taxes and add-on costs etc. there is also the risk that putting $350k into another single property is too risky now.
ive learnt that i can go into a share syndicate with about $200k and have it professionally managed. i’ll get exposure to a wide range of companies in order to dilute my risk, get the same negative gearing benefits plus some extra tax benefits, it will be far more liquid and will diversify me away from property.
ive talked to my mate and he has shown me a proposal that he has put together and this syndicate set-up will be run according to a model established in the US which outperformed the S&P over a 10 year period. it has quadrupled peoples money in 10 years.
im well aware that may not happen in the next 10 years but it is far more appealing than going into property again.
Originally posted by Jerzy Balowski:imagine your property, worth $318,000 in 2000, and holding on to that property, only for it to be worth $150,000 today.
This scenario is virtually unheard of in real estate, including all the two-tier marketing horror stories, yet it is common in the share market.
welli used to be like you once. i was brainwashed to thinking that property was the be all and end all of investing.
your comment reminded me that my sister bought an investment property on the gold coast and even after 5 years she couldnt sell it for any more than she paid for it.
ok, so thats nt as bad as the example you gave, but once you apply the effect of inflation, all her associated costs like council rates, agents fees, stamp duty, repairs and insurance she lost big time on it (and also went 6 months without a tenant a few times in those 5 odd years).
it struck me that you dont have to worry about any of those things when you own shares.
looking at what was faxed to me, they bought AMP at $4.50 about a year ago.
also the CBA was bought at the float and they reinvested dividends for the first few years and bought other parcels along the way.
well, to answer foundations question about what the syndicate has achieved i just had to ring my mate and find out. also because im getting more and more interested as the night wears on.
he faxed me their valuation statement and i cant decipher it too well but this is pretty clear:
Alinta Gas +37%
Amcor -7%
AMP +132%
Centennial Coal +62%
CFS Gandel +13%
Commonwealth Bank +218%
Commonwealth Property +8%
David Jones +59%
DB Reef Trust +11%
Fosters +22%
General Property +28%
ING Office +14%
Perpetuals ISF +32%
Platinum +15%
Qantas +13%
Suncorp +102%
Tabcorp +60%
Telstra +4%
Westfield +27%this is just the capital growth and the income that i mentioned before is about 6.5% on current market value but closer to 15% on original purchase price.
can you now see why i am very interested?
Originally posted by woodsman:Chipper,
One swallow does not a summer make.
How much did they make in the last five years?
The same issue applies with property until the end of 2003. Most people with any property made money in those preceding years
well i’ll ask him what theyve done over the past 5 years.
irrepsective, ive seen the graphs that prove the broad australian housing market does not achieve better returns than the broad australian sharemarket.
you might get lucky and buy in the right location or buy in a bad area like it seems i did.
face facts, a real estate agent has been contracted to sell specific properties and of course they are “all great investments” whereas a stockbroker is not contracted to sell BHP over Coles Myer or whatever. he just goes into the market and buys whats appropriate.
ive done some reading on another forum tonight and learnt quite alot.
think about it, for property to increase in value, the business going on inside the property must also be profitable. and its those businesses inside the property that you buy on the stockmarket.
I’ve been browsing these forums without ever joining up until i read this post cause i felt i just had to say my 2c worth.
For years i was a property man until one of my mates told me about the kind of thing you’re on about. Anyway he went into a syndicate with a few others and they all borrowed the money and put it in shares. So its still negative gearing – same deal really only its not property.
Well i looked at the portfolio and what they have achieved and when i compare that to what my property investments have done i nearly fell over. Also, now thanks to the great state government we have with all the land taxes, agents fees, insurance etc, basically my rental returns are a big fat zero on one of my investments and about 2.0% on the other one.
So i am seriously considering doing exactly what your friend suggested and diversify and finally get a decent tax benefit from neg gearing because apparently you also get tax credits or something from the income you get from a share portfolio.
My mate basically said they are getting income of about 6.5% from the syndicate which pays off most of their loan and they’ve also made over 20% capital growth in the past 12 months and don’t pay any taxes or insurance or have tenancy concerns. Anyway he told me heaps of things that sounded too good to be true until i researched it a bit more.
If you have any specific questions i can ask him and let you know on here because i’m still learning too.
