This one is good.

"Buffett, widely seen as one of the most savvy investors in the US, was bullish on the future of the US economy. "Money will always flow toward opportunity, and there is an abundance of that in America," he wrote."

If the tenants are going tomorrow then fine wait, how long would you like to wait Rachel, to find you need to replace whatever they have smashed up? I think I'd like to know now.

Buzz word for today – PROACTIVE.

D

Hi all,

Those are great comments Steve.

Something will have to give eventually, whether it is government policy will remain to be seen. I think the current crowd pleaser policies will remain until a party/government presents itself (for election) that will perform a real and considered change to the tax system. Many people would appreciate a real goverment who makes decisions.

So far we are stuck with lame duck politicians who are up for election time and time again. No one wants to present any policies that will challenge the status quo or get them the boot. Fresh blood into the political scene is stifled and and the ole boys (and a few gals) club will keep free thinkers and general intelligence out of politics. (Don't get me started with politics we will be here all night) 

The refinancing issue is a biggie too. How do you police this sort sort of policy? Do the banks report each financial transaction to the government, it may become a bit big brother. Sliding tax scale on percentage of refinance?

The Australian public are becoming more intelligent (yes they are) and with this will come financial intelligence. People already understand that when they spend money interest rates go up. Bye bye retail spending.

This next year will be a very interesting one.

Very interesting conversation.

D

So.

If there is a bubble it makes me wonder how many people will jump on the bubble wagon. "I said 10 years ago there was a bubble" that sort of thing

Investors and property owners alike need to ask the question. If, then?

If there is going to be a crash then…… what is the likelihood of this happening to X, Y, Z of my properties? What effect will this have on me personally? If there is a crash, then I will do x. That sort of thing.

I think a few people are discounting really how much people have stopped spending in retail and started shoveling money into their mortgage. People are discounting how much equity people have in their properties. Many comments speak as though most people bought houses yesterday. This is not the case.

I saw the comment made (cheers Steve) that people access equity like an ATM. I'm intrigued by this as I don't personally know anyone who does this. Sure people use equity to buy more property but after that point in the purchase the next property is a good or bad investment based on what the investor buys. They still can only have 80% in a lot of cases against any property.

I haven't yet met anyone who has drawn against the equity in their house an bought a plasma tv or gone to Maccas. I think I would be very afraid if I did.

I'm not discounting the bubble theory. But like Evolution it remains just a theory and any attempt to pass it off as hard truth at this point in time is incorrect.

I would prefer to wait and see. Sure I'll hedge my bets, I'm not stupid, but I won't be frightened by the mass media, false message mongers and people who don't own any property.

My 3 cents.

D

I think this is a really interesting take on this question.

Many of the comments made on this issue have been excellent. Thanks Steve and everyone for posting.

I have more questions…

AAQ has already raised the manufacturing issue, What of infrastructure projects and other initiatives that create jobs and ongoing jobs? Seems like quite a few in high places have shrugged and said hey the mining boom will take care of us for awhile. Then what?

Retail is getting it in the neck. Eastern states, especially QLD are getting it in the neck, as far as I can tell there hasn't really been a flow of money into anywhere in WA apart from the mining areas.

I think here in Melbourne we will see a bit of a tough bit, you can't have values rise in some suburbs by $400k in three years then expect it to keep going up.

Having said that what of the Victorian state governments initiatives on stamp duty. Will this just delay the inevitable or will a new bread of buyers step out of the shadows? Gen Y's who everyone has discounted.

The baby boomer effect hasn't even started yet, will this cause problems with high housing stock as they sell up or will this cause more employment as they opt out of the workforce to live off investments etc?

Watch the retail space for the clue to any rate rises. The RBA seems to have clipped peoples wings very suddenly and spooked people. Point to a person you know who has not cut their spending on 'stuff'. I think we are also discounting the amount of equity some people have in their properties. People may not care that the prices drop as they have a buffer. Not everyone will have this.

What of the return of 95% loans. Indentured slavery or banks confidence in the market?

I would be interested to hear Steves opinion on the "prestige areas". Steve – Do you think that values will decrease in these areas as people begin  to doubt the "perceived value"?

Please keep informative discussions such as these coming. Thanks again.

D

Let's dissect the 'average Australian'.

9-5. Generally ok in their job. Goes out and has a drink with friends on the weekend. OR has dinner out or take away. Happy with a nice new car or reasonably new car. Maybe paying for private school for kids.

Has a hobby. Goes to an event once a year. Has not really much ambition above eventually paying off the family house and moving to the beach in their state.

How big is their drive to be financially free? How ambitious are they? What are their views of money? Do they scorn wealthy people and say oh money 'it's the devil'? Are they financially educated? How motivated are they to actually leave the safety of their jobs or get rid of the nice car?

Will they make cuts in lifestyle to get ahead in the long term?

Is there still an average Australian?

Everyone is different, you cannot bake the same money cake even if you follow the same recipe. What works for one person doesn't work for another. Peoples age, risk, ability to access funds etc, etc makes it hard to do one size fits all investing.

What about mindset? What about a positive or negative outlook? People become extraordinary when they step outside of negative and change mindset and do what they set out to. Obviously Steve could have stayed an accountant however he made a change and a conscious decision to step outside the box he was stuck in and become and extraordinary investor.

How many average Australians even want to try that?

Just some thoughts.

D

Ps. Welcome back Number 8 it's been awhile also..I thought you were already financially free, what was your own experience?

The vendor finance was done as Steve being the vendor, and as I understand it he did a few that way. You'd still have the control of the property until it was refinanced out of the agreement. Probably a nice way to have a lot. Also I think he was never afraid of selling. Plenty of other 'gurus' tout the 'don't ever sell' message.

We did 0-5 properties in 6 years (it was supposed to be 5 yrs), now we have culled to 3 and it will be 0-15 properties in the next 2 years lol. I'd just be happy with a couple mil to chuck at commercial tenants who don't bug me Oh yeah and an island, race track, Bugatti Veyron, corporate jet, blue chip house on acreage…….wish real hard hahah!

Quality not quantity….

There is another book as mentioned above, and the illustration is how when you get plenty money and plenty houses you need something else as well. Still good reading.

D

It's pretty dirty. Plus add the fact that state govts are sitting on massive amounts of land ($450mil estimated in Vic) and of course house prices will rise.

There are a lot of people, companies, govts, banks etc with a lot to lose if prices drop. All these people will do whatever they can to ensure that the prices stay high.

D

Many thanks to the creator of that page 'Dan'. He is obviously an expert on the words bubble and craziness. My favorite line is "Kangaroos cannot save us from basic economics." No I guess they cannot.

I am completely bored with the idea that 'the bubble" may burst any day now and million dollar mansions will be worth $50.

D