Forum Replies Created
- our current IP (yes, it used to be my PPOR) IS actually for sale. Won’t pay any CGT (if it sells soon), in fact will make a loss, because it was at it’s peak value at the time I started renting it out. So that’s good, and even better that I can use this capital loss to offset any future capital gain
Err, wha..?
You’re going to claim a capital loss based on the percieved / approximated / appraised loss of value since you moved out and started recieving rental income?[blink]Well, this tactic sure is a new take on ‘timing the market’… only I think you’ll find the ATO less than impressed by it.
Cheers, F.[cowboy2]
My simple advice is that in uncertain times, and particularly when starting out with any kind of investing it is best to be cautious – don’t over commit yourself.
Wit property, a PPOR can provide fantastic tax-free gains, but it can also cost a lot to look after and there is no guarantee of capital appreciation. If you buy, aim for something you can pay off in ten or fifteen years. The savings in interest costs are huge.For example 2 couples, both with a maximum weekly accomodation budget of $320 are buying PPORs. The first couple buys:
$150k over 15 years
$312 p/w repayment
$93,000 total interest paymentsThe second couple buys:
$205k over 30 years
$317 p/w repayment
$289,000 total interest payments
both scenarios assume constant 7.07% IR.After 15 years the first couple have finished paying off their PPOR and start saving or investing their $312p/w.
After 30 years, the second couple has paid off their house, spending a total of $494k.
Meanwhile the first couple have paid off their house for $243k and also invested a further $243k (or at 6% compounding, $395k).Value land, look at the positioning of the house, consider whether you are likely to be able to subdivide / dual occ later.
If you’re interested in shares, managed funds can help you minimise the risk of losses. Read WayneL’s Trading Pages for some insight into how the pros work. You could try your hand at some direct investment with a couple of small parcels to get a feel for the mechanics of shares – conditional orders etc.
And finally, if you think Robert Kiyosaki is the guru, read This Article he’s written on the subject of house price booms, and their aftermath.
the best time to get rich is after a crash. My suggestion is: if you are new to real estate investing, this is not the time to jump in. If you are holding “junk” properties that are costing you money, you may want to consider unloading them.How long will the bubble last and keep expanding? I do not know. I just wanted you to know that I am currently preparing for a crash, an economic recession, and possible global depression. Why? Because this is a very big worldwide bubble… the biggest I have ever seen.
I also support his view that a few good gold coins are a very sound investment today.
Good luck with it all,
F.[cowboy2]All advice is general and should be considered as such. It does not consider the specific situation or goals of anyone etc blah-de-blah.
Originally posted by gafama:Remembering that property doubles every ten or so years (it has for the last 100!) then if you replaced the $1.3M one with 2 @ $400K and $600K, in ten years you’ll have assets of $2M rather than assets of $2.6M (that’s another $600K disadvantage.)
You’re obviously new around here…
Try a forum search on “double”+”ten”+”years”. You’ll save me a lot of effort.
F.[cowboy2]Originally posted by Don and Liz:
Hi Foundation,You lost me a bit there. How will the profits become illusory!
Most of the real estate “profit” from the last 5 years or so exists only as paper / equity wealth. Unless the house/s are sold, the “profit” can just evaporate (ie, it’s an illusion). Unfortunately for many, debt is much harder to shake.
Regards, F.[cowboy2]Do the new Peugots have such engines? The fuel consumption on their mid size diesels are incredible. If they can run on bio-diesel I might be interested.
Any idea?
F.[cowboy2]More of a certainty than a chance. Better off sticking to Terrigal and running a ‘ring fence’ operation on a forced seller…[fear]
Regards, F.[cowboy2]
… A $60k drop from $208k is only 29%.
That would take the median Ipswich house to $148k, which admittedly sounds cheap, but only comparatively.
Rent would still need to be well above $200/w to make that an attractive cf+ deal, and I believe there are plenty of 3 bed houses renting for $200 and less.Regarding house price perception – I was talking to my parents recently on the subject. They were looking at purchasing their 5th IP in a small country town for around the $150k mark. They informed me that it was a “very good price for what you get” to which I reminded them that when I was living in Melbourne in the mid 90s, the house I lived in (E. Brunswick) was valued at $180k. Today that same house would be well into the $300k’s. If the mid 90s value was adjusted for inflation it would be around $240k for a current rental yield of about 6%. I expect that value to again be reached within the next 2-4 years through a combination of falling nominal prices and inflation. If I’m right, it sure won’t make $150k for a house in povertyville look like such a “very good price for what you get”. It’s all relative, see.
Regards, F.[cowboy2]
PS – Yes, my parents still talk to me.
Originally posted by Dazzling:Petrol at the bowser and slightly higher costs on everything else to account for transportation charges is extremely minor in the grand scheme of things for our family.
Agreed. I won’t start complaining until prices get above $2.50/l. I think reducing our reliance on oil would be a good idea, and higher costs at the pump will help. Anybody who struggles to afford $1.20/l is likely to be lacking financial nouse.
On a side note, today’s newspaper reports that Swiss scientists have developed a car using hydrogen fuel cell technology that “could circle the globe on 8 litres of fuel”. Neat.
F.[cowboy2]Originally posted by Wylie:I think you can have lack of stock but a slow market. Unless I had to sell right now, I’d be holding off, hence the lack of stock.
Yes, but I dispute that being the ‘problem’ at the moment. It’s not a lack of stock, it’s a lack of sales. Average time on the market is up around 50% in east coast capitals, indicating an excess of stock outstripping demand. To see for yourself, use one of the online RE sales sites – count the total number of properties for sale in a suburb, and check back regularly. Believe me, the numbers are rising.
Cheers, F[cowboy2]I’ve been told that by smarter people than me that the US$ is not going to correct anytime soon. From my reading their massive deficit actually puts downward pressure on the dollar.Yes. And no. The US Federal Reserve is prepared to aggressively defend the value of its dollar. It has been doing so with a series of interest rate hikes since mid last year. Sure, in the medium to long term there will be a lot of financial pain in the US, but there is nothing to suggest that a correction is imminent.
The US credit binge has been worse than ours..The US current account deficit is around 6% of GDP. Ours is 7.2%. At least our governments have been wise enough to run surplus budgets during the recent ‘fat’ years. Theirs have not.
Last year, Americans were holding onto $37 trillion in debt – more than $123,000 for every man, woman and child in the United States. This amount of debt is more than three times the total number of dollars in existence anywhere – in home and business equity, checking and savings accounts, stock markets and even those held by foreign investors (66% of all dollars are held by foreign investors, by the way). If all of this debt comes due, there literally isn’t enough money on Earth to pay it.
Kurt RichebächerYou have to love the power of fiat money…
On that matter, over the last 36 months, fiat money and reserve banking have enabled housing in developed countries to rise in total ‘value’ by 50% or 20 Trillion dollars (US) to over 60 Trillion. Brilliant! And people think I’m silly for hoarding precious metals instead of buying houses!Anyway, back on topic – I agree somewhat with Ausprop. Inner city will be more desirable than new outer suburb developments, particularly as traffic congestion has caused peak hour travel times to double in many parts of Melbourne, Brisbane and Sydney over the last couple of years. However, I think the effect of higher petrol prices on house prices will be slight if any and lost in the landslide of declining prices.
Slightly on topic – how to benefit from high oil prices? In the short to medium term some oil exploration companies should do well, but the smaller ones will be a loser in years to come as oil reserves dwindle. For long term growth I’d expect the biggest oil/energy companies to be best placed to develop or embrace alternative fuel technology. Anyone with a stake in uranium reserves should be a winner, and of course biofuel and sugar will provide alternatives to petrol.
(And don’t forget that a bit of gold and silver will be nice to hold when the Americans are forced to face the reality of their excesses!)Cheers, F.[cowboy2]
Leaving aside the apparent contradiction
Although the market has slown downThere seems to be alack of property on the market.[blink]…
I see no signs of the types of falls you are refering to.What? Nowhere or just Ipswitch in particular? According to the REIV, Melbourne median house prices have fallen $18,000 in just 3 months!
the REIV’s most recent March quarter figures showed a decline of 4.9 per cent in the median price to $352,000 Linkand $35,000 since December 2003!Link
Brisbane has seen falls of 3% over the same period. Why on earth anyone would think that a cultural backwater like Ipswitch would be immune?
It will be interesting to see what happens in the spring marketsI very much doubt it will be interesting at all. Except to read the hilarious spin the various real estate organisations come up with when the ‘spring bounce’ fails to materialise!
Cheers, F.[cowboy2]
I like the logic of your post ez-rent. I’m not an economist either, but I have a few thoughts.
From memory, I think a 10% increase in the cost of petrol translates roughly to a 0.5% increase in CPI. This is approximately what we look to be facing in the short term ($1.05/l -> $1.20/l).
Clearly this will place pressure on interest rates.
However, if oil prices remain high, increased transport and manufacturing costs will gradually feed through to consumer prices. Pretty much everything consumers purchase is either created from, harvested with or shifted using oil products. Even the little things – for example:Tesco, for example, is having to pay an extra £9million a year for its plastic carrier bags, which are made from a by-product of petrol. Source HereSo the effect on CPI and pressure on interest rates would be greater than just the index weighting of petrol.
Then there is the very real risk that the AUD will continue its decline against the USD (unless the RBA support it by the only means available to them – higher interest rates!). A barrel of oil is currently around $78 Australian. If the AUD falls to 0.60 USD, that barrel of oil will cost around $100 Australian – the same as if oil was $77 US now!
In the medium term I don’t see oil prices falling, in fact I would not be surprised to see significantly higher prices during the northern winter(s). Add that to the above mix…So how does a rising oil price impact property prices? Mums & Dads have less disposable income. There is a very real chance they will face higher interest rates. There is a greater chance of redundancy at work – particularly in retail as businesses find their costs increasing while consumers reduce spending. In short, higher oil prices do not encourage house price inflation.
On a brighter front, it might be a good chance to pick up a gas guzzling 4wd for cheap!
Cheers, F.[cowboy2]
Originally posted by westan:it makes you realize how hard it will be for our younger generation (under 25’s) to partake in part of this nations wealth, (unless they inherit it).
On the other hand, the over 25s (and baby boomers in particular) may discover that the fortunes they have reaped from property investing are largely illusory, the under 25s find that house prices have returned to their historic trend (as they always have in the past), and the intergenerational rift will heal.
Cheers, F.[cowboy2]Sorry Robyn, I was suggesting that a licensed financial advisor might be just the ticket. You need a financial plan, (as we all do), but this is particularly important if you intend to retire with $400k of debt outstanding… or $100k for that matter.
Cheers,F.[cowboy2]
Why on earth would anyone buy a second home in such a situation? You have 3 years of income left in which to pay off Four Hundred Thousand Dollars of DEBT!!!… or perhaps you have a massive lump sum owing?.. in which case would you really be better paying for a house than earning income in the form of interest? Which one is going to give the greatest yield?
Talk to a professional.
Cheers, F.[cowboy2]Once the will is read and this all is finally confirmed, I’m going to ask a judge, etc. to grant that minimum 25% that was due if dad had died intestate.Then, if legal advice believes we have a strong chance of success – I’ll also go after the two witnesses on the will (the relatives that arranged for the solicitor) for fraud – plus the solicitor himself, since he did not obtain any confirmation from the doctors that dad was lucid enough to do so, when it was obvious he wasn’t and it was his legal duty to do so.
Once that’s done, I may then also think about pursuing compensation for the suffering, anguish and possible relapse of my chronic fatigue all this could have caused.
This speaks volumes…
I’m sorry for your loss. The loss of your father that is.
Regards, F.[cowboy2]Originally posted by brahms:it was extended. no change.
No change… except it is reduced to $3,000 from Jan 1 2006.
Link Here
F.[cowboy2]GOOD IDEA TERRYANNG.
ANOTHER WEALTH CREATION OPTION FOLLOWS:I AM MARIAM ABACHA, WIDOW OF THE LATE NIGERIAN HEAD OF STATE, GEN. SANI ABACHA. AFTER HE DEATH OF MY HUSBAND WHO DIED MYSTERIOUSLY AS A RESULT OF CARDIAC ARREST, I WAS INFORMED BY OUR LAWYER, BELLO GAMBARI THAT, MY HUSBAND WHO AT THAT TIME WAS THE PRESIDENT OF NIGERIA, CALLED HIM AND CONDUCTED HIM ROUND HIS APARTMENT AND SHOWED HIM FOUR METAL BOXES CONTAINING MONEY ALL IN FOREIGN EXCHANGE AND HE EQUALLY MADE HIM BELIEVE THAT THOSE BOXES ARE FOR ONWARD TRANSFER TO HIS OVERSEAS COUNTERPART FOR PERSONAL INVESTMENT.
ALONG THE LINE, MY HUSBAND DIED AND SINCE THEN THE NIGERIAN GOVERNMENT HAS BEEN AFTER US, MOLESTING, POLICING AND FREEZING OUR BANK ACCOUNTS AND EVEN MY ELDEST SON RIGHT NOW IS IN DETENTION. MY FAMILY ACCOUNT IN SWITZERLAND WORTH US$22,000,000.00 AND 120,000,000.00 DUTCH MARK HAS BEEN CONFISCATED BY THE GOVERNMENT. THE GOVERNMENT IS INTERROGATING HIM (MY SON MOHAMMED) ABOUT OUR ASSET AND SOME VITAL DOCUMENTS. IT WAS IN THE COURSE OF THESE, AFTER THE BURIAL RITE AND CUSTOMS, THAT OUR LAWYER SAW YOUR NAME AND ADDRESS FROM THE PUBLICATION OF THE NIGERIAN BUSINESS PROMOTION AGENCY. THIS IS WHY I AM USING THIS OPPORTUNITY TO SOLICIT FOR YOUR CO-OPERATION AND ASSISTANCE TO HELP ME AS A VERY SINCERE RESPONSIBLE PERSON. I HAVE ALL THE TRUST IN YOU AND I KNOW THAT YOU WILL NOT SIT ON THIS MONEY.
I HAVE SUCCEEDED IN CARRYING THE FOUR METAL BOXES OUT OF THE COUNTRY, WITH THE AID OF SOME TOP GOVERNMENT OFFICIAL, WHO STILL SHOW SYMPATHY TO MY FAMILY, TO A NEIGHBOURING COUNTRY (ACCRA-GHANA) TO BE PRECISE. I PRAY YOU WOULD HELP US IN GETTING THIS MONEY TRANSFERRED OVER TO YOUR COUNTRY. EACH OF THESE METAL BOXES CONTAINS US$5,000,000.00 (FIVE MILLION UNITED STATES DOLLARS ONLY) AND TOGETHER THESE FOUR BOXES CONTAIN US20,000,000.00(TWENTY MILLION UNITED STATESDOLLARS ONLY). THIS IS ACTUALLY WHAT WE HAVE MOVED TO GHANA.
THEREFORE, I NEED AN URGENT HELP FROM YOU AS A MAN OF GOD TO HELP GET THIS MONEY IN ACCRA GHANA TO YOUR COUNTRY. THIS MONEY, AFTER GETTING TO YOUR COUNTRY, WOULD BE SHARED ACCORDING TO THE PERCENTAGE AGREED BY BOTH OF US.PLEASE NOTE THAT THIS MATTER IS STRICTLY CONFIDENTIAL AS THE GOVERNMENT WHICH MY LATE HUSBAND WAS PART OF IS STILL UNDER SURVAILLANCE TO PROBE US.
YOU CAN CONTACT ME THROUGH MY FAMILY LAWYER AS INDICATED ABOVE AND ALSO TO LIAISE WITH HIM TOWARDS THE EFFECTIVE COMPLETION OF THIS TRANSACTION ON TEL/FAX N0:666-8-6969696969 AS HE HAS THE MANDATE OF THE FAMILY TO HANDLE THIS TRANSACTION.
THANKS AND BEST REGARD
MRS. MARIAM ABACHA
Thanks for the link g7. A fascinating read. I might have to get a copy of Shiller’s new book. I thought it was just an update to his Irrational Exhuberance (2000), but it sounds like a fair bit of real estate research has gone into the new version.
HotRod, I hope you’re not knocking tulips or DotCom stocks? Many people became fabulously rich by getting in on the ground floor in both cases and taking profits before the collapse.,.. in Australia the same occurred with austrich farming, angora goats, alpacas etc. Not to mention the latest…
Hooroo, F.[cowboy2]
[specool]Well done Ausprop. I find BRW writers are usually quite thorough. I’ll digest the article before I go calling anyone a moron.
Cheers, F.[cowboy2]
