Forum Replies Created
This sounds like a motel room…?
[blink]Don’t take offense so easily Jerry!
We’re all here to share and learn and I imagine I’m not the only one who would prefer that threads occasionally get bogged down with diverse views and a bit of detail rather than the standard.To your questions:
The price of land in Japan has fallen for 13 consecutive years (down 6% last year alone) and is now close to 1980 value in real terms. The nominal loss in value of house prices is 43% and commercial property 80%. Interest rates have been effectively 0% since 1999.Between 1989 and 1996, many parts of California saw median sale prices of houses drop 26% (although the average for the state was less, falling from around 220k to 183k if memory serves).
The UK had a similar situation from around 1990 to 1996, and oh yes, there was a ‘soft landing’ for the housing market in Australia too at around the same time.
I hope this has been informative.
Originally posted by terryw:renting is usually much cheaper than paying off a home loan on the same place.
Only at this point in the market – the last gasp of a bursting bubble. In a stable market rent is very closely correllated to the cost of mortgage repayment. This is why the phrase ‘rent is dead money’ came from. If the market climate of the last 6 years had dominated the long term such a phrase NEVER would have added up!
Interest free loans are still not available yet!And NEVER will be! Anybody care to buy a solar powered torch that recharges itself with its own light?
Originally posted by zen:(1)will I end up negatively geared for unforseable future? No sign that rent is going up even propertie prices are all time high? Say if an IP is yielding 4% now, (2)will I get 7% in 5 years time?
1) Yes.
2) Only if the CG on your property is around negative 50%! I can’t see incomes rising by 75% which would be the only way you could see a 75% rent increase given the state of the worldwide economy and Australia’s standing on the international stage.Originally posted by Ricksta:hmmm I know your right Foundation but renting in my opinion is such a waste of money.
In my opinion unnecessarily high interest payments are far more wasteful! Who would you rather the money goes to – the bank or to one of the wonderful ‘investors’ on this forum?[cap] You can rent for less than an interest only (IO=Rent) loan, save the difference, and watch the price of property continue to fall around you. When it bottoms out, use that saved money to pick up a bargain![king]
Go on, you know I’m right, do yourself a favour.Originally posted by Jerzy Balowski:Foundation, would you like to elaborate ? Did the above investors do their due diligence at the time ? Seeing that I dont have a clue about what you are refering to above, I wont even try to speculate.
If you don’t have a clue what I’m talking about, I would suggest that you yourself have not ‘done your due dilligence’ in relation to property investing.
Name One ! Are you saying that people could not sell their houses, or are you saying that they actually lost 50% of their value, which is what you are implying by quoting me ? Of course, the property market in some regions would have been flat for a very long time, but to have lost half their value ? I’m sure in extreme cases, it has happened, which is why I did write “Virtually unheard of in real estate”, but I was trying to compare blue-chip shares with blue-chip real estate, whilst you seem to be refering to the other end of the property market. You’re not even comparing Apples with Oranges, but Apples with carrots.Sure, some sectors fare better than others in a falling market. Unfortunately most ‘investors’ on this site are looking for cashflow positive properties and where are these found? In small country towns. These same houses were very difficult to shift for many years during the 90s, and those who really needed to sell found that they needed to drop their asking prices – yes, sometimes by 50%.
At the same time, ‘blue-chip’ real estate was also in the dolrums. Let’s take Melbourne for example. In 1989 the median house price was $183,652, in 1996 it was $182,261 (REIV). Sure, that looks like a slight drop in nominal terms, but in real terms it is a drop of around 24.4% (ABS CPI)! During this time, some suburbs actually increased in nominal value, but plenty fared worse, and the more ‘diverse’ the property investments, the closer to that median of 24.4% the loss.I have explicitely stated my own experience with the share market, and compared it in fairly generalised terms with the real estate market over the same period to give everyone a different perspective, which is what these forums are all about. How this can be labelled ignorant and seriously misinformed, is beyond me. If you feel the need to dispute this, at least back your comments up with relevent figures, as I have, and save the vitriol for the cat.Yes, you explicitly stated your own experience, but you didn’t explicitly state that it was just your own experience.
For what it’s worth, I agree that you can make money buying houses. I have done so myself, but I sold at what I believed was the peak of the market and put a large part of my profit into the undervalued ASX. I have done well from this, and will be moving to the ‘next big thing’ rather soon. Why settle for an average 1.9% above inflation (over the last 30 years, bearing in mind this includes the current bubble!) from property investing or 7% for Australian Shares when with very little effort you can do much better?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
“Virtually unheard of in real estate”? Try telling that to the Japanese who invested in property prior to 1991 or the San Franciscans or Londoners who invested in 1989! Or for that matter to anybody who tried to sell houses in regional Vic/NSW/Qld in the mid 1990s. I apologise if I always seem negative, but there are some truly ignorant people on this forum who are happy to share their seriously misinformed thoughts.[grrr]
I will be sure to ‘bump’ this back thread back into existence in 24 months time…
Originally posted by westburn:
There are sellers out there getting very keen to move on. I wouldn’t be parking/sitting on the fence. As the saying goes Time is Money.Why are these sellers getting so keen to sell? Could it be that they are holding a depreciating asset?
Perhaps time is money if hg DOES park his cash in an investment with positive CG potential rather than purchasing more property?[confused2]This is not a catch 22. You want something that you can’t afford, that’s life! It sounds like you’ll either need to sell one of your units or rent.
Sorry Chipper, the 20% CG got past me! Not too bad…
Chipper, 6.5% is a pretty poor return for the last 12 months! I’ve done better than 30%!
And LifeX, yes the overall stockmarket had a flat period while housing was reaching silly heights, but the clever investor could read some pretty simple signs from that and took profit from real estate to invest in shares. Of course, shares will tank at a not too distant point, so the clever investors are starting to shift focus again… any guesses?The REIV are about the most vested interest you could pick. Their data collection and ‘analysis’ methods are highly dubious at best. Does anybody know what the Australian Property Monitors results were for December? Would you care for me to share them?
What is the zoning of this land? If it is residential I doubt you’d be allowed to build a storage depot there, but if it is industrial this sort of development can be highly profitable. Check for competition.
Originally posted by Marc1:however…if they want to be nasty and the carport does not comply they may want you to alter it and that may cost some more.
If the carport does not comply with building regs, would they not be doing cruiser a favour by forcing him/her to alter it? They might save somebody’s life after all…
Originally posted by ajsov1:my father owns two units and is willing to sell one of them to help with my mortgage payments on a house for me and my family.
You’d be far better to use the money as a deposit (thus reducing up-front capital and saving a fortune in interest) than using it for mortgage payments…
Originally posted by Gramyre:get them to trust that someone else can cover your debts if you can’t
I know I can, I know I can
That’s very generous of you![blink]
mkomko, if I was you I would save as much as I could, sit back for 18 months/two years/five years until prices have bottomed out. Negative equity for somebody in your situation (no hedges / no savings / no plan b) will put a stop to your investing future very quickly otherwise. I’m happy to explain further?
Originally posted by Qlds007:You sign the contract in your name and receive a letter dated prior to the actual contract date with permission from the eventual owner appointing you to sign on their behalf.
Would this not constitute fraudulent evasion of duty?[worried]
[laughing]
This reminds me of the Simpsons…Michael Jackson: Homer, this is Floyd. He’s an idiot savant – give him any two numbers and he can multiply them in his head, just like that.
Homer: OK, 5 times 9!
Floyd: 45.
Homer: Wow.
Why change PMs? Do you believe it is their fault the tennants couldn’t / wouldn’t pay rent?
Originally posted by Redhaven:The agent said he gets people ringing up saying they’ll pay up to 170 for a place, but he rents them places for 120 and 130…
This scam (or one of many variations) is running in country towns all over Australia. It’s the real estate agent’s version of problem/solution etc. His solution is to make properties that he can’t sell into ‘cashflow positive investment opportunities’ for niave ‘property investors’. Have a look at the 10 year history of the area. Many country towns have very high rental occupancy rates, for now, but are very unpredictable. Find out what happened to property prices and rentals in the mid 90s….
Example (my home town):
1990
Population 3800
3BR House $110,000
Rental $90pw
Median Household income $26,0001996
Population 2350
3BR House $60,000
Rental $75pw (and very poor tennants)
Median Household income $17,0002004
Population 4100
3BR House $140,000
Rental $100-130pw (variable due to 100% occupancy!)
Median Household income $29,000And the REAs will tell you that this is a ‘golden investment opportunity, cashflow positive with rental potential of $160-$180pw, currently seeing capital gains of 30% per year’.
I would describe it as a serious liability. I kid you not, you could hardly give away a house for years on end. The town fell to pieces, buildings were neglected, people left looking for work leaving behind dole recipients and essential service workers. The cause was not one big factor – no mine closure, just the poor economic climate.
Over the last 2 years things have really picked up; the REAs have bought sports cars, businesspersons are back slapping over how they’ve turned around the town’s fortunes, sea-changers slap eachothers backs and talk about how they’ve cashed in and moved to paradise, school leavers return after uni rather than leaving forever. Things look great. We have been in what superficially appears to be an economic boom period. Unfortunately things will change / are already changing. The national economic outlook is not so great over the next 5 to 10 years, and guess who will be worst hit?Hmm, sorry, this has turned into an essay rather than a comment. Sorry. Just be careful ok? Make sure you have enough in savings (real hard cash, not paper ‘equity!) to cover many years of little or no returns and you’ll come out alright in the long to very long term…
