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Thanks to Scott No Mates for the old listing website I ran quick search on Port Hedlands neighbor Karratha. A sample property with a rent history indicates how hard investors are having it. The property below shows how far property rentals have come back since the heady days of 2011. Down 32%
http://www.oldlistings.com.au/
9/2 BUCHANAN CIRCUIT, KARRATHA
Category: UnknownBedrooms: 2 Bathrooms: 2
May 2013$950
May 2013$950 Weekly
May 2013$950 per week
May 2013$950 Weekly
May 2013$950 per week
May 2012$1,300 per week
May 2012$1,300
November 2011$1,400 per week
November 2011$1,400 Weekly
November 2011$1,400
Funny I was looking at developing an investment fund based on that kind of model for small investors who can't access the kinds of investment markets the bigger guys get access to. The idea centered around using business structures to cross invest across multiple international markets. Something the individual would find impossible to do. It would spread various risks such as diversifying markets, currency, sovereign (legal, policy etc), bank failures and so on. Core assets would be property both RRE and CRE with cash (term deposit ) PM's and SME direct investments.
Then I slapped myself around a bit and told myself I was supposed to be going after the stress free quiet life. Old habits.
Quote:but long term players like property investors who hedge their portfolios haven't changed their positions that much,And how have you hedged yours?
NSW or Vic?? neither locations gets me excited and $310k is way over capitalised at a guess given the limited info. 13k for a buyers agent is only justified when they bring you the bargain of the year and this definitely doesn't appear to be it. Generally you only negatively gear where good CG exists and that's definitely not this case here.
Basically any investment today should be at least 10% below current market, CG of 3-5%pa avg as a minimum and with at least 6% yield. Anything less and you're wasting your time.
Richard Koo provides a fairly balanced view of Abenomics in this article. The difficulties facing the Japanese govt and BOJ are immense. So far the results aren't encouraging.
Richard Koo: "Honeymoon For Abenomics Is Over"
Only 22% of people surveyed by the Nikkei felt Japan’s economy is actually recovering (27 May 2013), suggesting relatively few have benefited from Abenomics’ honeymoon thus far.
Moreover, an increase in long-term rates at a time when 78% of the population is not personally experiencing a recovery is most likely a “bad” rise in rates, and the authorities need to address it very carefully, keeping a close eye on private demand for funds.
JacM wrote:While the closure is unfortunate, it is not correct to presume the entire existence of Geelong hinges on Ford. There are well in excess of 80,000 jobs in Geelong, and Ford is responsible for only 600 of them. That is less than 1%. Additionally I would imagine that many of the skills used in roles at Ford will be transferrable to roles associated with aeroplane maintenance at Avalon Airport as it expands.True but my guess is for every 1 job at Ford there's 6 – 8 in the supply chain that will be affected.
Auto skills would not transfer to aviation. Huge difference from mass production assembly work to high tech aircraft maintenance.
Soros and GS are both market manipulators big time. I'm interested to know how a market speculator like Soros endorses in any way Abenomics. Soros plays the markets as he sees them. He's very short term in many respects. Soros is there to take advantage of the big volatile moves in the market. Nothing he does help Japan economically or materially. He won't for example make Japanese companies more competitive or grow the export market or lower their debt burden.
As for Bass he's been largely correct so far but you should read his views in more depth. He sees the JGB market as vulnerable to swings in BOJ policy and currency manipulation. He simply explains the fundamental problems Japan has and takes a logical view point. He says he doesn't see a crash per se but a correction that will for the most part go unnoticed by many.
Don't get too fixated with Bass. He has his weak points but he's just one of a growing number of high profile commentators that have Japan on a negative watch.
nvic wrote:Thank you Freckle very helpful ideas. You're thoughts are similar to mine in terms of a small startup which is what this initial operation is about. To prove the Model of management. an IPO wasn't my endpoint more leaning towards a fully fledged fund that perhaps super companies might be interested in investing in. Some of the management values and processes are one's I've used myself and are proven by a few profitable Dairy managers. The thing with dairy farms are that most have a high cost of production. I've heard on the radio that only %25 of dairy businesses turned a profit last financial year. So a good part of being profitable is about having someone with the skill to identify the properties that represent value and will facilitate the business objectives ofSounds like you're still in the "idea" phase with little real research done. I think the buy existing farms and turn them around has little merit in the investing world. ROI's just don't pan out statistically and the ultimate return of 15 – 20% definitely won't interest angel or seed investors. If you had a history of turning around loss making farms into profitable farms you might be able to sell that idea as a management company but not as a buy fix and sell proposition.
Quote:• Minimize Risk
• Maximum profitability in times of low milk price or high input costs or both.
• Be able to take advantage of times of High milk price or low input price or both.
• Focus on labour efficiency with emphasis on keeping it simple.
• Be a sustainable stable business that provides positive long term returns.
These points are what any business would expect as minimums. They are not points of difference (PODs). You need PODs as attractants for investors.
- 100% controlled environment that enhances animal welfare, productivity and waste management
- superior genetics that provide volumes that exceed industry standards by 30%
- scientifically advanced dietary program with computer managed feeding to control quality and output
- partnered with a leading company in automated shed handling systems
- IP development through technology innovation and genetic selection will add value going forward
This is the way you should be thinking.
Quote:Some of the issues with investing in dairy farms are that only a bit more than half the capital is tied up in land. So a large amount of capital is required for cows , machinery and startup/first year cashflow / setup cost. Those items aren't very easy to leverage.It's a total package that can be segmented. Land can be an investment in itself. The herd is both a production asset and IP asset. Equipment will be a capex but the software side could be a resalable asset (IP)
Quote:So at the moment I'm investigating how to find the people with the capital to achieve this. The risk of capital loss I believe is quite low but it is still their.Most entrepreneurs rate risk lower than what it actually is. As it stands the risk is relatively high from an investor viewpoint.
I would be looking at the likes of Fonterra and how they are setting up with business models, genetics and herd development, technology, automation, enclosed shed systems etc.
There's massive demand building in SE Asia and especially China. Get your business modeling right and your investor base could look asian or Chinese. Plenty of money there. You might also want to look at offshore opportunities to partner with new dairy companies there looking to tap into expertise.
Something else to consider is setting up a consultancy. You can tie that into the plan as well
Mikal wrote:I cannot imagine what it would be like for Australia to not have any manufacturing anymore. We are such an isolated nation, surrounded by a fair bit of water. Just, what if, and its a big what if, something happened to all the relationships the Government has and all of a sudden we didn't have access to buying imports anymore. If we don't have a manufacturing industry here, and i'm not just saying cars now either because we have lost a huge amount of manufacturing capabilities, what would we do? Its a scary thought. Australia needs to be self sustaining.An old argument that doesn't hold water. We could loose any one of hundreds of components that go into manufacturing from the IP, robots, raw materials, hardware, software etc that isn't made here because of a relationship bustup. The second world war was an example of how we cope with such periods. We were as cut off and isolated as anyone could be. Manufacturing and associated skill and technologies actually increased.
Your biggest challenge isn't tariffs and trade barriers. It's robotics.
The fact is most first world manufacturing simply isn't competitive anymore. Time to change your skill set to robot technician.
This is what I would do. Forget all the complicated BS and stick to mainstream structures and setups.
Develop a detailed business plan and then take it to an angel or angel investor group. You'll find there are plenty of high net worth individuals around looking for sound business proposals in this climate. Your startup should initially be setup as a model to prove the idea, planning and management style. Once that's been proved that should then enable the business proposal to go to the next level.
If your plan is too grandiose it has little chance of success. A small startup to prove the model lowers investor risk and consequently it's easier and less complicated to secure 1 – 3 core investors. They'll look to dilute their initial holdings as the business is grown to subsequent levels. They get a good ROI on the initial high risk startup phase and the diluted holding at the next and subsequent levels provides above market returns until the business goes fully public if that's the goal. Usually foundation investors look for an exit option somewhere. They'll take the initial risk for a high ROI, usually 50 – 100%pa, but want out as the equity dilution starts to diminish the return. You then attract more conservative investors and perhaps you look at an IPO type of deal.
There's a 100 ways you can skin this cat but that's the general direction I would head in.
PS: You might find retired farmers or the large corporate ag firms willing to place a bet on you. They tend to have an emotional and philosophical attachment to the sector as well as a good understanding of its potential.
PPS Failing that you could set up a management company and invite dairy farm owners to join a syndicated corporate type setup.
Terryw wrote:Yes it is all possible. You must seek proper legal advice to set up, as without it you will be in danger of breaching various provisions in the Corporations Act.Also needs to talk to investment brokers/merchant banks who are experienced in capital raising for startups and SME's.
Quote:This leads me to realize that despite all this regulation that really investors aren't really very well protected at all.The regulation is simply a structure that ensures investors have a minimum of information which meets minimum standards. It also provides a structure for participating in an investment and underpins the fiduciary responsibility attached to that investment. What is doesn't do is guarantee an investment would be successful.
The more you try to skirt the regulation the less protection an investor has under the law to some extent. That would lead anyone with any savy to suspect there are reasons to suspect the business is either high risk or the operators are dodgy or both.
Your idea is not unique and well run dairy operations along business lines tend to do alright. If I was you I would look to attract sophisticated investor partners with a stake in the industry. They could for example be operators within the supply chain somewhere. That could range anywhere from breeders to equipment suppliers to processing plants (butter, cheese etc).
The value is in the business plan and management team. If your idea has legs you should be able to secure sophisticated investors that will value add and lower the start up risk.
Its an interesting field. I see Fonterra are expanding big time in China with 300 cow fully automated enclosed sheds configured on a hub basis. I think 5 sheds to a hub. Their IP is in their genetics. They claim they're getting on average 32ltr/day from 3 milkings where the industry average is 17 in conventional setups. They've bee fine tuning their setup for something the last 5 years and reckon they're close to the ideal configuration now.
Jpcashflow wrote:I think Melbourne market is heading for very hard times, I dont care what any ways says…Cheers
JP
Vic's taken bit of a hit over the last few years. I'm not sure it will drop much more unless there's a severe down turn. Generally markets that have seen fairly stiff corrections generate resistance to further declines after a while. I kinda think that's where Vic is at the moment. Having said that I agree with JP in the sense that the Vic market will drift at best but we're more likely to see a shallow decline over the next few years.
I definitely don't see anything significant enough to give the market a lift for some time. It'll be a tough market to make a buck out of.
zmagen wrote:What happened to the graphs? It's been two days already!I don't want you suffering from graph burn out. You're also showing signs of graph addiction.
Big Mel wrote:. So where is the con?The con is that in a few years they won't be worth didly. Every man and his dog is trying to flog accommodation on this resource play that I doubt has 5 years in it.
jmsrachel wrote:Aunty Julia will be unemployed in a few months.Unfortunately not. Her seats pretty safe. She might not have the top job and there's a pay cut when you're in opposition but my guess is the old girl won't entirely disappear off the radar. She might even make a good opposition leader if she could hold on to that which I doubt.
Japanese Hodgepodge Of Old Ideas And New Contradictions, Stocks Dive In Sympathy
And so it went with his master plan, a hodgepodge of vague wishes, strategies, ideas, and contradictions, similar to those made by his predecessors over the last ten years. They too had wanted to overhaul the formidable bureaucracy and introduce competition only to get stymied at every twist and turn. The problem in Japan isn’t unemployment, which is low, or innovation in the private sector, but an unwillingness by everyone to pay for the corporate and individual welfare state, or alternatively, to dismantle it. Hence the horrendous deficits that just keep getting bigger, and the debt that has grown out of control. And any good options to deal with them have long ago evaporated.
Couldn't have said it better myself. Now watch the opinion polls.
Derek wrote:I notice Commsec had WA GROWING by 7.6% during the last quarter in this article http://www.perthnow.com.au/business/top-economist-wa-not-in-recession/story-fnhocr4x-1226658613073
Pretty much another BS figure because it neglects imports. There's going to be a big turn around in figures which will make it difficult to interpret numbers. CAPEX is an import and coming off big time. Then we have a massive amount of ore production capacity coming online (exports) over the next 12 – 18 months.
The figure to watch will be WA unemployment and that's already jumped 1.7%. That may mask the real job loss numbers as people like me head out of state in search of greener pastures or a different lifestyle. That makes immigration numbers another stat to watch. Strangely WA gets most (98%) of its population growth from overseas not interstate.
For God's sake don't tell Ziv. He still thinks things are going gang busters over there.
Dubstep wrote:So who is right and who has it wrong ? .Moot point I think. Fact is the economy is contracting on the whole and the boom states are contracting faster than most thought.
If WA is not in recession now then it's only a matter of time, however, a recession is only defined as a contractionary period. At some point that stops and economies stabilise (hopefully).
The opportunity is on the other side somewhere at sometime.