And there in lies the problem in thinking among many investors. What most fail to realise is this is not ‘a general rule’ incident in global financial events.

There has been no time in history that I can recall when virtually every major economy is near collapse simultaneously. Economies like Australia will not be able to weather this impending collapse simply because it has a relatively stronger economy. With $1.3T in debt (something like $600m of that is in housing) Australia will fold like a pack of cards once things start to unravel.

Just about every notable investor on the global stage is not asking how do we make money but how do we preserve our capital and reduce losses.

The Freckle

Seems to be something of a panic on as those nearing their desired retiring age look to make up shortfalls in retirement funding. You guys often see property as an easy answer to topping up.

I think we’ll see a lot of ppl like yourself jump into asset classes with little to no knowledge or experience and consequently do their doe.

Property prices are under downward pressure. Mining states especially WA have property sectors that are almost entirely reliant on resource sector performance. Personally I see resources pulling back especially expansion as the world deleverages. Resources are likely to decline and settle into a long term steady state pattern over the next 5 years. I believe that will see cities like Perth trapped in an over built lower demand cycle for several years.

As always it will be your typical boom bust scenario. WA at the moment is being driven by 3 of the worlds largest miners all trying to expand output capacity simultaneously. When that build out phase is mostly completed over the next 2 years you can expect to see construction driven demand drop by at least 70%.

My personal feeling is that Perth could be one of the hardest hit cities in Australia over the next few years as the global downturn starts to bite. There is still the potential to make money in property in any market but few have the skills and knowledge to manage that successfully in recession/depression environments.

Without skill and experience do you feel lucky!

The Freckle

And RP data says different

http://www.rpdata.com/research/daily_indices.html

Oh who to believe…

The Freckle

An easement appurtenant attaches to the land permanently and benefits its owner. In order for it to exist, there must be two pieces of land owned by different individuals. One piece, the dominant estate or tenement, is the land that is benefited by the easement. The other piece, known as the servient estate or tenement, is the land that has the burden of the easement. An easement appurtenant is a Covenant running with the land since it is incapable of a separate and independent existence from the land to which it is annexed. A common example would be where one landowner—A—is the owner of land that is separated from a road by land owned by B. If B sells A a right of way across his or her land, it is a right that is appurtenant to A’s land and can only be used in connection thereof.

http://legal-dictionary.thefreedictionary.com/easement

The Freckle

Luke using your figures

Purchase price $625,000

Loan $500,000

Expenses over 10 years

Interest $350 000
Expenses @ 1% of market value
(inflation indexed @3%/pa) over 10 yrs $ 73,964
Total costs over 10 years $423,964

Less income (inflation indexed @3%/pa) $332,862
Net loss $ 91,102

Market Value after 10 yrs at 3%/pa CG $843,345
Less Loan $500,000
Less losses $ 91,102

Gross Gain $252,243
Less Principle $125,000

Gross profit (7%/pa) $127,000

Looks good eh but hold we haven’t accounted for inflation on the original $125,000

$125,000 @3%/pa over 10 years = $168,669

Our real increase in spending power is only $83 574 or 5.13%

By the time we strip out entry, exit (incl any CGT) we’ll be struggling to get any return at all out of this particular investment.

This model doesn’t real prove anything because we’ve basically evened everything out. The lesson to learn is to keep an eye on how inflation is impacting on an investment in terms of asset appreciation/depreciation, expenses and income. It won’t affect all areas the same or at the same time.

the Freckle

And that’s the problem with the definition of profit over time. You may have more dollars in your wallet but if the dollars you had 20 years ago bought a dozen eggs and the dollars from the sale still only buy a dozen eggs 20 years later then are you actually any wealthier? Inflation tends to trick people into thinking they’re getting richer.

You need to constantly measure your wealth in terms of buying power not how many zeros are on the end of your bank book.

The Freckle

What a load of bull. MSM misdirection by big business. Enviro approvals that run into delays are generally caused by big business trying to bend the rules to get a project over the line. In other word I want to dump my toxic waste here instead of trucking and processing it there because it will cost us 4% of our bottom line

Big business know how long enviro’s take to push through the system. They do it daily on 100’s of projects. They are the proverbial experts at enviro law. Blaming Fed govt is just shifting the cause so they can blame someone if they can’t deliver to investors.

Rising costs are there own fault. The big miners have all decided to go hell for leather simultaneously. That’s put immense strain on everything consequently pushing the price up at an exponential rate.

I’m no fan of current govt or opposition MP’s but throwing rocks at them while a lot of you PI’s cream some of the best returns in the market absolutely smacks of hypocracy. Property investors are a significant part of the cost problem.

Rio’s pulled the pin because rising costs and falling commodity prices are the future outlook. All the big miners will do the same over the next few years. The booms peaked. Watch as the billions within the project pipeline dwindle over the next few years.

As Africa comes on line over the next few years iron ore prices are predicted to fall into a range between A$60 – 80/mt from it’s current US$147.
http://www.scribd.com/doc/90674359/Hurst-Africafeo-Eaber-Final

These kind of assessments will pressure the big miners to seriously rethink the big multi billion $$$ projects for some time. Govts are not the problem. Australia is still way ahead of every other region by streets even with higher costs and govt taxes. The ball breaker is expanding capacity leading to over capacity world wide coupled with falling global demand and Chinese restructuring.

The Freckle

Not usually a good idea. The BSod, vinegar solution will neutralise the smell first. It’s better to complete the cleaning process without deodorisers as they simply mask any residual smells that might be there fooling you into thinking you’ve solved the problem.

Clean first then assess how successful you’ve been. Clean again if necessary. Once you’ve got the odour problem licked then apply a pleasing odour like citrus, sandlewood or whatever takes your fancy.

The Freckle

I usually only ever pass through the place these days. Spent about 9 years there. Every time I spend any sort of time there, usually layovers, the traffic seems to get worse just a little bit more. Does my head in. Up here in Port Hedland there’s no traffic lights (yet) and only one stop sign… bliss

The Freckle

You can add to this with these recipes. We’ve got two dogs and urine smells in enclosed yards need regular attention.

http://www.back-to-basics-cleaning.com/natural-carpet-cleaning.html

These recipes work on concrete and timber as well. If your using it on timber floors test in a small area (wardrobe) first if your timber floors are aesthetic.

The Freckle