Forum Replies Created
- bardon wrote:The only message I can take away from the Economist argument is that there is an awful lot of upward pressure on rents.
Yes, landlords should raise rents. They are not getting enough return on their investment.
That was tongue in cheek, BTW.
Wynyard wrote:"In the end I had 6 applicants, if that, the vast majority of whom I wouldn't consider renting to for one reason or another (ie. potentially 'high-risk' type tenants)"what do you consider high-risk tenants?
Like people who were in a job whose wages were barely able to cover just the rent, let alone their daily expenses. For their sake, I wouldn't rent to them. It's just insanity. Why rent something you can barely afford?
Even a young boyfriend and girlfriend moving in for the first time can be high risk. They suddenly find that they don't like each other anymore, don't like staying with each other, have arguments, do damage to the house or even break their lease.
That said, even the 'best' tenant (on the surface) can become very high risk. All our circumstances in life stand to change. We could lose our jobs, get involved in an accident and be severely crippled, or we could be the target of a lawsuit that causes us to lose everything. The process of finding the 'best' tenant is really a process of reducing risk to a level we can tolerate.
Derek wrote:…are others who want to live in a McMansion.More to the point. There are people on average and below average salaries who want to live in a McMansion in the inner city.
Get real, folks. If you want it, EARN IT!
Aussie houses are world's most overpriced
For another take on the matter, pick up today's (6 March 2011) Sunday Age, go to the Business section and read the article on page 20, titled, "Don't believe the reports on Australian house values".
To partially quote,
"…what exactly did The Economist measure? The ratio of home prices to rents in 20 economies. Its a single measure – and a leaky one at that.
You could simply say Australia tops The Economist list because our average rents are too low – rental yields have remained unchanged at about 4 per cent for many years, though they are beginning to rise.
More likely out home values are justified by one of the best economies in the developed world – even if it is a two-speed model in which mining industries thrive and other sectors struggle.
…It is much more probable that [house prices] will drift for at least a year after slipping by an estimated 1 per cent in the 12 months to January. And this is not a bad outcome for most homeowners whatever this report or the next report might care to say."
brokersperth wrote:Make sure the shrubs and trees are properly trimmed; the grass is cut and tidy; the walks and driveway are edged and groomed.Well said. When looking for a new tenant (after a friend had been in it for 5 months or so), the garden at my place was not in the best condition. I made the mistake of not doing the gardening before the agent scheduled an open for inspection. In the hope that my previous tenant would have done the gardening, I potentially lost out on most of my applicants.
The result? I had over 20 groups through (more than 40 people) in a single inspection, all of them who were visibly impressed and in awe at the condition of the house inside, and at how cheap the rent was (to the point some were wondering if there was anything wrong with the house) but they then stepped out into the massive overgrown backyard and thought, 'This is gonna be a full-time job!'
In the end I had 6 applicants, if that, the vast majority of whom I wouldn't consider renting to for one reason or another (ie. potentially 'high-risk' type tenants). I got the gardening all done at my own expense before the new tenant moved in. Cost me less than $200 even for a day of work (which amounted to nearly 20 large bags of green waste). Of course, currently I'm blessed with a great tenant, but I sometimes imagine what could have been achieved if I ensured the gardens were tended to before I had the OFI.
DWolfe wrote:Buy clothes on ebay, markets and op shops.Oh, don't get me started on the op shops. As an op-shop junkie I am often amazed at the stuff you can find there. On an unrelated note, I bought a nice old chess book (from the 70s) and chess set (old-looking, little metal pieces and all). Reminds me of the days when I played chess with my Dad when I was a kid, probably 15 years ago. Very inexpensive, but a source of enjoyment nevertheless.
Sometimes the old stuff is still better. Garage sales are another good source of pre-loved goods, selling for a fraction of the price that you'll find if buying new. And no, buying old stuff doesn't mean your house needs to look like a junk yard. There's a style of decorating called 'shabby-chic', and I swear, when I finally get my own place, this is exactly how I'm going to decorate.
It's casual, cheap, hard-wearing and easy to replace. What's there to complain about?
Dan42 wrote:Close to the train station and a short drive to the beach as well. There are other, even cheaper houses in this suburb.
As a hint to anyone who's checking this area out: if you can swing a bigger loan, look south towards North Geelong/ Rippleside where you'll find a nice enclave of property where houses can be had for less than $550K, walking distance to the train station, literally next to lovely parkland and the beach. This area is mere minutes from Geelong CBD, the waterfront and shopping.
This is where I would like to retire when that day comes. Weekend bar-bee at the park, a swim at the beach in the mornings or a jog along the waterfront, and fishing in the evenings. And whenever desired, catch a train ride right into Melbourne CBD.
How lucky are we to have property like this in Australia. In Singapore, you can tear your clothes off and beat your chest and still you wouldn't find an APARTMENT for anywhere near that price and this close to transport, parks and the water's edge.
"Is property really unaffordable?" Well, I don't know. Just have a think about it.
Here's another gut feel: if such an area exists, people are probably busy buying up rather than posting here.
I think you'll have better luck expressing your interest to RE agents in the area and doing a good hunt on the real estate websites. Weekly property listings in the local paper are also worth checking out.
Wynyard wrote:What would a family, with two toddlers, who have lived in inner city Melbourne most of their lives, built up social networks, jobs and a life (it was affordable to rent until the last five years) do on a $40,000 household income? I did some rough maths on rental properties of $300-$350pw, and there's nothing left each week, even before nappies or clothes have been bought.I sympathise with this, however if a family like that didn't start looking for a solution, and fast, then things are going to stay tough. We don't NEED to live in inner city Melbourne if rents are too high. What about people who moved to an entirely different continent just to find work and hope for some quality of life? They too have built up all their networks and a life back home but lost all of that to go overseas in the hope of greener pastures. In life, sacrifice seems to be a daily occurrence. It's a matter of weighing things up and deciding if the advantages outweigh the sacrifices.
Okay, let's talk cheap rentals. Just plucking an outer-eastern suburb out of the sky: Croydon. We can find rentals here for $250 a week or less. That would get you into a 2BR unit. A little crammed for a family of 2 adults and 2 toddlers, but not unworkable. And didn't I tell you previously about some suburbs near Geelong where you can find cheaper houses and rentals?
Has this family (or your family, seeing that you are probably in this situation) tried seeking advice from an accountant or financial adviser as to whether you're entitled to any help from the government? Or just rock up at Centrelink and ask some questions. It never hurts to ask pertinent questions.
Wynyard wrote:What would they do? Leave it all behind due to inflated property prices. Move to a rough neighborhood or the country, where there is not the same industries or employment options available.Drive. I drive 50 minutes to work (one-way) and many people drive far greater distances than this. It is NOT realistic to expect to be able to walk to work, or to catch a short bus or tram ride there. Or perhaps catch a train.
Sure, the cheaper places could be a rough neighbourhood, I got road-raged by ONE mentally-unstable idiot (probable future wife-beater) after living there only 4 months, his girlfriend in the same car so embarrassed with her enraged boyfriend that she didn't even want to look at me (and she probably left him after the incident), but you get over it. There's nasty folk EVERYWHERE (well-heeled area or not) but the vast majority are extremely nice.
Wynyard wrote:Perhaps the end of the single income family is here. I'm all for equality, but there have been unexpected results to the duel income family. Higher household incomes have led to higher property prices. We only pay what we can afford. And its hit its peak (at least for this cycle). I sure can't imagine a single income family surviving in the city and staying above the poverty line anymore. And this is a fairly new reality, everyone has been priced out or rental and purchase in just the last few years – so its no wonder people feel displaced and resentful, all for someone to have a bit of 'equity' on paper and a big debt around their duel income necks.Perhaps this is why there are some astute kids delaying the start of a family (deciding not to have kids or even stay single for life) and staying longer with their folks so that they can save every cent and get a head-start before moving out. I'm not saying that we shouldn't start a family, or that we shouldn't be a family on a single income. But as with everything in life, we have choices, and with each choice comes a consequence. Assuming I had made certain choices in life, I'd rather manage the consequences than do nothing and starve.
bardon wrote:True wealth is appreciating what you have nowPhilosophical, but true. I'm happy to admit being financially poor, but rich with all the love from my family.
pharvie wrote:It does not matter if there is a loan, but has to be actual attributable equity, in other words a $US1m house with a $US500K loan = only $US500K actual equity. Logically 'x' number will be using gearing for appropriate asset classes.
I see. This makes sense then. Otherwise we could have more people out there wielding million-dollar property portfolios but paying off $800K worth of debt.
pharvie wrote:I am only loosely across it, but I did read that the Fed Govt. did an investigation and in theory very few instance were detected compared to the hype that it was prolific. The Aussie dollar is now making it less attractive for parents to send their kids here from OS as housing is expensive and fees similarly compared to somewhere like the USA where their dollar is being deflated.
At one point there was even talk of a 'dob-in' line for people to report suspected cases. It appeared to me that the greatest concern was that foreigners were buying houses and then leaving them vacant, hence compounding 'housing affordability' issues, further reducing supply of housing to the masses.
It was terrible to even suggest something like that, turning the whole thing into a witch hunt. A few months after I first moved in, my neighbour asked if I were actually living in the house or just leaving it empty. And you can just imagine how infuriated and insulted I was to be at the receiving end of such a question, to be suspected of having enough money to buy a house simply to leave it vacant! In reality, many 'foreigners' are really people who work locally, are faced with paying off their mortgage and experience struggles identical to those of the average Aussie.
Nevertheless it is feasible that a good number of foreigners have an interest in Australian property and own rental property here. Coming from Singapore, I can at least say that I've witnessed first-hand the property prices over there and how they compare to the prices here. Not implying it's a fair comparison, however it's a case in point that might explain why Australian property is popular with foreigners.
pharvie wrote:The stats show there are ~174,000 millionaires in Australia (~0.8% of the population) – a millionaire is defined by $US1m or more in tangible assets like cash, property and equities outside of the family home (eg, junk like cars, boats and jet skis are not assets). What this stat importantly tells us is that 99% of the population have recognised assets of less than $US1m excluding their home, which is not necessarily considered by some to be a lot of money to comfortably survive many years of retirement.
In this instance, do the said millionaires wholly own their property or other assets (as opposed to having significant loans)? If what you say about 99% of the Australian population is true, then this is alarming for another reason. Where is the government going to find the money to feed these people when they run out of money? My only thought is that our already-oppressive levels of tax have to rise further in order to keep the welfare system going for these guys.
pharvie wrote:Match that against a recent article in The Australian which said 72% of the wealth of those over 60 is in the family home. With a median house price in Melbourne and Sydney at roughly $600K this means the average couple has only a few hundred thousand in Super, etc, at best, so don’t have much money to throw around in the main.Someone said elsewhere they believed that grey power was splurging their huge Super funds as families were not attending house open inspections.
I'm not entirely up to date on the policies regarding investment by foreigners. But is it possible that all this money is coming from overseas? Most of us have heard of seriously loaded folk who come over here, buy premium properties with cash and then fly back home.
pharvie wrote:An interesting thing about successful investing psychology is that because you are always dealing with probability, you know sometimes you will be wrong. You actually have to like losing money, but only carefully predetermined amounts of it.
This statement is very true, and humorous in a very dark sort of way. Admittedly I have lost money in investing as well, however the amount I have subsequently gained (monetary, self-discipline and just a little experience) is always worth the ride. Certainly I'm very glad to have started out early in life and that much I'm very thankful for.
johnrisk wrote:The smart money leave clues they cannot eliminate, which is indicated primarily in volume and accumulation patterns. Look to volume flows as a guide, sometimes these volume flows are simple to decipher, at other times more difficult.A good example at the moment is the USD. Over the last year there have been record volumes flowing in and out of the USD that have not been seen in over 3 decades. Smart money is definitely active, but in this example it is difficult to decipher to outcome because the dollar is at such a pivotal point in terms of its long term value.
This is a concept that I'm somewhat familiar with, because when I was very young with very little savings, things started off with shares and I still have some of it. There was a book that I read many years ago titled 'How to Make Money in Stocks' by William O'Neil. It was an interesting read, and I got through the bulk of it before loaning it to a friend, who promptly lost it for me. Once again I put it down to inexperience, but I found the market far easier to read in the past compared to say, the past 8-12 months leading up to today. These days the stock market is frighteningly volatile, and I guess the number of global events, disasters, etc has played a significant role in determining the downswings, which to a large extent have not been predictable.
But on that note I certainly understand that in some circumstances it is possible to read the charts and watch for the price vs volume movements and to make a judgment call from there. Shares are easy because the charts are easily available. Property is a different matter it seems, and I have yet to dip my toes into commodities, although I would certainly like to try my hand in it at some stage.
Then again, I gather it would be difficult to be successful to be a 'jack of all trades, master of none' when it comes to investing. Perhaps time could be better spent just targeting two or just three different kinds of investment.
johnrisk wrote:Yes precious metals is an area that has done well, and the smart money entered 10yrs ago, holding until these metals are over valued (appropriate valuation of precious metals being on of the most misunderstood aspects of financial analysis).
My point is that smart money would not be buying large amounts of property relative to the rest of their portfolio at record high prices, when there are other undervalued assets that are being neglected by the public and institutional investors.A bull market that has not significantly corrected since 1955 is certainly very mature, and betting on a rise in real value in the coming years just like the last would be foolish IMO, and also indicative of a very unhealthy market, as all healthy and free markets swing from being overvalued to undervalued, unless govt develops policy that undermines the health of a market, which has occurred here in the Australian residential property market. That being said there is a brutal inflationary problem developing globally, and those that measure asset prices incorrectly without accounting for the eroding purchasing power of the dollar or crucial money supply increases are not accurately assessing the market.
Financial market precidents are being smashed almost every month to the informed investor, not having respect for the magnitude of changes will be costly to many, remember a bull market makes everyone look good.
And fword, if you can`t figure out what an undervalued market looks like, then you will likely struggle making the right choice when it comes to re balancing your portfolio. You need to work to find solutions, in light of an accurate assessment of the issues at hand. The question i have for you is why don't you know the answer to what investments would do well in inflationary environments?
Simple enough?
Maybe I'm getting this wrong, but are we then suggesting that precious metals were a good buy 10 years ago and they too, are now overvalued?
Maybe I'm young and foolish, which is why I have no idea what an undervalued market really looks like. Certainly, younger folks did not have the luxury of experiencing market rises and falls like some of those in our company have. Hence, I'm making a genuine enquiry: where is the smart money headed? So far, there have been a few answers as I can see above, and taking these on board.
But to say that 'smart money is and has been flowing into assets that will do well during inflation' is akin to somebody saying something to the effect that, 'To make a significant fortune in the property market, you need to buy a property that will outperform the market averages'.
The statement in itself has no value, not even worth the pixels it occupies on a screen. There has to be an elaboration to substantiate the point.
To make a general statement, my personal impression is that we can only make judgments about the market with the information that we currently have. Things that appear 'overvalued' or 'undervalued' to us now may certainly not be the same within the next few years, or even the next decade. Hindsight is a wonderful thing. If people were well and truly able to read the markets into which they have invested their money, they wouldn't be wasting time giving out information on these forums. They would be well-to-do, sitting on a beach in the Bahamas enjoying life. Or they would be otherwise busy trying to reach that goal.
Ultimately then, my opinion is that people are taking calculated risks, regardless of what they do, or where they put their money. Where there is chance of a gain, there is chance of a loss. The goal is the same. Everyone wants a slice of happiness. But in the end, I'm afraid, nobody really knows what investments will do well in the coming years. Of course, if you talked about something for long enough, it is bound to happen. Eventually there has to be a boom and a crash (or correction) in virtually every asset. But as the saying goes, the only certainties in life are death and taxes.
johnrisk wrote:Smart money is and has been flowing into assets that will do well during inflation.<moderator: delete flame> Care to elaborate on what assets those might be?
It's well and fine for people to say, 'Oh, don't invest in this', or 'oh, don't invest in that either'. But certainly then, these people should then be able to say WHAT we should then consider investing in.
As in most cases however, people are more interested in looking for problems than finding solutions.
More to the point. Looking at the stock market (which isn't going anywhere in a hurry) and the property market (which people are saying is overpriced and set to crash), where the hell is all the smart money going?
What should we invest in? Pig's ears?
god_of_money wrote:Hm.. no further comments??We should probably review the discussions of this (and similar threads) topic constantly. But it would be very interesting to see how everything went in the next couple of years.
irina87 wrote:You can become rich even earlier. The only thing you need is brains.Man, I must be missing a brain (or two).
The author is in a very enviable position: only 28 years old and needing to work only 2 days a week. Most people at his age need to work 40-hour weeks and still have difficulty buying a house.
The biggest lesson that I seem to glean from his article is this: when investing, start young, start early, and let time work its magic.
The second biggest lesson is the concept of delayed gratification: not buying the stuff you want right now but pooling that money towards a venture that will secure much greater riches in the future.
