Forum Replies Created
There is no way that I would sell. There are heaps of lo doc loans that you can get from another bank which will allow you to continue investing. You need a good mortgage broker to help you out. Good mortgage brokers are hard to find!!!
There are differences in opinion as to whether you should invest in your own name or under a trust. Some very successful investors with up to 38 properties only invest in their own name as they are fairly sure that they will not be sued. I personally have only invested in my own name for many years.
There are definitely some advantages in putting the properties into trusts so you should consider that pathway as a possible option.
hw wrote:Thanks for your response, I am aiming to stimulate some discussion, I have no preconceived notion that I may be correct.
Certainly Auction Clearance rates and Sales prices suggest 10-12, but prices are rising rapidly suggesting around 12, yeilds are falling suggesting about 1 and interest rates are raising quite fast with plenty of data to support their continued increase, suggesting closer to 3. Essentially what you are saying is that demand is too strong for the boom to end, and this is the point I am unsure of myself, how long can this demand negate the other factors.
1. Highest immigration ever, a lot of whom are either economic migrants or highly skilled immigrants.
Yes – I agree.2. Lowest unemployment rate for many years. More people in work than ever.
Maybe – Low unemployment is good, until we go beyond full employment. This puts pressure on wages and inflation (and interest Rates), watch for increased wage claims.3. Huge infrastructure projects in areas such as SE Qld.
Yes – my figures are for Adelaide, but there is probably something similar.4. Large number of baby boomers retiring which will mean that there will be even more work available
Yes – but conversely taxes must rise to pay the pension for them reducing household incomes. See table on page 31 of Steve's book 0-260 properties.5, Highest birth rate for many years which again will create a demand for additional housing,
especially on the fringes of the capital cities.
Yes – this is coming from a low base, and is symptomatic of the strong growth we have recently had and the baby bonus.You also mentioned the share market. This correction may be different as the shares getting hammered are property trusts and banks, because of their exposure to the sub prime mess. The question here is whether these investors will jump immediately out of their property related investments at a significant loss thinking I know i'll stick whatever i have left into the property market, there's a good idea.
I am aware however that this post looks a little negative, sorry but sometimes you just have to trust Newton.
The property cycle historically shows that investors go from the peak of the sharemarket to the safe haven of property. I'm confident that we are at this stage and that is the reason I have been buying as much property as I have over the last 18 months. I am very confident that Brisbane is nearing the top of the boom (12 o'clock) but prices should continue to rise throughout the year. At the moment they are rising by about 20% per annum and all indications are that they will continue to rise by about 10% for the rest of the year. You don't have to be an Einstein to work out where we are in the property cycle.
Who is Newton?
If we are at 12 to 3 then it means that we have hit the boom and on the way down. Herron Todd White in their last report stated that Brisbane and Adelaide are in a rising market which is 9 to 12 while Melbourne is in boom conditions so it is at 12 oclock. Most of your information is very gloom and doom. A falling sharemarket is usually good for housing as investors channel their money form shares to investment property.
There are a lot of good reasons why the boom should continue:
1. Highest immigration ever, a lot of whom are either economic migrants or highly skilled immigrants.
2. Lowest unemployment rate for many years. More people in work than ever.
3. Huge infrastructure projects in areas such as SE Qld.
4. Large number of baby boomers retiring which will mean that there will be even more work available
5, Highest birth rate for many years which again will create a demand for additional housing, especially on the fringes of the capital cities.I've used Elders for 9 years. Reasonable premium, good service and benefits are very competitive. I've found the bank products to be confusing.
Scott No Mates wrote:Personally ZJ, I will be looking at areas which have suffered the greatest median price reductions over the past 2-3 years ie western suburbs. These areas will have the greatest rate of recovery (rebalancing/price relativity) compared to the more affluent areas which have been experiencing prices growth over the last few years.There is no guarantee that these suburbs will do well in the long term. I much prefer suburbs closer to the CBD. The popularity of these inner suburbs is accelerating, especially with the Generation X's and Ys.
New Money, congratulations. In the long term, you will do well. My son-in-law bought in the area and was pleasantly surprised to find out that it had gone up in value by over 40% in 6 months. It was a run down house which cost $205,000. Similar houses are now selling for over $300,000.
Amzdesigns thinks that there may be too many houses going up in Redbank Plains. The opposite is closer to the truth as there is a severe shortage of properties for purchase and rentals throughout SE Qld. I've been looking for land throughout SEQ and there is hardly anything available for investment purposes, even in areas such as Caboolture which is a long way from Brisbane CBD.
simple wrote:OK, corrected info:
1. Jan-February rise of 0.25% with another 0.25% promised to follow ASAP
2. Property pricing growing at 6.04% (brisbane)
3. What is the current CC debt, anyone?
4. Unemployment is about 4.4 and holding
5. US housing market, still melting downAny input anyone ?
I'm not too sure what you are trying to get at with the above comment.
simple wrote:Hello hleung2. This is based on my search for new PPOR. I noted that in the last 8-12 weeks many properties worth about $700K have not been sold, instead price where reduced on some. Areas I looked in: Manly / Wynnum, Stafford / Alderley
4. Based on report : http://www.news.com.au/business/story/0,23636,22918048-462,00.html
according to the source, unemployment is rising now for two months in the row.Properties worth about $700K in Manly/Wynnu/Stafford/Alderley are not a true reflection on what is going on in the market in Brisbane. I've just had a look at Brisbane's median house prices (as provided by Residex) for the 3 months ended 30th November. Prices increased by about 6.04% which is more than the previous 3 months.
You need to read the total article not just use figures which suit your arguments. Note in the article that you quoted from (see below) that employment has increased by 52,600 when they expected only 20,000. The increase in unemployment was probably due to the increased number of people looking for work. Every credible economist and statistician would conclude that the employment situation is improving not worsening.
Economists had expected the November jobless rate to return to 4.2 per cent, but hadn't counted on a record number of people actively looking for work.The number of people in work in November surged by a seasonally-adjusted 52,600, bolstered by a 44,400 increase in part-time workers. Full-time workers rose by 8200. Economists had expected a 20,000 increase in employment.
Australia's economy is very healthy at the moment, not deteriorating as you seem to suggest.
simple wrote:Welcome to 2008!
So for a start of the year we have:
1. Jan-February rise of 0.25% with another 0.25% promised to follow ASAP
2. Property market started to level out ( as per my observations in Brisbane)
3. What is the current CC debt, anyone?
4. Unemployment started to rise
5. US housing market, still melting downComments anyone?
Can you substantiate 2 and 4.
2. I don't see any levelling out; my observations show that it is accelerating. In Brisbane, I could give you example after example of rising land prices, shortage of properties available for sale, offers $20,000 to $30,000 above asking price. It's not confined just to inner suburbs but is also happening in the fringes.
4..The trend shows that unemployment is reducing not increasing. Anybody who is healthy and wants a job can get one easily. My son works in a very large Australia wide recruiting agency and the general feeling is that there is still a desperate shortage of all types of labour.There is no way that I would sell New Farm. The costs involved are not worth it.
I'm a buy and hold investor who uses increased equity to buy more property. You may be able to use your equity to keep New Farm as well as buy the unit even though I'm not a fan of most units. You need to contact a good mortgage broker.
MichaelYardney wrote:SpudBoth Melbourne and Brisbane commenced the upturn phase of this new property cycle in mid 2006 – so there is still some way for them to go yet.
Sure both cities have had tremendous capital growth in the last year, in fact too much for my liking at this early stage in the proeprty cycle, but there is still lots of upside in both cities.
Brisbane and Melbourne's house prices both increased by about 20% to the year ended 30th November, 2007. If they still have lots of upside then we are looking at a median price of over $500,000 in the next few years. This is frightening for those trying to get into the market. It's going to be more and more difficult to get positive cash flow properties in the future, unless you start looking at commercial properties (as suggested by Steve McKnight) which I'm not yet prepared to do.
Sydney appears to be the capital city which has the greatest potential in the next few years. Brisbane, Sunshine Coast, Melbourne and Adelaide are too hot at the moment. I've got no idea how to pick good regional areas. Developers have done their research well before we find out what's going on in these areas. By the time we find out what's going, the market has already bolted.
I'd advise you to concentrate on a few areas and get to know them well. I live in Brisbane and it's hard enough getting to know 6 suburbs in one city let alone 6 areas in one country. Each city has got its different markets. For example inner suburbs of Sydney is still doing well while the western suburbs is going backwards. Most of Brisbane is doing well with riverfront suburbs going up at a much higher rate.
I lot of different opinions regarding this. Some very successful investors buy only in their own name while others buy through trusts. Margaret Lomas, who has over 35 properties, only buys in her own name as she doubts whether she will ever get sued. Even accountants have different opinions. You have to balance up the cost of setting up a trust with the possibility of getting sued.
I was going to set up a trust but now have decided to buy only in my name or/and my wife's name.
I'd be careful about going to the Philipines, Thailand or one of the other mentioned Asian countries to get your teeth done. I know that there are some good outcomes but I've heard some horror stories too. Some people have had to pay a fortune to fix up medical work which has been done in Asia. If you get it done in Australia, you've got an idea of what to expect; it Asia you have no guarantees and no comebacks if the treatment is not satisfactory.
You shouldn't have any problems getting your loan refinanced. I've just refinanced most of my properties. This allowed me to access quite a lot of equity which I'm using as deposits for more properties.
To add to the books to read, I'd recommend "How to achieve Wealth for Life through Property Investing" by Melvin and Chan. I was given it as a Christmas present. It's a cracker of a book, easy to read and fairly cheap I was told.
It cost us $24,000 to do the whole lot. We didn't do anything. As ours was a PPOR we got very good quality materials, vanities, toilet bowl etc. It cost us close to $5,000 just to get the old bathroom removed.
If it was for an investment property, I wouldn't spend any more than $10,000 as this would get me quite a good renovation.
MichaelYardney wrote:I don't know why your friend's apartment didn't go up – it was either in a poor location or he paid too much.I bought a whole block of 14 of them – settled in Feb 2007 – they are in the inner eastern Melbourne suburb of Glen Iris and have gone up 15% in value since I bought them (less than a year ago.)
But as I renovated the block inside and out and added courtyards to 5 of the apartments the value of this investment has gone up close to 30%.
Now if you think about it – that's about 100% on my money as I put in a 30% deposit.
My friend's unit was close to the Melbourne University, one of many which was suited for student use. Yes, it was probably too small but appeared to be well located.You've reinforced my point that you generally shouldn't buy one bedroom apartments which are part of a large complex, unless they have got some special features such as water views. I'm also a great believer that you should buy something in which you can add value.
Loved your book, Michael. It should be a standard read for anyone who is interested in property investing.
Great that we can get feedback from Michael Yardney and Steve McKnight, 2 of the most respected thinkers and successful doers in property investing in Australia.
SteveMcKnight wrote:Hey team,Thanks for the comments about the book. There's no doubt that property prices have moved higher since the 0 to 130 was released. I accept that some will view it as outdated, however I continue to use the same theories to make good profits today.
It is fair to say that residential +ve cashflow properties are now very hard to find. I recommend people interested in this approach look to commercial property where tenants generally pay outgoings, and as such, the cashflow outcome is better than residential (where the landlord pays outgoings).
Residential property is hard enough to master. Commercial property is an entirely different area where the risks can be so much greater. I'm not willing to go down that track yet.
I'm also not a fan of 1 bedroom apartments especially if they are amongst 100s of others. I've got a friend who bought one 7 years ago and after owning it for 6 years sold it for about the same price as he paid for it. Unless it is something different such as next to water I wouldn't go near them.
Steve has acknowledged that it is not easy getting cash flow positive properties. So do other respected property authors such as Margaret Lomas, Michael Yardney, Melvin & Chan, Jan Somers and John Fitzgerald. Before you decide to concentrate on cash flow positive properties read a few other books. I have just read Michael Yardney's "How to grow a multi-million dollar property portfolio in your spare time" and am part way through Melvin & Chan's "How to achieve wealth for life through property investing". Both are easy reads. Both, like Fitzgerald, advocate growth based investing.
Steve McKnight's strategies are great if you are willing to put the time into his type of investing. Fitzgerald's approach suits me a lot better as I'm too busy working to put too much time into property investing. Most one bedroom apartments are definitely not growth based investments.
bruxism wrote:thanks for the help so far guys. Just a couple of queries.1. first home owners grant. I won't be living in it, so i couldn't get it….right? Fiancee is not a permanent resident, so she can't get it, so what's the ruling if we bought a house together?
2. Rural areas. Yes, i'm aware of the problems with rural areas, but I'm confident with the area i've chosen to perform well and with my father's ability to see a good deal, having dealed in the area for 40 years now. Brisbane prices, on the other hand, have gotten way too high for me and i don't see myself having the ability to enter the market there just yet.
3. When it comes to pooling our money, while i understand the legals of us splitting up, what i'm more interested in is the financial side of things. like…will the artificial lending ceiling hit us sooner if we borrow as one entity? How will our tax returns be affected (i really don't understand how that one works). should we maybe even kick things off in a trust, or does that come later?
Thanks very much for all your help so far L.A Aussie and hleung it's really appreciated!
bruxism
1. Using a trust to invest in is not a clear cut issue. There are some people with 35 properties who don't invest in trusts. I personally don't as I doubt very much whether I'm going to be sued in the future.
2. Don't know the situation regarding joint applications between a permanent and non permanent residents. You need to contact an accountant.
3. You'd be struggling to borrow much on your individual incomes. Much better if you could pool your resources together.
4. Even though your father has dealt in rural areas for 40 years, I'd still get a second opinion. Surely you can buy something farily cheap in Brisbane? Have you considered units or townhouses? There are still properties under $300,000 in places like Ipswich.
