Forum Replies Created
Steve
Good point about replicating your success (and not necessarily your portfolio or strategy) as well as being positive.Okay, I get the bit about inner city costing too much and it being cheaper to rent there, but I was actually referring to +ve CF IP and in particular 11 second solution IP’s which cannot be found in inner city suburbs.
I guess the main point I am trying to make is that I see the tenants of these +ve CF IP’s as more of a risk due to their circumstances and also a higher turnover of tenants. Just the two things which a landlord would like to avoid. I don’t want to get into the debate we had a while back about battling tenants (divorcees etc) as that can get too ugly. I also think you cant have it both ways and if the purchase prices are too high in the inner cities (as they clearly are for most of us) then you don’t have a lot of choice but to acquire IP further out. Just how far out is the question? I tend to think that capital city fringes are a better option than regional towns. The big cities will continue to grow and what are now the fringes will be part of the middle core in 20 years time. But regional towns have a real potential to completely disappear. Hope I have not struck too much of a nerve here!
Hi All
Steve and Dave probably have admin. and other staff working for them so to say they did this alone would be incorrect as well. Theirs is a fulltime business which employs people and uses subcontractors extensively. To attempt this in your spare time (not that they ever said they did)would just never work, not even 20 IP’s would be manageable part-time for one person (would seriously affect your real job). I know that they transitioned into this business. Steve and Dave also did this on the rise to the peak of the cycle. Reproducing this now at or after the peak, would be a lot more difficult. I also agree that we all need to just take some ideas and strategies from others like Steve and Dave and use them to fit our profile, not just duplicate their system “as-is”.Hi All
I dont think I can agree that Warren Buffet’s strategy can be safely used in property. Equities are much more liquid and thus one can move completely out of an investment in hours. When you buy into property you are generally stuck there for a long time. That means that to put all your eggs in one basket is a lot more risky. To diversify not only between yield and capital growth properties but also other assets is more prudent. Stuart seems to have the right idea.
my 2c worth!Hi Kristine
I am guessing a bit with regard to your motives for wanting this data but if you are seeking the population figures in order to understand population movements I would suggest that you seek data which shows the population numbers over an extended period (say last 30 years). If you plot these numbers against say the median house price for each year you will start to get a good idea of which towns have grown and which have shrunk in line with the business cycle. This is the kind of research which is required to understand a locations potential. You would hate to buy into a town which becomes a ghost town when there is an economic downturn. As far as finding these stats is concerned REIA.com.au or REIV.com.au should be able to give you median house prices. Population stats are available through ABS.gov.au and maybe also REIA. As you mentioned it is hard to find what you are looking for. I am finding it hard to get the summarised data that I would like for e.g. a table of all towns and cities(postcodes) with their population numbers for each year over the last 30 years. If anyone can provide this please post to this forum – thanks.Davo
I am referring to +ve geared IP not negatively geared IP and more specifically IP that fit the 11 sec. rule. (i.e. 10% return or greater)westan
As I have mentioned before, the figures dont really matter and also you are right that over the long-term the market will recover. Just how long it will take to recover after this large bubble deflates is hard to say. I would just like to see fewer inexperienced mum & dad investors getting into this sellers market. The long-term reputation of the industry will be severely damaged in the same way the equity markets were when that bubble burst. I am in this industry for the long run and believe that the greed that is driving the industry at present is very unhealthy and will come back and bit us all.Crashy
Although I agree with you about the prices of property likely to correct sharply in the next few years, it starts getting a little silly trying to justify each others statistics. Anyone of you who know the smallest thing about statistical analysis will know that you can find exactly the sample of data you need to justify any case. All you have to do is adjust the selection criteria until the data matches. So lets not worry too much whether the figures quoted by the Surveyor General or the DNR or the REIA are the more accurate ones or if the figure is 15% or 30%. All these percentages can be proven correct. The bottom line is that there is a reckoning coming and it is going to be bigger than most people think.
I completely agree that the issue here is about warning people and it just so happens that the Treasurer, Gov.of Res.Bank and heaps of others agree.brianc
I agree with you that a 2% increase in interest rates will have a big effect on the Syd/Melb markets. I think there are many inexperienced IP owners who are negatively geared and also many families who have paid too much for their PPOR’s. These people are not going to be able to support a 2% rise in rates and will be forced to bail out. Some say that there is not a recession factored into world economics now or for the next 18 months. I believe that politicians will never admit to a recession even when you are in the midst of a full blown depression! In general the economic prosperity of moms and dads here in Aus. is directly tied to their properties at the moment and if that is removed the economy will not be looking all that good especially considering the record debt levels.Many people speculate about country towns ability to tolerate a downturn in jobs (higher unemployment). When higher unemployment does occur (not if), then I believe that country towns will be hit harder as people are forced to find work in the major cities. The economies of scale favour cities resilience to cycles much more than regional centres. As is always seen in the property world, any and all areas perform well in a boom but good inner city areas perform better in downward movements of the cycle from a price and rent point of view. The relationship between property prices and rents is another complex issue so I wont go into this now.
Does anyone have real stats on the number of people migrating into and out of Aus. as well as some population flow figures between cities and towns? It would be interesting to know which areas are growing in terms of population, at what rate and from which sources (i.e. OS immigrants, interstate). Also cross matching this with some employment/unemployment data may point us to areas we have not seen before.
aussierogue
I agree that baby boomer movements will create demand near the water out of but close to the larger capitals, e.g. Sunshine Coast which has had a very hot run lately but still has further room to grow as the boomers from south get pushed out and wind their lifestyles down.Hi Richmond
I am always on the lookout for a good deal therefore will never sit it out completely.
Good deals have a habit of coming around when you least expect them! Having said that, it is obvious that as prices rise one must go further and look harder to find deals that stack up. With prices so high at present it is much harder to find IP’s that fit my profile. I am expecting that this will continue until interest rate rise by at least 2%. This is expected to happen in the next 24 months but may be as soon as 12-18 months-who really knows?I would have to agree with Stuart. The way I understand it, if you purchased a PPOR live in it for a while then later you decided to rent it out, you can claim the interest costs on the original mortgage amount. You cannot refinance and obtain more equity offsetting the interest on the additional debt beyond the original mortgage amount at the time of the change of intent (when you decided to rent it out). You would have to be careful about refinancing just before changing your intent. I dont think this would be allowed by the ATO either.
Thus you can claim the interest as an expense as it is in the pursuit of generating income. There may be certain specific facts about different circumstances that do change this so do check with your accountant as mentioned before.
Hi All
Well it is difficult to discuss all the facts that influence such a complex market as the property market let alone the economy as a whole in such a brief message (i.e. without writing a book).
Firstly, it is not correct to work backwards from today’s prices and use any % increase over time to estimate where prices were. This thinking does not work because these statistics are based on a real base price x number of years ago (you choose 20/100/350 years) on which price increases over the long-term are applied. This causes the trend line to move upwards over time in a consistent manner. In fact the figure of 10% used above is far too liberal and in fact most property markets around the world including Australia return more like 5-7% over the long term. Yes some economies (like ours) perform better than others at certain points in history but they also perform worse at other points. There is no way of refuting the long-term trend. Sure one can look at better snapshot (shorter selected period like 20 years) of the trend to justify or prove a particular point of view. This is very much the tool used by members of the property industry with a vested interest in the industry defying the long-term trend (i.e. Real Estate Agents, Landlords, Investors, etc).
Supply and Demand influence the price of anything. It can certainly be said that there has been a supply shortage in the last few years because of many factors such as the FHOG and the explosion of the share market etc. This probably has evened out now and in fact there is a decided oversupply in certain segments of the market. Only a huge immigration inflow (larger than the current immigration programme) can keep the supply side lower than the demand side. This is probably unlikely with the current government.
The reality of property prices is that they are often inelastic because people who buy at the peak just hold onto their properties if they can rather than sell at a loss in most cases. This causes prices to often not drop off by a large amount but rather to level out and show no increase for a prolonged period (which is price deflation in real terms). However, where the “bubble” becomes ridiculously inflated (as is the case now), then there will be many more people who just cannot hold onto their properties through the tough times. This is where one sees a dramatic decrease and falling in line with the long-term trend. Jobs are the key to the prosperity of the economy and the property market not property values as a lot of people are starting to think. When people start getting pink slips the property market will change quickly.
As far as the London market is concerned. 20% increases over the last 5 years and then 5% increases this year is hardly a price correction and more price levelling is to be expected. I agree that Sydney and probably even Melbourne are reflecting London a year ago. Interest rates will definitely go up as they are effectively at zero in the US and there is nowhere else to go but up. This will have an effect on property prices.
In conclusion, I cannot believe how much people are still talking up the property market, enough is enough already. Get real people.
aussierogue
[
]-Touché. It would appear that my forum name is at odds with my advice. Truth is that I do believe in a balanced portfolio and in fact do own units, houses and other investmensts. Within the investment class of property I have in recent times begun to favour houses over other types of IP for 2 very good reasons. Greater capital gains because more buyers are owner occupiers as opposed to investors and also lower vacancies.Sorry to drift off the original subject a bit!
SuperTed
I believe that the short answer to that would be no, if you owned a property while married to her at any time in the past.
Captain
Acquiring many properties at any price with the view to them working for you and you not requiring you to put in much effort is not very realistic. Managing or just owning 100 properties would certainly require more time than one person has. There is an unwritten rule of part-time property investing that says the average person will only be able to afford enough time to own about 5 IP’s (give or take a few) before the burden increases to an undesirable level. Of course this often does not yield the kind of passive income which will allow one to enjoy the finer things in life.The alternative is to invest in property managed funds. The return is considerably lower but so is the input (virtually none).
Of course the real answer is to ensure that you have a balanced portfolio of investments which covers several investment classes.
Hi Jules
Here are the rules from the following website
http://www.osr.qld.gov.au/gas/fhog/grant.htm
To be eligible for the base $7,000 grant, you must have completed an eligible transaction in relation to the purchase or construction of a home that is your first home and must satisfy certain eligibility criteria. The eligibility criteria are as follows. (All criteria must be satisfied for you to be eligible.)
You must be a natural person (i.e. not a company or person acting in the capacity of trustee)
You, or a joint applicant, must be an Australian citizen or a permanent resident.
You or your spouse must not have received an earlier grant under the First Home Owner Grant Act 2000 or under an Act of an Australian State or Territory providing for payment of a first home owner grant, unless the earlier grant has been repaid.
You or your spouse must not have previously owned an interest in residential property in Australia prior to 1 July 2000. This includes investment homes.
You or your spouse must not have, on or after 1 July 2000, owned an interest in residential property in Australia and lived in that property.
You must occupy the home for which the grant is claimed as your principal place of residence within one year after the eligible transaction for the home is completed.
Hope this helps?
Hi Stephen
I personally don’t buy anything I don’t inspect myself and do not trust anyone with a vested interest in the deal (i.e. Real Estate Agents).
Do the numbers, inspect yourself and then definitely get a building inspection. There are certain things which photos cannot show for example, a bad neighbourhood or neighbours etc. These types of problem can be a huge pain and cause vacancies. I know it is a catch 22 because +ve gearing is getting further away and in regional towns rather than the big cities, so the travel may be necessary.
Good luck.
]-Touché. It would appear that my forum name is at odds with my advice. Truth is that I do believe in a balanced portfolio and in fact do own units, houses and other investmensts. Within the investment class of property I have in recent times begun to favour houses over other types of IP for 2 very good reasons. Greater capital gains because more buyers are owner occupiers as opposed to investors and also lower vacancies.
