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Europe just laid off 67,000 bank staff…. the US about 10,000 so far. And there’s a lot more to come. Financial services and banking will be oversupplied with skilled experienced personnel for years to come. Property has been over-cooked for 2 decades and isn’t likely to offer much in the forseable future. Property will be(is) high risk and low returns (if any) over the coming years. You’ll probably have better odds and lower risk at the casino.
Think economic collapse (global) and try to figure out where the opportunities lie in the future once the dust settles and the rebuild begins. Many ppl will make fortunes in the coming economic meltdown. It won’t be in merchant banking (you won’t get a job there because half the banks and financial companies will fail) or property in the short term. 3-5 years out you might make a killing on property if you’re cashed up
Jack
emptyvessel wrote:Even if China slows down, we have India coming right up behind them on a slower, steadier and some would argue, far bigger climb with a bigger impact on our economy.Michael Pettis: Long-Term Outlook for China, Europe, and the World; 12 Global Predictions
http://globaleconomicanalysis.blogspot.com/2011/08/michael-pettis-long-term-outlook-for.htmlIf some of you ppl (pro property) actually take the time to research the interconnectedness of all the markets you might sing a different tune.
There’s this illusion that somehow China and India will somehow save AU’s bacon needs some serious rethinking. The reality couldn’t be more different.
Jack
johann22 wrote:But for me i still see this as a chance to really pick up a good proeprty and a really good price.Oh to be ten foot tall and bullet proof again.
I suppose it depends on your risk appetite. Property is the last place I’d personally put my dollars but then after 50 odd years I’ve got a few bullet holes that deters my desire for more damage. Virtually all of the market is risk. You actually don’t sound like an investor but more like a speculator’
Quote:Im only 27 and have bought and sold a few properties and know looking at creating a fresh investment portfolioIf you want to speculate then look at the REALLY HOT spots and that’s anywhere mining is occuring.
Read this: http://tiny.tw/8qn
I live in Port Hedland. The article is reasonably accurate. The only thing I’d say is that houses that are in poor condition do take time to rent. You can expect a rental return of around 8-11%. I would say that I believe the market is topped out and there are big plans for housing expansion in this region however we won’t see much in the way of new houses for at least 2 years. Infrastructure limitations (especially water and sewerage) are constraining expansion.
It’s high risk though. These mining areas are driven by mine construction not actual mining. Construction could hit a brick wall if GFC version 2 hits with any force. The little miners go belly up fairly quickly and the big guys just pull the pin on expansion plans. During the last GFC we were loosing 4-500 positions a day. Staff were told they no longer had jobs and were on a plane that night. When it happens it’s very quick.
Ravensthorpe is an example of how a town can become a ghost town literally overnight when commodity prices contract. Oakajee is experiencing very real problems. How that one will pan out is anyone’s guess. See news here http://tiny.tw/8qo
Personally though I wouldn’t invest in property (housing) with someone else’s money let alone my own right now. The boom’s over and it’s going to take a while and a bit of pain for PI’s to figure this out. It’s hard for someone who’s had a good run for a decade or more to pull the pin and look elsewhere for investment opportunities.
This article makes for sobering reading: http://tiny.tw/8qp
Now in saying the above there are opportunities in property that are infinitely more flexible, liquid and just as profitable if not more so over the long term. Two areas that PI”s invariably ignore are agricultural properties and commercial. Most people just don’t understand how easy and safe these two sectors can be. There are 2 main vectors to invest; direct – you buy and manage the asset yourself or indirect; you invest through a trust or share vehicle.
These guys are one of the most profitable commercial property trusts around today http://www.bwptrust.com.au/
Quote:Business Description
BWP Trust (BWP, formerly Bunnings Warehouse Property Trust) is focused on bulky goods retailing properties, in particular, Bunnings Warehouses. Currently all properties owned by the trust are on long-term leases to wholly owned subsidiaries of Wesfarmers Ltd including Bunnings Group Limited and J Blackwood and Son Limited. Established in 1998, the responsible entity for BWP is Bunnings Property Management Limited.Why invest in BWP?
Pro’s
-BWP pays almost 100% of profit as a dividend every 6 months
-yields are around 6-7% after costs.
-by rolling dividends back into shares compounding growth doubles every tens years
-add equity growth to compound growth and values can grow exponentially over ten year periods
-investment is liquid
-leveraging is optional
-adds diversity to property/investment portfolioCon’s
-values go up and down
-value exposed to share market sentimentAgricultural property is one that few rarely even consider. I’m talking here mainly of food production NOT forestry!
Five reasons to consider Ag http://dailyreckoning.com/invest-in-agriculture/
Those are the underlying fundamentals however the icing on the cake is a slow realisation by the wider corporate investment community of the growing (excuse the pun) growth opportunities food Ag offers going forward. This demand will help to drive up equity values as well as fund continued sector growth and development.
Anyway youngfella that should give you some food for thought and broaden your horizons.
Pretty simple really. You have an asset with an operating loss as well as a likely depreciating loss.
Fact: operating loss… suggestions to date will only reduce or minimise this loss at best. I see no plan nor know of one that will move this asset into an operating profit.
Fact: over 5 years the property has depreciated and you owe more than its worth.
Fact: the global financial situation is precarious and almost inevitably we are heading to GFC2 but with more serious downside. To hold onto a loss making asset in the hope that things may turn around is financial suicide.
Common sense would tell any investor regardless of the type of investment that one must cut and run. Better to lose a little than a lot.
The negative2positive idea scares the crap out of me. You have no equity in this property so where’s the vendor finance coming from. You’re a property investor not a financier. Anyone who can’t get a regular bank mortgage and who needs vendor finance is high risk obviously. To me that’s just jumping out of the frying pan and into the fire. Paul Dobson may mean well but his suggestion is highly subjective.
Think with your head and not your heart. Bite the bullet take the loss and move on.
Jack
