Forum Replies Created
And what about the risk and volatility in the performance of these funds.
Usually the risk in these funds is greater because they are subject to the wild fluctuations of the stock market. Property values have considerably lower volatility and thus real estate has less risk.Petros
I am no expert on Australian macroeconomic trends but assuming that interest rates are at about the levels that are in US and Europe, which are still low by historical standards I would agree with F's comments that the reason the slump has appeared much less severe is because we are seeing only the beginning of the correction of a very sharp increase in housing prices in the last 5 years due to the very low interest rates. Of course such an assessment is valid on the assumption that interest rates will continue to rise, which is really an unknown factor. I know in the US economists were predicting every year since 2002 that interest rates would rise but those predictions did not come true for many years that followed and still by today they haven't risen as much.
No, it should not cost to get on a list. It will cost you only if a transaction takes place, that is, you purchase a property. However, when you call you need to show that you are serious about purchasing a property and be ready to give to the broker a good description of what you are looking for (price range, type of property, etc.) so he does not waste your time and his time. Hope this helps.
Did the broker tell you that all other properties in the area have risen in value or that is your impression based on some information you have seen or heard? If this is what the broker told you then it definitely sounds strange. If other properties in the neighborhood of the property you are looking have appreciated, the steep slope of driveway does not explain the value staying stagnant for five years. It should rise but perhaps at a somewhat slower rate because of this "disadvantage". You should ask the broker if the seller can provide an appraisal or otherwise maybe you should get one yourself. If there is another serious reason because of which it did not rise in value it will be mentioned in the appraisal report.
On the other hand if the assessment that values of all other properties in the area have risen is based on some other information source than the broker make sure that this information refers to the neighborhood of the property in question and to the same type of housing unit in terms of quality and amenities.
Hope this helps
There are definitely rent cycles. Actually for income property, property cycles are caused by rent cycles since the value of an income producing property is determined by rents. So if rents cycle property values follow that cycle. You may want to read my article on my website about real estate cycles and their double-positive impact on property values.
Hope this helps.
My advice is to focus on investing on property types and locations that have strong appreciation potential. Unless you know very well the market you are investing, I would suggest consulting the leading real estate agencies in your market to get sound advice as to what property types and submarkets are experiencing price/rent increases and whether the demand/supply fundamentals and vacancy rates favor continuation of these trends.
Using leverage you can increase your investment capital significantly. I would also avoid investing all the money on a single property, but spread it to at least three properties to minimize risk, unless you are absolutely certain you found a property that it is a true steal.
Hope this helps. Petros
Petros Sivitanides, Ph.D.
http://www.property-investing.org
