Forum Replies Created
Oh here's my prediction by the way, please share with ANZ's CFO and bank directors :
"House prices will crash 50%, then they will stagnate for years"
good luck with that.
"The ANZ has recently said that we are just around the corner of a new housing boom"
Did you know ANZ is one of the first banks that are going bust if the housing market keeps slumping ?
Ofcourse they will say there's a boom upcoming. Did anyone ask them where they will find the buyers ?
Oh wait, buyers aren't important in a housing market, only the sellers are, and they use a simple formula "house prices double every 7 years". So, from that, your house should automatically go up 10% per year, regardless of what the economy is going, because "house prices always double every seven years, and they never drop"It's funny to see the sheep follow the wolves' advice
It's a shame that property investors gone wrong never bother posting here, it would certainly fire up the discussion. I'm not going to elaborate on why the property market is crashing, suffice to say that it will crash much harder and faster than anyone expected ( well.. except perhaps me ), and don't expect a minimal 10% or 20% drop, expect 50% drops all over Australia.
Unemployment will rise ( as I said months ago ), and with it, we're in for some heavy duty revamping of the housing market. 50% crash *at least*. ( sydney is already at 35% crash now btw.. , so we're well on our way ).
Sav wrote:What can you buy with 150k?There's plenty of houses for sale for 150k.
Hi Matt,
Yep , I can help if you want. First, a few anecdotes :
– If it sounds too good to be true, it is not true.
– Money never comes easy.
– The only way to make money is to work for it. ( even a scam takes a good amount of work )Judging from your post, I take it you are interested in investing in property. Investing in property is very easy.
First rule : Never borrow more than you can safely pay back. Let's say you earn 50.000 dollars gross a year. That means you should not borrow more than 150.000 dollars to invest in your own property.There's a few ways to make money relatively easy, but like most things, they come at a cost.
I personally bought my first property when I was 20. Ofcourse I didn't have enough money to pay back the mortgage, so I put 3 students in my own home, and I had only 1 room for myself, and had to share the kitchen and the bathroom with 3 other people, and I didn't have much privacy. I lived like this for 6 years, until I earned enough to pay back the mortgage by myself.I suggest that if you want to invest in property, you start with buying your own home first. Buy a cheap home that looks REAL crappy, and divide it in two : Two options :
– Divide it in floors ( townhouse-like )
– Divide it in half ( london-style )Then rent 1 part of the house to someone else ( a starter- worker for instance ). His rent should be paying most of your mortgage. Save some money while doing this.
Once you are comfortable with the payments and are sure you don't get stressed financially, you're ready for your second home.
Go look for a place where YOU would like to live. Buy it, then rent out your previous home : You now have 3 properties ( 2 rented out , and 1 property where you live yourself ).
With the double rent incomes, pay off 30% of your PPOR , then you're well on your way to SAFELY investing in property. After 4-5 years, you can think about buying another property and using the rental incomes and your own income to pay back that property also. Try and buy a big crappy home ( 5 bedrooms ) , and divide it, that way you have 4 renters and 3 physical homes ( yours included ). Alternatively, you can buy a 5 bedroom house close to a university and rent it out to students. Mind you this takes a lot more stress than renting to a working person, BUT.. you earn more with renting out to students, and students generally don't mind living in a dump, as long as it's cheap for them ( 5 students bring in a lot of rental income ).
Well, that's it, this is what I suggest you do. Don't use 'graphs' or 'computer models' or 'software' etc.. just use your own brain to do the maths. Generally , you want to get more rental income than mortgage payments.
If you can't earn enough by renting the property out to 1 guy, then rent it out to 5 students instead, or divide the place and rent it out to 2 workers instead of 1. Noone needs 5 bedrooms ( they think they do but they don't ) AND… you will actually be helping out society by providing more rental properties.Don't spend too much money 'doing the house up'. Just buy it, and rent it out in the state you bought it, unless something is broken, then replace it. Get landlord insurance. For a sample rental contract, just contact a rental company and say you would like to rent a place somewhere : They will provide you with all the contracts you need ( thinking you will sign them and send them back, rather than modifying them for your own use ).
Good luck mate!
You're asking the wrong question. The right question is "How much should I borrow to be able to safely survive a depression ?"
The answer is well-known : maximum 3 times your gross wages. So if you earn 50.000, you should borrow MAXIMUM 150.000$, and make a deposit of 15.000$ cash.ofcourse you can't see the property, ofcourse you can't advertise before the place is yours.
The place is not yours until settlement. You are harrassing the current owners.
How obvious is it that you are the wrong one here , and not them ?They LIVE there.. You act like YOU live there ??
Stressed borrowers conned out of homes
haha. That's funny. What do they do to 'con' these stressed borrowers ? They offer them fair market value, which is 50% of what these idiots paid for their houses, which is the reason they are 'stressed borrowers' in the first place.
If you can't afford a house, don't buy one. If you buy something at 200% overpriced market value, then you should expect to have to sell it at 50% if you get into trouble. You see, if noone wants to buy your house at 500.000, and noone wants to buy it at 250.000, why would they be 'conned' when someone offers them 300.000 ? Either they sell , or they foreclose and risk getting even LESS.Stupid spruikers, defending the 'poor investors' who so unsuitably can't make 200% profits every 5 years because we have PASSED the ceiling of what people can pay. Now , people realize "oh shit.. I can't pay what I promised the bank I would pay them…"
Then they come up with "I got conned out of my house by an entrepreneurial predator"
Don't make me laugh, please.
Sell.
The market will keep going down until at LEAST 2010. Then it will stagnate for years.
You will not get back your money , you can only lose more money the longer you wait.
Get a quote, then put it up for sale at 20% under that quoted price if you want to have viewers.
If you just want to put it on the market for the next few years without having any viewers, then put it at market at quoted price, then in 1 year, put it up for 20% less, and in 2 years, put it up for 40% less, and still don't get viewers.A flip… in this market. Please don't resort to crime after you go bankrupt.
Peaknik : I agree 100% with your post. Great advice.
RobL wrote:I generally try to stay out of the chicken little discussions …*Cut the useless info*
Hi RobL, thanks for sharing your invaluable time with chicken littles like us.
Hm.. after cutting out all the useless info, there's nothing left. What was it you wanted to say ?The domino effect is there. People just don't see how exactly it will come into effect because they think that houseprices only go down if people are forced to sell . Here's an outlay of the problem :
– It starts indeed with 1% of the people who HAVE to sell
– Together with a HUGE supply of housing, and a HUGE lack of buyers, house prices for people who have to sell will be 20% lower. These people will stretch themselves to huge extents in order not to sell at 20% 'loss'.
– That means more sellers even. In the meantime, the interest rates are up, so buyers can get LESS money because higher interest. On top of this, credit is not available anymore to banks, meaning even LESS money to be borrowed
– Stressed mortgages will eventually force some people to sell at 20-30% less value.Now, this is where the other people who weren't planning to sell come in :
– Banks will devaluate the houses by 20% since the only houses that sold were sold at 20% less than the 'figures'.
– Banks will then force people who have negative equity to pay up ( there's a clause in your mortgage contract , just look it up ! ) CASH for the deficit on their mortgage. This could be up to 50.000 AUD$ they have to pay CASH.
– Those people will borrow money from credit cards and payday loans. These are huge interest loans, to pay the banks.
– After a while, it becomes unsustainable, the people will have to foreclose.
– Those houses are sold at 30% – 40% loss, which means another devaluation, and more negatively geared and negative equity people. These will have to pay cash too , but there's no money, high oil prices, unemployment rising etc.You see the problem ? It's domino, but not the kind that property investors like to see.
L.A Aussie wrote:Rather than just keep stating the obvious, give the forumites a few strategies that will teach them how to invest successfully in the times ahead.You're right. I think it's obvious now. Hm. Investing successfully in the times ahead :
– Buy alternative energy funds ( solar / wind / geothermal technologies )
– Buy bank shares at the bottom of the crisis
– Buy goldie : stay away from property. The market will stagnate for years and years.
After you stop hearing stories of real estate, and everyone knows someone who lost tens of thousands of dollars on properties, THEN you need to buy. Wait for the negative AND the positive news to stop. When you hear nothing, then you know it's time to buy property again.Banks always recover before the property market does. So if you invest in banks before you invest in property, you should be making enough money to have a head-start on the rest.
http://www.news.com.au/story/0,23599,23947854-5007146,00.html
A good summary of what's to come ( and what I posted 2 months ago ).
Rudd said "I will fight inflation at all costs". Just look it up. Also , any country with a reasonable view on the future will fight inflation. The steps that the FED has taken so far have led to financial TERRORISM. Just look at this :
USA heading for hyperinflation : http://www.bloomberg.com/avp/avp.htm?N=adv…VkI8WexWY2M.asf
Worse than '94 inflation : http://www.bloomberg.com/apps/news?pid=20601087&sid=aLyjKy00BA1AFed has no clue on what to do. They're in so deep that they have no way out. We're heading for 1929 crash.
Stockmarkets have dropped 20% already, the only reason why they haven't dropped more is that they are not ALLOWED to drop more by the stock exchange ( they will prohibit trade if dropping stocks reach 'critical levels' ( 2% or something ) ).The crisis is huge. People don't realize how big this is, and that's good, because if they knew, we'd have a mass hysteria on our hands.
What were your reasons to buy that IP ? What maths did you do , how did you intend to make money on the property if your rent is less than your payments ?
yarpos wrote:the immigrants I work with from UK, Singapore, HK and Sth Africa are wealthier than me , they can do what they choose to do and arent struggling for 5 months let alone 5 years. The situation isnt as black and white as you present, some actually do come with millions…some with 5c. You may not be seeing the effect in SA but it is significant elsewhere.Interesting position to take …. you dont agree with me so you are blind … sort of makes discussion pointless
The immigrants you work with were part of the bubble creation. I'm sure they were wealthy since they would have sold their house before the USA and UK bubbles. I was talking about future immigrants ( aka, the ones that would be buying houses in 4-6 months from now )
bardon wrote:Why do you think that the US Fed has chosen not to act on inflation in the US in fact they are doing the opposite you have a situation where IR's are way lower than inflation and only last week the Fed yet again failed to act ?Hm. Well that is the most difficult question to which there is not 1 good answer I am afraid.
I personally think there's a few reasons for it. The official reason would probably be that USA is afraid of stagflation, and would rather have inflation than inflation + recession. In order to counter the recession, they lower interest rates, and thereby keep the economy going.
You could also put your tin foil hat on and think that the USA are pressing the oil prices up. Since USA has a contract with Saudi's to buy oil for no more than 70$ per barrel, they can sell it on for 140$ a barrel and make some nice profits.
Or, you could think that USA doesn't want to affect their export and therefor try and keep prices low, thus keeping economy going.
Then again, maybe you could think the Fed are affected by presidential elections and want to keep their rates low because otherwise the shit hits the fan.
Or maybe the Fed is so incredibly worried that USA banks will tumble over due to the credit crunch that they will give the banks cheap extra credit to stay afloat.
Or perhaps even, the Fed just wants USA to stay in power by 'sharing' their crisis with the rest of the world.It's hard to say, that's why I haven't answered. I have no respect for USA or their policies. All I know is that they are warmongerers , their economy thrives on war and bullying and blackmailing, they are a fake country and are the most hated country on earth. In other words : they're not really interesting.
ItalianDragon wrote:Also too many times, I hear about the immigrants.From what I have seen I can guarantee you that only a very very small FRACTION of them is able to pay a LITTLE mortgage AFTER at least 5 years since they get in the country. For most of them the first 2 or 3 years are just a struggle and usually most of them come from poor countries. How can anybody expect that they have millions in their bags?
They hold on to Pom immigrants. Those used to be filthy rich when they came to Australia. They used to have 300.000 to 800.000 POUNDS of equity to spend in Australia on 'cheap' housing, due to the positive exchange rate.
Well :
– Pound has lost a LOT of value lately
– House prices have dropped by 30% to 70% in UK. ( and people now have higher mortgages than their house is worth , ie : subprime crisis )No more rich Poms. No more rich USA immigrants.
Immigrants entering the country of Australia are poor, at best. ( and unemployed )
