Where to next ??

Hi AD

Congrats on the new three star rating. I believe we are in for a year of uncertain times. Some areas are still going up, some areas may have hit a plateau and some areas/regions will go down due to a number of signs or indicators that are wise to watch out for. The indicators are not yet clear but their are reasons for them to start to appear. I have just bought an under valued IP in a still rising market and I am actively looking to continue to purchase so I don’t consider myself a doom and gloom negative type but I am cautious. It seems to me that the experienced successful investors started in a more forgiving market, we are fortunate to be able to benifit from a few of these experienced investors. I get a lot of encouragement to “look harder” and “do something today” from these mentors, I believe I can (faith statement) make money in any market,it’s just that I don’t know how yet. I look at the conflicts over seas, the unprecedented amount of investors investing in real estate, the state of the economy, the drought, the colour of peoples socks nowdays and I wonder how hard and how fast should I be going, “fools rush in where angels fear to tread”and “don’t do what everyone else is doing” thoughts are at the forefront of my mind. I am not letting these thoughts stop me but they do get in the road at times. My question is what did history do that we may learn and profit from?

Key

“A procrastinators work is never done”

Greetings All, just in relation to what Key said in relation to “the unprecedented amount of investors investing in Real Estate” and AD said “no doubt that many people have entered or are about to enter the property market” ,l wonder what will happen to all these one off investors in the next three to five years.We all relise that property investing is not all beer and scittles and it takes commitment in your beliefs as an PI to get you through sometimes.Now dealing with the public(as tennants) and banks and R E agents and all the other people who sometimes seem to be there just to add spice to what could be just another day, could knock about some one off investors to the point that it just gets to hard,then what? Could there be enough one off investers to hurt the rental market in years to come ? or is there going to be bargins galore when its not going as well as they had hoped and its time to sell up? . MITCH

Hi Guys (all sexes)

Just some thoughts

History repeats itself because people don’t learn. A classic example is the recent stock market boom where the talk was ‘this time is different’ ‘new econmy’ etc and the prices were pushed beyond reasonable investment criteria. People believe the hype get on the band wagon the axels break and low and behold a lot of people get hurt.

As discussed before the average interest rate has been 10% over 20-30 years yet people are buying property that returns 2-3 %. Their justification, capital gain and the interest rate is <6%. What happens when we get interest rates back to historic levels. These people will suffer massively on the increased payments required with no rent increases and even see a drop in the value of the properties.

Mitch, in relation to the one off investor the stats on property investing is 7% have 1 IP 5% have 2 ip, 3% have 3 and 1/2% have more than 3. Don’t quote me on the actual break down but it is dramatic. What I believe happens is that these people hold mainly for emotional reasons until the next boom, about 6-8 years, by which time they are absolutely fed up with the problems then they sell up just before the next big jump in capital gain. They have made 25% in capital gain for a 6-8 year hold (real loss) and the next person makes 100% for a hold of 1-2 years. The motivation for these people is the slight gain after many years of no gain. They rushed in and are then rushing out.

The irony is that at the same time rental returns will be increasing as shortages in rental properties occur.

By the way I think one of the reasons that this boom is going longer than normal is the influcts of baby boomers who realise they suddenly have to do something before its to late.

In realation to the baby boomers I am doing some research to determine the correct angle to play.

Cheers