Hi all,
I have today made an offer on my third ip and am confident of scoring it. I researched it thoroughly and all the numbers add up.
Then i read comments from reserve bank govener suggesting interest rates may go down this year.
Great I think, then i read on where he says he’s worried a rate cut may encorouge property investors to continue in a credit cycle that is very late in its maturity,and is probally about to turn down.
I must admit , these statements left me a little confused.I have an lvr of about 40% and only positive gear properties based on worst case scenarious of rates rising to 7 – 8 %.I feel my strategies make me fairly safe.
Is it time to close shop for a while and sit on what i have got for while, or trust my instincts and research and forge on?
Any thoughts would be appreciated.
Joff [?]I would welcome any thoughts on this as i am
HI,Michael.
Yes my properties are p@l. I am still not convinced that interest only loans are the way to go. Yes, I know, interest only loans free up cash flow, but unless you are very disciplined and working to a strict budget the bit extra you get i would rather put back on the loan. when i get a bit older and start wanting to really up my lifestyle is when i will go to line of credit structure.
I will consider fixing in my loans if things get dodgy but i will continuen to plan on that old maxim “THE PROFIT IS MADE IN THE BUYING ,NOT IN THE SELLING”
You are right though, at the moment risk aversion is the key statement. But that is why i will keep investing, because i have both eyes open at all times,and just because we are coming into a changing market, means i will just study harder to stay ahead of the mob.
Joff.Hi Joff
Went to a Steve Navra mini seminar on Monday night in Brisbane after returning from the APIM seminar.
His opinion as to when the market would seriously “turn” against investors would be when interest rates reach about 8.5%. If I remember correctly the reason for this is that some investors have a very high LVR. This combined with rising interest rates would really put the squeeze on the affordability of these investors to meet their financial commitments.
I guess as your LVR is very much under control, I’m not sure that you will have too much trouble meeting your commitments.
Good on you for minimising your risk as you see it.
Take care
Dave [
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