Will the bubble burst?

You need to pick the growth areas per residex.
I suggest Ed Burtons seminar in nov, mention my name and he will give me a gift.
He is an accountant with over40 properties and a financial adviser, excellent value.
He gives you the formula for picking the right property.
His seminars are excellent value for money and he covers everything you need to konow about investing, very down to earth and no b.s.
He has a slightly different approach to steve Mc, I think both approaches are worth knowing about.
I am also wondering if we are nearing the peak of the property cycle, ie shares starting to come up again, int rates will start to rise and property will decline and so it goes.

Our strategy consists of buying large blocks with houses in the eastern suburbs of Melb, ie dual occs.
We have five on the go in various stages,
It takes a long time but the land (ie back yard)is a huge buffer to flattening of growth.
Shares: I am looking at buying some growth shares in my super fund.
Iam also exploring the possibility of buying a share portfolio which is fully hedged (protected)and writing covered calls or similar using low exercise price options for income.
I am doing a seminar on shares by Allan hull in 2 weeks, he is very good.
Having not done well with shares, I am trying to avoid more mistakes.
Eventually I would prefer a good share portfolio to property but keep some of the income producing property.
Ed Burton talks about investing in overseas funds via Vanuatu, but I am not so sure, you are not as much in control.

Regina,

Very well done!!! (With the properties with big back yards).

Can I ask a few questions about that?
Do you always keep the existing house when subdivide the block or sometimes you knock the existing one down and built 2 or more new once?
Do you use builder or you subcontract the work?
And last do you manage to negative geared the properties while you are waiting for the council?

Thanks a lot in advance!!!

Maggie

Regina,

How was the Allan Hull seminar.

Could you also tell me what the investment to attend was.

I also note you are a big supporter of Ed Burton. I recently attended one of the freebie intro seminars held by Break Free PTY. I can’t remember the guys name but he was reallly fat. He wanted $3K to attend. But the cost of Burton seems more reasonable @ $1.4K.

ANy other seminars or books you would recommend.

Thanks,
W

Hey there Retire

Im no accountant, or professional property guru, but i do think there is a change on the way… its fueled by many things, media hype, even whats happening on the news… I personally believe that the property boom was triggered by several things:

1) The almost common knowledge that in 20 or 30 years time the pension as we know it will no longer exist (time to invest!)
2) The olympics (sydney is now “on the map” so to speak)
3) Sep 11 and the drop in interest rates
4) First home owners grant
5) The plethora of TV shows relating to auctions and renovating houses in a week end…

Sooo… i went for a stroll down the street just a few days ago, after seeing an “auction today” sign on the corner… the house is familier to me, was bought 2 years ago by the family for $340K. has been very nicely renovated, an extra level added up top, and nicely done in general
i also bumped into a friend from school, who just happened to be one of the agents doing the open house.. i asked him what it would go for, he said between 6 and 7 hundred thousand.. which was about right for the area….. (lower 6’s perhaps)…

Auction time… 4 bidders, and no 1 would start it off… then a dummy bid for $700,000… it was soooo bloody obvious… and this agent was meant to be the best auctioneer in NSW for the company he represents… It was such a joke that the 1 or 2 serious bidders threw the paddles on the ground, mumbled under their breaths some nasty words and drove off at high speed… the whole event was a joke and the property was passed in after 3 minutes….

why the story??? because 6-12 months ago there would hav been 20 serious bidders, all fighting for the place, as has happened in the past for other auctions in the street…

Whats on the news now? bubble bursting, interest rates on the rise, property seminars being exposed as scams, high vacancy rates etc etc etc

many ppl i know hav loans they can hardly support.. just wait till rates go up…

Loan of $300K, 25 years P&I @ 6.1%= $487.43 PW
Loan of $300K, 25 years P&I @ 6.6%= $510.69 PW
Loan of $300K, 25 years P&I @ 7.1%= $534.45 PW
Loan of $300K, 25 years P&I @ 8.1%= $583.38 PW

when this happens, time to sell! and there will be 1000’s of households that will be doing it if they were not careful with their finances…

Thats my opinion i guess, the last place i bought in sydney was 2 years ago for this same reason….

Jason

G’day all,

I am always amused when I read/hear the term, “Property Bubble Burst”. Can anyone explain what this term actually means? I know its an emotive media term, hence it is thrown around a lot.

To me a bursting bubble implies something is inflated and then bang, in an instant there is nothing. How on earth could this be applied to property??

If in a worst case scenario: interest rates hit 10%, unemployment 10% and investors ran to shares, property would still exist, with a real value. There may be a levelling in the market, maybe a correction of say 10-20% (being extreme for “normal residential” housing)

When I hear the investing term “Bubble burst” I think of shares. HIH, World Com, IT crash. In those cases it was actually possible for the bubble to burst and have nothing overnight….

Cheers,

Battz

Hi Retire2012,
There are still properties in the Newcastle area/surrounds but you need to be really looking and checking with agents. Prices have gone up incredibly even in this year. eg,look at Mayfield where early in the year you could find a house under $200,000, now $50,000 more. We have a few in the Maitland area which has also gone up. Rents are good there. Currently have another settling soon in Newcastle.

I agree with Batzz. We look back on properties we have bought and sold over the years and none of about 20 in various areas including Sydney, have gone backwards. You just have to check the net to see what is happening in whatever area you choose – and invest in Australian Property Investor!! I think the “bubble bursting” is media stuff. No doubt prices will level out as a couple of economists said in the last week or so but they also said prices would continue to rise till 2006. And it depends on who is talking. Our daughter bought her 3rd unit in Sydney a few months ago, we did a quick reno which was mainly paint/carpet and it would sell for $40,000 more now.

Everyone has their own strategy, but if you have bought wisely/positively geared, and the interest rates go up, you are ok as your mortgage is still covered. We made an unwise purchase at Uppera Coomera 3 years ago but it has never been untenanted and valuation now is past purchase price. Also on talking to an agent there today, the area is booming – as we knew – with expected population of 50,000 by 2005. Since then though, our properties are cfp – suits us better. Confirmed by Steve’s strategies – I’m off to read the book which has just arrived in the mail – soooo fast – ordered a few days ago. Thanks.

Anna

Couldn’t agree more Anna. And re Coomera, I reckon that will be a solid investment area – that boom is stil to come!

Cheers,

Battz