I have read various threads with interest over the last few days and there are clearly some astute and experienced property investors in the Forum.
So Guys – for all the newbies out there – If you were looking at beginning to invest in real estate, especially for +ve cashflow, would you jump in to the market now, or would you hold off until the much heralded price slump/crash/plateau happens? If yes – why? If no – why?
Cheers[
]Morning Brian,
Whilst it may be fairly anecdotal I used to work in residential r/e in ’99 and couldn’t count the number of buyers I came across back then who were “waiting for prices to fall” because the market was “overheated and just about to crash”. I kept in touch with them in successive years as prices continued to rise and yields fall. As I watched, their requirements changed from semi’s to 3br units to 2 bedders etc.
Unless you are in the market to some degree you risk it moving against you. If it is your first one do your due diligence and jump in.By owning property you also avail yourself to a lot of financial bonuses (optimistic valuations/ PAYG witholding variations/ depreciation) that you can be fairly creative with. And if it genuinely is CF+ what have you got to lose?
So do your homework and go for it.
Good Luck
Perhaps I should put my views first, perhaps to stimulate debate.
It seems to me that if you are seeking to get into the +ve cashflow property market for the first time right now, you should tread warily and be prepared to put in a lot of research, both in front of the PC and on the ground.
As the CBDs and suburbs prices have taken off – and as investors scramble into property as a perceived safe haven from the equity markets – the regional centres have also experienced significant, and perhaps unsustainable, property price rises.
The majority of new property investors are still happy to negatively gear their property as that is the ‘established norm’, they stop those b—-s at the ATO getting their hands on some of their hard-earned, and property always goes up doesn’t it?
These are warning signs (plus interest rates etc)that a property bubble is forming, and not just in the major centres.
So if you are not in the market yet, get in, but choose your properties very carefully, be prepared to put in a lot of hard work, don’t expect them to make you rich tomorrow and don’t overcommit yourself financially such that you can’t weather a storm.
If you are young with few responsibilities you can ignore all of the above, because if you ‘do your dough’ you can always rebuild from scratch. Moms & Pops should move more slowly.
My ten cents worth.
Cheers[
]Thanks Captain. I agree with you and I’m not suggesting people sit on the sidelines, especially for their PPOR. See above.
Cheers[
]brianc
Please read a post by davide in the subject “Will you buy if -ve gearing is abolished?” It is an excellent post and has some great advice from a really successful businessman.I personally don’t back -ve or +ve gearing based only on the numbers like some investors do. I prefer to choose IP very carefully and consider many factors including the yield, capital gains, tax benefits, saleability, rentability, future job and population trends, future infrastructure developments, etc etc.
I would be very careful of regional towns. These may look great now but have a very small capacity to weather an economic storm. On the other hand, the top end of the city market is also very volatile in terms of price in a downturn. To my mind it seems that the safest ground is the mid-lower end of the city markets. Do your due diligence and jump right in. There are good deals available all the time both in booms and in busts.Hi there,
I am more a newbie than an “experienced property investor” but from my own research and reading of this forum I would say hold off for the crash in Sydney, Canb and Melb. QLD still has some potential for growth due to it being a little behind, seachange effect and migration patterns but it certainly isn’t easy.
Since the release of Steve’s book this forum has attracted a great deal of newbie attention and most of them seem to like talking about positve cashflow property. They seem pretty excited like I was when I first read about the idea, but the fact is that there are not many around and you really need to know what you are doing. Sometimes I think this forum makes investing look easier than it is, investing is sustained hard work.
I would advise newbie’s to do their research before diving in. The more you learn the better your chances.
McDeyess
mcdeyess
I agree about Syd, Can, Melb due for a correction but must also add that although QLD has always been behind the others it has always been for good reason. This reason being substantially less jobs and general economic activity. This has not changed and the migration of people from south has also not changed much (not increased as much as people think). Baby Boomers moving up here also dont account for a big enough number to really make a huge difference to demand. The bottom line is that for the market to sustain price growth in QLD continuing while Syd, Can, Melb are falling, more jobs must be created in QLD and that is not happening. I live in QLD and would love the boom to continue but know that it cant.Housesonly, I live in QLD also, great place isn’t it [
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Some of the reasearch I have read suggests QLD could move up another 10 – 20% by 2003, after that things could become more interesting again, I think Warren Buffet is the one who said 2008 is the year to look out for with regards to the baby boomers so look for them to come in droves. Your point about the job market is extremely valid I could not agree more. I quite often to go Caboolture and it amazes me the amount of shops and industry going on there, people appear to come from everywhere to work there, glass house mountains etc, I have never been able to explain what keeps it going??? I guess my main point was I think there is more chance of QLD experiencing growth before a fall (and perhaps a softer fall than down south) as opposed to Syd, Melb and Canberra. From speaking to my mortgage broker a great deal of the purchases he is making from external investors quite a few foreign so they really don’t need to worry about getting jobs locally. I certainly did not mean the QLD boom would never end of course it is cyclical.mcdeyess
Yip QLD is a fantastic place to live. I agree with you that their is still some upside left is QLD and that the bust may be less severe for Bris. but do not think that the rest of QLD can justify and hang onto the increases that they have seen. I really dont think that Baby Boomers will flock here any more in 2008 than they are now. There may be a gradual increase in numbers due to the ageing population syndrome but not a sudden surge.Am also from SE Qld. Not sure about the baby boomer and interstate investment. Several Real Estate agents I know say still very strong demand from both – and they are driving the market in some areas/types of property.
I think property investing is great, but I am loathe to see a lot of Moms & Pops lose their retirement funds by falling into the negative gearing trap (especially right now) or going full on to match Steve & Dave’s numbers (although doing that now, is problematic to say the least – unless you’re investing many clicks past the black stump!).
Cheers[
]brianc
RE agents, mortgage brokers, developers, etc will all talk up the market wherever they are as they have a vested interest in the wave continuing. Need I say more!My RE buddies are buddies first and RE agents second, so they share the truth behind the BS when we chat. They are all saying interstate investment into Qld is still very strong.
How long that will last is anybody’s guess.
What are the views on the negative article on wraps in the Aussie Property Investor?
Cheers[
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