G’day….
Yep me again….and its lengthy too.
Not wishing to leave anyone out I address this post to ALL that responded to my last G’day.
I feel that those who responded at least are considering what I had to say and appreciated your input…thank you.My first purchase in Real Estate was 3x1br Units in a block of 36 Units. It was Unit Plan number 1 in Canberra…near the Hackett shops if you live in Canberra…. @ $6,000 each….promptly sold for $9,000 each.
1st Mortgage 80% of purchase price plus unregistered 2nd Mortgage from Vendor for balance.This is too easy… next deal 1/3 share in 42 units for $550,000 ( 1971) Sold 36 on the phone
(subject to inspection)within 48 hours prior to settlement. I kept 6 and made a 1/3 profit of the
$112,000 on the 36 that we sold with simultaneous settlements.Kep Enderby MP (showing my age) introduced a “fair rent” tribunal…some where marked up others down. Overall now negative as interest rates went up, up and away…….. Now not so clever after paying 66% tax on the profits.
2004/005 Interest rates UP whether our exporters like it or not…A$ moves up to .7700 against US$.
Wage increase demands…inflation takes off by 2006…so Howard gets back in before the Sh*t hits the proverbial fan. Real Estate starts it’s next move up but, by now “Real Estate is a mugsgame”.Those that held don’t worry about their temporary “paper loss”. For them it’s tough mentally. However those with the “magic” off the plan.. with family home now at risk…dump their “I’m gonna be rich investment properties”…along with the rest of the “crowd” that wrapped deals without knowing what they were doing. All proffessions require many years of experience to excell in their chosen field…. it will be blood in the streets. Some will have committed suicide, and I don’t mean just financial.
Just before all this happened…inexperienced players got into the investment market after reading a book or two…most only “talked” about what they were “gunna do”…a lot acted and got caught up in the hype. They tried to wrap properties…they were at the bottem end of the scale as far as expertise was concerned…so were their clients………impending disaster because neither party knew what they were doing…they didn’t get an experienced partner or a mentor.
But this market is different….yeah? October 20th ’87 Stock Market is VERY VERY similar to now, believe me I had clients mostly out…but some still in and watched $250,000 investments crash to about $110,000 within an hour of the market opening.
Back to Real Estate…imagine a $280,000 new landscaped home “stunning” could not sell @ $215,000 within 12 months..that was Canberra 1996…inched it’s way up for a year or two…owner bails out with only a $50,000 loss…he thanks his lucky stars. Today it’s worth $475,000…with another 25% decline…12-24 months about $350,000 odd.
Smaller 2Br. units from $112,000 down to $60,000. Cheap homes $120/$130,000 down to $75,000 if you could find a buyer…..and where did the smart money go…you guessed it ” Real Estate” and made a fortune from 1997 until 2003/04. The Real Estate market troughed in September 1994…9 long years ago. But this time it’s different……..BS.
Not too many of you would know that…in the 16th century in Holland, people got caught up in the Tulip Bubble and actually sold their Real Estate to finance their speculations in Tulips…the early birds made money…the followers didn’t…
No Tulips and No House.Have a look at some of the country towns a couple of hours from major cities today…now we see For Sale signs…months ago anything for sale had a Sold sticker on it. You couldn’t rent anything decent unless you paid $200pw…now take your pick at $185pw. The buyers in these towns used Sydney/Canberra properties as collateral to buy them…..some will sell at a loss…others may have to even sell the family home.
One of the earlier replies to my post suggests that they are going to Sell an option to purchase with a lease deal ” as a hedge against the impending fall in values”.This is justified they feel as the poor old client isn’t interested in prices…they just want a roof over their head that they can call their home. One of you MUST get hurt in todays market. They won’t exercise the option and be dissalusioned about Real Estate.
But there’s another “victim” around the corner.Real Estate is Fantastic…So is the share market
I’ve done both….mostly at the right time…but the times I was wrong…”OUCH”We had a saying in the share market….
” Let your loss be your lesson “.Like me back in the mid 70’s…maybe you have to experience a loss/setback before you learn.
I just wish I had a 56 year old mentor like me back then.
But as my wife of 33 years just reminded me
” You wouldn’t have listened to him back then”.Learn from my mistakes they won’t cost you a penny.
Whatever you decide….
Differentiate your service, find a niche market,
work very hard WITH Integrity and add value to your service that doesn’t cost a lot of money,but has a high perceived value to your clients.Wishing you ALL the very best.
Billfromoz.
ps. No I’m not negative…I’m the most enthusiastic, positive person I know.Tell it brother!!!
I’m with you on this Bill, putting my dough into shares and getting in a position to mop up the blood from the streets.
andy
Tell it brother!!!Most don’t want to hear. All the better for those waiting for the right time.
If you look back at all the topics relating to this very issue, they don’t get read nearly as much as the others, and even less discussion.
putting my dough into sharesI have concerns about the stock market as well. As billfromoz has said above, the market has a 1987ish feel about it at the moment. This has been a comment from a number of traders. It is STILL trading at historically high p/e values.
The great advantage of the stockmarket though is liquidity, you can get out FAST. Plus you can also hedge your exposure via options or SPI futures.
Anything I buy atm in the stockmarket definately will NOT be going in the bottom drawer, trading purposes only. I have a number of short positions also.
All just a long-winded way of saying, be careful in the stockmarket also.
Cheers
WayneYes, I’m inclined to agree with the concepts you’ve outlined.
Some will put forward the scarcity factor of property, but I read in the Economist where both Hong Kong and Singpore have had a severn year decline in property values. Neither of those places have much land available, so that’s not a valid arguement.
Some will put forward the “intrinsic” value of property and being “better”, somewhere a family can live, unlike a share certificate. Why would one compare a dwelling with a certificate for the purposes of deterining the best abode? They then use this “proof” to indicate the best investment vehicle.
I’m not suggesting one is better than the other (ho-hum, not again), however, it appears that some people need to clarify their reasons for investing in a particular vehicle type.
To say: “My son and his wife can live in an investment property I bought. They can’t live in a share certificate.” is only showing that this persons prime motivation to purchase this asset type is to provide a home for someone else, not to choose the best overall investment.
We’ll maintain the properties we have, but after 120+ days for St George to refinance on one of them (which they still haven’t completed), I’m inclined to look at investment vehicles that are somewhat easier to move in and out of.
Michael
Good on you Bill for going against the trend.
To back up your argument with facts and figures is great. Having read your earlier posts, I know you have a wealth of experience and we should take your comments seriously.Most investment?wealth creation books I have read, recommend that you should not follow the crowd – Be first, not last
Keep smiling,
Sue [
]Be careful not step on the flowers when you’re looking at the stars
I agree with many of the comments below and also agree with the vigorous extent to which they have been stated. I feel that too many of the people in this forum are still talking up the property market and some talking up the share market too. The bottom line in every investment is that they all have a downside risk. Saying that share are more liquid doesn’t help you too much if you wake up in the morning and see “$250,000 investments crash to about $110,000 within an hour of the market opening”! No matter how quick you are you are likely to incur a massive hit in those type of circumstances.
When an investment drops it is obvious that investors will look at moving their money into something else. The big question for everyone now is what are the alternatives to riding out the downturn? I believe that cash at call is a good option when there is so much uncertainty. The is nothing more liquid than a Cash Management Account and sure the return is only 4 and a bit % pa but you can sleep easy at night. And when the market does drop you will be really well positioned to snap up some bargains from the bloodbath in either property or shares!
Saying that share are more liquid doesn’t help you too much if you wake up in the morning and see “$250,000 investments crash to about $110,000 within an hour of the market opening”! No matter how quick you are you are likely to incur a massive hit in those type of circumstances.This is very true housesonly.
But if we examine the period in question(1987):
*The total fall of the market, although dramatic, in time terms only represented 15 previous months gains. In other words there was a TREMENDOUS run up in the market prior to the crash (much like the property market today; ominous eh?)
In the period from July 1986-September 1987….14 months… THE MARKET DOUBLED. Thats like todays market market going to 6300 by christmas 2004.
The market basically was red-lining for too long and blew a piston out of the block.
Those who were hurt the most were the late comers.
Just like the new property investors of today (unless they are smart enough to do it right….hmmmmmm)
*Unlike the property market you can hedge yourself via shortselling a portion of your portfolio, buying put options, or sell SPI futures (not so easy at the time but dead easy today) so in any share market crash, we stand to gain much as well as taking a hit…..a net profit for those with experience.
The market immediately before the crash had SELL written all over it. People should have been out of the market or hedged their positions. In the weeks before the actual crash the market decined about 10%. That should have been enough to convince people to do something about their portfolios.
Anyone who plonked 250K into the sharmarket in september 1987, didn’t do their homework.(hmmmmmmm, just like so many new property investors of today[
])wayne
I must say I agree with what is being written. I fear for a lot of people they have the herd mentality and at the moment it is positvely geared property. I am grateful to Steve that he set up this forum but we must also remember that he has his own agenda in life and this forum gives him a good audience to sell his seminars to. We are always warned with managed funds that past peformance does not garantee future performance this applies to all areas of investing. I wish everyone well in their investing but beware a rapidly rising market that everyone just has to get into.
Whilst individuals that are more knowledgeable wait to feast on the carrion, spare a thought for those that will fall victim to a hyped-up market. Mugs perhaps, but they needed guidance from responsible people. I take issue with those that encourage and fund such inexperienced investors.
The whole property investment pitch is nothing short of a pyramid selling scheme. Get in early, keep on flogging the idea to boost your investment and bugger those that follow in your wake!
Finally a skeptic.[
]Any chance of getting mentored?
G’day….Yep me again….and its lengthy too.
Not wishing to leave anyone out I address this post to ALL that responded to my last G’day.
I feel that those who responded at least are considering what I had to say and appreciated your input…thank you.My first purchase in Real Estate was 3x1br Units in a block of 36b Units. It was Unit Plan number 1 in Canberra…near the Hackett shops if you live in Canberra…. @ $6,000 each….promptly sold for $9,000 each.
1st Mortgage 80% of purchase price plus unregistered 2nd Mortgage from Vendor for balance.This is too easy… next deal 1/3 share in 42 units for $550,000 ( 1971) Sold 36 on the phone
(subject to inspection)within 48 hours prior to settlement. I kept 6 and made a 1/3 profit of the
$112,000 on the 36 that we sold with simultaneous settlements.Kep Enderby MP (showing my age) introduced a “fair rent” tribunal…some where marked up others down. Overall now negative as interest rates went up, up and away…….. Now not so clever after paying 66% tax on the profits.
2004/005 Interest rates UP whether our exporters like it or not…A$ moves up to .7700 against US$.
Wage increase demands…inflation takes off by 2006…so Howard gets back in before the Sh*t hits the proverbial fan. Real Estate starts it’s next move up but, by now “Real Estate is a mugsgame”.Those that held don’t worry about their temporary “paper loss”. For them it’s tough mentally. However those with the “magic” off the plan.. with family home now at risk…dump their “I’m gonna be rich investment properties”…along with the rest of the “crowd” that wrapped deals without knowing what they were doing. All proffessions require many years of experience to excell in their chosen field…. it will be blood in the streets. Some will have committed suicide, and I don’t mean just financial.
Just before all this happened…inexperienced players got into the investment market after reading a book or two…most only “talked” about what they were “gunna do”…a lot acted and got caught up in the hype. They tried to wrap properties…they were at the bottem end of the scale as far as expertise was concerned…so were their clients………impending disaster because neither party knew what they were doing…they didn’t get an experienced partner or a mentor.
But this market is different….yeah? October 20th ’87 Stock Market is VERY VERY similar to now, believe me I had clients mostly out…but some still in and watched $250,000 investments crash to about $110,000 within an hour of the market opening.
Back to Real Estate…imagine a $280,000 new landscaped home “stunning” could not sell @ $215,000 within 12 months..that was Canberra 1996…inched it’s way up for a year or two…owner bails out with only a $50,000 loss…he thanks his lucky stars. Today it’s worth $475,000…with another 25% decline…12-24 months about $350,000 odd.
Smaller 2Br. units from $112,000 down to $60,000. Cheap homes $120/$130,000 down to $75,000 if you could find a buyer…..and where did the smart money go…you guessed it ” Real Estate” and made a fortune from 1997 until 2003/04. The Real Estate market troughed in September 1994…9 long years ago. But this time it’s different……..BS.
Not too many of you would know that…in the 16th century in Holland, people got caught up in the Tulip Bubble and actually sold their Real Estate to finance their speculations in Tulips…the early birds made money…the followers didn’t…
No Tulips and No House.Have a look at some of the country towns a couple of hours from major cities today…now we see For Sale signs…$months ago anything for sale had a Sold sticker on it. You couldn’t rent anything decent unless you paid $200pw…now take your pick at $185pw. The buyers in these towns used Sydney/Canberra properties as collateral to buy them…..some will sell at a loss…others may have to even sell the family home.
One of the earlier replies to my post suggests that they are going to Sell an option to purchase with a lease deal ” as a hedge against the impending fall in values”.This is justified they feel as the poor old client isn’t interested in prices…they just want a roof over their head that they can call their home. One of you MUST get hurt in todays market. They won’t exercise the option and be dissalusioned about Real Estate.
But there’s another “victim” around the corner.Real Estate is Fantastic…So is the share market
I’ve done both….mostly at the right time…but the times I was wrong…”OUCH”We had a saying in the share market….
” Let your loss be your lesson “.Like me back in the mid 70’s…maybe you have to experience a loss/setback before you learn.
I just wish I had a 56 year old mentor like me back then.
But as my wife of 33 years just reminded me
” You wouldn’t have listened to him back then”.Learn from my mistakes they won’t cost you a penny.
Whatever you decide….
Differentiate your service, find a niche market,
work very hard WITH Integrity and add value to your service that doesn’t cost a lot of money,but has a high perceived value to your clients.Wishing you ALL the very best.
Billfromoz.
ps. No I’m not negative…I’m the most enthusiastic, positive person I know.blah blah blah
you dont need to be to bright to know we are in a property bubble. nor to we need to be told that we ‘inexperienced’ investors ‘need’ to be told how to suck eggs. thanks for your magnanimity (guidance from responsible people – yeah right) but give it to someone who wants it. im a trader also (commodity) and as long as you tread carefully and use the right strategies there will be money to be made in property. yes even now.
you guys have just entered this forum and these topics have been done to death for 12 months. every 2 weeks someone new comes in and tries to tell people what they think they dont know.
like the responsible people you are – do your research – look at previous threads and realise you havent invented the wheel
pinky and arty – whens the bbq??
Aussierogue,
Thanks for the input buddy.
But if you look there are plenty of new* members of this forum, who haven’t read it all 300 times like you have.
Invented the wheel?? LOL. Its all just part of the cycle[
]. Its all happened before a hundred times.Wayne
g’day wayne – yeah i know. its called forum fatigue.
must admit though felt good to have a rant and rave. better you guys on the forum than some unsuspecting service provider.
ps – i enjoy reading your posts
g’day wayne – yeah i know. its called forum fatigue.LOL, I hear you.
I’m just trying to get my posts up so I can get my 3 silver stars, so forgive me in the future for repetitive waffle[
]Cant you guys help yourselves and not get personal? Yeah sure some of the posts are repetitive but you are able to click on ones which are not repetitive or just exit when you realise it is old news. I for one do not mind helping newer members with old questions over and over again if it means that they are improving their knowledge and avoiding bad decisions normally made too quickly and made without enough info.
Many people use these threads to make all sorts of comments and that is a bit wasteful. I personally would prefer if people stuck to the subject of the post. If you need another thread then by all means create on!
wow – that was harsh
Bill
Food for thought! Thanks for your comments. It is good to get another point of view on the matter of PI.
You appear to be very knowledgable about investing in many areas. However as a new investor to everything I would be loathe to place even $1000 into the Stock market. I don’t know anything about it and my impression is that you need to have LOTS of spare time and constant access to be able to be successful.
I am still young – 35 and have been married for close to 4 years (no kids yet). I suspect that by the time I retire there will not even be a pension. I also suspect that there will not be a middle class. So I definitely do not want to be poor, but don’t necessarily want to be rich. I do want to be comfortable.
As I do not have any relatives or friends to assist me in investment matters, and going to a financial planner was a nightmare (just wanted to sell us insurance, insurance and more insurance) I was wondering if you interested in helping us with some of your grounded advice?
If yes – please email me.
I’m looking forward to hearing more on this topic.
[]
[email protected]” I fear for a lot of people they have the herd mentality “
Hi Erika
i don’t think so, apparently only 10 percent of Aussie IP’s are +ve CF anyway, and only 0.05 percent of Australian property investors own 3 or more investment properties. (i’m one of ’em.)
I know it seems like the herd – and i notice that the gospel of +ve gearing is spreading – but +ve gearing is the way you can buy IPS and continue to buy more without maxing out like with negative gearing.
OK – if values are high and might crash – then +ve geared properties are the ONLY type you should be buying right now, right?
And saving the surplus to put deposits on more, should bargains suddenly litter the streets!
Ahh the talk of the 87 crash …..
One of Australia’s great investors when asked how he felt on the morning he woke to find the Dow down 500 he said that he “slept like a baby”
Slept, woke up, cried, slept, woke up, cried, slept, woke up, cried ….
Be told as someone that has been in the stock market since the Poseidon Boom that when the godzilla effect hits and it falls you just can’t get the hedges on in time ….
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