I am getting very, very careful about my property purchases. I worry about interest rate rises, oil prices and the pending baby boomer retirement situation. Yet I still see people talking about 11 sec rule and positive cash flow calculators. I would’t think a rush into buying a lot of properties in 3.5 years would be the way to go unless you had assurances of a very good income outside of property.
I use a ten day rule and check everything possible relating to any property I consider. I also make sure I put enough cash into any purchase to offset increases in interest. I also buy quality only in the hope that prices will always be firm on quality homes.
Does this make sense on November 14, 2004?
Hi Marsden,
sorry i dont get your 10 day rule… is it a caculation…?
Cheers,
sisHi Marsden,
Having a time limit in which to make a decision is a sound strategy as it does allow you to time to make a decision. Having said that – in some markets 10 days can be too long, in others too short and in some just right – so the ‘solution’ can be problematic in some respects.
As for the ‘current economic factors’ you mention – these types of factors have been around for years and there is always something similar just around the corner. I suggest you look back through the recent histroy – interest rates ~18%, unemployment ~11% in the late eighties/early nineties, Gulf War (1), fuel crisis, banana republic, international trade wars, cold war, Vietnam, EEC created, and so on and see that property still did its ‘thing’ despite all the reasons why it shouldn’t.
You need to make decisions on what is right for you – can you afford the property, what about if rates rise, no tenant, does the property fit your investment goals and philosophy, is it comparable (or better) to those in the area, is it tenantable? and so on.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
My 10 day rule is really a touch of sarcasm. I feel somewhat concerned at the lack of debate on a topic that is having its effect on property investment now. The oil crisis will, if it continues, obviously cause increased inflation- which, in turn, will likely cause interest rates to rise. The baby boomer phenomenon is a special “one off” episode with no prior occurance to study. The BB generation are notorious for their lack of savings attitude, they are a spend generation and many are without a retirement contingency fund. Many hope to sell off the family home in order to cash in on their equity for retirement. However, in about year 2010, when this “asset dumping” occurs their may not be the buyers to allow them to cash in on their windfall.
I am sure that land will always be a safe investment. I feel that the near future will bring many opportunities for sensible investment. I do not think that sensible investing includes leveraging the family home for 3 to 4 years in the face of this asset dumping situation, all the while battling increased interest rates.
Regards Marsden
Hi Marsden..
Fixed my rates a while back ..at 6.2%, my rents have also increased of late..
I think most of us agree rates and inflation will rise again..
Have a plan..[biggrin]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorPersonally I prefer to BE the house (in the gambling sense).
Hence a lot of my money is going into the areas that are rising…resources, oil, etc
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Hi Guys,
personally i agree with Redwing and Aceyducey, i would be seriously investing into comodoties at the moment…
with inflation on the rise and a pull back in oil prices… i would be honestly buying up gold… as its the best hedge against inflation and a low US dollar, though Australia is one of the biggest resources suppliers in the world… you would have to been crazy to have and miss out on the share market boom… that is currently happening…
while the property market, sits in the corner… its taking a beating in some inner city areas of australia… ouch!
Cheers,
sis… you would have to been crazy to have and miss out on the share market boom… that is currently happening…Oh, I don’t know… When you don’t understand something enough, so that it seems more like gambling than investing – I call staying away from it a move of a very wise man.
I thought about getting into stocks/shares. After two weeks of determined research, it became obvious the learning curve was beyond me (and most other people if they’re honest, unless they’re content being gamblers instead of investors).
The learning curve with property seems much less stressful. Companies can go bankrupt overnight and there’s no guarantee that those that seem successful according to their prospectus are not fiddling the figures (as many have found out in recent years).
But there’s not many properties that can reduce in value to zero in one day – even if they burned to the ground with no insurance, you’ve still got the land.
Allan.
Hi JustAllan,
sorry but i totally disagree with your comment, as a private trader and property investor…
personally i see shares as less risk, than property (alot less risk) property and shares both have there cons and pros, though i would totally disagree that share trading is gambling (its technical, fundamental, displine and psychology analysis)
Oh, I don’t know… When you don’t understand something enough, so that it seems more like gambling than investing – I call staying away from it a move of a very wise man.Agree… if you dont understand it, stay away from it until you learn and understand it, (but do try to learn about that new idea or subject.
I thought about getting into stocks/shares. After two weeks of determined research, it became obvious the learning curve was beyond me (and most other people if they’re honest, unless they’re content being gamblers instead of investors).the learning curve is hard, but the rewards, to understanding and putting effort towards the market, does come back, (handsomely) though, if someone who gambles on the market (deserves to lose money, if thats how they think the market is)
The learning curve with property seems much less stressful. Companies can go bankrupt overnight and there’s no guarantee that those that seem successful according to their prospectus are not fiddling the figures (as many have found out in recent years).true… but isnt this the same with property, you dont keep up with your mortgage (tenants fall behind in rent), non taxable expenses are claimed… (sorry but this happens in both markets)
But there’s not many properties that can reduce in value to zero in one day – even if they burned to the ground with no insurance, you’ve still got the land.With property can you hedge your positions like shares, and protect your capital from the downside, but profit there too, but also profit on all 3 angles…
up market, down market, and a sideways market…
with property, you cant do that, but with shares you can protect yourself, by getting insurance… but in property you cant profit from insurance like you do with shares…
Cheers,
sisps… even though i invest in both investment vechiles, it is shares that are providing the capital, to purchase more and more investment properties, than properties on there own…
like everything, have a balance! – resources are riding on China’s back at the moment – but who knows what could happen there if they have a credit squeeze, political upheavil etc etc. some would argue there is already a bubble or atleast to much emphasis on one factor (china) to be a relatively risk free investment..
short term ok but 2-3 years anything can happen – dont bet the house!!
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