Just wondering whether this property downturn the papers are screaming is actually affecting all you property investors out there?
Is anyone out there losing money or does it not matter as it’s just cyclic? Is this the time to just collect rent and forego the cap gains?
PT
Hi P
It depends on when the properties were bought and how much gross rental yield they have. People are definately hurting, especially those that bought off the plan appartments at the top of the market cycle. There are some appartments 5K from where I live that were sold off the plan for $900,000 and have been appraised for $730,000 on completion. Investors are walking off and forgoing their $90,000 deposit! Those that are buying have to come up with more money, as the bank will only lend on the appraised value.
That’s one example, it is happening everywhere, I get approached almost daly by investors that have bought off the plan asking me to buy their appartments from them (I don’t buy appartments by the way, unless someone wants to sell me the whole block!!), the downturn is definately affecting people and its real!
However, for prepared investors, these are exciting times and the time to get back into the market and pick up more property!
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582That echoes a lot of what i thought but it just seems like when you read in papers (which i believe influence the mojority or property owners) that prices have fallen for e.g. 10%, is that real value, the price you are likely to pay or is it just a stat that holds no ground. In a lot of areas in southern Sydney there seems to be more property for sale but the price as stagnated rather than fallen.
I take it then this is going through the bust portion of the cycle and you savvy investors are running around getting good deals….. does that mean you were the ones also selling during the boom and collecting capital gain?
PT
I don’t believe that there is a uniform 10% drop in all properties everywhere, according to aust prop investor magazine, it is hitting mainly the inner city appartments and mainly in Melb and Sydney.
I’m sure some savvy investors were cashing in at the top of the market, but not all. Just think about it, if you bought property for cashflow and the rents are covering the mortgage repayments and then some, why would you sell?
Investors get caught out in a downturn if there is a huge shortfall between what rents are bringing and what banks are charging, or if they are too geared. If you have $100 million of property and a bank loan of $50 million you are sitting prety in a hot market, in a downturn, that property might all of a sudden be worth $45 million and all of a sudden you have to come up with the difference or there will be some major bank sales!!!
We recently got rid of the highly geared or non performing properties (those below 12% yields), the ones we are holding on to are either very high cashflow or almost entirely debt free. That way we are protected against a downturn.(they will still be worth less, but hopefully the banks wont be chasing us).
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582
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