Hello Friends,
Its official Property gives best returns. Well for me its true but this is where most of my time has been spent. And i just signed a contract on a property with a 13% return(Thats with no deposit).
Article :Property gives best returns: study
December 05, 2006 02:55pm
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INVESTORS should be devoting at least 20 per cent of their investment portfolio to direct property assets in the retail, office and industrial sectors, a study shows.
The study commissioned by the Australian Direct Property Investment Association (ADPIA) found increasing the direct, or commercial, property component in an investment portfolio significantly reduced risk and the chance of investment loss.
The research looked at the performance of 11 different asset classes over 10 and 20 year periods, such as local and overseas shares, residential and listed property, Australian fixed interest and cash, and managed funds.
“ADPIA’s view is we should have at least 20 per cent in direct property,” ADPIA immediate past-president and executive committee member Richard Cutler said.
Mr Cutler, who also heads up Macquarie Bank’s Direct Property division, said there was a very significant mismatch between the findings and what was happening in the market, with the allocation to commercial property from investors and their advisers declining since the 1980s.
“It (property) is the financial wealth of the world and … we’ve got a very low and decreasing allocation to it,” he said.
“So common sense says we’ve got it back to front and this research will really flesh that out.”
Atchison Consultants managing director Ken Atchison, who carried out the study for ADPIA, said the decline was caused by a lack of available research, as well as behavioural finance.
“A market goes bad and everybody withdraws – that’s the time when you should invest … it’s a classical psychological reaction,” Mr Atchison said.
Investment in direct property peaked in the property boom of the late 1980s and early 1990s.
He said the research showed direct property provided strong total returns of 9.5 per cent in the 20 years to June 30, 2006, and 10.5 per cent over the 10-year period, with industrial and retail assets the best performers.
In the 10 years to June 30, direct property also produced the highest levels of income return of any other asset class, at 7.2 per cent, the report found.
According to the study, the asset class also exhibited the lowest volatility of income returns over both periods, a valuable characteristic that made a significant difference to long-term returns because it reduced the chance of making a timing error entering or exiting the market, Mr Atchison said.
He said a fully diversified property portfolio should be made up of “four states, three sectors”, being NSW, Victoria, Queensland and Western Australia, and across the office, retail and industrial sectors.
ADPIA represents property industry professionals such as fund managers, custodians and financiers and was set up as the peak industry body in 1999.
Dom [biggrin]
The study commissioned by the Australian Direct Property Investment Association (ADPIA) found ………
Doesn’t sound like any sort of independent study so far. [blink]
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I happen to also agree that property is one of the safest, low risk investments around, after all we all need a roof over our heads!Just be wary of “studies” though its amazing how figures can be twisted to support their case.
He said a fully diversified property portfolio should be made up of “four states, three sectors”, being NSW, Victoria, Queensland and Western Australia, and across the office, retail and industrial sectorsPersonally I think one of the main reason many property investors dont succeed in the long term is beause they dabble in too many areas at once. You should be developing your own strategy based on your own personal circumstances, resources and market conditions and then keep repeating, making any minor adjustments along the way.
To diversify between four States and 3 sectors, is in my opinion, a disaster waiting to happen and really only for those quite experienced.Take small steps at first, learn and develop your system and you can be just as successful closer to home. The grass isn’t always greener interstate.
Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”I agree – diversification does not always work. I think it was Robert Kiyosaki who said that by diversifying you become knowledgable in many areas and an expert in none. He argued that you are better off becoming an expert in one area and then invest in that.
Although at the same time if that one area turns bad, then you stand to loose a lot more. So there are advantages and disadvantages both ways. But houses tend to be pretty safe anyway.
Andrew
http://www.rentmaster.co.nz – Property Management Software
http://www.RentalAnalyst.com – Property Analysis SoftwareHi Dom
Interesting read and good to toss this around for opinions.
I’ve just listened to Steve’s take in the mini-seminar for his Book #3 launch. Sounds like he’s got very conservative in the current change in property trend generally.
Property definitely has its place in one’s overall wealth creation asset selections, albeit the savvy may try to time the entry and/or exit, to make long term sustainable profit.
I thought if I choose wisely and watch it closely to monitor if it still fit in my overall plan; I might be OK.
Hell, I’m still holding T2 shares, what am I doing??
CT
G’day all,
I hate to tell you all. but you’re all wrong. (Actually I do like telling you !!).
On the sixth of july 2005, I bought a large parcel of “bnb” shares.
Cost $14.75 per share.
Today they are trading at $24.90 a share.
My parcel totalled 30,000 shares.
Cost $442,500.00. Forgeting overheads.
IF, IF, IF i sell today they are worth $747,000.00. Again forgeting overheads.
Profit $304,500.00. And again etc etc.
Not to bad for a seventeen month profit.
If I only sold my investment property and invested it on shares, I
would have re-couped over one million dollars in one trade.Make no mistake, shares KILL property. EVERYTIME !!!!
bruham.
Tell that to the EMRON or WORLDCOM shareholders.
You can pick any ‘window’ in time, or any share or property deal and see a fantastic result, and vice versa.
For example, we bought a house in 1998 on the Mornington Peninsula and sold it 2 years later and we DOUBLED the price of the house. My input of dollars was zero. I used equity from a previous house (which also went up in value quickly) as a deposit and borrowed the rest. That is a fantastic result.
Based on this story you would say property is great.
Meanwhile, I know a lady who owned a condo here in L.A and had to sell 2 years later for a $37k loss that she will be paying off for many years.
Based on this story you would say property is not great.
Look historically and long term to give the real comparison between shares and property.
They are both good investments, but the factor always ignored when comparing the two is the risk. there is risk in both, but in property it can be managed much more.
Were any Emron shareholders insured against loss, and did they know they were about to lose every cent they had invested? I would doubt it.Cheers,
Marc.
[email protected]BNB 23.510 -0.490 23.510 23.540 23.740 23.740 23.500 1,197,854
Bruham
My property portfolio does not drop this fast in one or 2 days!You have made a healthy profit but $23.51 * 30000 = $705300 today.Thats $41766 less then you had when it was $24.90.
Lets hope they dont drop like amp or telstra.
Dom [biggrin]
Hi all
My 2c worth
NO investment, be it shares or property can be deemed to have made a profit – UNTIL you sell them / it , and the NET profit is in the bank. I know some will argue you can utilize the equity.
There is no real profit until you realise it.
Property and shares can decrease in price or increase. You need to have the right timing and choose the correct unit be it shares or property.
I think the best investment strategy for anyone is the one they enjoy and that they KNOW and especially the one that gives them there prefered end result. money or time.
My prefered wealth, is free time and a creative outlet. hence Reno’s, any profit over my yearly target is a bonus.[biggrin]
Celeste
G’day Salacious,
Yes, “BNB” is a volitile share.I love that.
To-day BNB jumped 54 cents. And as I’ve done before,on the first ten cents plus fall I’ll sell.Then when I think they bottomed I’ll buy them back. This is my way of trading shares.
I’ve bought and sold BNB a number of times.Thirty thousand shares by 54 cents gives a gross profit of $16,200.00.
I turn over one million dollars a year.I trade ten to twelve stocks.
bruham.BNB yields 1.2% and only has 38% franking credits ie little tax advantage. Its trading at a PE of over 100. Its only a matter of time till youget burnt my friend. The share market is rediculously over priced at present largely due to compulsory super contributions.
It has a nasty habit of regression to the mean. And when it corrects its stocks trading on high PE without sound fundamentals that get hit first, hit hardest and remain depressed for the longest. Youve sure have picked a winner for this category. Not only that when your stuck in it cause it raced past your stop loss without trading at that price you will have a great yield of 1.2% till your price regains.Its for this reason I trade the higher yielders (in terms of dps or eps)with sound fundamentals. Look for stocks with high eps and dps growth high ROE, 100 franking and low debt. They are still easily volatile enough to trade and make great money.
And yes I do have to agree its way faster to make money on the sharemarket than in property. But it requires considerably more work and could hardly be called passive.
To the regular share trader/investors out there; has anyone read Robert Kiyosaki’s ‘Rich Dad’s Prophecy’?
If yes, what is your opinion?Cheers,
Marc.
[email protected]In his “Guide to investing ” he covers all the basics and his principles are sound. Its a good first read but certainly not enough to trade or buy and hold from.
Just google value investing. You will get heaps of good sites
like
http://www.moneymanager.com.au/investing/index.htmland many others. Then use this knowledge plus a knowledge of where we are in current cylces to trade good fundamental shares.
Robert only skims the surface.
Personally, I believe that you get good and bad returns in both shares and property. The trick is to be able to ride the bad times and not have to sell. I have made good money in both shares and houses.
Bought a House at $108K and sold for $285 7 years later with only $20K work done
Bought a Unit for $55K and sold for $160 7 years later with no more than $2K done on renovations.
As for shares first started with the TELSTRA 1 shares which were sold for $7 or $9 dollars and has continued from there.
These figures might be too slow for some, but I am in no rush and have got a life outside of Investing.Originally posted by condog:In his “Guide to investing ” he covers all the basics and his principles are sound. Its a good first read but certainly not enough to trade or buy and hold from.
Just google value investing. You will get heaps of good sites
like
http://www.moneymanager.com.au/investing/index.htmland many others. Then use this knowledge plus a knowledge of where we are in current cylces to trade good fundamental shares.
Robert only skims the surface.
Sorry condog – I think you missed my question. I’ve read all his books so I know what they are all about. Thanks for your reply though.
What I want to hear is an opinion of that specific book – ‘Rich Dad’s Prophecy’.
In it he predicts (or rather; Rich Dad does) the ‘perfect storm’ for a stock market crash around 2012, and he gives a lot of reasons why.
When you read it it all makes sense, but does anyone else agree, or not agree?Cheers,
Marc.
[email protected]Sorry Marc i had a grey matter explosion.
If anyone here uses The Elliot Wave theory for trading in conjunction with RSI and value fundamentals as i do you might have noticed all three are ringing major alarm bells.
Whats worse the sharemarket is at a point 5 in the Primary Wave which is the same point we were at with the 1987 crash.
Now there could be extensions to the primary wave thate takes us through to sometime in 2007.Hopefully superannuation contributions prior to the July changes will sustain the market for a while but the point to note is that we are very very due for both short and long term corrections.
My reason for writing this is several people on this forum seem to be contemplating a jump from property to shares. NOW IS NOT THE TIME. If your real lucky you will get a short upside ranging between a feww weeks up to July.
But be warned………….[hmmm]
Hefty rent increases squeeze families
By Melanie Christiansen
December 19, 2006 12:00am
Article from: Herald-SunFont size: + –
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WELFARE and housing groups are demanding limits on how much – or at least how often – landlords can increase rents, amid reports of rent hikes as high as $90 a week.
The latest statistics from the Residential Tenancies Authority show the median weekly rent for a two-bedroom flat in Brisbane jumped $30 in the year to the end of September.
But with a critical shortage of rental accommodation in Queensland, the housing advocacy group Queensland Shelter said many families were now being hit with much bigger rent increases.
“We’re hearing quite a few stories where rents are being put up $50 a week,” Queensland Shelter executive director Adrian Pisarski said. “It’s extremely worrying, especially in the lead-up to Christmas, because it will almost certainly lead to an increase in homelessness.”
One West End family is among those facing difficult decisions this Christmas, after receiving notice of a fourth rent hike in two years.
From this Thursday – just four days before Christmas – Kate Raiti and her family will have to find another $30 a week to pay their rent.
“There will have to be a lot of adjustments,” Ms Raiti said. “We’ll have to cut back on groceries.”
Ms Raiti is reconsidering whether she can afford to stay at home to look after her daughter.
Tenants Union Queensland co-ordinator Penny Carr said thousands of families – especially those on very low or fixed incomes – were facing even more difficult choices.
“We constantly get calls about rent increases. The largest one I’ve had to deal with was a $90-a-week rise,” Ms Carr said. “People out there are really struggling.”
The Tenants Union has asked the Queensland Government to limit the number of times landlords can increase rents in any one year, while the Queensland Council of Social Service wants the Government to consider capping rental increases.
QCOSS director Jill Lang said that would help combat alarming reports of bidding wars for rental properties.
“We are getting into a sort of dutch auction situation where the rental property goes to the highest bidder,” she said. “The sky’s the limit in that situation and those on low incomes will miss out every time.”
But Real Estate Institute of Queensland chairman Peter McGrath said any cap on rent increases would backfire.
The Queensland Government is expected to release an options paper on changes to the laws governing residential tenancies in March.
Hell !
And I thought increasing my rents by ten dollars a week was being tough.
How can anyone increase rents by ninety dollars a week?
That would be theft at it’s worst. No one that i know could or would pay that increase.
But then it’s in a newspaper. So that’s one reason NOT to believe the story.bruham.
The apartment building where we are staying in L.A has single beds at $2200p/m and the 2 beds are as high as $2700 p/m.
Several tenants we know are moving out in the next few weeks/months when their leases are up.
When I asked a few of them why, they all responded the same – the rent is going up from $2700 to $3200 p/m!!What’s even more crazy is a big number of tenants keep staying.
(our rent is paid for us so we don’t have this problem thankfully).Cheers,
Marc.
[email protected]FEARS of “absolute bedlam” in the rental housing market are becoming a reality as vacancy rates drop and demand peaks, sparking calls for a national affordable housing policy.
The rental vacancy rate has dropped from 1 per cent to 0.5 per cent in Adelaide for the first time in three years, and Real Estate Institute of Australia president Graham Joyce said vacancies in Perth, Sydney and Melbourne would also take a dive early next year.
“If you’re at a 0.5 per cent vacancy rate, January and February (the peak months) are going to be absolute bedlam,” he said yesterday. “Rental vacancies are going to be a huge issue throughout Australia.”
Perth recorded the nation’s highest vacancy rate in November at 2.1 per cent, and the rate was likely to drop below 1.5 per cent early next year, he said.
Mr Joyce predicted Sydney and Melbourne would also fall well below the 1.7 per cent and 1.6 per cent vacancy rates recorded last month. “REIA is looking at indexation of the first-home owners grant,” he said. “Comparing house prices, $7000 in Sydney is different to $7000 in Adelaide.
Federal Community Services Minister John Cobb did not return calls.
South Australian Housing Minister Jay Weatherill said he had warned the Howard Government for the past five years about an affordability crisis.
He called for a federal housing minister to address affordability problems.
Adelaide renter Darren O’Grady, 37, said rents had sky-rocketed to the point where he would be unable to find a house comparable to his Teringie home if he lost his lease. “I’m on the offensive and working hard so I don’t get booted out.”
He hopes to buy the home he rents. “This is the first house that’s made me want to rise out of the doldrums of rental no man’s land.”
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