Hi all, happy New Year!
I once asked “Who wants to be a landlord?” Buy IP & get 2.5% yield? Plus all the hassles?Rents in Adelaide (really) are as follows:
4 BR AVJennings home in Reynella in 1999 – 2003 = $175 pw
Currently? I’d guess $230 – $240 pw [maybe $250 if you’re lucky]
That’s $80 increase pw in 7 years. In 1999, there was no land tax, rates were lower, we hadn’t got all the levies etcThis is true. I owned that house which I’ve since sold.
I haven’t put up the rents on my commercial properties in 3.5 years.
Any wingeing from anyone who rents from me, I sell out & they can rent from someone else.
I’m sorry for people who have problems paying rent but sometimes I’m sorrier for myself.
Good luck to all who invest,
Kum YinI have some excellent tenants who have payed $170/wk for my IP for past 2 years. They do a bit of small maintenance on the property and are happy to pay for it unless it’s major. Currently the rent appraisal is about $240/w. The tenant has a new job is earning an extra $70,000/year in the mines. Do you think it would be rude to put their rent up $40-50wk?
Marc, Are you talking about the predicted stock market crash due to the baby boomers retiring? I’ve read some Kiyosaki books, tapes, etc, attended a seminar. Approx 3.5 yrs ago he was saying Aussie’s should sell their real estate – everything was pointing to a crash in property in Australia. (He may have even specified Perth) If I did that I would be a lot poorer and have to go back to work.. As for his advice on the sharemarket crash, I think he’s got a point, but may not be right. A lot depends on peoples confidence and emotions at the time and many other factors – war, disasters, resources booms, etc. I have also wondered with compulsary super that the government increases every year plus more people trading in the share market is it really going to make any difference. Also, I think people now have more flexibility with their investment options in super so I can’t see a major crash all at once. Maybe the baby boomers will shift their money into a safer superannuation cash fund before 2012. I agree with his basic tips but I don’t hold much faith in what he and some other wealth creation writers say. I just take a bit from everybody and think about what business plan and goal is the author trying to achieve. Why are they really writing this book? And I must say 80% of the books and content I’ve read are brilliant.Millions try this.
http://www.census.gov/ipc/www/idbpyr.html
Its a gov censis site showing age based population for most countries in the world in 2000, 2025 and 2050
Take a look at htis site if you want to work out the effect of populations retiring on our economy. Japan has the worst situation and being the second largest population willl impact on heavily on our stock market demand.
The Aussie population hardly declines following the baby boomers, but the boomers are the first group to ever retire not followed by a massively bigger group of contributors so there will be a dent in demand. Despite compulsory super.
The US is worse than us and has a reasonable dent in population. There biggest population group are currently 47-51yrs old. They cant collect any Social Security to suppliment superannuation to age 62, and this age is under review with a look to raise the age limit to 65. In any case the USA should have continually high super contributions in its stock market for approx a good part of the next 10-11 yrs. As anyone who retires prior to that will be self funding and most likely continuallyto be partially reinvesting.
So it would seem the “Big Withdrawal ” by the baby boomers is still away off yet. Especially given China and Indias young and expanding populations. And the likes of oil rich coutries like Saudi Arabia with young and expanding populations investing in equity buy out conglomerates all over the world.
But as warned previously the we are in a stock market bubble at present that has a lot of resemblence to 1987. Graph XAO and have a look for yourself.
The best way to sum up that statment is to say. Results may vary. Because one factor would be the area your in. All and all if the price is right the property will sell.
http://www.thebusinesssuccessgroup.com/Real-Estate-Investment-training.html
Thanks for your reply Condog. The sharemarket crash is something that sits at the back of my mind. I don’t bother much with the sharemarket, I prefer property. I figure people are always going to need a roof over their head, and when prices are too expensive to buy there will be greater demand to rent so there is a win-win situation.
The thing is when you buy into the stock market after a crash or major correction the yeilds are unbeatable.
Dont forget the value of franking credits which means stocks pay you in tax free dollars. (depending on your tax rate).
Also good companies grow their earnings year in year out upwards of 15% pa. Now there really arent many pproperties that do that.
However there arnet many stocks you can buy and subdivide and get a certain $50,000 profit.
Must admit I don’t know of many blue chip stock that grow their businesses 15% year in year out.
I think most companies would work on somewhere around 8% PA growth in their stock price and pay out around 4% FF dividend.
Buying in a SMSF will increase the Franking credit benefit.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Then with due respect you havent analysed the right companies.
ANZ, CBA, WBC SGB have all averaged a first year franked yeild of well over 7% and 15% growth in share price and earnings for 8 of the last 10 years.
In roughly a 5 year period
MND has averaged over 40%, BHP and RIO have averaged over 30%, WPL has averaged over 50%, UGL over 30%, Rinker above 10%, Wesfarmers 16%, TAH 18%, Seven network over 30%, etc etc etc.The only two here that arnt blue chip are UGL and MND, both of which have fantastic outlooks, sustainable growth and good balance sheets.
That being said no one here will be able to buy in and attain these returns at the present prices until we have a correction.
Originally posted by condog:Then with due respect you havent analysed the right companies.
ANZ, CBA, WBC SGB have all averaged a first year franked yeild of well over 7% and 15% growth in share price and earnings for 8 of the last 10 years.
In roughly a 5 year period
MND has averaged over 40%, BHP and RIO have averaged over 30%, WPL has averaged over 50%, UGL over 30%, Rinker above 10%, Wesfarmers 16%, TAH 18%, Seven network over 30%, etc etc etc.The only two here that arnt blue chip are UGL and MND, both of which have fantastic outlooks, sustainable growth and good balance sheets.
That being said no one here will be able to buy in and attain these returns at the present prices until we have a correction.
So who wants to be the last man/woman to jump on before the ‘correction’? Most people I talk to that have some shares knowledge say the correction will be big when it happens.
The last 10 years (and almost all 5 year windows in between) will show a fantastic return on the stock market. It is probably the longest bull run in history.
Will it ever happen again? I think so – but not until after a major correction. I have my check book ready for that time. I’m waiting for the winter to buy some straw hats.The difference with property is that you can buy at any time in the cycle and as long as you select the right property you will be able to sleep at night, knowing that the price won’t take a major dive overnight – if at all.
Sure the returns on property may not be as good (personally I think they are) as shares, but the return added to the relative safety of property is what I like.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by L.A Aussie:Originally posted by condog:Then with due respect you havent analysed the right companies.
ANZ, CBA, WBC SGB have all averaged a first year franked yeild of well over 7% and 15% growth in share price and earnings for 8 of the last 10 years.
In roughly a 5 year period
MND has averaged over 40%, BHP and RIO have averaged over 30%, WPL has averaged over 50%, UGL over 30%, Rinker above 10%, Wesfarmers 16%, TAH 18%, Seven network over 30%, etc etc etc.The only two here that arnt blue chip are UGL and MND, both of which have fantastic outlooks, sustainable growth and good balance sheets.
That being said no one here will be able to buy in and attain these returns at the present prices until we have a correction.
So who wants to be the last man/woman to jump on before the ‘correction’? Most people I talk to that have some shares knowledge say the correction will be big when it happens.
The last 10 years (and almost all 5 year windows in between) will show a fantastic return on the stock market. It is probably the longest bull run in history.
Will it ever happen again? I think so – but not until after a major correction. I have my check book ready for that time. I’m waiting for the winter to buy some straw hats.The difference with property is that you can buy at any time in the cycle and as long as you select the right property you will be able to sleep at night, knowing that the price won’t take a major dive overnight – if at all.
Sure the returns on property may not be as good (personally I think they are) as shares, but the return added to the relative safety of property is what I like.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
I couldnt agree more that we are due for a major correction on the share market and if you read my previous two posts in this thread thats what ive said.
No matter whether your a value investor or a charter all the indicators are that we are at the very end of a bull run that began in 1987 (post crash). There is currently little to no value in most good stocks on the stock market. But that can and will change very quickly and those who buy in post a big correction will never look back. Their returns will be unmatchable.
I also agree about property is less volatile and suffers less down years, in fact only 2 in 22 years on national data while shares have suffered 6 years down in 22 years. But for people who active invest and move with the cycles more money is made in the share market and in far less time.
The biggest problemwith the share market is as value disappears people and up buying crap because of percieved value rather than actual value. They should wait for cyclic correections to again buy in with value. The later the buyers the more chance of getting burnt.
Right now anyone going in is speculating and a very late buyer.Hello condog
Just to clatify something. Are you saying that people holding even blue chip shares like ANZ, NAB,BHP,SPT etc. should be selling now and waiting to pick them up again after the correction?
Not asking for advice, just your opinion.
Thanks [smiling]
ElkaIm not a stock broker or financial planner so dont act on my advice. Its only an opinion.
Any one planning to sell up would only do so after consulting a financial planner and or accountant as everyones circumstances are so different. CGT implications, etc etc.
So no im not advocating that you sell up.
But im definitely saying that i think (opinion) now would be a rediculous time to buy. Any shares i bought in the last 12 months or so ive now sold and im patieintly waiting for a correction. Which may be tommorrow or in 18 months. But rest assured when it happens the money i will make then will far exceed any that can be made at the moment.
Its so much easier to make money early than late. And its safer.
There is just little value in most stocks at present. Even Clime have stopped buying on behalf of their managed funds and are heavy in cash. They havent sold, they have just stopped buying.
The thing is the stock market retreats severly and swiftly compared to prioperty and despite a strong economy the stock market is stretched to the limits of value, given that most companies on todays prices are returning close to term deposit. There is inadequate compensation to take on the risk.
Thanks condog for being willing to share your opinion on this.
B.T.W. In case you get a chance to live in Belgium for a while grab it. For someone into shares it’s great. Australia does not apply CGT on shares for overseas investors. Belgium taxes the dividents at 25% ( which is lousy for fully franked shares as in fact you end up paying 55% tax) but does not tax CG.
Cheers [smiling]
ElkaCondog,
That’s a bold opinion! I don’t agree that a looming stock market correction or crash warrants all small investors to vacate the market (I hope I’m right!). There is money to be made on the stock market in both up & down trends. I will be keeping some money in the market as BMN & MBN have both been friendly over the last month.
[cigar][cigar]David
We can argue until the cows come home about which gives better returns – it depends who you talk to, but here’s a question for some discussion:
You own, debt free; one property – your PPoR and it is worth $500k. You have no other assets such as I.P’s (cars, boats, house contents, superannuation and personable valuables such as jewellery, don’t count).
You can access the full 80% of the equity – $400k, through a standard Line of Credit.WHO WOULD PUT THE ENTIRE $400k INTO SHARES? (current sharemarket position not-withstanding)
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
In the current market no.
Following a major correction hell yeh.
Mid way id be in both property and shares.
I’ve read the for’s and against’s on this thread, and I’ve got something for all of you: You are all right and you none of you are right.
The idea that someone can say ‘shares is better than property’ or ‘property is better than shares’ is as sensible as people of different religions slaughtering each other with the battle cry of ‘my god is better than your god’.
Each investment class has it’s positives and negatives. What matter not is the class of investment but it’s suitability to the investor, both in terms of the investor’s skills, risk tolerance, investment goals, available resources and experience.
Warren Buffet is the 2nd richest man in the world on the back of sharemarket investing. Clearly he would hold property but recommend shares. Frank Lowy is one of the richest men in Australia on the back of commercial property. Clearly he would recommend property. The point is they both made their fortunes working with their strengths.
Sharemarkets are liquid and you can quickly and efficiently realise profits. You can move on opportunities very quickly and it is easy to profit on both up markets and down markets. You can do all your research and investing on the internet and never talk to another soul. (something to think about for the myriads of people who post ‘I can’t find any positive cashflow property on realestate.com.au, but haven’t talked to any agents)
However you can’t borrow much against a sharemarket portfolio and the risk of getting a margin call is very real. You have no direct control over your investment (note that direct control over the management is probably one of Buffet’s advantages) and you can’t, for instance, go into a company you own and fix up an ailing division like you can repaint an investment property and build a double garage.
Property has the opportunities to create profits through your own problem solving and allows very high leverage levels (sometimes exceeding 100%). The market moves down pretty slowly and property is always required by people as somewhere to live.
However property is illiquid and finding and sourcing good deals takes a lot of legwork and persistence. It involves much higher up-front capital commitments and leverage to get started.
What would-be investors should be doing is figuring out which investment class suits their circumstances and requirements and researching that further. Within that class, they should be finding out which approach suits their needs and pursuing that. Some people make their fortune on the back of renovations and developments. Some on commercial property. Some buy and hold median houses and negative gear them for years. Some sharemarket investors are buy-and-hold value investors, some are short term traders who are constantly buying and selling. Some are trading with borrowed money, some are not.
The successful investors in all asset classes are the ones who are using an approach that is right for them, or changing themselves and breaking down comfort zones until they suit the approach they have chosen. Read Steve’s and Robert’s books and you should be gaining not a recommended do this, then do that, approach, but be realising that it is a journey you need to travel on and find your own way of doing what is right for you.
Personally I’m into both, and I’m fully aware of the ebbs and flows of each of the markets, and there is a right time to get into property and a right time to get into the sharemarket. That right time depends on the approach, the goals, the resources (you get the picture).
And as for people who doubt the rental jumps reported – my IP in Brisbane jumped $50 / week in rental when I signed up new tenants in December. If we see some sort of capping of rental jumps then expect worse times ahead for tenants as the incentive to build new properties or sign long leases dissappears and the rental shortage gets worse. Friends of mine in Sydney had to vacate their house when the landlord put the rent up $90 per week. New tenants were waiting to move in straight away. Whenever governments attempt to intervene in the market processs they always make it worse for the intended helpers. Just like they bought in a FHOG to make it easier for first time buyers to get into the market and ignited a property boom that put prices even further out of first-timers reach.
_____________________________
We all need somewhere to live – but do we all need a CBD apartment?
You must be logged in to reply to this topic. If you don't have an account, you can register here.
