As all would agree. Positive cashflow cannot be found easily today with most properties needing renos to achieve anything close to positive cashflow.Or you have to look in remote areas.
Now if we see a housing slump like the US with possible 30% to 40% drop in house prices(god i hope not).Does this mean coupled with rent increases that we might see positive cashflow properties return to better areas and easily found in realestate mags with no renos required.
What are your thoughtsWe are not going to see a collapse of 30-40%. To even suggest this is silly. Even in the United States the slump has been nothing like this. In fact6 in cities like San Antonio in Texas the market has incraesed by 11.5% in the last 12 months. It is important to remenber that America has a population of 300 Million. The reason the market has not collapsed is the same it will not collapse here. A strong economy and secondly anyone who has owned a home for say 5-10 years is sitting on a larhe amount of equity, which most of us can access.
Frankly if you waqnt great cash flow property take a look at the United States.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
If house prices slump, we will move to recession as cash dries up so will spending (we have had acredit driven economy) so not sure about rents rising during a recession.
Especially at the bottom end
devo76 wrote:As all would agree. Positive cashflow cannot be found easily today with most properties needing renos to achieve anything close to positive cashflow.Or you have to look in remote areas.
Now if we see a housing slump like the US with possible 30% to 40% drop in house prices(god i hope not).Does this mean coupled with rent increases that we might see positive cashflow properties return to better areas and easily found in realestate mags with no renos required.
What are your thoughtsI hope the ppty market drops by 30%-40% as it will be great for us +ve geared investors (this is a +ve geared ppty investment site after all).
With all the -ve geared investors being forced to sell up, we should be able to get ppty cheap and hopefully +ve geared with some luck as well !
House prices dropping by 30-40% is a massive generalisation and should be ignored, as there are a million micro-markets which have their own economic and demographic factors driving the prices.
The USA disaster we are all hearing about is across the country, but only affects those who were border-line borrowers and those silly enough to over-extend on their LVR and repayments anyway, and as Nigel said, many places are still doing well. The same will apply to Aus. The percentage of people in this category is small thankfully; the majority of people are safe as long as they are not forced to sell.
There will always be examples of someone doing their dough on a property deal, but if you do your due diligence and select well located property with features that will see long-term cap growth and strong rental demand, and make sure the numbers are such that you won't ever need to make a distressed sale, then the state of the market is basically irrelevent.
As for houses dropping enough to make returns pos again, I don't think so.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
