G'day,
Is anyone taking profit and waiting for interest rates to reverse. Would it not be better to put your cash in a bank in an 8%+ term deposit account?Or are you buying into the interest rates to pick up from desperate vendors?Dom
Neither, in particular. Property is a very expensive commodity to trade, because of high entry and exit costs. I'm a long-term investor and I'm just going to ride it out. Though I do think there will be some good bargains around the next couple of years, and I plan to expand my portfolio as opportunities arise.
I don't respond to overall market conditions, as I don't rely entirely on the market for profit. I only buy properties where I can instantly create equity (by buying under market value, developing or improving, and/or obtaining favourable finance terms) and then hold.
Me on the other hand, i have my cash in a high interest 6.7% on call account. Am keeping an eye on things and if a bargain comes up the interest rates wont stop me from buying. Am doing the conference in April and then the mentoring program so am kind of holding my breath until then. To be honest, i'm a bit unsure of exactly what i should be doing! kInd of scared really!
Starting to see more and more of these posts arent we guys!!! All it takes is a bit of nervous sentiment, a little bit of fear and the property market will crash!!! Its building and its coming, so be prepared to take advantage!!! A LOT of people out there who have jumped on the property bandwagon who will jump ship or be forced to sell soon, especially once they see that their property hasnt gone up 20% in value at the end of this year, I think there are a lot of people in for a wake up call. Im guna sit back and enjoy…
I have and still am taking quite a bit of profit.
I am out of the share market in my super portfolio, the volatility is very difficult to handle, unless you are in and out shares quickly.
Most shares are now either sideways or in a down trend.
So, that's a small pile of cash.
I have sold and I am still selling property, but will still have one for a subdivision in a good location.
Even with a significant drop, it will still be ahead.
I've heard that if you have cash, try and keep it in one of the big 4 banks, some financial institutions are vulnerable,
We are now in the high interest phase of the economic clock, inflation is starting to be rampant through out the world.
Wages have not kept up in any way with housing prices and rental yields remain low, so cash is offering a less risky options.
It could take some time for a balance of asset value to return, learning to be patient and "inactive' I find difficult.
I am also going to the April seminar.After the next 4 interest rates rises it will be to late to sell we will be giving them away.LOL
Dom
I dont see the problem, I am a long term investor. My rents are higher than they have ever been and are starting to create some cash flow, why sell? the rents wont be going down.
Only if you have bought in an area that is turning undesirable, population dropping etc..would I be taking the extreme measure of saying the prices will drop dramatically and it would be time to sell.By the time you sell all the properties and pay all the selling costs and cap gains tax, then invest the rest in a cash account and pay tax on the interest, plus losing any capital growth that you might have got in the properties while your capital gets eaten away by inflation in the Bank, I'd say hold 'em.
… after 25 years of doing this one of the lessons you learn is there is no time to sell unless you absolutley have too or your a developer. The current rates are also raising the price of properties in this market. Many of the comments above are also very valid… the cost of exit and taxes and so on v's the futire value of your investment… for mine its a no brainer … stay in.
Hello,
A lot of talk about interest rates rising until middle to end of this year. This normally follows a price stagnant period for many years. And decreased buying activity. Would you not sell to free up cash when this happens?And buy into the downturn or park your profit in a high yielding savings account?
What do you think the majority of the very successful investors are doing?
(Hint: it aint selling.)
I'm personally looking at getting in to the market, albeit using high deposits in rural areas to make my properties CF+ – it's a low growth option but low risk as well…
trakka wrote:What do you think the majority of the very successful investors are doing?(Hint: it aint selling.)
What evidence do you have to support this 'hint'? Hopefully you are actually talking about investors who know more than what they have seen on telly over the last 5 years…….
i'm speaking mostly from extensive discussions on another forum, Somersoft, which I perceive has a greater proportion of advanced/established investors than this forum, and is generally much more active (ie much higher volume of posts). I've gotten to know the styles of various investors over there, and it's generally those who have limited holdings that are a bit jittery and talking of selling, plus the odd seasoned investor who's predicting property prices Armageddon and is cashing up to take advantage of the great buying conditions they're anticipating.
Of the investors who I think speak the most common sense, and who already have substantial portfolios and have been around for a while, the vast majority have long-term views and are planning to ride it out. One of the problems they cite is that if you get out, it can be very difficult to time your re-entry precisely enough to compensate for the transation costs. Few to none of the investors in this class are predicting large price drops; possibly fairly long periods of limited price growth, if anything. They see that as just part of the property investing landscape when you're in for the long term. Most people with substantial portfolios also have fairly low LVRS, too, so they are cashflow neutral to positive and/or have sufficient equity reserves to ride it out.
Of course you may have to think differently if you have a very high LVR, can't afford negative cashflow, and were relying on increasing equity to fund negative cashflow.
Likewise, if you think the long-term outlook for a particular area has changed, then you may want to re-assess.
But if the fundamentals of your investment were sound – in an area with solid demand, access to transport, jobs available etc – then the current "jitters" are just a hiccup.
trakka wrote:i'm speaking mostly from extensive discussions on another forum, Somersoft, which I perceive has a greater proportion of advanced/established investors than this forum, and is generally much more active (ie much higher volume of posts). I've gotten to know the styles of various investors over there, and it's generally those who have limited holdings that are a bit jittery and talking of selling, plus the odd seasoned investor who's predicting property prices Armageddon and is cashing up to take advantage of the great buying conditions they're anticipating.But if the fundamentals of your investment were sound – in an area with solid demand, access to transport, jobs available etc – then the current "jitters" are just a hiccup.
And what you have described is EXACLTY the reason we are heading for trouble -"it's generally those who have limited holdings that are a bit jittery and talking of selling". The vast majority of property investors out there today are people who have no idea about finance or the proprty market, they are all sheep who have jumped on the band wagon and will all jump off again when the herd starts to run the other way….
I would hazard to say the minorty of people with property investments are liquid enough to hold on if things turn bad-its all the 'sheep' who will be on the edge that Im worried about. Good for me so I can buy in but for a lot of others……ouch…
Concur with all, blogs.
Hi
If Salacious is right about the period after high interest rates where it stagnates for a while, would that not allow for rental yields to come back up to a more reasonable level than the 4-5% in some capital cities?
I say, hold on to the ones in good location (public transportation, amentities, work…) If jittery less experienced investors panick and start to sell, then it will present good buying opportunities to those who are ready to pounce.
My aunt, who has been casually buying property for many years and has a few under her belt, asked me the other day if I had fixed my interest rates. I explained that the rates here are ending the end of its run after 11 raises, and would be pointless to do so. Would have been better off fixing it 3-4 yrs ago when rates were lower, but I was not in the property game yet.
She looked at me with a 'Aren't you silly for not fixing your rates?' look.
So, is that a sign of jittery?
Cheers
Daniel Leedaniellee wrote:HiMy aunt, who has been casually buying property for many years and has a few under her belt, asked me the other day if I had fixed my interest rates. I explained that the rates here are ending the end of its run after 11 raises, and would be pointless to do so. Would have been better off fixing it 3-4 yrs ago when rates were lower, but I was not in the property game yet.
She looked at me with a 'Aren't you silly for not fixing your rates?' look.
So, is that a sign of jittery?
Cheers
Daniel Leelol no its not jittery-its comments from someone who I dare say knows more than you. She has obviously lived through times of very high interest rates-have you? She has seen property prices come down-have you? She has lived through times where all and sundry have sworn that 'this is the last interest rate rise surely' only to have it go up again-have you? Interest rates are still historically very low-still a long way to go……
Hello, all.
I am not an experience investor and may not be qualified to advise. However, when I start investing in property, I know price will go up and down in a cycle. Therefore, I am ready to ride the cycle and let time do it ticks on properties.
It is good to hear price growing. But, when downturns come, people start to question their believe and understanding. That may be the reason why so many people considering selling their portfolio. I think Steve suggested in his book that we should take profits when the property is not performing or there is better opportunity.
I am going to get myself ready for the coming storms. If succeed, I may even grow my portfolio with some bargains in the next few years.
Cheers,
FrancisBy the way, I don't believe the rate rises is going to end soon.
Although I am not an economist or expert, it is easy to understand that more demand on the limited supply will push the price up. The Labour Gov't has already indicated that they are keen to keep their election promise in big tax cut and spending.
Rate rise together when inflation rise. Inflation rise when people have more money to spend. How could you expect rate will stop to rise when gov't putting more money into people's spending pocket.
On the contrary, if the gov't suspend the cut or use the money to encourage Australians to save money, that may help to ease the inflation and rate rise may slow. However, I cannot see this is going to happen soon. Therefore, rate will rise until people cannot spend more or recession hits home.
Cheers,
Francis
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