- fWord wrote:– Last question: do you NOT control any property now and wish you did?
Actually I should refine/ redefine that question:
– if you do not control any property now, did you plan on buying/ would have bought at some stage but now cannot, because of current conditions?
fWord wrote:And so the debate rages on. You know, there was an irritating voice that started to play in my head. It sang annoyingly,'Would you like to take a survey??!!'
A survey that reveals the following:
– Are you a bear, bull or a 50-50?
– How many properties do you control?
– If you control properties (whether your own home or an investment property), how many do you own 'outright' (ie. unencumbered)?
– Amongst the properties that you control, what are the approximate dates of purchase?
– Last question: do you NOT control any property now and wish you did?Not an exhaustive list of questions, but a good start. If we ever started something like this, it would be very revealing. The opinions of people on threads such as this are usually very much divided. That's because these opinions stem from a thought process based on their current situation. I suspect that, in the end, the property market will do whatever it wants, despite what any individual might say. 'Getting it right' is nothing to brag about, whichever way things turn out to be. That's because if a person 'gets it right', he/ she does so by chance.
People who are reliably able to pick a trend shouldn't be wasting their time here, or on television talk shows. They'd be out there spending all their time making billions of dollars.
On 99% of the Australian market, I am a bear, but have limited areas I am a huge bull on.
I own 3 properties, purchased in ’09 and ’10 during GFC.
Property 1, Melbourne land, purchased $320k, currently selling for $469k
Property 2, Melbourne house, purchased $348k, current value $400k. Have sold as a wrap, hugely cashflow positive ($625 per week)
Property 3, Gladstone house with 868 sqm of land, zoned high density residential, purchased $352k. Currently negotiating to sell 400 sqm for $200k to the person developing next door. Will retain the house and remaining land for another 3 years then sell at the peak of the market in Gladstone.My perspective:
– Purchased land in Melbourne as the equivalent Sydney locations were twice the price. Melbourne (and other Australian Capitals) have now peaked, so it is time to sell
– Gladstone is a town of 40k people with $40+ billion investment in the next 3-4 years, that is $1 million per person
current jobs on seek.com.au = 1146
current rentals available on realestate.com.au = 78
expected additional workers = 10k+ and their families
this huge imbalance represents a great opportunity
very low risk as the lng companies have huge forward contracts for $10s of billions for the next 20 years, so the projects will go ahead
right time to exit, just before the construction phase finishes in 3 years timeFuture opportunities to be explored:
– More Gladstone properties for capital growth
– US properties for cashflow (20%+ yield in some areas) and eventual capital growth
– Australian cities once they have dropped, find the best deals with the best yieldsI see myself as a value investor. In most of Australia, there is currently no value, hence I am a bear. I hope this clarifies my point of view.
Cheers,
Mattummester wrote:Why? Why is making billions of dollars the be all and end all. There are greater things to invest in than money.
Of course. For one thing, some would say it's better to invest in religion than invest in anything you have in this world. Money doesn't bring happiness on its own. However in my opinion, with money brings choice. It means I can choose to NOT work if I want to. I can do ANY job I want regardless of how much it pays, without worrying how to put food on the table. It means spending more time with family or doing the hobbies I enjoy do, because I need not be tied to work 44 hours a week.
Choice is power. Choice means happiness.
ummester wrote:How old are you?
What is your family situation?
What is your work situation?
When are you looking to retire?
What do you value most in life?I'll answer these as well as the ones I posed:
Q: How old are you?
A: Turning 29 this year.Q: What is your family situation?
A: Single, and enjoying the simplicity of it.Q: What is your work situation?
A: Veterinarian, working 44 hours a week (4 full weekdays and 9-1pm on every Sat). Wish I could work less and have leisurely breakfasts instead of the regular 6-10 minute deal. Also, I'd rather be spending time with people whose company I enjoy, not clients, who likewise probably don't enjoy seeing me, and are strictly at my clinic on a business-basis only. The job is fairly stable, but it took 5 years of Uni studying and 4 years of slogging in the workforce to get me to a salary that is only 'national average'. It ain't going to make me financially free. I need to do something more.Q: When are you looking to retire?
A: The sooner the better, hopefully before I hit 50. Retiring before 40 would be awesome, but not at the rate I'm going, and I'm not counting on a massive inheritance from my parents to 'set me up for life', because honestly, they've done a magnificent job of bringing me up. It is up to me now to make my own success. However, retiring doesn't mean to not work at all. It could be working 2-3 days a week, in a job I enjoy more than my current one. That said, there's no point retiring when I'm say, 70 years old and about to get an aneurysm the year after.Q: What do you value most in life?
A: Tough to answer. It might be Happiness or Freedom, or it might be Time. Either one would be very empowering. I'd like to live near the sea and to do photography of weddings, landscape, animals…Both photography and the smell and sights of the sea make me feel very much alive. Having Time also means spending more time with people I love, particularly family, and when I'm happier, I can make a better son, a better brother, nephew and friend.Q: Are you a bear, bull or a 50-50?
A: Depends on the prevailing conditions. Won't consider myself an expert analyst, but I understand the fundamentals when they are there and similarly the effect that sentiment can have regardless of the fundamentals. Sentiment is hence one of the things in investing that has a self-fulfilling effect. People seem to react more to bad news than they do to good news. I've joked about this before, but in the news, the things that sell the best are stories about a disaster of some sort. Personally I think there is money to be made and lost with any venture you make. I was investing in the stock market for nearly 12 years before pooling the funds as a deposit for my first home. I don't see one investment as being better than the other, but the choice simply reflects my personal priorities. I absolutely WANT to have MY own place to live. But to answer the question directly, on Australian property, I'm 60% bull, 40% bear. I love how cheap Australian property is, compared to that in Singapore where I was born and spent most of my life. How lucky is this: I get to control a house on thousands of square feet of land and at a price my buddies in Singapore wouldn't even be able to dream of. The vast majority of my Singaporean friends and relatives (of my age) do not control property at all, and some have no hope of doing it in the near future. Having said that, the AU$ is way high at the moment and consumer sentiment is not good at all. I believe there is plenty of scope for property price growth in Australia in the future, however current conditions are a dampener and hence causing price drops in some areas, or at least constraining price growth. I am waiting for the baby boomer shift, which should create a stir in the property and share market.Q: How many properties do you control?
A: Two properties. One is a Melbourne outer suburban house with a lovely rustic huge backyard that I plan to move into eventually with the woman of my dreams (if I find one). If not, then I'd be getting a couple of mates to board with me. The other is a beachside period home in North Geelong/ Rippleside. You could call this a 'regional' property. Considering the access of transport to Melbourne CBD and the commute time however, I'd consider it 'outer-suburban'. Eventually, this would be my 'retirement' home. Incidentally, I believe this is a possible area that the retiring baby boomers may move into in the future. Truly magnificent value in this area IMO. I love both my houses and consider them as much a place to live as an investment (if not more). For me, the importance is having a place to live that defines who I am, a place that is part of my identity. Making money from it is a secondary consideration.Q: If you control properties (whether your own home or an investment property), how many do you own 'outright' (ie. unencumbered)?
A: None. The bank owns most of my house. I am prepared to pay almost ANY price to have a place I can call my own (so long as I keep up the repayments). The certainty of having a specific place to reside is crucial for me.Q: Amongst the properties that you control, what are the approximate dates of purchase?
A: The outer suburban house was purchased in Aug 2009, and the North Geelong house in Dec 2010.Q: If you do not control any property now, did you plan on buying/ would have bought at some stage but now cannot, because of current conditions?
A: Not applicable to my situation. When shopping for my first home, I did have difficulty finding something within my budget in the middle suburbs. So I looked to the outer, less trendy suburbs. Voila! Home ownership suddenly became easier.Very revealing, isn't it?
ummester wrote:emptyvessel wrote:I find it interesting that "bears" have this almost fanatical need to be right. It is in almost every post by a person that identifies themselves as a bear. They also tend to be "black-hat" or "critical" thinkers that are fantastic at finding statistics, graphs and interpreting the numbers. Obviously to support their negative sentiment. Many seem to take offense with so called "bulls" that have made good money, for whatever reason, be it dumb luck or smart investing. No matter how positive the market sentiment, the bears seem to always be posting about how and why they predict a collapse. Any mild decrease in any portion of any market is always considered to be the "beginning of the end". The bears also tend to congregate in "packs" to support their negative views. It is almost like a negative gravity well that sucks more into it.As for the "bull" posters, they on the whole just seem to be "glass half-full" positive-types. They don't seem to need to be told they are right. It is almost like they don't care about being right, they just keep being positive and investing. They quote some statistics and graphs to support their way of thinking, but it often tends to lack any real independent substance and is often picked to pieces quite well by the "black-hat" bears. The "bulls" also don't seem to take any notice of the "bears" with their well-reasoned and logical arguments. They do seem to take delight in poking fun at the bears and getting them up on their "high horse" soapboxes to pontificate. They also seem to be getting independently richer. But this could just be the positive language rubbing off on the rest of us.
Then there are the vast majority that swing on a personal pendulum between being bullish and bearish. They don't really know which way things truly are going at a macro level, but they are trying to do the best for their own personal wealth creation. They do tend to read the bear posts and wonder if they are right, but hope they are wrong. They read the bull posts and hope that they are right and can emulate their success, positivity and and creativity. I am on the "bull-faction" of this group I reckon. The bull part comes from being incredibly positive about my individual success no matter what the macro or global market is doing.
Thanks for bothering to read this if you get this far. I just felt like sharing my observations.
You know the only difference between a black hat and a white hat is which side you are looking at them from, right?
Scenario – MS hacks Sony. Blackhat to Sony, White hat to MS.
Then Sony hacks MS – the colour of the hats don't matter, it's understanding the whole game that does.
Small adjustment in perception for you my learned bear;
My reference to "black hat" was the Edward De Bono type described in "Six Thinking Hats"; http://en.wikipedia.org/wiki/Six_Thinking_Hats#Black_hat_.E2.80.93_Being_CautiousI have a tendency to wear the blue and green hats by nature. When I am "down" I tend to wear the "black-hat" too much.
The economic world is a set of intertwined chaotic systems. All very, very imperfect and largely unpredictable except in terms of long-term trends. Much like the weather. I am very happy in your belief that you understand this game. I do not believe in your belief. The game doesn't seem to care.
emptyvessel,
we were obviously thinking of different hats:)
With your hats I'd be blood coloured – dark red, or black red:)
ummester wrote:harb wrote:Isn't APF the forum where most of the refugees from Global House Price Crash Forum gather ?Nah, not the smart and reasonable ones anyway. We have our own quite place now.
Interestingly there's a thread on TalkFinance about this very subject right now…..
(snippet below)
Quote:…..so I'm constantly perturbed by how quiet it is here. Some days I log in and there have been no posts for 2 days! Even now, the last post (before this one) was nearly a whole day ago!!!As an experiment I tracked the post count on all major Australian property forums for this week (I noted down the total forum post count each day), and here's what I got……..
Somersoft Forum ….. 360 posts per day
AustralianPropertyForum.com ….. 171 posts per day
Credit Crunch Australia ….. 59 posts per day
Simple & Sustainable ….. 32 posts per dayBelieve it or not, even Simple & Sustainable at 32 posts per day is busier than TalkFinance Kangaroo House Prices.
What puzzles me greatly…..
Interesting observations. Don't know why PI.com doesn't get a mention though. I'd say this place is one of the more active forums?
NC.
Hi Matt,
The way I see it, is the governement doesnt want crisis on their hands. The thing I see is that if the tide moves too far the other way they will prop it up. They dropped rates 4% and doubled the FHOG because america was in trouble…. If Australia ends up in trouble I am sure the gov will step in to prop it up.
Your right though people who buy silly properties hoping CG or mainly very highly negative geared to pray of CG can get wiped out overnight. This is why its important to have a solid portfolio which will help you out if the market could potentially turn to paste.
I havent read 7 pages of replies, however I am sure there is a match of how dare you say this, or that from all members, however there is evidence to support both sides of the market and its important to protect yourself in any market, whether its in summer months for the winter or in winter for the summer, at the end of the day there will be opportunities for both times and its a matter of farming for the best outcome at that time whilst remembering at the end of the day your still a farmer working the seasons.
p.s.
The guy with the bull and bear avatar I LOVE IT! Classic!
I think Nathan Birch hit the nail on the head, regardless of what occurs in the future smart investors will guard them selves against potential downfalls but also take full advantage of opportunities that become available.
There are always opportunities lurking, how do some investors no matter what the economic climate seem to always make money?
What if I was to go as far as saying that the GFC has created some extremely viable investment opportunities, opportunities that wouldn't be there if there hadn't been a GFC?
I think that more experienced investors need to be careful when voicing their opinion on such a public avenue, especially when predicting such dire times (like in the first post). One must remember that there are a lot of in-experienced readers out there and when you paint, what I saw as a "MAD MAX" type scenario a lot of these potential investors will run screaming to the hills. Now this applies to both sides of the equation, or like someone advising that any property investment is a good one, when its clearly not.
At the end of the day we make the best with what we have, investing is no different. All the climate does is dictate what opprtunites are better then others. Take the US property price crash, does this mean there is no good investments in the US property market? Do 20% yield returns sound bad?
Always hedge your risk, but never give up there are always good investments out there. BE SMART!
Nathan Birch wrote:p.s.The guy with the bull and bear avatar I LOVE IT! Classic!
They're cuddling – proving that bulls and bears can get along:)
You write some insightful stuff.
I also believe the gov, RBA or both will take action before our correction is done – just not sure how and when. And I believe that once things start rolling, it's going to become pretty hard to reverse or contain – like any other property correction that has happened recently around the globe.
Like everything, time will tell. But I recon' sensible investors who haven't been too greedy during what is historically a pricey market (and a bit of a free for all) will be fine.
I feel a bit sorry for the FHBs who brought on the back of Rudd's stimulus though – especially towards the end of 2009, most things were selling for an easy 50k above what they were worth the year before.
ummester wrote:emptyvessel,
we were obviously thinking of different hats:)
With your hats I'd be blood coloured – dark red, or black red:)
Hehe. I reckon you should change that avatar you have. Give the Bear a dark red hat! It would look hilarious!
BTW, first time I saw that avatar I laughed my head off. A year or two down the track and I still giggle. What a juvenile
Thanks for your post MattNZ,
Your insights are always valued, and something in my guts tells me that when you speak I should listen to you regardless of how gloomy the news is. I have undertaken a brief analysis of Gladstone's economy and property market and things looks quite promising, especially with the commodities boom that will continue throughout this decade.
MattNZ
Can you tell me some of the areas in US where properties are achieving 20%+ yeild?
Cheers
MattNZ
Step 7. At the recent "Think and Grow Rich" seminar held in Perth we were told that the big 4 were already headed for trouble and there was even talk the US dollar wouldn't be used as currency in the future.
MattNZ, sorry, posted before I had finished… another alarming figure we were given was that 5% of the $50billion credit card debt the country has was in default, 11% of home loans were over 90days overdue and 30% of non-conforming loans are also in default. *goes back to read rest of post one*
Nathan.
How will the govt. prop us up? By accessing our super?
Steve McKnight has been buying up half of Fort Myers in Florida, with 20%-50%+ yields. You can see some of his properties here http://www.facebook.com/properinvesting?sk=wall
Hi Mattnz
I was aware of some pretty sensational deals. I don't know if those yields are still happening, however. I know of 2 people over there right now (one has come back to Oz for a while) who say that it more like 10-15% yield. I guess like anywhere you need to be in the "know" every step of the way where there is competition. I will check out your link, thanks.
Thanks for posting this have been a great read
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