Opinions on Property Market!!

Maybe its less to do with the media and more to do with the fact that getting $350 bucks a week rent on a house that costs $650 a week to hold onto isn’t such a good investment after all. I think ppl are slowly waking up to the fact that property in general is far overvalued

If you think that's what investing in property means better try something else.
Yes people do still buy property to reduce their tax. But these are not serious investors. It is usually uninformed mum and dad investors who listen to the "we'll save you tax" spiels. What many fail to realise is to save tax you need to lose money. I prefer making money myself.

There are some great deals out there ATM. Just need to look. Even some CF+ in Sydney. Even slightly CF- in Sydney will bring rewards quickly as rents and CG go up.

You can convert ordinary deals in residential property into amazing deals.  For instance, what about buying a house that has a large backyard, renovate the house, and subdivide and sell the backyard.  That turn it into an amazing yield for not such a massive outlay.  If you expect it to be handed to you on a silver platter, you'll probably be disappointed.

Oh to be ten foot tall and bullet proof again.

I suppose it depends on your risk appetite. Property is the last place I’d personally put my dollars but then after 50 odd years I’ve got a few bullet holes that deters my desire for more damage. Virtually all of the market is risk. You actually don’t sound like an investor but more like a speculator’

If you want to speculate then look at the REALLY HOT spots and that’s anywhere mining is occuring.

Read this: http://tiny.tw/8qn

I live in Port Hedland. The article is reasonably accurate. The only thing I’d say is that houses that are in poor condition do take time to rent. You can expect a rental return of around 8-11%. I would say that I believe the market is topped out and there are big plans for housing expansion in this region however we won’t see much in the way of new houses for at least 2 years. Infrastructure limitations (especially water and sewerage) are constraining expansion.

It’s high risk though. These mining areas are driven by mine construction not actual mining. Construction could hit a brick wall if GFC version 2 hits with any force. The little miners go belly up fairly quickly and the big guys just pull the pin on expansion plans. During the last GFC we were loosing 4-500 positions a day. Staff were told they no longer had jobs and were on a plane that night. When it happens it’s very quick.

Ravensthorpe is an example of how a town can become a ghost town literally overnight when commodity prices contract. Oakajee is experiencing very real problems. How that one will pan out is anyone’s guess. See news here http://tiny.tw/8qo

Personally though I wouldn’t invest in property (housing) with someone else’s money let alone my own right now. The boom’s over and it’s going to take a while and a bit of pain for PI’s to figure this out. It’s hard for someone who’s had a good run for a decade or more to pull the pin and look elsewhere for investment opportunities.

This article makes for sobering reading: http://tiny.tw/8qp

Now in saying the above there are opportunities in property that are infinitely more flexible, liquid and just as profitable if not more so over the long term. Two areas that PI”s invariably ignore are agricultural properties and commercial. Most people just don’t understand how easy and safe these two sectors can be. There are 2 main vectors to invest; direct – you buy and manage the asset yourself or indirect; you invest through a trust or share vehicle.

These guys are one of the most profitable commercial property trusts around today http://www.bwptrust.com.au/

Why invest in BWP?

Pro’s
-BWP pays almost 100% of profit as a dividend every 6 months
-yields are around 6-7% after costs.
-by rolling dividends back into shares compounding growth doubles every tens years
-add equity growth to compound growth and values can grow exponentially over ten year periods
-investment is liquid
-leveraging is optional
-adds diversity to property/investment portfolio

Con’s
-values go up and down
-value exposed to share market sentiment

Agricultural property is one that few rarely even consider. I’m talking here mainly of food production NOT forestry!

Five reasons to consider Ag http://dailyreckoning.com/invest-in-agriculture/

Those are the underlying fundamentals however the icing on the cake is a slow realisation by the wider corporate investment community of the growing (excuse the pun) growth opportunities food Ag offers going forward. This demand will help to drive up equity values as well as fund continued sector growth and development.

See http://tiny.cc/yihxa

Anyway youngfella that should give you some food for thought and broaden your horizons.