Is Buy and Hold still a good strategy

[bonecrusher]

Hi all

Have been thinking with all the talk of the future for the ageing etc. Is buying property to hold still a good strategy for a person say 10-20 years from retirement.

With percentage of depreciation minimised to what can be claimed

The threshold raised that keeps the PAYG person on 30% tax

Is NG still a reasonble strategy for people in this wage and age bracket.

The Super has been made a bit more pallitable

Should this group of people be looking for alternative strategies in property or something different?

Cheers
BC

[Nigel Kibel]

I still believe that property will perform well over the next decade. It is a matter of being selective on where you purchase. In my view Melbourne and Brisbane are likely to have the strongest capital growth over the next ten years. The other place I would concider would be New Zealand. There you have no stamp duty or capital gains tax and very strong rental demand. It is still possible to purchase positive cashflow in main cities with capital growth try doing that in Australia.


Regards

Nigel Kibel


www.propertyknowhow.com.au

[grubar30]

New Zealand huh. interesting.

I'm guessing this topic has already been discussed in detail, so I won't start in this thread. I'm going a search!

George

[tubs]

It doesnt matter whether there is CGT in NZ. You dont pay tax in NZ, you pay it in Oz so if you make a capital gain you pay CGT, regardless of where it was made.

[Simon]

If you are buying and holding then CGT isn't so much of a worry - generally only comes into effect if you buy and sell.

I am now of the buy and never sell camp.

[Kiwi Investor]

Yes tubz, I believe you are correct, I have ppty in NZ and I also believe that if you sell many houses for a capital gain the IRD (tax dept) in NZ may start asking you to pay tax on the gains.

I'm also in the Simon Macks camp of hold and don't sell !!
And yes NZ does have many options for investors, I have contacts in the Sth Island who have properties for sale, from $75k to $110k renting from $120-160 p/w.

Regards

KI :)

[tubs]

Hi KI

What I mean is that even if they dont have CGT in NZ, you still pay CGT in Australia. If you are an Australian resident and pay tax here, you pay CGT on ANY CG that you make, regardless of where it is.

And also for Simon as well, do you mean that you will NEVER, EVER sell?

Tubs

[Nigel Kibel]

If you establish ther correct tax structures in New Zealand, you pay tax in New Zealand not Australia. We have a tax agreement between both countries. It is not tax avoidence, but it will protect your interests. Because some people on the forum have not got a structure in New Zealand does mean that it cannot be done.

Regards

Nigel Kibel

www.propertyknowhow.com.au

[Thommo]

If you establish ther correct tax structures in New Zealand, you pay tax in New Zealand not Australia. We have a tax agreement between both countries. It is not tax avoidence, but it will protect your interests. Because some people on the forum have not got a structure in New Zealand does mean that it cannot be done.
]
This structure: Are we talking of simple things like trusts or do you go the way of incorporated companies?

I would like such a structure in Canada so I can trade mining shares there.

Regards ...... Thommo

[MichaelW]

Guys,

So long as there are any costs on acquisition and costs on divestment of this asset category then buy and hold will continue to be a good strategy.

If you didn't have to pay CG tax, and didn't have to pay a real estate agents fee and stamp duty and listing fees and loan application fees etc etc. then you could trade readily in the category and the cost of trade would be zero.

Since there is a cost of trade, then you need to offset these costs to the potential gains from trading the asset. i.e. If you really think the market is going to bomb, then maybe these costs exceed the cost of holding. Given the high costs of trading though, it would take a serious correction to make it a prudent approach to take.

Not too mention the "time and effort" cost of trading this class of asset.

Cheers,
Michael.

[see_change]

Since there is a cost of trade, then you need to offset these costs to the potential gains from trading the asset. i.e. If you really think the market is going to bomb, then maybe these costs exceed the cost of holding. Given the high costs of trading though, it would take a serious correction to make it a prudent approach to take.

Not too mention the "time and effort" cost of trading this class of asset.

Cheers,
Michael.

Don't just consider the cost of the trading and any potential fall in the market . On the other side of the equation is the downtime where property goes sideways and your money is in a holding pattern.

Sure you can draw down equity , but then you're taking on extra debt at a time in the cycle where values arn't going up much ( or are already going down ) and interest rates are potential going to go higher.

We've just had a cycle that has been double the normal length. Who knows how long till the next price rises kick in .

See Change

[MichaelW]

See change,

Good point, but even if your money goes sideways for 3 years or so, you might well be leaving it in the asset than getting out and getting back in. Sure, there's opportunity costs of not investing elsewhere, but the trading costs here are substantial.

Good point though.

Cheers,
Michael.

[depreciator]

I wouldn't advocate any particular strategy. Surely a mixture is prudent?

I sold a regional property in December because I felt the market in that town had peaked and there was profit on the table. I'm selling another property shortly because there is very good profit sitting there and I can't see the price moving for a long time. I have better uses for the money.

Then there are a couple of properties I'm holding. Their prices have softened, but they are quality properties that I believe will always perform medium term.

Never say never.

Scott

[Simon]

Hi KI

What I mean is that even if they dont have CGT in NZ, you still pay CGT in Australia. If you are an Australian resident and pay tax here, you pay CGT on ANY CG that you make, regardless of where it is.

And also for Simon as well, do you mean that you will NEVER, EVER sell?

Tubs


Thats the plan atm. Buy good quality property which I will hold. I will sell if there is any changes in my situation but I don't believe that the cost of selling and repurchasing is warranted if I buy the right places.

But no plan survives H Hour intact and I don't know what the future holds.

Cheers,

[see_change]

See change,

Good point, but even if your money goes sideways for 3 years or so, you might well be leaving it in the asset than getting out and getting back in. Sure, there's opportunity costs of not investing elsewhere, but the trading costs here are substantial.

Good point though.

Cheers,
Michael.


If it was only three years before we were going to see significant further gains , I'd agree with you , but I expect there to be more than three years before I see significant gains in the markets that I've been selling in ( Logan and Rocky ) . There may well be further gains to go in Rocky , but I've decided to sell the majority of my holdings there prior to the peak , rather than after , or trying to time the peak. ( happy to take a healthy chunk out of the trend ).

If I was holding in Sydney , it might be another matter , because I can see myself possibly buying in sydney within the next three years. But that will be in specific suburbs which I think will out perform the whole in the next cycle.

See Change

[keithj]

Good point, but even if your money goes sideways for 3 years or so, you might well be leaving it in the asset than getting out and getting back in. Sure, there's opportunity costs of not investing elsewhere, but the trading costs here are substantial.Some commentators believe the last boom was an aberration, and is unlikely to be repeated. It finished less than 2 yrs ago - so I wouldn't expect the next one to start for a while.

I think at the present time (& also for the next 3-5 yrs) buy & hold is a below average strategy. In 3-4 yrs I would expect B&H to be a lot better strategy.

Remember that even if IP growth is flat (& not -ve), IP is still losing value in real terms (after inflation).

[WillG]

Some commentators believe the last boom was an aberration, and is unlikely to be repeated. It finished less than 2 yrs ago - so I wouldn't expect the next one to start for a while.

I think at the present time (& also for the next 3-5 yrs) buy & hold is a below average strategy. In 3-4 yrs I would expect B&H to be a lot better strategy.

Remember that even if IP growth is flat (& not -ve), IP is still losing value in real terms (after inflation).

Hi keithj,

Can you qualify what you mean by 'At the present time, buy & hold is a below average strategy' ?. Is holding cash a better strategy even though it will be eroded by inflation ? Can you suggest a better strategy in te short term (3 - 5 years) ?

I agree that prices seem to have stalled but to say that IP is losing value in real terms (after inflation) may be a bit strong. This is very dependent on location and type of IP. Building a portfolio (while managing risk) for the long term is the key.

[keithj]

Can you qualify what you mean by 'At the present time, buy & hold is a below average strategy' ?. Is holding cash a better strategy even though it will be eroded by inflation ? Can you suggest a better strategy in te short term (3 - 5 years) ?

I agree that prices seem to have stalled but to say that IP is losing value in real terms (after inflation) may be a bit strong. This is very dependent on location and type of IP. Building a portfolio (while managing risk) for the long term is the key.Hi WillG,

All this is generally speaking. I see IP as having no (or below average) growth for the next 3-5 yrs and inflation at 2-3%. So relatively speaking IP is going to go backwards & highly leveraged IP will go backwards faster.

In 4-5 yrs(?) the next boom (or at least above average growth) will be closer, so postponing buying till then will make B&H a better strategy then. So even if planning for the long term (20+ yrs) I believe it's better to hold off buying an asset that is likely to go nowhere for 3-5 yrs.

This time of the cycle is a good time to diversify. There will be signs of a boom before the boom happens, so I will wait till then.

Alternative strategies include -
- cash (with zero risk) will return 4-5% interest
- LPTs (with lowish risk) will return 7-8% & growth at CPI
- shares, LICs, index funds - higher risk

Cheers,

Keith

[Panic]

Hi WillG,

All this is generally speaking. I see IP as having no (or below average) growth for the next 3-5 yrs and inflation at 2-3%. So relatively speaking IP is going to go backwards & highly leveraged IP will go backwards faster.

In 4-5 yrs(?) the next boom (or at least above average growth) will be closer, so postponing buying till then will make B&H a better strategy then. So even if planning for the long term (20+ yrs) I believe it's better to hold off buying an asset that is likely to go nowhere for 3-5 yrs.

This time of the cycle is a good time to diversify. There will be signs of a boom before the boom happens, so I will wait till then.

Alternative strategies include -
- cash (with zero risk) will return 4-5% interest
- LPTs (with lowish risk) will return 7-8% & growth at CPI
- shares, LICs, index funds - higher risk

Cheers,

Keith

Also.... AU is not the only place to invest in property as mentioned earlier ie NZ.
If one wants to stay with property, then in the next 5 years, much better returns can be achieved elsewhere.
As Keithj, noted earlier, other investment strategies are more productive at the moment. Shares for sure, Managed funds, Franchise business etc.

As to "when the next boom will be?".... there may not be a boom at all :-)

Thx
V

[MichaelW]

Another point,

Even applying buy and hold, its not all about the long term. If I can make a 10 to 20% return in year 1 or even in the first 6 months on smart buying, then I can lock that equity down with an LOC. Then I can park that asset for 20 years and let it do its thing as its already returned my cash down.

In this way I can accumulate a nice little string of assets which I hold for the long term, but the short term performance is critical. If I buy smart, even in today's market I can make those sorts of gains short term, then come what may for the long term.

Sydney may plateau for 2-3 years or even longer, but my buy and hold strategy is really pitched at 30-40 years. I don't think it will tank for that long...

Cheers,
Michael.

[Merovingian]

In 4-5 yrs(?) the next boom (or at least above average growth) will be closer, so postponing buying till then will make B&H a better strategy then. So even if planning for the long term (20+ yrs) I believe it's better to hold off buying an asset that is likely to go nowhere for 3-5 yrs.

This time of the cycle is a good time to diversify. There will be signs of a boom before the boom happens, so I will wait till then.

Alternative strategies include -
- cash (with zero risk) will return 4-5% interest
- LPTs (with lowish risk) will return 7-8% & growth at CPI
- shares, LICs, index funds - higher risk

I agree: If one was to not buy property for the next few years due to stagnant projected growth, perhaps simply using a high interest bank account to save for the next deposit would be a better idea. Therefore, when the next upswing occurs, or is projected to occur soon, you're already cashed up, and ready to make an informed decision, and most importantly, are in a good stead to follow through with a decision.

Hence, in my mind, when a market is flat, building up some cash somehow, (high interest account or even LCPTs through capital gain and re-invested dividends), would be the best preparation for the next boom or given opportunity.

Just my naïve $0.02... :p :o

[WillG]

Hi Panic & keithj,

Thanks for the responses. I understand where you are coming from.

As property is my favorite investment (mainly because I can manage the risks), I may have to resort to keeping my extra $$'s in my 100% offset account. At least it saves me 7% interest at zero risk, keeps it liquid and it's not taxed.

Thanks

[MichaelW]

As property is my favorite investment (mainly because I can manage the risks), I may have to resort to keeping my extra $$'s in my 100% offset account. At least it saves me 7% interest at zero risk, keeps it liquid and it's not taxed.WillG,

I too know where you're coming from. The risk is, though, that if you are always trying to "predict" the market then you will never enter the market. I think you can still buy well in any market and let the long term take care of itself.

Look to lock in some immediate gains on the buy, and buy well in the right postcode. There's always postcodes that buck the trend. Then you can still go up in a sliding or stagnant market.

This way you're in and in heavy when the market eventually turns North in earnest.

Just another pespective of course,
Michael.

[XBenX]

Guys,

So long as there are any costs on acquisition and costs on divestment of this asset category then buy and hold will continue to be a good strategy.

If you didn't have to pay CG tax, and didn't have to pay a real estate agents fee and stamp duty and listing fees and loan application fees etc etc. then you could trade readily in the category and the cost of trade would be zero.

Since there is a cost of trade, then you need to offset these costs to the potential gains from trading the asset. i.e. If you really think the market is going to bomb, then maybe these costs exceed the cost of holding. Given the high costs of trading though, it would take a serious correction to make it a prudent approach to take.

Not too mention the "time and effort" cost of trading this class of asset.

Cheers,
Michael.

And that, is why I both love and hate perfect mobility of capital...

[NigelW]

Hi WillG,

This time of the cycle is a good time to diversify. There will be signs of a boom before the boom happens, so I will wait till then.

Alternative strategies include -
- cash (with zero risk) will return 4-5% interest
- LPTs (with lowish risk) will return 7-8% & growth at CPI
- shares, LICs, index funds - higher risk

Cheers,

Keith
One point to bear in mind is that the LPT's are somewhat different these days from what they used to be...no longer are they solid, boring, great rental streams...some now have, through stapling, an element of development risk...great whilst the market was going up...a risk item when the market is flat to negative.

I have to say that I reckon you're much better to take a punt on some of the better and long established LIC's like AFIC and Argo than accept a consistent, but slightly below the relevant index performance from an index tracking fund...

If history is anything to go by, the big LICs have consistently outperformed and have a very low fee structure...

Cheers
N.

[keithj]

I too know where you're coming from. The risk is, though, that if you are always trying to "predict" the market then you will never enter the market. I think you can still buy well in any market and let the long term take care of itself.

Look to lock in some immediate gains on the buy, and buy well in the right postcode. There's always postcodes that buck the trend. Then you can still go up in a sliding or stagnant market.

This way you're in and in heavy when the market eventually turns North in earnest.Even if you score a bargain 10% (or even 20%) below 'market' today, it still ain't gonna grow much for 5 yrs. So on average you may make 20% in 5 yrs which is 4%pa - just beating inflation.

Why not consider waiting a couple of years and find a bargain then? Do you think there will be more or fewer bargains in 2-3 yrs ?

If it's a 5 yr wait till the next boom that's around 20% of most peoples total investing timeframe. If you put your money into an asset class that is counter cyclical to IP then it may stand a better chance of doubling in those 5 wasted(?) years.

[NigelW]

Some commentators believe the last boom was an aberration, and is unlikely to be repeated. It finished less than 2 yrs ago - so I wouldn't expect the next one to start for a while.

I think at the present time (& also for the next 3-5 yrs) buy & hold is a below average strategy. In 3-4 yrs I would expect B&H to be a lot better strategy.

Remember that even if IP growth is flat (& not -ve), IP is still losing value in real terms (after inflation).

I think this ignores the amplifying effect of leverage. Sure you have to manage your cashflow in the interim, but I'd rather have, for example, 4% per annum growth on $400,000 property costing a few thousand after tax with the chance that growth will accelerate down the track than have my $100,000 getting say 3% after tax and no growth potential...

because for sure when I next read in the papers that [insert name of city here] has had 15% growth in the last quarter...I've missed the boat on growth...

Seech makes a good point though...my thoughts are limited to buying in capital cities in historically strong suburbs. Taking a trading approach in regional areas or "bad" areas which have had ballistic growth and rolling that into shares or quality properties sounds like prudently reaping the rewards from a calculated risk...

Cheers
N.

[Peter 14.7]

Hi all

Have been thinking with all the talk of the future for the ageing etc. Is buying property to hold still a good strategy for a person say 10-20 years from retirement.

Cheers
BC

Yes, property is very unique in that it provides a very secure income and very secure ( long term ) capital growth. Shares provide an income and capital growth with the risk they could do a HIH.

Growth with income is more important to retiree as they are living longer and 10 year annunities and such obviouls lat only 10 years.

You can also reverse mortage a property and subject to your draw down verus growth actually hold your position.

Hi all

The threshold raised that keeps the PAYG person on 30% tax

Is NG still a reasonble strategy for people in this wage and age bracket.

Cheers
BC

Yes if you want to gain aproperty portfolio.

And because at 30c in the dollar when you sell capital gain will be only 15c in the dollar ( assuming you dont go over your threshold). If you sell when retired it willbe from 0 cents and up.



The Super has been made a bit more pallitable

Should this group of people be looking for alternative strategies in property or something different?

Cheers
BC

Super is better and for the average Joe that is all they will have in retirement. Thats why the gov is trying to fix it.

Owning (no debt) 10 properties by 65 is better than any super in my book.

Peter 147

[Simon]

Even if you score a bargain 10% (or even 20%) below 'market' today, it still ain't gonna grow much for 5 yrs. So on average you may make 20% in 5 yrs which is 4%pa - just beating inflation.



Have you a reference for these growth projections?

Ta

[keithj]

Have you a reference for these growth projections?

TaHi Simon,

None whatsoever - it's all my v. own guess. I was continuing this from post #18 (http://www.somersoft.com/forums/showpost.php?p=153151&postcount=18) where I said

All this is generally speaking. I see IP as having no (or below average) growth for the next 3-5 yrs and inflation at 2-3%. So relatively speaking IP is going to go backwards & highly leveraged IP will go backwards faster.

Cheers,

Keith

[Merovingian]

If you put your money into an asset class that is counter cyclical to IP then it may stand a better chance of doubling in those 5 wasted(?) years.

I think we're starting to generalise about investment properties here. I assume that most references to "IP" implies "residential investment property".

So, perhaps one could consider industrial property or perhaps commercial property syndicates, whereby if they're chosen correctly, they will be counter cyclical to residential property.

Just chucking ideas out... :o

[Aceyducey]

Not only generalise, but to espouse opinions as fact.

It's the first step on the slippery scope to demagogy!

Yes buy & hold is still a good strategy. What you should buy and hold right now may vary from what you should have bought to hold in the past.

Cheers,

Aceyducey

[ralph wiggum]

It's the first step on the slippery scope to demagogy!



*Demagogue - person who wins support by appealing to popular feelings and prejudices.
Thanks Acey, I just learned a new word.

[see_change]

Michael

One thing to remember is that even well selected properties in good areas will go down during a down turn.

The top end of the market tends to go down further than the middle end.

From the previous peak in 89 to 94 ( when we bought our PPOR ) I saw a couple of examples of good positioned properties on the North shore drop by about 40 %.

That's not an issue if you don't need to sell, but you may find that when you revalue to increase a LOC , that it hasn't gone up.

I'm already watching an area where I want to buy in Sydney in the next cycle , it's centrally located ( by sydney standards) and has good fundamental reasons why it should increase in value, and it has gone down about 50 K for an average house in the last year to 18 months. If I see places selling at 40 - 50 % below the previous peak I'd probably start buying , but outside that I'll wait untill I see definite signs the market is moving up before buying.

An investor friend follows Newington ( previously promoted as one place to buy ) and he reports that prices have dropped there .

At this time I'd still be parking my money in an offset rather than actively buying in Sydney.

IMHO , if you watch the market closely , you can get a pretty good idea when the market is starting to move up consistently.

See Change

[MichaelW]

Seech,

I like where you're coming from. The more I think of it, the more I start to agree that holding off could do no real harm. So long as you're well positioned to move in earnest when you see the market start to strengthen again. My concern is primarily "missing the boat". I invest carefully and like to spend a fair bit of time selecting properties. If the market starts to turn, it will be a full 12 months later before I'll have my IP portfolio to the size that I want it to be. That's 12 months of lost growth, but I suppose that lost growth might be much less than the potential actual decay experienced if buying too early.

Just trying to get the timing right. In the interim I might park that cash in my PPOR offset, or even leverage in to Steve Navra's trading account. He seems to perform well even on a falling market given his DCT not DCA approach.

His fund is pretty liquid too so I can bail enough funds quickly when I need to start my IP purchase spurt.

Cheers,
Michael.

[see_change]

Seech,

My concern is primarily "missing the boat". I invest carefully and like to spend a fair bit of time selecting properties. If the market starts to turn, it will be a full 12 months later before I'll have my IP portfolio to the size that I want it to be. That's 12 months of lost growth, but I suppose that lost growth might be much less than the potential actual decay experienced if buying too early.

Cheers,
Michael.

Michael, I can understand your reasoning .

Part of the logic I'm applying to property is borrowed from the "trend following " style of share Technical Analysis and my observations over the last few years seem to confirm what I thought instintively.

The chances of picking the bottom and the top are pretty remote. My aim is to wait untill the trend is established and then jump on board and grab the main chunk of the trend.

The reality is when the market is going down , no one knows when it will start coming up. There may be signs that it could be changing but you don't know when the bottom is untill some time after.

I've also noticed the Property market doesn't change direction that quickly. While people can point to periods of rapid growth, if you look at what was happening before you will see that there had been a longer period of slower growth prior to the "manic " periods . Logan went ga ga in about four months in mid 2003, however prices had been going up more gradually in the 2-3 years prior to that.

Within the body of Vendors ( and Agents ) there is a different level of knowledge about what is happening in their own market. While some will know exactly what their property is worth , some will still be operating on values that may be 1-2 years behind. We sold our last PPOR in late 2001 ( Pymble ) and spent several months closely what was happening with sales and I picked and got a selling price that was 150 K above the highest price that any of the agents told us we could get.

In reverse we've just sold a property in logan for 20 K below what several agents told us we should get. We were repetedly told that we can get you $ xxx , but after several months on the market , I told them what I thought we should be asking , and it sold within two weeks. ( we still made a very nice profit ... :D )

See Change

[Thommo]

Australia is no longer flavour of the month for hot international money. It is being pulled from both our stock market and mortgage market.

The D........ financing model would now be totally dead because they have missed their window of opportunity (ignoring other problems). The all ords has just flipped into the red today in spite of having a had shocker y'day and Wall St having a good night.

I'm thinking patience and preservation of capital are the orders of the day. We are beginning a period of asset deflation.

Thommo

[Aimjoy]

Michael

One thing to remember is that even well selected properties in good areas will go down during a down turn.

The top end of the market tends to go down further than the middle end.

See Change

mmmmmmmmmmm the "middle end"......sounds like Homer's advice to Marge when she was working a rubicks cube.
Spin the middle side topwise. Topwise!

Thanks for the laugh. :D
Aimjoy

[Panic]

Seech,

My interests are very similar to yours. You are not Elder's student by any chance :-) ?
Anyway, what type of technical analyses would you employ to outline the trend in the property market?
Do you have any enter/exit indicators besides the usual that you look at?
I also want to put some money in Sydney, but I'm looking into the mid-south area... have you done your analyses of this area and decided to go with central Sydney instead?

Thx
V

[Aceyducey]

Panic,

Are you aware that in shares technical analysis isn't anything of the kind :)

In property you want to look at the fundamentals!

Cheers,

Aceyducey

[see_change]

Panic,

Are you aware that in shares technical analysis isn't anything of the kind :)

In property you want to look at the fundamentals!

Cheers,

Aceyducey


Acey

I'm yet to work out a " fundamental reason " which would increase the value of a property in somewhere like Logan or Rockhampton by any where from 50% to almost 150 % in under two years.

On the basis of a change in the " fundamentals " it shouldn't happen , but it does. Does that mean if I can see it coming I shouldn't take advantage of it because I can't explain it in terms of a change in fundamentals ....

I'm happy to buy in places which do have good fundamentals ( and my next purchases will have good fundamentals ) , but if you see opportunities elsewhere , why ignore them ?

Panic

Very rudamentary analysis. Purely looking at trends and prices breaking above previous highs ( areas of resistence ) . In Logan I bought before the prices broke through the high set by the peak in early 90's , simply because talking to the agents I could see that there was a rapidly decreasing supply in properties available and an increasing demand from investors. Once prices broke through that high,prices moved more rapidly.

Another thing I did was ask the agents where they were sourcing their properties. When a market heats up , the agents will send letters to all of the owners on their property management list. Once the owners realise they can finally get what they paid for the property seven or eight years , they are happy to get rid of it .... ( after all they've been holding a negatively geared property for several years and seen the prices go backwards.... :)) .When the agents are having problems getting their " owners" to sell is another good indication that supply is about to dry up.

At the moment in Sydney, the down trend is established , and in trend terms it is more likely to continue in the established direction than change direction. From my own observations there needs to be significant favourable changes in the economy going on for a while before the property market changes direction.

I've read Elder , but I think there are better Authors around. I don't think he added much to my knowledge. Van Tharp on the other hand.....

See Change

[Panic]

Panic,

Are you aware that in shares technical analysis isn't anything of the kind :)

In property you want to look at the fundamentals!

Cheers,

Aceyducey

You are right Acey.... that is why I havent got any IP in Sydney at the moment. The fundamentals are not there.
Opposite to the share market where I as a trader I can make money on the short side as well, in IP I cant do that. Let me know if you have found a way to make money in Bear IP market I would love to hear that and learn :-)

Seech,
Here is what technical indicators in analyzing the IP in Sydney I have looked at:
- Number of properties for sale (even MACD would be applicable, but I haven’t done that)
- Average median price in the area and its EMA
- Number of properties for rent
- Average rental price and its EMA
- Average sell time
- Average rent time (bit hard to get, more of a general "agents" view)

Just my 2c

Thx
V

[Andrew_A]

You are right Acey.... that is why I havent got any IP in Sydney at the moment. The fundamentals are not there.
Opposite to the share market where I as a trader I can make money on the short side as well, in IP I cant do that. Let me know if you have found a way to make money in Bear IP market I would love to hear that and learn :-)

Seech,
Here is what technical indicators in analyzing the IP in Sydney I have looked at:
- Number of properties for sale (even MACD would be applicable, but I haven’t done that)
- Average median price in the area and its EMA
- Number of properties for rent
- Average rental price and its EMA
- Average sell time
- Average rent time (bit hard to get, more of a general "agents" view)

Just my 2c

Thx
VThis is a very interesting idea, applying share ideas to property analysis, one that has a LOT of merit if done properly I think. Steve Navra's 'Rental Reality' is once such idea I think.

Regarding going short property it's difficult with bricks and mortars unless you are creative perhaps.

I refinanced to lock in my equity in 2004, though this was not entirely nescessary perhaps as my property was around the median for the suburbs and has done quite well in holding value. This equity can then go on counter cyclical and better investments, getting your money working with double or triple leverage. I think for people with property that is subject to large capital loss (luxury property etc) locking in equity is a very important idea.

You can always sell your property, though this is a cumbersome method. I heard from an agent about a recent sale in my suburb for 1.2 million, problem is the person bought it for 1.8 million less than a year earlier :) So there is money to made in trading luxury property I think.

One benefit I am receiving by holding my property (which has gone backwards slightly in the last two years in value, and might do little for the next so many years) is that the rents are going up nicely now so the yield is getting better.

Historically it might be remembered that the best times to buy property are when most people are saying you are crazy for buying it :)

SC: I agree completely about Van K. Tharp being much better than Elder, and also the Market Wizard series by Schwager are must reads for all investors/traders.

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Andrew

To my understanding Rental Reality would be classed as a " Value " indicator. Just because something is good value doesn't mean it's going to go up in price ... soon.

I'll stick to trend following.

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