Based on my experiences over the last 15 years, I believe Noel that you place too much emphasise on what your renters are willing / going to pay you.
Will resi really continue to double every 10 years?
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Based on my experiences over the last 15 years, I believe Noel that you place too much emphasise on what your renters are willing / going to pay you.
I just extrapolated 4% yield at 4% inflation over 10 years, not really emphasising much at all... In truth I'm more interested in the $1M that the slow growth rate returned to me, than the rental.
Noel
Maybe so from your perspective, but then the Banks who are continually extending you these big gobs of LOC may be more interested in the servicing and income side of things. If that is the case, and they chop your LOC off, then they may force you to place more emphasise on the income side of things.
Have you approached the Bank's credit squirrels of late ??
Of course, at the other end of the cashflow pipe, Harry Worker doesn't give a stuff about your retired LOC / LOE lifestyle and will continue to pay you the absolute minimum that he can get away with.
Kevin Young's concept of harvesting of equity idea does have its limitations. Could be wrong though.
Have you approached the Bank's credit squirrels of late ??
Of course, at the other end of the cashflow pipe, Harry Worker doesn't give a stuff about your retired LOC / LOE lifestyle and will continue to pay you the absolute minimum that he can get away with.
Kevin Young's concept of harvesting of equity idea does have its limitations. Could be wrong though.
I didn't say the borrowing money part would be easy! 
The point I was trying to make was the small nominal increase (and potentially zero real increase as was pointed out) in property values still allowed for a significant increase in my wealth over the period. From then on perhaps I waffled and diluted my point a bit.
How you harvest that wealth is a discussion I will have with the group in ten years time. However if you're smart about it, it can still be done. I got a loc for $220K recently from ANZ on lo doc just for "future investment", and CBA commonly does cash out for clients of $250K under full doc. The key is to just borrow all the money before you quit your job
So there are ways, but it's definitely not as easy as it was.
And one of my properties has had a 20% increase in rent in 2 years, so I'm not discounting the possibility of my rent increasing 40-50% in 10 years. Does someone here have an example of an existing house from 10 years ago, what is was renting for then and what now? Am I wildly optimistic to suggest it would roughly follow inflation?
Noel
The point I was trying to make was the small nominal increase (and potentially zero real increase as was pointed out) in property values still allowed for a significant increase in my wealth over the period. From then on perhaps I waffled and diluted my point a bit.
How you harvest that wealth is a discussion I will have with the group in ten years time. However if you're smart about it, it can still be done. I got a loc for $220K recently from ANZ on lo doc just for "future investment", and CBA commonly does cash out for clients of $250K under full doc. The key is to just borrow all the money before you quit your job
So there are ways, but it's definitely not as easy as it was.
And one of my properties has had a 20% increase in rent in 2 years, so I'm not discounting the possibility of my rent increasing 40-50% in 10 years. Does someone here have an example of an existing house from 10 years ago, what is was renting for then and what now? Am I wildly optimistic to suggest it would roughly follow inflation?
Noel
I agree - it could still work but you don't want to be relying on it. hence neutral or pos cashflow is the go IMO. dunno how you achieve that with resi tho, like beating head against a brick wall. you could support the cashflow from elsewhere (like having a job), but you can only do that for 1 or 2 digs before you run out of cash.
Ahhhh his name's Noel. I though he was just happy and singing Christmas carols
I stopped watching it - whenever I do, I feel my brain getting sucked into a 'cone of ignorance'.
I stopped watching it - whenever I do, I feel my brain getting sucked into a 'cone of ignorance'.
there was a trifecta of property stories last night
That would be why so many investors keep changing jobs, you can get a larger pay rise moving somewhere else than you can by staying put and doing a fantastic job.
Cheers
Graeme
We bought a house ten years ago for $156K and it was renting at $190 per week. It's value would be about $650K (conservatively - perhaps could reach $690K or so) and we are getting $495 per week rent.
It is pretty much as it was except we have replaced the roof (about $4K), added a deck ($15K) and polished floors ($1.5K) and painted it outside ($3.5K) and inside ($500 for paint). Those figures are pretty much all we have spent on it apart from regular maintenance but I suppose they need to be added to the cost base for working out reasons.
I am hopeless at math, but someone could work that out.
These threads amuse me - perhaps I'm easily amused. It is a kind of variation on the "Why it is going to be different this time" mantra.
Heard it all before........not convinced it is going to be any different this time though - just like it wasn't different all the other times.
Let's all pull out some charts and see whose is bigger
Heard it all before........not convinced it is going to be any different this time though - just like it wasn't different all the other times.
Let's all pull out some charts and see whose is bigger
These threads amuse me - perhaps I'm easily amused. It is a kind of variation on the "Why it is going to be different this time" mantra.
Heard it all before........not convinced it is going to be any different this time though - just like it wasn't different all the other times.
I agree really. I remember in 1973 when my grandfather's house was sold for $29K and about three months later it would have sold for $50K. The market moved that quickly in Brisbane. Each time I have bought a house, someone has said "you paid WHAT for that house?"
and I just cannot see that it will not keep going forward as it has done in the past, slowly, sometimes backwards slightly, creeping up, rocketing up.....If it doesn't, then at least we are lucky that we have benefited but I just keep thinking the cost of houses will rise, just like the cost of food and other things. There will be flat times, as there always has in the past, and times when the market moves very quickly, and times when it slowly creeps up, in my opinion.
When we bought the house I mention above for $156K I could not really envisage that it would be worth three times that in ten years either. I knew it would go up in value but I just didn't think about projecting ahead. I just rely on "blind faith".
I see room for ability to pay higher prices in -
Interest only payments
and
35, 40 or even 50 year loans.
IO would become the norm and 50 year loans are already happening overseas a lot I read.
Later retirement would also factor into this and make higher prices able to be paid off over the longer mortgage terms.
Interest only payments
and
35, 40 or even 50 year loans.
IO would become the norm and 50 year loans are already happening overseas a lot I read.
Later retirement would also factor into this and make higher prices able to be paid off over the longer mortgage terms.
Or what about this scenario. Say, nobody buys any more or sells any more RE. There is a freeze on transacting RE for 10 years. Would RE then double in those 10 years?
Assume rents also double over that same 10 year period. Wouldn't that mean if ppl were expecting a constant rate of return (say 5%) that RE would also then double in value even though no credit is being provided to purchase?
Reflect on that
My example is a bit different to Wylie's. Not as good, but I'm happy with it. This was our first IP.
Bought for $90500, spent around $8 on repairs, had it valued at $120k around 3 months later. The value today is around $270k. Have done nothing to it since except maintenance, and it has needed little of that. When it was first rented out it got $175pw. It is now getting $260pw and is due to get another rise of $10 soon.
This is an average house in an outlying suburb of Sydney.
I sort of know what you are talking about, it shocks me now at property values in the small area we invest in from 10 years ago up till the last weeks rates notice values ,which can be up too 30% under the market value in the inner southside of Brisbane, who would have though that it wasa going to go this way,and the only item i keep in the back of my mind is this one for inner Brisbane the is only roughly 400,000 resi blocks under the BCC control,comm and all the rest i don't know the numbers on, and the only way it can go is if you are a on large blocks is up,mutli floor walkups developments,imho.willair
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same as eggs and milk really
There is a very interesting article with comments by Yardney, Lomas and others about this very subject: http://www.yourmortgage.com.au/articles/3184/default.aspx
RPData analyst, Kusher, says:
while other areas not so much
So this "doubles every 7 - 10 years" thing is an AVERAGE and cannot be said to apply to one specific suburb.
RPData analyst, Kusher, says:
while other areas not so much
So this "doubles every 7 - 10 years" thing is an AVERAGE and cannot be said to apply to one specific suburb.
