A story to keep us all inspired

[cad]

Hi all,

Just felt compelled to share a good news story.

I just received an email form a friend to say that their uncle bought a house in North Fitzroy in 1977 for $34K & sold it recently for 900K.

WOW... What an amazing result.

I love stories like this one because this is the aim if the game.

These stories not only inspire me but also keep me motivated.

I hope it happens for all of us.


Cad

 

[kissfan]

Hi cad. Wish that was my rich uncle. Great to hear those type of stories. Hopefully somewhere in the future one of us will be able to relate the same type of thing. Thanks for sharing that with us.

All the best

Marty

 

[peteb]

ok but in 1977 what was 40K worth ?
what was a car worth ?
what was the average wage ?
I'm sure it was as hard to buy then as it is now ......

so the story is buy now and in 26 years time you can say I bought that house in toorak for only 2mil ad ow it is worth 10mil.

 

[cad]

Yes peteb,

As I said "Aim of the game."

 

[Kris Sheather]

To put things into perspective, using todays numbers, and assuming the rate of growth would be the same a
$500,000 property would be worth $13,235,294.11 in the same time period..

 

[lissie]

Originally posted by Kris Sheather
To put things into perspective, using todays numbers, and assuming the rate of growth would be the same a
$500,000 property would be worth $13,235,294.11 in the same time period..

Which is wont be unless inflation occurs again and people can affor $13M for a house at that future time. .... On the other hand cash flow +ve is always going to work ...

 

[Andrew]

Which is wont be unless inflation occurs again and people can affor $13M for a house at that future time. .... On the other hand cash flow +ve is always going to work ...

Whoa, hold on there. Where did you get your crystal ball?

I bet if you told the uncle that his house would one day be worth $900K at
the time he bought he would have told you to piss off.

By my calculations the CG rate on this property is 13.5%. There's no reason
to think that this growth can't continue, especially in Fitzroy which has got a
long way to go in terms of streetscapes and demographic changes.

andy

 

[handyandy]

Hi All

At that point in time or most probably before we will need to move the decimal point so that you can still fill out cheques with some reasonable effort.

Imagine having to write 19,999 rather than 19.99. After all its all relative.

Cheers

 

[lissie]

Originally posted by handyandy
Hi All

At that point in time or most probably before we will need to move the decimal point so that you can still fill out cheques with some reasonable effort.

Imagine having to write 19,999 rather than 19.99. After all its all relative.

Cheers

Actually no - when I was in Turkey a couple of years ago it was TL1,000,000 = USD 1 - 60mil for a hotel room - which is what becomes the shorthand. All the ATM's require you to push a button for an amount rather enter a figure - this is bit tricky if the lighting is poor - you might get $100 woth of lira e.g. 100,000,000 when all you want is 10,000.000

 

[INVESTRON]

holden commodore in 1977 cost 5,500, now you need 30,000 or more.

most electrical goods are much the same price, if not cheaper now, so it makes it very hard to compare things.

never think it silly, that we'll be paying many millions for an average house in 30 years time, if 900,000 is acceptable now.

 

[D.T.]

Hi,

Those of you dissing those stories should consider this. Those prices back then were probably median values for their area at the time. Now they tripple it the median for their area.

-Something to think about

Dave

 

[Les]

G'day Dave,

Good point - back in 1977 the property might have been "out in the boonies" (i.e. 7Km from the CBD). Today, they are ONLY 7Km from the CBD !!!!!

That would have some effect on the area's median, wouldn't it?

Regards,

 

[peteb]

ok so to make some sense of the comparison we need a property that was bought in the same year but closer to the cbd.

hang on a minute the neighbours across the road from me bought into their property for low 300's in the early eighties and we are 3km from the cbd in melbourne.

that same property is valued at 2mil now.

run your figures across that and work out what it will be worth in another 20 years ......

 

[jaypster]

You never know maybe one day sunbury will be considered inner city.

 

[L Bernham]

Those years in the 80s where we had 15-18% inflation have really distorted things.
I really hope people arent looking too much at the prices our parent paid for their houses.

For house prices to get to $13 million levels is not ridiculous. It is all relative. But for them to do that over the next 20 years its going to take a good few years of VERY high interest rates which the average punter is not going to be able to afford.

When houses are $13 million the average wage would have to be around $1.5 million per annum or owning houses will just be a right of the priveliged top 1%. Likely, I dont think so. Far too much space in Oz for that to happen.
What happens when cities become too expensive?
Office rents go up, businesses move because they can get cheaper rent and labour elsewhere new towns, cities are created and existing small ones grow into larger ones. It happens everywhere.
One only has to look at London and the growth in cities on the outskirts and factories and head offices moving to the middle of nowhere but near the M3.
Another good modern day eg is LA. Much of the inner city region has become slums that you wouldnt dare walk through.

 

[jahn]

Hi
One thing to consider is how time flies when your having fun.

If anyone had tried to tell me when I was 23 that I would pay as much in 2003 in stamp duty for an IP as I paid for PPOR back then, (My son is now 23) I would call them some funny names, and walk away. I paid more for a good second hand car 3 years ago, than the house and land in total then.
Whatever the prices are in the future, they will be a lot more (No crystal ball needed) than now, even without the 18% of the 80s
BTW Paid 1 third of weekly income in payments each week. $20.
Want to do the sums on what the income will be in those future times ???
jahn

 

[L Bernham]

Once again the whole statement of "in the future" and the myth that "prices always goes up" raises its ugly head.

Its interesting that everyone seems to be able to predict the future economic state of Australia. If you asked 1000 people in Japan if it was likely that they would go through 10 years of deflation half would have asked "whats that" and the other half would have said 'no way!'

Spare a thought for poor old Argentina, 100 years ago the worlds wealthiest nation per capita. Now where are they. The currency has devalued so much that anyone who bought an IP 100 years ago there would still be sitting on a tidy loss.

But then of course this won't happen in Australia because we are so much smarter than other countries. And we arent at all reliant on Asia or a teetering on the edge USA. We dont really need to export to these countries do we?

I aint predicting anything but I like to look at statistics and when I see the results that similar levels of unaffordability brought in 90% of situations in other countries and our own, I figure I might just sit out for a while. I'm not that desperate for a gain to take a 9 in 10 chance of a large and lengthy capital loss.

My own IP is under contract and I wish plenty of success to the buyers. I'm happy that I made an actual profit worth 5 years wages for doing virtually nothing. I dont think there have been too many people throughout history that have been able to replicate that so I wont complain if I dont ever find an investment that good again.

Greed has brought many a wealthy man to ruin. Amazing how we dont hear too much about these millionaires who invested in the stockmarket using 'the banks money" . They must have forgotten the difference between paper profit and real profit.

 

[duncan_m]

Originally posted by L Bernham
My own IP is under contract and I wish plenty of success to the buyers. I'm happy that I made an actual profit worth 5 years wages for doing virtually nothing

So you've bought one IP, held it for 5 years and now you're selling it. Doesnt sound like a really well thought out strategy for successful retirement to me.

I just cant help but feel there's a big chip on your shoulder over something.. dont know what..

Duncan.

 

[L Bernham]

no, I'm cool.

There just seem to be a few people around who arent appreciating that all forms of invesment have risks attached.
Property included. There seem to be an awful lot of sheep following the crowd and YES that does concern me because its the whole economy and our overall wellbeing at stake.

I know someone who bought at way too high a price at an auction and didnt even care because their assumption was it doesnt matter what they paid because its value will rise from the price at which they paid??? This is neither logical or smart.

What I mean when I say I'm content that I made approximately $160K gain (well when the contract goes through). I have the tendency to look at the big picture and I realise that a very very small minority of people ever make and hold onto a profit like this, so belonging to this minority makes me feel privileged.
Maybe when it looks like the right time to enter again I will.
If it doesnt, so be it. I'm happy.

I wasnt aware that this forum was only for those who are investing for retirement and believe that property is the only way to achieve this.

 

[cad]

L Bernham,

Seems to me your glass is half empty.