Bill Zheng newsletter - lack of global credit to cause price crash.

[nonrecourse]

I am not a property investor, but am simply trying to learn as much about property as i can before i commit to a huge purchase, but i think that--if i were a property investor--the above statement would be hitting home very hard.

anyone can make money in a rising tide, it is when the tide goes out--as buffett says--that you find out who isn't wearing any clothes. it is gratifying to think that one has made piles o money based solely on one's own merits, courage, intiative and that may well be the truth. however keeping that money might require different skills--caution, foresight, risk management.

my 2.5 cents.

Your stealing my thunder Now is a great time to be learning about real estate because you are going to see a lot of red ink in the Streets.

The nonsense that you can't lose with property long term is about to be severely tested. A ten year period for most SS formites would qualify as long term being that the average boom to bust cycle is 7 years.

We have just lived through a 16 year purple patch and the next ten are going to be tough.

As for Buffet Andrew he is always cash flow positive and is in another Universe as per investing. He is the JP Morgan of the 21st century.

 

[gigigoodyear]

Your stealing my thunder Now is a great time to be learning about real estate because you are going to see a lot of red ink in the Streets.

The nonsense that you can't lose with property long term is about to be severely tested. A ten year period for most SS formites would qualify as long term being that the average boom to bust cycle is 7 years.

We have just lived through a 16 year purple patch and the next ten are going to be tough.

As for Buffet Andrew he is always cash flow positive and is in another Universe as per investing. He is the JP Morgan of the 21st century.

I think you are talking to a few numpties who can only learn through going through the fires of experience. Lecture all you want but people still can't assimilate what is being said.

One anecdote I want to relate is about a property investor friend who said that she did not fear the credit crisis after I explained to her in detail how it might affect her. She is paying IO on several properties and she said she will keep on adding more properties each year to her portfolio since she was focused on retiring by age 50. This year, she will be buying a property in Brisbane at LVR 90% IO loan only (since property prices only go up - that's what the Investors Club told her). She could not understand the macro perspective but only her own micro perspective - i.e. retiring in 10 years. She is in the graphics design industry. I believe that my background in history at school and afterwards helped me to understand where this economic crisis is all heading. Unfortunately, history is a subject that has been cast by the wayside since it is a soft arts subject and not very profitable.

 

[urchin]

Buffet is buying now

yep. because he knows what he is doing, front and back. investing for him is like taking candy from a baby, i think. but he is only interested in candy that he can take by the truckload...

 

[Dis]

If you hold your investments in your name, you don't use a discrestionary trust that then owns units in a unit trust that holds your long term properties then your a target. We didn't initially either that's part of the learning curve.

Can You explain what you mean by this please.

 

[joe jo jo]

Can You explain what you mean by this please.

He is talking about asset protection. The thing is, about 99% of Australia dont do it this way, so everyone is a target

I guess the moral of this whole thread is "whats the point of doing anything".

It's a bit like when somone realises one day they are going to die, so they decide "whats the point in doing anything" ?? Some people accept the doom and failure and other people cant (very deep, I know )

Lets just assume that Non-recourse has an objected via his messages. If I could take anything from it, I would say it is:
(1) things are going to get tougher
(2) if you are not prepared, get prepared
(3) prepare for the worst, even if it doesnt happen

If you think your job isnt secure, it is probably a good idea to make your debt manageable.

If you havent drawn extra funds for emergency, do so now as the credit markets are still flowing pretty strong in Australia (despite what might come).

If you cant deal with the pressure or potential failure, then get out of the game.

What gets me is I see a number of posts (not from you non-recourse), saying "any dope could have made money in the boom", but they consistently seem to come from people who havent made money in the boom. Strange

 

[josko]

I have been tryiing to sell one particular property for 9 months now. I listed it at what the R/E told me was a market price only 5K over what he thought I should get bottom dollar. It is a terribly hard market and liquidity is difficult. I have since dropped the price by 20k.


I have been preparing, but really should have started as soon as I'd been to the seminar back in March. I simply could not foresee that things would go so bad so very, very quickly.

So here I am, trying to sell but with 0 buyers!

My point is: if you're not prepared now, and things are tough..you may too late!

Regards JO

 

[josko]

Originally Posted by nonrecourse

If you hold your investments in your name, you don't use a discrestionary trust that then owns units in a unit trust that holds your long term properties then your a target. We didn't initially either that's part of the learning curve.

I'd also be interested to know what you mean NR? Do you mean you are easy fodder for the banks. I believe if the bank wants your money....trust or no trust....they go after everything. I do not TRUST that the trusts protect you from the banks.

Regards JO

 

[joe jo jo]

I have been tryiing to sell one particular property for 9 months now. I listed it at what the R/E told me was a market price only 5K over what he thought I should get bottom dollar. It is a terribly hard market and liquidity is difficult. I have since dropped the price by 20k.


I have been preparing, but really should have started as soon as I'd been to the seminar back in March. I simply could not foresee that things would go so bad so very, very quickly.

So here I am, trying to sell but with 0 buyers!

My point is: if you're not prepared now, and things are tough..you may too late!

Regards JO

Looks like you will have to sit it out. Whip that equity out if you can

 

[The Fence]

josko....

Where there is a will, there is a way...

 

[josko]

josko....

Where there is a will, there is a way...

Thanks for the reminder Thorpey...I'm constantly working on it.

Regards JO

 

[nonrecourse]

Trusts are trustworthy if you plan ahead

Originally Posted by nonrecourse



I'd also be interested to know what you mean NR? Do you mean you are easy fodder for the banks. I believe if the bank wants your money....trust or no trust....they go after everything. I do not TRUST that the trusts protect you from the banks.

Regards JO

Hi Josko sorry I run out of time when you sent your pm and I did't reply. I note you have worked it out.

As for trusts there are no free lunches josko. The reason for setting up the correct trust structures at the start is for the end game. Think of it like a chess match you need to be at least looking three moves ahead. When your filthy rich people like to take shots at you.

Initially when you set up these structures your right the banks tie you up tighter than a fishes bum But as time goes on if you have been diligent in your investing and your asset protection you end up with a number of trusts.

Some of the trusts the banks will have you by your short and curlies. Your job is to ensure that as your portfolio increases you pay off some of the properties and hold the titles outright, in a then ungeared unit trust with no guarantees and this is then held by a discretionary trust also with no guarantees.

You also have to be smart enough to read your loan contracts and strike out the all monies clauses. My concern is not the bankers, its the tall poppie cutters who invariably come along and think hmm I'll have a piece of that.

Unfortunatly one consequence of the republic that the pollies want us to have is its a lawyer's (read liar's) feast.

That is the other reason why I suggested you set up an SMSF and purchase a commercial property with a limited recourse loan as this is another way of diversifying your property portfolio as you continue to grow. As I mentioned to you before once you reach 6 properties ++ your in a rarefied atmosphere that few formites attain. All the more reason to protect your end game. If you put it off it gets even more difficult and too expensive to transfer assets across. Your better to start with your next acquistion and just accept that your backside is waving in the wind for someone to kick.

 

[josko]

Thanks Nonrecourse,

It seems I have done everything you suggest - have all my IP's seperated into four dif DHT trusts and 1 IP Commercial !

I have wondered....and I'll admit - more than often lately, how good my trusts are with concern to the banks.

It seems I am structured correctly, shame I have to sell down.


Regards JO

 

[nonrecourse]

I think you are talking to a few numpties who can only learn through going through the fires of experience. Lecture all you want but people still can't assimilate what is being said.

One anecdote I want to relate is about a property investor friend who said that she did not fear the credit crisis after I explained to her in detail how it might affect her. She is paying IO on several properties and she said she will keep on adding more properties each year to her portfolio since she was focused on retiring by age 50. This year, she will be buying a property in Brisbane at LVR 90% IO loan only (since property prices only go up - that's what the Investors Club told her). She could not understand the macro perspective but only her own micro perspective - i.e. retiring in 10 years. She is in the graphics design industry. I believe that my background in history at school and afterwards helped me to understand where this economic crisis is all heading. Unfortunately, history is a subject that has been cast by the wayside since it is a soft arts subject and not very profitable.

G'day gigigoodyear; Your spot on about history that is why we are doomed to repeat it including another world war in around ten years time.

 

[DavidMc]

It is a terribly hard market and liquidity is difficult. I have since dropped the price by 20k.
...
So here I am, trying to sell but with 0 buyers!

Interesting. Thanks for sharing.

Question - is this regional, holiday, outer suburb, inner suburb, CBD? Median priced?

 

[joe jo jo]

Your spot on about history that is why we are doomed to repeat it including another "world war" in around ten years time.

Now I know you didnt get that from the RBA website

 

[emu]

G'day gigigoodyear; Your spot on about history that is why we are doomed to repeat it including another world war in around ten years time.

WOW..................I bet your the life of a party??????????????????????????

 

[AUSPROP...]

My point is: if you're not prepared now, and things are tough..you may too late!

Regards JO

agree with this... where you are at now is pretty much what you need to deal with for the next year or so... or 10 depending on who you subscribe to

 

[boomtown]

G'day gigigoodyear; Your spot on about history that is why we are doomed to repeat it including another world war in around ten years time.

Lol sorry mate we had our bash at that was called the Korean war, Berlin airlift, Cuban missile crisis, Vietnam war, Soviet invasion of Afghanistan, Argentine invasion of Falklands, Kosovo war, Operation Desert Shield and Operation Desert Storm.

We have used up our quota and are now out of new wars until the next shipment which isnt due until 2050. In the interim we will just have to make do with Iraq and Afghanistan.

 

[nonrecourse]

Lol sorry mate we had our bash at that was called the Korean war, Berlin airlift, Cuban missile crisis, Vietnam war, Soviet invasion of Afghanistan, Argentine invasion of Falklands, Kosovo war, Operation Desert Shield and Operation Desert Storm.

We have used up our quota and are now out of new wars until the next shipment which isnt due until 2050. In the interim we will just have to make do with Iraq and Afghanistan.

Sorry sorry mate stupidity is intergenerational those little dust ups you mentioned were just the side show the real fire crackers (nukes) are still to be set off. I was born and raised in Canada. In the 1960's and 1970's when a nuclear war looked immenant the shortest trajectory between the USSR and the USA was over Canada and where the missiles would meet were called the dew line Just enough time living in Toronto to bend over put your head between your legs and kiss your @ss goodbye.

Being a straight A student in geography Australia was the natural choice to avoid MAD (mutually agreed? destruction) Wasn't aware of the movie on the beach when I chose Melbourne as home many years later

 

[joe jo jo]

Sorry sorry mate stupidity is intergenerational those little dust ups you mentioned were just the side show the real fire crackers (nukes) are still to be set off.

Dont think I have a "trust" to solve that problem