Bill i think you can look at several area's for a alternative strategy other than long term property investing,but for myself i like to read all the D-G that some post in this site just gives me an idea on the way some think, and for someone like myself who only started with 4k of my own money in 1983 i don't care less what they think, i know full well long term well placed inner city property does not go backwards now that some blocks can go up above 8 levels in Brisbane, the price of petrol will play a big part in the value of inner city land over the next few years, i also have the share market covered but that's up and down like a 20 cent yo-yo what other people say does not worry me ..imho..willair.OK, the title is a little catchy to gain the attention of all the recent tro.../ new people with a negative biasthat have joined this forum.
I am not sure if this is the right category, but there is a point.
How does this new influx of "caution" influence your investing habits???
Opinions??
bye
DOOM GLOOM and the END of LIFE as we KNOW it
- Thread starter Bill.L
- Start date
Bill, it hasn't effected me, and at this point it's getting quite repetitive - I've stopped reading a lot of it. It's the same D&G rehashed over and over and over again, with a slightly different slant each time. Not to mention all the one post wonders who dump an article and are never heard from again - if your going to post a thought/article that you support, at least have the conviction to defend/debate it.
Especially when you get drivel like "LL's are keeping houses vacant on purpose to limit supply" and all the other deluded crap.
Too many people make sweeping generalizations about entire markets - and that's not exclusive to the bears, many bulls here do it as well. It's just as wrong to say 'the aussie market will rise next year', as much as it is to say 'the aussie market will crash next year'. Personally, any comments I make are generally referring to the Adelaide market, and specifically micro markets within the Adelaide market (ie. I don't give a toss what $3M mansions in Unley are doing), because these are the areas that I focus on and research.
This is another reason that some of the polls we see are useless as well. Will property crash next year? Will your property double in 3yrs? Unless we are all investing in the exact same market - other than people's sentiment about their particular area, what do the results tell us? If everyone voiced a resounding 'no' to the positives of property next week - they're not referring to my individual properties.
So no, my investing philosophy has not changed. Find individual deals that make sense - and that means make sense to me. There's a fair chance that the property I bought last week would make very little sense to many investors here - do I care? No, it makes good financial sense to me, and will make me a great deal of money in the future. To borrow from Alex for a moment - I'm worried about me, not the entire market. I don't feel the need to crusade for the 'every man' and society in general. My time is valuable and better spent focusing on my investments, than hypothesizing about the world in general and social/economic issues and the evils of our current system.
Let the D&G's have their little moral victories, because don't think for a moment you'll change their view. I'll stick to my financial victories, and don't particularly care if 'in theory' what I'm doing can't work.
I can't speak for others here, but I doubt anyone can buy a whole market (with the possible exception of Daz ) - and that is what the D&G's continually refer to. Guess what - I'm not buying 'Sydney', and not even 'Adelaide' for that matter.
Especially when you get drivel like "LL's are keeping houses vacant on purpose to limit supply" and all the other deluded crap.
Too many people make sweeping generalizations about entire markets - and that's not exclusive to the bears, many bulls here do it as well. It's just as wrong to say 'the aussie market will rise next year', as much as it is to say 'the aussie market will crash next year'. Personally, any comments I make are generally referring to the Adelaide market, and specifically micro markets within the Adelaide market (ie. I don't give a toss what $3M mansions in Unley are doing), because these are the areas that I focus on and research.
This is another reason that some of the polls we see are useless as well. Will property crash next year? Will your property double in 3yrs? Unless we are all investing in the exact same market - other than people's sentiment about their particular area, what do the results tell us? If everyone voiced a resounding 'no' to the positives of property next week - they're not referring to my individual properties.
So no, my investing philosophy has not changed. Find individual deals that make sense - and that means make sense to me. There's a fair chance that the property I bought last week would make very little sense to many investors here - do I care? No, it makes good financial sense to me, and will make me a great deal of money in the future. To borrow from Alex for a moment - I'm worried about me, not the entire market. I don't feel the need to crusade for the 'every man' and society in general. My time is valuable and better spent focusing on my investments, than hypothesizing about the world in general and social/economic issues and the evils of our current system.
Let the D&G's have their little moral victories, because don't think for a moment you'll change their view. I'll stick to my financial victories, and don't particularly care if 'in theory' what I'm doing can't work.
I can't speak for others here, but I doubt anyone can buy a whole market (with the possible exception of Daz
) - and that is what the D&G's continually refer to. Guess what - I'm not buying 'Sydney', and not even 'Adelaide' for that matter.
Good for you - I don't know where in my post I suggested otherwise, and I certainly wasn't giving you any advice. I tried to keep it vague specifically so it wasn't taken as advice.
My post wasn't referring specifically to you - but to people in general.
I'm just saying basically that there is always money to be made even in times of doom and gloom. I am a contrarian though and always do the opposite of everyone else - buy when everyone is selling and sell when everyone is buying is my motto.
Looks like advice to me. (see below)
Anyway, we are talking property and doom & gloom. To help with your credibility Nat, can you be a little bit more specific.
Like, where is the big money going? btw: Putting your money where the big money is going isn't being contrarian. I love those buzzwords
FWIW i think the big money is going in cash at the moment. Its definitely not going to the property market and the stockmarket has seen a hell of a lot more selling than buying so it aint going there.
I think you'll be ok being specific, nobody will go broke taking your advice. If they do, i'll cover your legal bills. There you go, its in writing. Go for it Nat.
If you are not willing to risk losing money, then you have to accept the limitations that entails.
If you believe that the entire Australian property market is a "dud" then you need to invest elsewhere.
Anyway, we are talking property and doom & gloom. To help with your credibility Nat, can you be a little bit more specific.
Like, where is the big money going? btw: Putting your money where the big money is going isn't being contrarian. I love those buzzwords
FWIW i think the big money is going in cash at the moment. Its definitely not going to the property market and the stockmarket has seen a hell of a lot more selling than buying so it aint going there.
I think you'll be ok being specific, nobody will go broke taking your advice. If they do, i'll cover your legal bills. There you go, its in writing. Go for it Nat.
If you are not willing to risk losing money, then you have to accept the limitations that entails.
If you believe that the entire Australian property market is a "dud" then you need to invest elsewhere.
I would advise Nat against being too specific.
Nobody remembers your good calls but they never forget the bad ones. You're on a hiding to nothing.
I, for example, clearly remember being laughed at for talking about +cf properties in the provinces. The gurus here said to go where the money was.... Sydney...... because that's where all the cap gains were. The year? '02/ '03.
Nobody remembers your good calls but they never forget the bad ones. You're on a hiding to nothing.
I, for example, clearly remember being laughed at for talking about +cf properties in the provinces. The gurus here said to go where the money was.... Sydney...... because that's where all the cap gains were. The year? '02/ '03.
Me too, however all the D&G talk over the last few months has made me take extra care in researching what, where, when and why....
I agree that bargins will start to appear towards the end of the year. I think that you will find a number of home owners currently in mortgage stress holding out for as long as possible, but it's only a number of months before they have to pull the plug.
In terms of all the D&G talk changing my position, it hasn't - I will buy an IP and I will be able to service it comfortably, for me it's more about finding my feet in the property market, and be willing to take that next leap of a 2nd IP while prices are in my favour. (Actually, it's not about me, it's about hubby's comfort level moreso!)
Cheers
Buddybee
It reaffirms my belief that there will always be those who are swayed by short term sentiment & consequently cause the mispricing of assets. If recession hits, IP falls by 50%, rents keep rising, IRs fall, then it will be a(nother) once in a lifetime opportunity for us. I say take advantage of prevailing conditions.
Fully agree. There are currently twice as many Chinese PhDs out there as there are in the US, and their numbers are growing way faster. China has most to gain from a breakthough in alternative energy... if I was running China, I'd be making sure there was a disproportionately large number of then working on solutions. Yeah, peak may be close, but it's not really relevant, because solutions will appear. Think about technology 20 years ago and how far we've progressed since then. IMO it will progress at least 10 times faster in the next 20 years We'll all think back to today & how crazy some were to be scared of the sky falling in.
As a byproduct of cheap energy, disposable income will increase. And when people have more money to spend on stuff (rather than essential food and petrol), it gets spent on things that make then happy.... like plasmas... oh...and upgrading the PPOR
.
As of last year after buying established properties for the previous 5 to 6 years, and really in response to the price surge during 2007, my last purchases have now focused only on properties with the following features.
* value adding possibilities (renovation or development)
* located in inner city suburbs (eg within 7 but may go to 10 kms of Melb CBD). I know these areas better than outer suburbs, so am more comfortable with this choice. Currently, whilst not an exhaustive list my focus has been in Richmond, Abbotsford, Prahran, S Yarra, Malvern, S Melbourne
* Close to at least two modes of public transport (train must be one and nearest station must be within 10 mins walk).
* Period homes with original features (eg fireplaces)
* Close proximity to private schools or highly rated state schools
* Walking distance to strip shopping centres
There is a point where some of these reno opportunities due to land size become development blocks, however entry price can be prohibitive, even with the softening in prices.
Of course, the "caution" as Bill L describes, that has infiltrated everywhere, has made me more diligent in pursuing these hurdle criteria.
I am contemplating selling one of my other properties, although philisophically I am finding this a difficult path to go down, give my B&H mentality. Bit like a rose bush really, do you need to prune back the rose bush to generate re-growth? Not sure at this moment. Plus, I don't feel like voluntarily giving more money to Swan in CGT.
Like many others here have a property in Frankston S, and whilst development is something that I would be very interested in pursuing, the one aspect of the "storm clouds" on the horizon that is impacting me, is the price of oil/petrol. Been discussed before, but will make transport & mobility more expensive and would IMO would have a bigger impact on the outer suburbs. (Yes, realise there is a train line to Frankston). So for now, I am holding off on any other purchases unless the proverbial killer property comes along. But would be secondary to the inner city option.
The long term intention is to build a portfolio of a number of properties in inner city Melb, that are either period home renovations or new contemporary properties. The intent will be that they are finishsed in a way that is highly desirable, well located, serviced well with amenities and transport. These will be equally attractive for different reasons to both prospective OO or renters.....
Whilst acknowledging some of the issues that will impact all investment classes (well except for energy & resource stocks) in the next little while, I don't subscribe to the "end is nigh" outlook that some have, but at the same time, I am neither a pollyanna (thanks for the term Sunfish). Then again, I am not an expert, so who knows. I defer to others here on that matter.
I am more convinced that buying property in the nervous 08's, quality of location/property & matching property type to your target market will become even more important than ever. The basics will come to the fore more than ever, because buying and holding (and doing nothing) is not going to make you a fortune in the next few years.
We should all make a date and come back here in December 2009 and see who was right or less wrong
* value adding possibilities (renovation or development)
* located in inner city suburbs (eg within 7 but may go to 10 kms of Melb CBD). I know these areas better than outer suburbs, so am more comfortable with this choice. Currently, whilst not an exhaustive list my focus has been in Richmond, Abbotsford, Prahran, S Yarra, Malvern, S Melbourne
* Close to at least two modes of public transport (train must be one and nearest station must be within 10 mins walk).
* Period homes with original features (eg fireplaces)
* Close proximity to private schools or highly rated state schools
* Walking distance to strip shopping centres
There is a point where some of these reno opportunities due to land size become development blocks, however entry price can be prohibitive, even with the softening in prices.
Of course, the "caution" as Bill L describes, that has infiltrated everywhere, has made me more diligent in pursuing these hurdle criteria.
I am contemplating selling one of my other properties, although philisophically I am finding this a difficult path to go down, give my B&H mentality. Bit like a rose bush really, do you need to prune back the rose bush to generate re-growth? Not sure at this moment. Plus, I don't feel like voluntarily giving more money to Swan in CGT.
Like many others here have a property in Frankston S, and whilst development is something that I would be very interested in pursuing, the one aspect of the "storm clouds" on the horizon that is impacting me, is the price of oil/petrol. Been discussed before, but will make transport & mobility more expensive and would IMO would have a bigger impact on the outer suburbs. (Yes, realise there is a train line to Frankston). So for now, I am holding off on any other purchases unless the proverbial killer property comes along. But would be secondary to the inner city option.
The long term intention is to build a portfolio of a number of properties in inner city Melb, that are either period home renovations or new contemporary properties. The intent will be that they are finishsed in a way that is highly desirable, well located, serviced well with amenities and transport. These will be equally attractive for different reasons to both prospective OO or renters.....
Whilst acknowledging some of the issues that will impact all investment classes (well except for energy & resource stocks) in the next little while, I don't subscribe to the "end is nigh" outlook that some have, but at the same time, I am neither a pollyanna (thanks for the term Sunfish
). Then again, I am not an expert, so who knows. I defer to others here on that matter.I am more convinced that buying property in the nervous 08's, quality of location/property & matching property type to your target market will become even more important than ever. The basics will come to the fore more than ever, because buying and holding (and doing nothing) is not going to make you a fortune in the next few years.
We should all make a date and come back here in December 2009 and see who was right or less wrong
i've said it before - i see the shine coming off the top of the last great bull run over the next "few" (2-4) years.
i see AUS losing 2-4% pa every year.
what i DON'T envisage is a sharp correction in MEDIAN values. some areas that are speculative will get hit hard, yes. some areas that are fundamentally strong will continue to appreciate in growth.
attached is my outlook on the AUS market. please excuse the dodgy paint pic.
i see AUS losing 2-4% pa every year.
what i DON'T envisage is a sharp correction in MEDIAN values. some areas that are speculative will get hit hard, yes. some areas that are fundamentally strong will continue to appreciate in growth.
attached is my outlook on the AUS market. please excuse the dodgy paint pic.
Attachments
My timing sucks so don't learn from me about timing. I think it is becoming more and more unlikely I can buy back my apartment for less than I sold it. Still a possibility though I guess ...
doesn't that hurt :/
Hi guys,
My strategy now is to hold on as tight as I can, see this period through and look at passive income from other directions.
This is my first Cycle of investing and as a newer investor of only 4 years, I have accumulated 7 IP's. Now I am learning the hard way what cashflow REALLY means. Or rather the lack of it.
As Winston says; "I don't think of property in terms of $ values anymore.
I think of it in terms of debt serviceability because 99% of people have to borrow to buy." - I find I am changing a little of my mindset and moving from an "Extrememly Aggressive" investor ( A Financial Advisor's dream) to a slightly more cautious one.
I allowed for Interest Rates to rise in my budget. . . .but not enough. I have completely misjudged IR's. I didn't factor in CPI increases, fuel, food. Nor did I factor in my pregnancy, birth and subsequent lack of income.
This is a time for me to reflect, correct and learn, and I have to say: Even though times are tough for us. . .it's pretty exciting.
There is no better time than the present to observe and learn, in order to take action in the future.
Regards Jo
My strategy now is to hold on as tight as I can, see this period through and look at passive income from other directions.
This is my first Cycle of investing and as a newer investor of only 4 years, I have accumulated 7 IP's. Now I am learning the hard way what cashflow REALLY means. Or rather the lack of it.
As Winston says; "I don't think of property in terms of $ values anymore.
I think of it in terms of debt serviceability because 99% of people have to borrow to buy." - I find I am changing a little of my mindset and moving from an "Extrememly Aggressive" investor ( A Financial Advisor's dream) to a slightly more cautious one.
I allowed for Interest Rates to rise in my budget. . . .but not enough. I have completely misjudged IR's. I didn't factor in CPI increases, fuel, food. Nor did I factor in my pregnancy, birth and subsequent lack of income.
This is a time for me to reflect, correct and learn, and I have to say: Even though times are tough for us. . .it's pretty exciting.
There is no better time than the present to observe and learn, in order to take action in the future.
Regards Jo
yeah i allowed for a whole percent rise E/O since buying my block and so far it's moved 1.25%.
so yeah feeling the pinch but not a long way from foreclosure.
so yeah feeling the pinch but not a long way from foreclosure.
the problem is it's not doing anything to inflation.
Looks like advice to me. (see below)
Anyway, we are talking property and doom & gloom. To help with your credibility Nat, can you be a little bit more specific.
Are we? The OP did not mention property gloom and doom specifically that I could see.
Like, where is the big money going? btw: Putting your money where the big money is going isn't being contrarian. I love those buzzwords
No it isn't. Buying property (or anything else) when everyone is saying that it is a dud investment is. Thanks for the grammar lesson though.
FWIW i think the big money is going in cash at the moment. Its definitely not going to the property market and the stockmarket has seen a hell of a lot more selling than buying so it aint going there.
Not disagreeing with you, but there are more than 3 asset classes, and more than one property market. I have had a lot of money in cash recently as well and am just starting to divest it into other asset classes after a bit of a break.
I think you'll be ok being specific, nobody will go broke taking your advice. If they do, i'll cover your legal bills. There you go, its in writing. Go for it Nat.
If you are not willing to risk losing money, then you have to accept the limitations that entails.
If you believe that the entire Australian property market is a "dud" then you need to invest elsewhere.
Like I said, I wasn't referring to you specifically. I could have said "if one is not willing to risk losing money then one has to accept limitations", but that sounds too toffee nosed. Anyway, as advice goes I reckon it's pretty damn good. Do you think that people who don't want to lose money should ignore foreseeable risks and invest anyway? Would you invest in an asset class you think is a dud? Obviously not, so I don't understand what you are disagreeing with.
In my opinion the big money is still going into resources, mainly oil/gas and coal. By big money I mean company investment in jobs, infrastructure (including property) and alternative technologies. I also think there is $$$ going into softs (TC has mentioned this as well) and I am putting some spare cash into agriculture and water resources, oh and unlisted property trusts.
I don't think resources will stop or slow down in the near future and any short term wobbles in the share market or futures market don't bother me - already factored into my risk profile. Markets are built on fear and greed, and one thing I have learnt is that greed is always greater than fear. Anyway, I don't only invest in shares but invest in products that track the value of the underlying asset itself.
Anyway, all this is just my opinion from reading various media and speaking to people in the industry, and a fair bit of "gut feeling". I could be very very wrong and end up broke living on a park bench though, so please don't construe the above as advice in any way.
And, yes, there is tin-pot mining town or two on my radar
Hi guys,
My strategy now is to hold on as tight as I can, see this period through and look at passive income from other directions.
This is my first Cycle of investing and as a newer investor of only 4 years, I have accumulated 7 IP's. Now I am learning the hard way what cashflow REALLY means. Or rather the lack of it.
As Winston says; "I don't think of property in terms of $ values anymore.
I think of it in terms of debt serviceability because 99% of people have to borrow to buy." - I find I am changing a little of my mindset and moving from an "Extrememly Aggressive" investor ( A Financial Advisor's dream) to a slightly more cautious one.
I allowed for Interest Rates to rise in my budget. . . .but not enough. I have completely misjudged IR's. I didn't factor in CPI increases, fuel, food. Nor did I factor in my pregnancy, birth and subsequent lack of income.
This is a time for me to reflect, correct and learn, and I have to say: Even though times are tough for us. . .it's pretty exciting.
There is no better time than the present to observe and learn, in order to take action in the future.
Regards Jo
Great post Josko,
All my fixed interest only loans expired this year and while I'm not working the bank won't let me refinance. My properties went from cashflow neutral to very, very negative overnight - ouch.
Now I focus on cashflow and income a lot than I used to and would be reluctant to purchase a property I could not afford to hold without the help of rental income.
You have done well in accumulating 7 properties in 4 years though - hang on and in a few years it will all be worth it.
reminds of when i first started selling houses in karratha a couple of years ago at $400k.. the amount of people that expressed the opinion above was quite large. Amyway some clients took up the opportunity (some in multiples) and are now sitting on a couple of mill equity returning up to $200,000 per annum positive cashflow. not a bad retirement outcome for signing a few contracts!
FWIW, I think it's still the strongest property investment around, but you have to know what you are doing.
To answer the original question 'How does this new influx of "caution" influence your investing habits???' (note - it wasn't 'what do you think will happen?', I think we all know what everyone thinks there... several times over...).
I've paid the LMI and established more 95% loans and stored into offsets (as I have been doing for years). Prior to them I might have just done 80% loans or a mix of 80 / 95%'s.
I also did a portfolio revalue after the third consective drop in clearance rates and from my on the ground experience attending local low attendance auctions, seeing places get passed in. I usually do this once a year anyway, so unsure if they influenced me.
If a recession hits my charge rates will probably drop so I thought I'd get finance now whilst it's still flowing relatively freely. I've just made enough funds available to purchase another 3 median priced IPs with a decent buffer to spare, 4 with a smaller buffer or just to take a year or two off work. Gotta love that imaginary money.
I'll continue to sit out for now, at least another 6 months and re-assess. Still pretty close to my regular buying schedule, although I got a gut feeling my next purchase will be a bit further away than usual.
I also need to pull my finger out on a PPOR reno... a nice way to occupy yourself and create some equity during the quiet times.
That's the great thing about property, banks and valuation data moves slowly giving you months to react.
I've paid the LMI and established more 95% loans and stored into offsets (as I have been doing for years). Prior to them I might have just done 80% loans or a mix of 80 / 95%'s.
I also did a portfolio revalue after the third consective drop in clearance rates and from my on the ground experience attending local low attendance auctions, seeing places get passed in. I usually do this once a year anyway, so unsure if they influenced me.
If a recession hits my charge rates will probably drop so I thought I'd get finance now whilst it's still flowing relatively freely. I've just made enough funds available to purchase another 3 median priced IPs with a decent buffer to spare, 4 with a smaller buffer or just to take a year or two off work. Gotta love that imaginary money.
I'll continue to sit out for now, at least another 6 months and re-assess. Still pretty close to my regular buying schedule, although I got a gut feeling my next purchase will be a bit further away than usual.
I also need to pull my finger out on a PPOR reno... a nice way to occupy yourself and create some equity during the quiet times.
That's the great thing about property, banks and valuation data moves slowly giving you months to react.
