history of cash-positive properties

[sashatheman]

Hi guys

I have read a couple of property investing books, inclusing the author of this website. Anyway it sounds to me like in the past there has been a lot of cash-positive properties on the market. Especially writters like Steven Mcknight make it sound like in the early 2000s there were cf+ everywhere he looked.
I am also aware of the high interest rates of the 80's in australia so not sure how that ties in.
But basically what I am asking is, has there ever been a golden-age for people who wanted to persue a strategy of acquiring cf+ properties to build up their portfolios? Or it has always been very difficult, and has now become much more difficult?

I am just wondering if the strategy needs adjusting with the times. Perhaps add in the component of a renovation to boost rent etc.

 

[Nathan]

12 months ago they were on the shelf all over western syndey, south west sydney and regional NSW. They didnt look CF+ but they were, because pricces hadnt moved however rents were and psyche hadnt caught on.

I reckon over a period of a week I would witness 30-40 of them in todays market week in week out.

 

[sashatheman]

12 months ago they were on the shelf all over western syndey, south west sydney and regional NSW. They didnt look CF+ but they were, because pricces hadnt moved however rents were and psyche hadnt caught on.

I reckon over a period of a week I would witness 30-40 of them in todays market week in week out.

Wasn't that due to the sharp drop in interest rates which didn't remain low for long.

 

[Nathan]

Nope, not when you buy regionals for $60k renting for $180-$200pw. Now they are $100,000 renting for $200pw and these are towns of 10,000+ populations with bunnings etc...


Sydney properties $160,000-$200,000 renting for $270-$300pw.


They are still out there but takes more skill to find them. 2008 - 2009 they were everywhere.

 

[Ausprop]

Steve reckons right now is a once in a life time opportunity to buy CF+... in the US

 

[Aaron Sice]

Steve reckons right now is a once in a life time opportunity to buy CF+... in the US

third leg down is what i'm hearing - but the fact that some cities are sitting at 1993 prices means they can't get much lower - values may just stagnate and inflation may take hold.....

appears that no matter what your country's economic credentials, everyone's looking down the barrell of stagflation.

interesting how that can happen - reeks of architecture.

 

[sashatheman]

Steve reckons right now is a once in a life time opportunity to buy CF+... in the US

It might be. But for someone who hasn't bought his first IP yet, I will stick to the shallow end.

 

[Ausprop]

It might be. But for someone who hasn't bought his first IP yet, I will stick to the shallow end.

as long as you are sure you are in the shallow end

 

[topcropper]

But basically what I am asking is, has there ever been a golden-age for people who wanted to persue a strategy of acquiring cf+ properties to build up their portfolios? Or it has always been very difficult, and has now become much more difficult?

.

I reckon there was a golden age. Starting about 1996 and going to 2000 in say Sydney, and extending to a later date in other areas. In my part of rural NSW, house prices never took off till 2003, and then they promptly doubled or more in a few years.

This was caused by the high interest rates and inflation of the 70's and 80's. Lots of people including my family nearly went under from 20% interest rates, and people were scared to borrow much for a long time after.

Houses were super cheap in 1996, and I reckon these times were a one off and may never happen again.

Rental yields may have been high as well 10 years earlier, say in the 80's, but if interest rates are 15% and rental yields are just 8%, then they are no where near cashflow positive, but probably worse than today. I don't remember many people having much cash in the 80's, it was tough.


See ya's.

 

[Deltaberry]

third leg down is what i'm hearing - but the fact that some cities are sitting at 1993 prices means they can't get much lower - values may just stagnate and inflation may take hold.....

appears that no matter what your country's economic credentials, everyone's looking down the barrell of stagflation.

interesting how that can happen - reeks of architecture.

It is a good time even if the leg is going down. You'll never catch the bottom.

But as an investment proposition, at 8% yield and 2% interest rates in key cities (not talking rubbish Detroit 25% yield styles), why not?

At 80% gearing, that's 30% ROE

 

[Deltaberry]

Rental yields may have been high as well 10 years earlier, say in the 80's, but if interest rates are 15% and rental yields are just 8%, then they are no where near cashflow positive, but probably worse than today. I don't remember many people having much cash in the 80's, it was tough.

I would rather 5% yields and 7% interest rates than 8% yields and 15% interest rates.