IP's becoming mainstream

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From: Rob Millington


Greetings all, this is my first post.
Recent news reports suggested that investment was the aim behind 20% of all residential purchases, up from 5% historically. As I have not yet purchased an IP the stomach bugs tell me beware. Any feedback on the future impact of more people trying to fill IP's with tenants.

Regards, Rob.M
 
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Reply: 1
From: Caroline Wilson


Rob,

I've heard that younger people are not buying homes as their parents have done but are either spending or investing the money in other areas (such as shares).

That means they're happy to pay rent. So my assumption would be that property is still a good investment as far as demand goes.

Just my thoughts
Caroline
 
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Reply: 2
From: Adam Randall


Hello
I'm Don't know about other states, pretty sure Adelaide is going through a prolonged low vacancy rate. I have always been told (I could be wrong) that 4% vacancy rate is basically 0% (similar to employment). Most people I know in the flesh who own I/Ps only own 1 property excluding their place of residence, and I read somewhere that over 50% get out after 5 years because its harder to run a rental property (even with a manager) than most books mention. Not only that It gets progressively harder the more houses you accumulate. 5% to 20% jump is massive though, I would be checking to see if they have changed the way someone qualifies as a property investor, maybe they include property trusts etc, to make the figures look bigger so that it becomes newsworthy.
Regards Adam
 
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Reply: 3
From: PT Bear


The same three words apply here (as always):
Location, location, location.

There'll always be a demand for the right sort of property in the right area. It doesn't matter how many people are doing it, there'll always be winners and losers. It's just up to you to figure out what the renting public thinks is right.

PT_Bear
 
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Sim

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Don't sweat it

Reply: 4
From: Sim' Hampel


The general public buying IPs is cyclical, like most types of investments. Interest rates are very low at the moment, so IPs become much more affordable.

Negative gearing is as popular as ever, and there are a huge number of seminars around right now encouraging people to part with their hard earned cash.

The media is full of property boom hype, and the government grant is causing people to pay much more attention to investing in property (both owner occupied and rental)

I think when the interest rate cycle starts climbing again, and the booms start to turn, property will once again become the investment NOT to have.

Many people will realise that they cannot actually afford their loss making property, and those who locked into 5 year fixed rates will be forced to sell up after that 5 year period is over and they discover that they have to accept a much higher rate.

Right now, you will not have too many problems finding people who are "experts" in property investment, and everyone has some advice about what you should be investing in and where.

As mentioned by others, there will be those vehemently opposed to property due to themselves, or someone they know being badly burned (most likely by their own mistakes or foolishness). But while the booms last, there will be many, many more preaching the virtues of property as an investment vehicle.

When the booms ease or reverse, and when interest rates start hiking up, there will be more and more people talking of doom and gloom about property as an investment, and stongly advising you against it.

Of course, those who have been in property for long enough (not me yet), have seen these cycles come and go, and apparently it never changes. The smart ones (they keep telling us how it works right here in the forum), learned a long time ago to use this cyclical public sentiment as a means of working the system and making the most of other people's whimsy and ignorance.

The one thing our more experienced colleagues here keep telling us is that provided you are prepared for the changes and understand what is happening, there is good money to be made during all periods of the economic cycle. You just need to vary your strategy to suit the times.

 
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Don't sweat it

Reply: 4.1
From: Rob Millington


Thanks for the replies, some wise words there.

The 20% figure was in the paper and a national weekend morning business show. As I have only recently found this excellent forum my first thought was to "ask the panel".

It's obvious to me that confidence comes with experience, therefore first IP coming soon.

Thanks again,
Rob.M
 
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Don't sweat it

Reply: 5
From: Nigel W


Ah the "reticular activation system"!!

Never was a truer word spoken.

Until I got into property investing I would drive down a street and not even notice the for sale/for rent signs. Now I can't stop seeing them - they're everywhere!

It is a fundamental truth that you often don't see things (including deals) until you are ready to see it

(i think the eastern version of this is "the teacher arrives when the student is ready")

Which I guess is why we have to get out there and go! look for those deals, read those books, go to those (reasonably priced and reputable) seminars and...to borrow some words from Nike - Just do it!

My ramblings for the day
Nigel.
 
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