Kennethkohsg said:
Dear Kenneth.
You just sold in Perth didn't you? I would say that makes you a bit of a contrarian as well. Selling at the height of the market boom [maybe]. Well done mate.
See ya's.
Is a recession looming?
- Thread starter pricey
- Start date
Dear Kenneth.
You just sold in Perth didn't you? I would say that makes you a bit of a contrarian as well. Selling at the height of the market boom [maybe]. Well done mate.
See ya's.
Dear TopCropper,
1. Thank you for your kind words.
2. Yes, I did.
3. I have safely exited out from the market for prudency related reasons though I know that the housing growth will still continue for a while albeit at a slower rate before it flatten out/decline eventually.
4. Being "cash-rich", I am now ready to be on the look out for other investing opportunities. My SANF has also improved significantly while I continue to monitor the market and review my own investing strategies.
5. It will require special courage and skills, to be able to continue to selectively buy into the housing market at this stage of the property market and then quickly exit out from it profitably, as some of the traders and market speculators are still doing now.
6. I guess that I have lower risk appetite than an average investors in this forum and my profits made are "ordinary" rather than "extraordinary" which many of the fellow Perithes are making now.
7. For your kind update, please.
8. Thank you.
Cheers,
Kenneth KOH
1. Thank you for your kind words.
2. Yes, I did.
3. I have safely exited out from the market for prudency related reasons though I know that the housing growth will still continue for a while albeit at a slower rate before it flatten out/decline eventually.
4. Being "cash-rich", I am now ready to be on the look out for other investing opportunities. My SANF has also improved significantly while I continue to monitor the market and review my own investing strategies.
5. It will require special courage and skills, to be able to continue to selectively buy into the housing market at this stage of the property market and then quickly exit out from it profitably, as some of the traders and market speculators are still doing now.
6. I guess that I have lower risk appetite than an average investors in this forum and my profits made are "ordinary" rather than "extraordinary" which many of the fellow Perithes are making now.
7. For your kind update, please.
8. Thank you.
Cheers,
Kenneth KOH
Kenneth,
I don't reckon I'm being truly different. Many people I know are busy investing when the market is going down. For every sale there's both a seller AND a buyer.
However I do pay a lot less attention to the media than the people I know who get worried about reports of imminent or looming economic events.
If you're not able to look at the market without emotional influences from the media I can only suggest that you:
a) Change your media consumption habits.
b) Change your investment strategy to one where emotional responses are a positive stimulus.
And frankly I've never seen a time when the entire market (property, stock or otherwise) is going down. Look for the opportunities that are going in the other direction - or are going down for irrational reasons - or have a huge recovery potential.
And keep Kipling in mind.
Cheers,
Aceyducey
I don't reckon I'm being truly different. Many people I know are busy investing when the market is going down. For every sale there's both a seller AND a buyer.
However I do pay a lot less attention to the media than the people I know who get worried about reports of imminent or looming economic events.
If you're not able to look at the market without emotional influences from the media I can only suggest that you:
a) Change your media consumption habits.
b) Change your investment strategy to one where emotional responses are a positive stimulus.
And frankly I've never seen a time when the entire market (property, stock or otherwise) is going down. Look for the opportunities that are going in the other direction - or are going down for irrational reasons - or have a huge recovery potential.
And keep Kipling in mind.
Cheers,
Aceyducey
Kennethkohsg said:
You got me confused here...
Do you mean October 1997 and October 1998 in the above statement.
By the way, this is a great post on the psychology on investing. I'm still learning to invest despite my emotions as well.
Cheers,
the thing is, in a recession, as property is going down, you cant refinance to get purchasing power.
the limiting factor is, for most people, a LVR of 80% (as we want to buy as many as we can / borrow as much as we can)
does that mean, before the recession, you keep a lower LVR for reserves?
the limiting factor is, for most people, a LVR of 80% (as we want to buy as many as we can / borrow as much as we can)
does that mean, before the recession, you keep a lower LVR for reserves?
lowb said:
You can't refinance, but any new properties you buy will be cheaper, too. The purchasing power of your existing funds increase.
Optimally, you should buy when the market is bad. When the market is booming (as in Perth), you should be pickier, and lock in some LOCs (in essence keeping your LVR low). When the market is low you can be more indiscriminate.
In a recession, savings become much more important.
Alex
**********************************House_Keeper said:
Dear House-keeper,
1. You are right. I have mis-typed the years concerned. My apologies, please.
2. Thank you for pointing out my mistakes. Much Appreciated,please.
cheers,
Kenneth KOH
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*********************************Aceyducey said:
Dear Aceyducey,
1. Care to further illustrate and elaborate on this? Perhaps, I can learn more from you to further improve on my own investing stratgey + mindset in a more pragrmatic manner.
2. Thank you.
Cheers,
Kenneth KOH
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++++++++++++++++++++++++++++++++Aceyducey said:
Dear Aceyducey,
1. While this may be the case for you in Australia, my own experience in Singapore has been a completely different one:- one of following the market's basic fundamental trend.
2. My own investing experience in Singapore has been such that it seldom just "rains" alone but it often/always "pours" as per our own experience during the local tropical monsoon season!
3. This is also what I have observed of the HK market during the last Asian Financial Crisis in 1997 as well as the Japanese market between 1990s-2000s period, as well.
4. However, when the big "storm" has subsided, we will again see the "sunshine" and that is the time/why we will re-enter the market again.
5. Consequently, I am always on the lookout for a basic big overall change in market sentiments as well as its underlying fundamental market trend when I invest.
6. Thus, I am personally quite "fascinated" by the Australian market, whereby the major bulk of the investors' monies keep running internally to/fro between its stock market and its own internal property market, without having the need to look to the other markets outside Australia.
7. I further wonder what exactly happened to these investors' monies duirng the last 1991 economic recession in Australia.
8. KPH and myself were just talking about this topic this afternoon at Rockingham. We were also comparing notes and exchanging our own views on the Perth's peaking property market.
9. For your kind update, please.
10. Thank you.
regards,
Kenneth KOH
Dear Bradje and Aceyducey,
1. Is it a case of the size + nature of the market in the affected countries?
2. Do your own experience continues to apply during the last economic recession in Australia in 1991?
3. Looking forward to learn from you further, please.
4. Thank you.
Cheers,
Kenneth KOH
1. Is it a case of the size + nature of the market in the affected countries?
2. Do your own experience continues to apply during the last economic recession in Australia in 1991?
3. Looking forward to learn from you further, please.
4. Thank you.
Cheers,
Kenneth KOH
Kennethkohsg said:
Kenneth, may I ask why you sold your Perth house rather then leverage off the equity?
thefirstbruce said:
Bruce
Maybe his thinking is along the lines I expressed in this post .
http://www.somersoft.com/forums/showpost.php?p=228464&postcount=38
See Change
'*********************************thefirstbruce said:
Dear thefirstbruce,
1. For safety and prudency related reasons as well as to meet the DIMIA's pre-requisites requirement of achieving a minimum of A$250,000 annual turnover for my Australian company in order to qualify ourselves for the Australian Permenant Residency application by the end of this year/early 2007.
2. We have further seen how a local Perth couple with a A$32 million property portfolio got wiped out during this boom, probably due to "over-leveraging" related problems.
3. Presently, we are also "anticipating" some sort of major global scale financial crisis to occur in the near future some time between 2007-2012 period.
4. Previously, we have leveraged off the equity from 2 properties in 2003 to 4 properties in 2005 with a fifth one under a JV arrangement. We have further acquired/settled on the 6th property in early 2006.
5. Believing that the the Perth property market has peaked in 2006, we've since then sold off all our 5 newly completed properties, achieving high resale prices well above our own asking prices. Legal completion for the 5th house sale will take place on 6th Sep 2006.
6. We are now left with one lakefront vacant land lot at Lot 2012, 26 Eldon Street, Shoalwaters , which we are presently planning to build a double-storey townhouse there.
7. Being cashed-up now, we can then safely afford to start looking at other investing opportunities in the other property markets outside Perth, like the Sydney and Melbourne markets too as well as to better cope with a major financial crisis, should one truly occur in the immediate near future.
8. Why do you ask?...If I may know your reasons for asking, please?
9. Thank you.
Cheers,
Kenneth KOH
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Your analysis is well overdue on the forum SC. I had got the impression that the common wisdom on the forum was to hold and borrow against equity, a la Jan Somer's ideas... Had meant to model the pros and cons for some time.
Kenneth, I was asking because it seems to have been the convention on the forum not to sell but leverage off equity. And indeed that has been Jan Somers advice.
However, I can accept that if you think there is going to be a global melt down, Sydney and Melbourne might be marginally safer to be in than Perth.
However, I wonder whether it is a consideration that you will move from +CF status to -CF in the Sydney market.
Kenneth, I was asking because it seems to have been the convention on the forum not to sell but leverage off equity. And indeed that has been Jan Somers advice.
However, I can accept that if you think there is going to be a global melt down, Sydney and Melbourne might be marginally safer to be in than Perth.
However, I wonder whether it is a consideration that you will move from +CF status to -CF in the Sydney market.
************************thefirstbruce said:
Dear thefirstbruce,
1. I used to believe and follow Jan Somer's ( as well as John FritzGerald's) advice to a certain extent, using TIME and compounding capitial growth to create wealth through property investing.
2. However, of late I sort of came to realise for myself that this can be a highly risky practice in building my wealth.
3. Though theoretically sound, the key challenge is how long and how safe and prudently can we continue to safely hold onto our ever expanding property portfolio over a long period of time.
4. Given my various experiences, I find that as our property portfolio expands, we need a increasing bigger cash buffer/LOC as a contingency fund and the portfolio increasingly more difficult to expand further.
5. Consequently, I now decide to create wealth through using more velocity of monies circulation for re-investment purposes and looking at how fast/big the real monies in my own bank accounts can generate/expand each year, instead of focusssing on the size of the property portfolio and our projected nett worth on paper at the end of each financial year.
5. My own investing experiences has also confirmed for me that if I were to buy vacant land and build a house on it for sale, my cash-to-cash ROI can easily be as high as 150%-200% each year upon the project completion each time compared to the 50% cash-to-cash ROI returns which I have achieved each year with holding onto my own property portfolio within the same 12 months period, not withstanding the compounding effect of accumulated capital growth.
6. Morever, I also realise that a lot of my house equity monies is, in fact, used to pay for the interest costs, rather than used for re-investment purposes.
7. I believe SC has done an analysis comparing these 2 methods of wealth creation over time.
8. Consequently, wealth creation (through investments) and wealth retention (bank account monies) are equally important, as I have seen a number of investors losing away their entire property portfolio over time before they could retire on it.
9. Morever, given the baby-boomer generation demographic anomalcy, we can expect a time in future where there will be a sudden worldwide "over-supply" of housing around the world as the baby-boomer generation start to collectively retire and die off as from 2016 onwards, resulting in the anticipated worldwide housing slump.
10. Consequently, for me to be found holding a big property portfolio then, would be a highly risky proposal against such future developmental trend. It will also make me less flexible and nimble to cope with the major financial crisis that may occur from time to time between 2007 and then.
11. For your kind update, please.
12. Thank you.
Cheers,
Kenneth KOH
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I agree with most of what you say Kenneth. In particular, it is a common strategy in uncertain economic times, to decrease risk exposure by flicking projects quicker.....just a form of passing on risk...pass the hot potato so to speak. Near money is dear money....
Though this is not a passive affair, like the Somers' buy and hold.
I'd be interested to hear more on how you negotiate and finance building the houses you are attaining 150%pa returns on.... I have considered doing something similar myself, as I understand the market for completed houses (not spec) is undersupplied. Many people who move from interstate will pay a premium for a quality completed product, in order to save themselves the time and hassle of building themselves...especially when they don't know local builders and they in short supply.
Though this is not a passive affair, like the Somers' buy and hold.
I'd be interested to hear more on how you negotiate and finance building the houses you are attaining 150%pa returns on.... I have considered doing something similar myself, as I understand the market for completed houses (not spec) is undersupplied. Many people who move from interstate will pay a premium for a quality completed product, in order to save themselves the time and hassle of building themselves...especially when they don't know local builders and they in short supply.
Dear thefirstbruce,
1. Based on "Buy-and-Build" land and house package investing strategy and a 80% borrowing, one can easily achieve the more than 150% cash-to-cash ROI. There is really nothing spectcular except we need to be more active and adventurous and be willing to bear the house construction building risks as compared to the passive way of "Buy-and-Hold" investing strategy.
2. I have directly dealt with 2 different builders in Perth on a turnkey basis when I built my first 2 houses at the Anchorage Estate in Rockingham. Despite attending some part- time some of building trades courses, however, I still found myself to be lacking in experience and the technical competency of the building trade to effectively and actively supervise the whole house construction process and to deal with the appointed builder's supervisor/subscontractors on the ground, on my own.
3. On my neighbour's recommendation subsequently, I now engage an external consultant to value-add on my investing process by getting the consultant to design the house I want to build, to source and negotiate the building contract with the builders and to project-manage the entire house construction on my behalf, in return for a professional fee. I have found this process to be more efficient and cost-effective for my investments as the value-added services provided by the consultant, has provided me with a much better returns on my houses and time-saving, which greatly far out-weighs my additional costs incurred.
4. For your kind update, please.
5. Thank you.
regards,
Kenneth KOH
1. Based on "Buy-and-Build" land and house package investing strategy and a 80% borrowing, one can easily achieve the more than 150% cash-to-cash ROI. There is really nothing spectcular except we need to be more active and adventurous and be willing to bear the house construction building risks as compared to the passive way of "Buy-and-Hold" investing strategy.
2. I have directly dealt with 2 different builders in Perth on a turnkey basis when I built my first 2 houses at the Anchorage Estate in Rockingham. Despite attending some part- time some of building trades courses, however, I still found myself to be lacking in experience and the technical competency of the building trade to effectively and actively supervise the whole house construction process and to deal with the appointed builder's supervisor/subscontractors on the ground, on my own.
3. On my neighbour's recommendation subsequently, I now engage an external consultant to value-add on my investing process by getting the consultant to design the house I want to build, to source and negotiate the building contract with the builders and to project-manage the entire house construction on my behalf, in return for a professional fee. I have found this process to be more efficient and cost-effective for my investments as the value-added services provided by the consultant, has provided me with a much better returns on my houses and time-saving, which greatly far out-weighs my additional costs incurred.
4. For your kind update, please.
5. Thank you.
regards,
Kenneth KOH
