It's all you Investors to Blame!

[Deltaberry]

Investors, yes. Good investors, no!

Yes inflation carries them.

 

[tom32]

Yes the number of investors that have more than 3 properties really drops off. (Less than 1% of total investors are the figures I've seen). IMHO these are the serious real investors who are investing towards the goal of total financial independence.

In most states the taxation policy regime makes it difficult to own over 2 properties.

Yes you can buy in different states etc but that an individual with one IP gets around a 1.5% nett benifit on yield (assuming 2.4% land tax rate approx 60% land component) compared to one that owns several in one state so I have little doubt this situation leads us to our fractured ownership position in Australia compared to other countries where often land / homes are concentrated in fewer hands.

In commercial property land tax appears to be factored into yields, i.e. they yield about 2% more than resi as most in commercial property including corporations / property funds are over the threshold and so appear to factor this into yields.

Guess just defending why many stop at 2 IPs and don't go on to have more even if they have been successfull with these first two. It is not necessarily a lack of ambition.

 

[Aaron_C]

In most states the taxation policy regime makes it difficult to own over 2 properties.

Yes you can buy in different states etc but that an individual with one IP gets around a 1.5% nett benifit on yield (assuming 2.4% land tax rate approx 60% land component) compared to one that owns several in one state so I have little doubt this situation leads us to our fractured ownership position in Australia compared to other countries where often land / homes are concentrated in fewer hands.

In commercial property land tax appears to be factored into yields, i.e. they yield about 2% more than resi as most in commercial property including corporations / property funds are over the threshold and so appear to factor this into yields.

Guess just defending why many stop at 2 IPs and don't go on to have more even if they have been successfull with these first two. It is not necessarily a lack of ambition.

Land Tax never stopped me investing in more than 2 properties.....if you just use a different entity then your land tax isn't a problem

 

[Rixter]

Guess just defending why many stop at 2 IPs and don't go on to have more even if they have been successfull with these first two. It is not necessarily a lack of ambition.

In the beginning it may not be a lack of ambition. However as they progress they will begin to come up against more and more issues (walls) that may prevent or inhibit from progressing further. This is the vital time that if they are not truly committed to their 'reason' for investing in the first instance then they tend to flounder and not continue on their investment journey. This is commonly referred to as, hitting the wall.

Over the years I've been actively investing I've come up against lots of walls that may have prevented myself and others from continuing on.

Some of the common ones (in no particular order) being ....

No defined investment plan.
Lack of knowledge to overcome perceived issues.
Not being able to access further finance
Selling up Realising profits.
Sick of day to day Property management issues

The list is endless...feel free to add others.

Basically all these 'perceived walls' comes down to ones mindset or head space. There is a classic quote I read a while ago that IMHO sums up why most investors do not continue on. It went something like this.... "To over come a problem requires a higher level of thinking than the thinking that created the problem in the instance".

Its a sad to say unfortunately most investors start out fine with the one or two properties however when the inevitable walls do start showing up they tend to splat instead of finding a way around.

I hope this helps.

Maybe this should be the topic for another thread, starting here...

 

[random]

Yeah but there's only been the investor flood over this last 10-11 yrs with the boom , home reno shows , guru's everywhere, make millions, make millions.

I reckon 90 % of those guys will be running scared with tails between legs over this next few years and balance will return to normal.
It'll be back to actually needing some skill to make money in our property over this next decade and once again they'll also be very very easily brought undone .

Once properties flattened out and stagnated to where ever it's going to end up , buy up, sit tight and just wait for the next round of sheep I reckon.

Cheers

 

[BayView]

Hi Aaron, so being in the finance game (I assumed from your signature), is this your experience with the investors/speculators that you broker for? That they are willing to pay more than the market to get what they want? Do they have the attitude that they want properties to go up in value rapidly? Are they emotional buyers? Does the sharemarket affect their investing or buying behaviour?

What about the OP? Are investors to blame for the rapid rise of properties?

I meant no sarcasm with my questions. I really would like to know your observation which I hope you would share since you're in it.

My 2c worth.

I see it this way with the type of investors you describe here;

Some are very keen to buy (usually in a boom) and are therefore competing with the O/O's who are buying during this phase of the market.

The investor in this case doesn't want to pay much, but feels as though if they don't buy now, they'll miss out on the boom wave.

They therefore have no choice but to bid/offer along with the (more) emotional O/O buyer at that time, and do.

These are the emotional investors who are in the minority of us, and investors make up a very small % of overall buyers anyway.