Landlords shouldn't bet house on capital gains

[jahn]

LB
I would like to make one thing clear.
I have no intention of getting into a debate of right or wrong, or putting your views down, but please don't use throwaway lines to avoid a point.

"As someone posted previously
In the last few years you could have thrown a dart at a map blindfolded to find a place to buy and made a profit "

BTW - I believe the original exression started with - "any mug could have thrown a dart etc."
And the post that you misdirected the quote for, was re the last few months, not the last few years. Different dartboard altogether. The dartbard that has a lot of people saying 'don't go in the water'
What about your friends. Didn't they buy in the last few years. ?
You sold, made a profit, out of the market, Well done.
I don't look at anything through rosie coloured glasses, but realism and a positive approach to everything is highly recommended
jahn

 

[abcdiamond]

Acey
From the way I read it, LB says he rents from his trust, meaning that he owns property in Brisbane via his trust. I may be wrong here, especially after a bottle of red wine tonight
It just seems that if he does own property after all, and after all his comments, its good that he has confidence to retain a property in Brisbane.

I'll try to read the replies tomorrow when the screen looks a bit clearer... Maybe I did read it wrong..

PS, my own property has gone up by at least 50k since August too.

 

[Jimmyjamjars]

Didn't want to add to this thead because, quite frankly, I feel that it's been flogged to death pages ago but I do have to agree that, yes ABCDiamond, red wine WILL do that to you.
JIM

 

[brains]

LB,

Out of curiosity would you like to clarify your situation re renting, trust...etc....when you say you dont own property that could mean your trust owns 150 houses. Or does your trust rent from someone else? If so, what would be the benefit of this structure?

Originally posted by abcdiamond
Acey
From the way I read it, LB says he rents from his trust, meaning that he owns property in Brisbane via his trust. I may be wrong here, especially after a bottle of red wine tonight
It just seems that if he does own property after all, and after all his comments, its good that he has confidence to retain a property in Brisbane.

I'll try to read the replies tomorrow when the screen looks a bit clearer... Maybe I did read it wrong..

PS, my own property has gone up by at least 50k since August too.

 

[suggo]

Originally posted by L Bernham
As someone posted previously
In the last few years you could have thrown a dart at a map blindfolded to find a place to buy and made a profit .

Makes me wonder why LB only ever had two properties if it was that easy to make profits!!?? Or is it just that hindsight is a wonderful thing!??

Jahn, we have just purchased a house in Warwick (128km sw of Brisbane) for $88000 and it is renting out for $150 per week. While we haven't had a valuer since the bank did it but the real estate agent reckons we could probably sell without doing a thing to it for $100-$110k. Pretty happy about that!!
There are a few things we could do to it too to improve the value.

 

[see_change]

August, Cant remember if that's before or after the latest big jump in logan .

If it was before the last jump in Logan , a bit over 300k.

If it was after , probably only about 100K.

Currently looking at a private sale in an area that has just started to take off. ( not Rocky ....) . They want a delayed six month settlement. Probably about 20 K under current market....

See Change

 

[L Bernham]

its funny reading all these posts from people who have "made 50K or 100k" in the last few months.

Paper profits are a wonderful thing.
99% of investors in the tech boom had made "thousands" some even hundreds of thousands.
Where are they now.
Thats right, they forgot that you havent made ANY money until you;ve sold.

Hindsight will be a wonderful thing. But those lucky enough to be on this forum could gain some valuable foresight and hopefully wont need the benefit of hindsight.

 

[np2003]

Well the problem at the moment is that once these newbie investors make $50-100K profit selling a highly rised CG property, they think they've hit gold and then take out 3-4 more properties hoping it will do the same plus in the same time tell numerous family/friends who then go and do the same thing. See if 1/3 Bob's repeat this scene, something's going to give way.

Some of the properties near my house just 2 and a half years ago took months and months to sell. Now they get sold in a matter of days. There is absolutely no way in hell Australia's population doubled, so who's buying them? Definately not home owners, but investors who have attended too many seminars. Those who will be really screwed are the ones who got to greedy snapping up lots of houses with no way to service the loans (no contingency plans). When property prices slow down and stagnate, it will be these types of investors who will be forced to sell. There aint no shortage of them either.

Originally posted by L Bernham
its funny reading all these posts from people who have "made 50K or 100k" in the last few months.

Paper profits are a wonderful thing.
99% of investors in the tech boom had made "thousands" some even hundreds of thousands.
Where are they now.
Thats right, they forgot that you havent made ANY money until you;ve sold.

Hindsight will be a wonderful thing. But those lucky enough to be on this forum could gain some valuable foresight and hopefully wont need the benefit of hindsight.

 

[see_change]

Personally I think it's hilarious.( though bloody annoying that I didn't start doing it sooner )

I've made more money in the last two years by sitting down watching my property portfolio, than I have in the last ten years of busting my guts working as a GP.

See Change

Oh , By the way LB . How many darts did you throw .....

As you said it's easy to know retrospectively

 

[Aceyducey]

Originally posted by L Bernham
Paper profits are a wonderful thing.
99% of investors in the tech boom had made "thousands" some even hundreds of thousands.
Where are they now.
Thats right, they forgot that you havent made ANY money until you;ve sold.

L Bernham,

You've again forgotten one of the nice things about property investing. You don't need to sell the property to realise your equity. and it can be used while still in the property to go and buy more assets to get an even better return.

I guess it shows that even in a boom some people are not able to make much money.

But I guess your dart throwing abilities must have been pretty lacking

Cheers,

Aceyducey

 

[Aceyducey]

Originally posted by np2003
Definately not home owners, but investors who have attended too many seminars. Those who will be really screwed are the ones who got to greedy snapping up lots of houses with no way to service the loans (no contingency plans). When property prices slow down and stagnate, it will be these types of investors who will be forced to sell. There aint no shortage of them either.

You've got to love them - these people help serious investors build their wealth. Prices go down, guess who snaps up the best of the properties.

And there's no advantage taking here - those people have had plenty of warnings to buy intelligently & not overextend themselves.They simply did not understand the investments they were making.

It's been said that if all the money in Australia was divided equally amongst all the people in the country,within a few years the top 20% would be back to holding 80% of the wealth. I believe this is very true - and people only have themselves to blame for it.

Cheers,

Aceyducey

 

[brains]

Acey, What - in your opinion - is the best way to turn equity into cash (or an income stream?

Originally posted by Aceyducey
L Bernham,

You've again forgotten one of the nice things about property investing. You don't need to sell the property to realise your equity. and it can be used while still in the property to go and buy more assets to get an even better return.

I guess it shows that even in a boom some people are not able to make much money.

But I guess your dart throwing abilities must have been pretty lacking

Cheers,

Aceyducey

 

[Aceyducey]

Brains,

LOCs. Then use the money to invest in whatever is providing the best return at the time.

If you cannot get a return better than the interest rate on the LOC I'd be surprised. There's almost always an asset class you can make money on (and when there isn't, don't touch the LOC facility so don't pay interest).

Cheers,

Aceyducey

 

[brains]

Acey,

The problem is that the difference between the rate you are paying on the LOC and the rate you are earning with the money from the LOC is usually eaten up with fees and charges from the LOC and wherever you are earning the money from.

So its not really an effective way to use equity, anything that would return higher rates usually have too much risk for most people.

 

[see_change]

LB

I'm amused at how you ignore questions that you don't want to answer.

You say that

"In the last few years you could have thrown a dart at a map blindfolded to find a place to buy and made a profit "

That may well be the case, but the reality is that most people didn't throw the Darts.

Property investing may well be a national obsession now , but when people like myself and Acey were buying a couple of years ago it was not.

I almost lost count of the number of people who warned me against the perils of investing in Brisbane, and I've almost lost count of the number of people who I know who have recently bought IP's or are intending to buy them.

Sure there are some people who are buying now who will end up loosing money.

My job is to make sure that I'm not one of them.

The Darts I have thrown have increased my net wealth form about 300 K three years ago to close to 2 mill now. Close to one mill of that has occured in the last year. Even without further growth we will be close to 3 mill in another years time. If there is further growth in Brisbane ( not CBD units ..) and rockhampton ... who knows..

So how many darts did you throw ?

Or does L Bernham really mean " I'll Burn Em "

See Change

 

[L Bernham]

If you mean this question
"So how many darts did you throw ?"
Of course I didnt answer.
I thought you were asking a rhetorical question .
Not only that but I never actually said I threw any darts myself.
I also was quoting someone else who used the example of throwing darts to mean pick a random house in a random suburb.

I try to answer relevant q's when I can.

Congrats with your success I hope it continues.

I'm also doing quite well thanks. I closed my short WBC position for an all up around 700% gain on a mere $10000 investment. I dont mind that for a weeks effort. Admittedly opportunities like that come around rarely and you need to take the odd $500-$1000 loss, but Ican live with that.

LB

 

[Aceyducey]

Originally posted by brains
Acey,

The problem is that the difference between the rate you are paying on the LOC and the rate you are earning with the money from the LOC is usually eaten up with fees and charges from the LOC and wherever you are earning the money from.

So its not really an effective way to use equity, anything that would return higher rates usually have too much risk for most people.

Brains,

I'm surprised at your post. I thought you were more astute than that.

It's actually pretty easy to find better returns than the housing interest rate level & the small fees charged for most LOCs.

If it wasn't very few of us would ever buy property.

Cheers,

Aceyducey

 

[suggo]

Astute!!??? You want astute from a man who posts "NANANANA"!!!???

See-change, couldn't agree with you more. My wife and I had some many people at work and even close family friends saying things like "Don't buy property, share funds return better!" and the usual bad tennents, raterise troubles etc etc etc etc. And this was just three years ago!
We purchased our first house with $6000 (now own six) and today even if the market were to drop 50% as someone on this forum predicted, we'd still be far and away better off than if we had gone into shares!!! EVEN WITH A 50% DROP!!!
I would like to give credit to Jan Somers' book for being there giving us the resolve to keep moving forward despite the negitive opinions surrounding us! Chapter 10 'Time - Not Timing' was a god send, the opening paragraphs is what we continue to try to remember.

LB
Have you read Jans book?

 

[brains]

Acey, I consider myself astute but others might not.

My statement was made in the light of using the LOC funds in a conservative/low risk investment strategy, which is what most people would demand.

Sure i can get higher returns than the 5% cash rate around at the moment but would not be willing to risk LOC funds on spec. or higher risk investments just as im anti margin loans for share buying, i couldnt stand a margin call. I would also hate to be making interest payments on a loan for an investment that has gone bad, could not think of a worse scenario for an investor.

And im not a real fan of the cashbond concept (as BillL has previously noted) they wouldnt work real well in a low growth environment.

Basically what im trying to say that i dont mind risky investments but not with borrowed money - the only investment i borrow money for is property.

I didnt even borrow money to expand my business, i took the slow and steady path of organic - self funded expansion.

And Suggo - lighten up mate

Originally posted by Aceyducey
Brains,

I'm surprised at your post. I thought you were more astute than that.

It's actually pretty easy to find better returns than the housing interest rate level & the small fees charged for most LOCs.

If it wasn't very few of us would ever buy property.

Cheers,

Aceyducey

 

[suggo]

Originally posted by brains

And Suggo - lighten up mate

That's why the razz was there brains, open your eyes mate