Missed Opportunity?

[brains]

Great thread.. My story is in 1988 (i was 27) i put my hand up at an auction and bought a terrace in Leichhardt (5km from Sydney CBD) for $170 000.

I Rented it for $250/week for 2 years and then moved in with a friend for 2 years. Sold in 1992 for $187 000.

Today Leichhardt has become sooo trendy (Its the italian centre of Sydney)The property would be worth conservatively say $500 000.

I sold it in 1992 to buy a house on a big block in the burbs of Sydney, i ended uo doing a dual occupancy/subdivision on the block and making $80 000 nett on the new house in 1996 and $40 000 on the existing house (PPOR)on half a block in 1997.

And still the IP light didnt come on......six months ago i started reading some investment books and now own 5 properties in QLD.

I just wish i realised all those years ago.

***Dont forget that the increases in value of properties mentioned on this thread have to be balanced against inflation over all those yeras, theres been a lot of inflation in 50 years***

 

[ruk]

everything sounds cheap back then, compared to now
but when you consider that my annual income in 1973 was around $ 3,000.

 

[Macca]

thats true ruk, another thing that we have to consider is the after tax pay we get in our hand.
In the early sixties my father was a "tradesman house painter", working 2 hrs o/t a week he earned 23 pounds gross or $46. His tax was the grand total of $2.30 or 5%, he had a wife and 2 kids as dependants.

What would the % be in tax deduction for that tradesman today?

Society has changed, today all governments need to tax much more heavily than then because the general public expect the government to be responsible for everything.
We expect much better social benefits than were available in 1963, somebody has to pay for it all, guess that's us!!!

Macca

 

[Donna L]

What do I learn...........

It's 1985 and I inherit some shares from my father. Stockmarket rolling - making $1,000 a week. I start buying $300 pairs of shoes (which was expensive for 1987) After a lovely holiday decide to invest in a block of land at our favourite spot on South Coast. Find block of land for $26,500, only half the value of the shares - we can pay cash. Decide to sell shares. It was a very busy Friday at work and din't get around to ringing stockbroker. Will ring Monday - that's BLACK MONDAY - 1987 stockmarket crash. Lose $30-40K in a few days.

1988 - regroup. OK we still want the land - new block, same place, almost same price - you couldn't sell land at that time, tripping over FOR SALE signs with all the executives selling up after the Crash. Buy land with a loan and dutifully pay it off P & I until 1994. Few thousand left on loan. Land now valued at $60k. Need to build extension to home - do we borrow against land - no. DOH! we sell it. Property values in that area proceed to stagnate for over 7 years. 2 years ago see another block down there (dying to get back in) for $80k, even better than the one we had before. Put a deposit on but back out thinking we will make more money in Sydney. Less than six months later, block worth $150k and rising fast. Deep depression Could have had retirement place ready and waiting but greed got to us!

Lesson 1 - Never sell the land. Borrow as many golden eggs as you want but never sell the goose.

Of course, not as depressing as a friend's mother who was offered some very cheap land in the US about 50 years ago. "Must have thought I was an idiot!" she said. "It was a dust bowl." Fifteen years later - Las Vegas!!

 

[Ross Sneddon]

Hi Jamie

You started an excellent post. Look at the response. Brilliant.

I dips me lid to ya. Well done

Ross

 

[AlexE]

Well here is my little story...

Back in 1971 my salary was $6000 and I went and bought a brad new V8 XB Falcon Hard top for $4.750. Those days the single front houses in Richmond were $4.000 - $6.000.

So I could've been a millionere many years ago...

But I've learned my lesson.

A.E

 

[Crystal]

An old, wealthy and well educated English friend of my mother's uses the word....
"deflation"
to keep my enthusiasm under control.
He uses Japan as an example that deflation can and is happening...
The price of Japanese property has been going down for the last ten years!??
Surely, there is land scarcity there!!!
Can anyone explain this phenomenom?
Cheers,
Crystal

 

[Macca]

Hi Crystal,

Read an article on this somewhere.

There is an extreme shortage of land in Japan, but there is an abundance of multi level apartment blocks.

When the Nikkei index was flying high, home units in Japan were selling for $2m, you could sign up for 200 year loans and you passed on the mortage in your will.

The amount of repayments were such that whole families would crowd into (by our standards) small units and all would contribute to the repayments.

As the Nikkei collapsed, demand for investment apartments dried up, the "yuppies" had to sell off their units and this triggered the collapse.

A classic case of over supply!

Are we approaching this in Sydney and Melbourne?

Macca

 

[Crystal]

Hi Macca,
Thanks for your reply.
It would seem our developers are working hard to oversupply our cities with units.
Surely though, such deflation could not happen here, to such an extent. I certainly hope not!!!
Cheers,
Crystal

 

[paulzag]

deflation

Some members of the US Federal Reserve board are publicly expressing their strategies for dealing with deflation in the US (should it eventuate) . That in itself is an anti-deflation strategy.

Long term declines in real values of assets have happened in the the past. These tend to be generational.

I don't think it will happen in Oz, but I've been wrong before. My current thinking is if it happens we are in so much trouble that my portfolio will be the least of my concerns.

Paul Zag
Dreamspinner

 

[mannypalma]

Hi Jamie,

As they say, swings and roundabouts...my parents bought their first house in Oz in Bondi Jct for 5000 pounds in 1965 and sold it for $39,000 in 1975. Seemed OK at the time. Same house now probably worth $750,000. When they sold, they moved to Maroubra, two blocks from the beach and bought for $53,000. Sold it for half a million when they retired several years ago. Same house probably worth $900,000 now. With the money they bought in the South Coast of NSW, got an investment property up the street, both properties paid for in cash. Now live a very comfortable life with income stream from rent, money still left over in the bank, brand new car, boat, all the gadgets they could ever wish for and part pension as they meet the assets test. Ok, so the properties are worth a lot more now than what they sold them for, but in the meantime they have secured their retirement and have a lifestyle they like....isn't that the whole point at the end of the day?