New Year - At a Crossroad.....

First of all Happy New Year!

As I am in holidays at the moment ..... I have a lot of time to reflect on my property strategy for the year.

Believe me or not I am at an investment crossroad!:eek: I feel that there are very few bargains around the market. Though the odd one or two I have enquired about have sold on the day. I have been here before.....but this time I have a lot more capital....

I have the itch to invest now but have held myself back as paying overinflated prices could be a mistake. I am looking at some regional areas which offer better prospects.

Would love to hear what others are doing?

PS - The reason I am itching is because my 4-5k per month CF+ income could be better spent than to the taxman.
 
Last edited:
Sash

Happy new year.
I know how you feel mate.
I want to buy some more as well but like you I don't want to pay too much or to be too heavily negatively geared for the sake of tax minimisation.

I'm also thinking of buying in NSW regional areas and interstate so will be interested to hear if anyone has a particular location in mind and the reasons for buying there.
 
You reckon that prices will be coming down to be less inflated?

Rarely happens in my experience and new highs are always higher than previous ones so any overspending is soon negligable.

I remember worrying over paying $52K for my first home. I was hoping to get it for under $50K. I guess my point is that it seems laughable now with hindsight. The important thing was that I got into the market rather than procrastinating in anticipation of the perfect deal....

Anyways - for the crossroad decision I guess the cliched advice is to take the road less travelled :)
 
BV

Had a look interstate also...but these have sold or are overinflated.

Hoping that more supply in NSW regional comes up. There is stuff there but supply is only trickling down. I am looking at Newcastle, Wollongong, Dubbo, Albury-Wodonga, Wagga Wagga, Tamworth, Taree, Coffs Harbour, and Port Stephens.

Sash

Happy new year.
I know how you feel mate.
I want to buy some more as well but like you I don't want to pay too much or to be too heavily negatively geared for the sake of tax minimisation.

I'm also thinking of buying in NSW regional areas and interstate so will be interested to hear if anyone has a particular location in mind and the reasons for buying there.
 
Agree on the road less travelled.....I have done this over the last 3 years of my investment career.

Prices do come down though not substantially....usually a 5-10% correction. I personally believe that rates will rise to about 7.8% for std variable by mid 2010. This will definitely slow the market.

But you are correct over 10 years what you pay does not matter....I tend to buy stuff 10-20% under market. Obviously this gets more difficult now than early last year when there was a lot more desperate sellers. I managed to buy 3 last year.



You reckon that prices will be coming down to be less inflated?

Rarely happens in my experience and new highs are always higher than previous ones so any overspending is soon negligable.

I remember worrying over paying $52K for my first home. I was hoping to get it for under $50K. I guess my point is that it seems laughable now with hindsight. The important thing was that I got into the market rather than procrastinating in anticipation of the perfect deal....

Anyways - for the crossroad decision I guess the cliched advice is to take the road less travelled :)
 
I feel that there are very bargains around the market. ...I have the itch to invest now but have held myself back as paying overinflated prices could be a mistake. .

Sah,

Something doesn't make sense here -how could they be overinflated if they are bargains? :confused:

Cheers,

The Y-man
 
Argh I'm in the same boat. I have a few thousand a month I "could" invest and which too much of it is being spent of crap I don't need :( but at the same time I don't want to take on any more large loans that stress me out. I've thought about putting the whole lot into shares but this won't give me any tax benefits this financial year as I'll be using after-tax dollars.
 
Sash, we are on different boats (I'm on the Negative Gearing Princess), but heading to the same place.
I'm in a similar situation in that I've got my eyes on some properties that I see value in, yet I'm torn between keeping my debt level and -ve gearing where it is, or winding back the throttle and either paying down some debt (did I say that out loud) to reduce my input or buying more property.
I've almost made the decision to keep the day job for another 12 months and use that time to buy a couple more (maybe 3 if I buy one in the SMSF).
Once I go down that path, I'm committed and can't easliy back out, so I find that a little daunting.
The last 12 months just flew by. I'm sure the next year will pass just as quickly.
I've milked a lot of equity over the last 9 months and there is a certain comfort level in seeing it sitting in the offset account. But like I always say, the goodies are outside the comfort zone.
I'm glad you started this thread as I've been pondering my situation for a little while now. Glad I'm not alone.
 
First of all Happy New Year!

As I am in holidays at the moment ..... I have a lot of time to reflect on my property strategy for the year.

Believe me or not I am at an investment crossroad!:eek: I feel that there are very bargains around the market. Though the odd one or two I have enquired about have sold on the day. I have been here before.....but this time I have a lot more capital....

I have the itch to invest now but have held myself back as paying overinflated prices could be a mistake. I am looking at some regional areas which offer better prospects.

Would love to hear what others are doing?

PS - The reason I am itching is because my 4-5k per month CF+ income could be better spent than to the taxman.

Hi Sash
Looks like you have an opportunity to really capitalise on your position. Fantastic

What about looking at properties which can be developed or where you can add value, put plans and permits together etc. The price you can sell on completion is more important than the price you pay for the property.

I changed my strategy about 6 months ago and it has made an incredible difference. I feel I am now running an investment business as I can actually make money from my deals today rather than depending solely on rental income/growth. I am now networking with people who have been doing this for some time.

Not sure whether my comments help, but it would be great to look at other ways to enhance what you are currently doing, rather than getting stuck with the price you have to pay for property etc.

Cheers, MTR
 
Sash, we are on different boats (I'm on the Negative Gearing Princess), but heading to the same place.
I'm in a similar situation in that I've got my eyes on some properties that I see value in, yet I'm torn between keeping my debt level and -ve gearing where it is, or winding back the throttle and either paying down some debt (did I say that out loud) to reduce my input or buying more property.
I've almost made the decision to keep the day job for another 12 months and use that time to buy a couple more (maybe 3 if I buy one in the SMSF).
Once I go down that path, I'm committed and can't easliy back out, so I find that a little daunting.
The last 12 months just flew by. I'm sure the next year will pass just as quickly.
I've milked a lot of equity over the last 9 months and there is a certain comfort level in seeing it sitting in the offset account. But like I always say, the goodies are outside the comfort zone.
I'm glad you started this thread as I've been pondering my situation for a little while now. Glad I'm not alone.

Hi Rob
this is exactly why I had to change my strategy, "-ve gearing is flawed", there I said it now....

Holding, buying and deals for today to improve cashflow, they all work well together, this is what I love doing and can not understand why I did not do this 9 years ago when I started, there you go a I am very slow at picking up things.
Cheers, MTR
 
Don't forget at this time of year there are less listings.

Come late january to feb there will be more listings, although more buyers too.

Sorry I can see house prices falling any time soon. Prices are higher (or overinflated in your words) compared to 07/08 but many parts of sydney are still at or below their peaks in 2003.
 
Yes...I suspect a few of us maybe in the same boat....

I'm glad you started this thread as I've been pondering my situation for a little while now. Glad I'm not alone.


MTR, I did consider that but ruled it out as I have a demanding day job....though at times I spend more time on SS than I should!;)

I certainly see that you have moved up to be a developer. Perhaps...a point to ponder on more....., congratulations.

Hi Sash
Looks like you have an opportunity to really capitalise on your position. Fantastic

What about looking at properties which can be developed or where you can add value, put plans and permits together etc. The price you can sell on completion is more important than the price you pay for the property.

Not sure whether my comments help, but it would be great to look at other ways to enhance what you are currently doing, rather than getting stuck with the price you have to pay for property etc.

Cheers, MTR
 
Hi Sash

The hardest thing is finding a suitable property and regardless whether developing or not you still have to spend time researching.

Look forward to reading about your next property purchase.

Cheers, MTR
 
Is there ever a new year that does'nt present a X-roads?

An underlying theme in my posts is that i'f I'm going to negotiate from a weak position, I'd rather not even start.
Why even bother trying to buy when no one wants to sell?
Why even bother trying to sell when no one wants to buy?

May sound simple, then why so many repos? (and rates lowered so there are less of them).
Why are people buying & holding NG IPs?
Fear & greed of "missing the boat" fuelled by easy money, in a recessionary economy.
Sure every market has it's opportunities, but patience is the virtue of the strong.
I'd only want to start negotiations from a position of power, if the power is with the opposite side, guess where the money's going?...
 
Prices are higher compared to 07/08 but many parts of sydney are still at or below their peaks in 2003.

Which means they are expensive already.

Prices have already moved so yields are now lower and interest rates have increased considerably so property is not as attractive as it used to be 1 year ago.

I guess prices are still ok for some people and particularly for first home buyers but not for me anymore. I want to see value stare me in the face or I won't buy.
 
So Bill what needs to happen to make the properties better value?

Prices to drop or cost of funds to drop? Anything else?
 
Hey I'm in the same boat, i have equity drawn and enough cash ready to splurge but I have noticed a considerable rise in housing prices. I am also torn as to whether to go ahead and become far more -ve geared (I am still slightly positive overall due to the low interest rates) yet I fear some massive jumps in interest rates this year due to inflation (which is accurate as the world is just on a debt binge at the moment, printing and borrowing money to prop up asset values).

The way I see it (and of course its just my thoughts), China's bubble manufacturing and property market could burst this year, which would see a decrease in housing values here in Australia, and also add to that, interest rates will deter more people from buying.

I am thinking I can just stock up on cash and horde it this year and if the correction does come (im thinking its a 50/50 thing) then I will have enough to buy straight away 3 properties.

Of course I could be wrong but this is just my assessment on the world and local economy.
 
I have an almost bi-polar thing going on with my investment rationale atm.

Am thinking about buying again in Sydney-a cheap 2 bedroom unit in Auburn.

Its in the sister block to a block where I bought 2 and half years ago for $172k. My unit rents for $280/week (could probably get $295/week). The unit I'm looking at would rent similarly but is asking $239k.

However, I have found it quite easy to make large returns on the stockmarket in the second half of 2009 by aggresively using margin loans (200% retun on capital invested) and am tempted to skip further property investment for a while.

At the back of my mind I know that the stockmarket can quickly turn flat or nasty and is unlikely to offer these type of returns long term. Have been lulled into a very false sense of security with stocks before.

However IMHO materials (coal/iron ore/copper/lead etc) stocks were too heavily sold off in the GFC and commodity prices continue to reflate back to pre-GFC levels.

Have a look at the 5 year charts for these commodites on Kitcometals

Copper:-

http://www.kitcometals.com/charts/copper_historical_large.html#5years

Lead

http://www.kitcometals.com/charts/lead_historical_large.html#5years

Coal

No chart but have just sailed from Sydney to Newcastle. Counted 33 bulk coal ships off the Central and Newcastle coast waiting to enter the harbour to be loaded (we sailed between some of them).
 
Last edited:
So Bill what needs to happen to make the properties better value? Prices to drop or cost of funds to drop? Anything else?

I was actually refering to prices in Sydney, Melbourne, Brisbane, Adelaide etc
Property prices either need to fall, rents to increase or interest rates to come down.

I think we have a bit of room to move with rents but none of the other 2 factors seems likely in the short term so I guess we'll have to look outside the capital cities or to look for unique properties where we can value add and increase yields that way
 
Top