Now all of you who said prices would never come down #2

[evand]

Why do you want to do that? I find max's argument compelling and intelligent and staying true to investing fundamentals.

That's the difference here. Some people collect houses like its a hobby, ignoring basic investment fundamentals and some only buy when the fundamentals are telling them its the right time to buy.

I'm not sure there is an 'ignore if what someone is saying doesn't agree with my existing beliefs' button.

Exactly, wish we han a user ignore button on this forum....

im ganna buy max a towel so he can wipe all the **** off his chin which he is dribbling.

 

[boomtown]

How is that the same as a negatively geared IP which will always be underwater unless it has capital growth?

You really are missing a massive piece of the puzzle arent you? Do you genuinely believe that rents don't go up?

The rent on my IP1 has gone up 32% since I bought it in Feb 2007. Its gone from neutrally geared to cashflow neutral in 18 months. It will be slightly CF+ when the rent gets reset in January 2009.

 

[boomtown]

No... I haven't actually. I've got several down and several up. And the average is closer to zero than -10. But do you understand how that doesn't matter?

Ok - educate me. What equities do you hold that have gone up over the past fortnight.

 

[Nathan]

Ok - educate me. What equities do you hold that have gone up over the past fortnight.

Theres only 1 equity that max holds(few cm), and i dont know if he ever gets dividends, nor do i think it goes up (hmmm). His equity would be below average size, and stays stagnant without any equity injection (ami).

 

[topcropper]

You really are missing a massive piece of the puzzle arent you? Do you genuinely believe that rents don't go up?

The rent on my IP1 has gone up 32% since I bought it in Feb 2007. Its gone from neutrally geared to cashflow neutral in 18 months. It will be slightly CF+ when the rent gets reset in January 2009.

I simply had no idea you could buy cash flow neutral in inner city Brisbane in Feb 2007. Well done then.

So is that neutral after tax?


You can't even do that in my local small town and anything close is a total dump.

See ya's.

 

[oracle]

Sure if they haven't borrowed to buy. Sure, if they've bought for yield. Sure, if they're investors, not speculators, and have sufficient rent coming in to cover all expenses and provide surplus income besides. Sure, if their plan does not depend on being able to refinance or sell at a higher price later.

Do you think I've just described "most IP owners"? I don't actually believe so. I believe most have bought in hope/expectation of capital gains (ie they are speculators), not because they could buy a good income (ie investing) for a cheap price. I reckon most need significant capital gains just to ever be able to 'break even' on their speculation after balancing all costs and all income. I think the stats showing more and more people buying property for so-called 'investment' even as yields halved then continued to fall, are ample evidence of this.

I agree with you Max. Most people who start out on the journey of property investing do speculate in their early years of investing. If they survive they usually keep improving on their investing skills with each new investing decision they make.

Usually, by the time you reach your 3rd or 4th IP purchase you will make much wiser investment decisions then your first IP. For a normal person they need to build up the experience. Hence, the important thing is to make sure in your early days of investing you don't over stretch yourself.

Cheers,
Oracle.

 

[Francesco]

The income will more than compensate for that in a few months. Even if they fall further, the income still justifies my purchase - they are damn good value.

How is that the same as a negatively geared IP which will always be underwater unless it has capital growth?

My shares will repay my purchase price many times over during the next 20 years regardless of price. The negatively geared IP won't unless there's a greater fool to buy it at a lower yield in 20 years (I am absolutely certain that rental yields will actually be much higher in the future than today).

This is the difference between investing and speculating. Does that make sense to you?

What is investing but educated guesses as there are risks regardless? Yield from my properties range between 5% to 8% and with the IR drops they are CF neutral to positive. The synergy with shares and superannuation from IPs leverage has enabled me to be relax now. Just looking at negative gearing of IP and comparing one to one with other investment options fails to take advantage of its unique contributions to synergy with other options. Even if capital gains do not come and you sit tight to let the rent raise your CF is not a bad outcome; you need more of these auto income streams to retire!

 

[piNoob]

somehow this thread makes me laugh the same way this video does -

http://au.youtube.com/watch?v=60CLQse27p8

Not sure why though

Edit: pay attention to both sides @ 3.20..

 

[Nathan]

hey interesting to see peter was on the money in 2006... now look @ what he is predicting, hyperinflation...

i think we should take note, he has hit the nail many of times.. however he is a bear, he has credibility.

 

[Nathan]

http://au.youtube.com/watch?v=LfascZSTU4o&feature=related

 

[craigb]

i am sorry i did'nt get that! how much did your peerents pay for their home??? idiot!

 

[Nathan]

If that was directed @ me, i mean in 2006 peter was predicting the crash very accurate, he has credibility out there, and do belive we will see high inflation pressures.

If we see similar effect here it would be interesting, doubt it, but we would haveout own set of dramas then, as petrol, comodities would rise against us dollar.

 

[craigb]

no bud ,those who say stuff like "you said house prices dont go down" how stupid are these people, and they all condem property at the slightest news sensation.
sorry bit tired, busy day.

 

[Nathan]

oh ok thats cool mate...

Our mate max i am guessing after rereading the string of posts.

 

[Max Carnage]

If that was directed @ me, i mean in 2006 peter was predicting the crash very accurate, he has credibility out there, and do belive we will see high inflation pressures.

Huh?

Do you realise he's on the record repeatedly saying that home prices in Australia are going to fall just like they have in the USA?

Also, you'd need to follow his work and words carefully (I have for 4 years) before jumping to the conclusion that he thinks high or hyper-inflation is the only possible outcome in the USA. You'd also need to understand why he does not advocate a real-estate dominated portfolio even in the eventuality of high inflation...

 

[steveadl]

Ha, love to see a reunion of those three commentators to watch a replay of that video and see what the two bagging the cr@p out of the other guy say now.

 

[redwing]

somehow this thread makes me laugh the same way this video does -

http://au.youtube.com/watch?v=60CLQse27p8

Not sure why though

Edit: pay attention to both sides @ 3.20..

Some of the threads, at different points in time, make me think of this picture from another forum

 

[greedy saffa]

REIV delays to announcements

REIV, the Victorian regulator (i.e. read Marketing and PR Agency for all the good they ever do) generally publish the week's auction results - clearance rates, median prices, etc on the Sunday following the Saturday auctions.

It is now Tuesday - where are the results?

Is it because they are weaker than were reported in the press on Sunday morning?

 

[james_w]

so boys and girls.

What's the outlook - 20% / 30% decline through forced sales when all those margin calls come home to roost?

where are we going to grab us some bargains - us greedy cashed up looters?

[Edit: posts split from this thread]

Really umm my home has gone up in value my interest rates have came back down and theres an area close to a decent size city and coastal area where blocks can be bought for 65k houses built for 80 total coast 158,500 and cheapest 3 bedder is 220k howver there is also an open cut mine opening up 3kms from this town wheres the bad side here?

 

[Minx]

Now that the government has announced an increase in the first home owners grant this will do two things. 1 - it will stimulate new constructions and 2 - it will increase the cost of housing like it did when the first home owners grant was introduced.

Supply and demand. We have a serious housing shortage and I don't believe that house prices will come down. Maybe a little but not substantially like some people anticipate.