Landlord costs don't determine rent. Rent is determined by the market sentiment - supply and demand. Sure, if interest rates go up a heap, you'd expect some movement in rent, but it aint a simple "my costs have gone up so jack up the rent" type thing (unless the rent is currently below market).
okay now i'm worried.
- Thread starter Aaron Sice
- Start date
Landlord costs don't determine rent. Rent is determined by the market sentiment - supply and demand. Sure, if interest rates go up a heap, you'd expect some movement in rent, but it aint a simple "my costs have gone up so jack up the rent" type thing (unless the rent is currently below market).
Agreed. Fix enough to keep you happy. Leave some variable though, so offsets etc are available.
hi
I am with rolf in that you should see risk as your risk level not mine or anyone else.
its not alot of point saying you should have fixed 6 mnths ago.
not if you just bought.
so it all to do with risk
if you think that rate will go up and I don't then you should work out your battle plan for that rise and if you think so then fix.
your crystal ball is saying on ething and mine might be saying something else but don't work out your ideas on my crystal ball leave thats to me you work on yours.
just as a foot note I have change my view as well as my ball tells me to worry also.
so I do some thing very different.
get into more debt and build up a cash reserve.
just like when you are seeing a storm comming build up your food reserves to see you thru the winter or storm.
so what do you do
get more wood(cash)
and food( cash flow positive property)
batten down the hatch ( close off the loans)
and wait.
but thats not because of risk thats because I see a storm.
no doom day here just alot of financial turmoil and in that hurracane a few lenders being spat out and not to returning.
but that just a view not investment advice
I am with rolf in that you should see risk as your risk level not mine or anyone else.
its not alot of point saying you should have fixed 6 mnths ago.
not if you just bought.
so it all to do with risk
if you think that rate will go up and I don't then you should work out your battle plan for that rise and if you think so then fix.
your crystal ball is saying on ething and mine might be saying something else but don't work out your ideas on my crystal ball leave thats to me you work on yours.
just as a foot note I have change my view as well as my ball tells me to worry also.
so I do some thing very different.
get into more debt and build up a cash reserve.
just like when you are seeing a storm comming build up your food reserves to see you thru the winter or storm.
so what do you do
get more wood(cash)
and food( cash flow positive property)
batten down the hatch ( close off the loans)
and wait.
but thats not because of risk thats because I see a storm.
no doom day here just alot of financial turmoil and in that hurracane a few lenders being spat out and not to returning.
but that just a view not investment advice
hi Aaron,
I have already been through what you are going through!
I "freaked" out about 4 months ago when two of my banks wouldn't allow me to fix my rates (it was like re-applying for a full doc loan), and I realised that my "buffer" had become mere grocery money.
Rental increases are not keeping up with IR rises. And I'm not talking about the Reserve Bank's. We.re all getting hit by non-bank lender increases.
Now I have accepted it, thank goodness IR's are not 17%.
You need to ask yourself:
"What am I going to do about it?"
Is it feasible to fix your rates?
Can your wife earn an income? Can you get a second job?
Stay positive, be assertive and find your way.
Regards Jo
In any case, my crystal ball thinks it's all alot of hype
I have already been through what you are going through!
I "freaked" out about 4 months ago when two of my banks wouldn't allow me to fix my rates (it was like re-applying for a full doc loan), and I realised that my "buffer" had become mere grocery money.
Rental increases are not keeping up with IR rises. And I'm not talking about the Reserve Bank's. We.re all getting hit by non-bank lender increases.
Now I have accepted it, thank goodness IR's are not 17%.
You need to ask yourself:
"What am I going to do about it?"
Is it feasible to fix your rates?
Can your wife earn an income? Can you get a second job?
Stay positive, be assertive and find your way.
Regards Jo
In any case, my crystal ball thinks it's all alot of hype
Fair enough, but what about if those same investors had continued investing in the sharemarket during that 9 year period, assuming they could, regardless of their losses at the time. No doubt they would have more than made up for the losses during this period.
This is why it's all about time in the market and not timing the market, within reason.
As a newbie having read a heap of stuff over the last 6 months, one can go on and on about different strategies, theories, etc, but I have come to the following conclusions.
1. Buy decent properties in good locations when you can
2. Structure your finances properly from the beginning
3. Never sell
4. Wait for CG to do it's magic over a 20 year period
My 4 simple steps to financial freedom.
I did say MAYBE a rate drop.
It's interesting; in the USA right now they are experiencing very low rates, and yet people are still not buying houses; but the consumer spending is still up.
I don't think the rates are much of an influence on the consumer spending; not as much as the ease of access to credit if the USA is any guide.
Cut that down, and spending will decrease. Good luck with that.
It really annoys me that the RBA assume that all the home owners/investors are the spenders, and we get punished.
To answer the questions;
1. I reckon it's happening, but the figures will take a little while to reflect the trend.
2. Higher rates will cut down the volume of buyers, so demand will decrease. If the existing owners need to sell due to unmanageable repayments, then they will be selling lower to attract buyers. Basically; not alot of stock to choose from, but cheaper prices for those who are in the market to buy.
Shouldn't that read My 4 unproven steps to financial freedom.?
Food for thought.
New loans with a fixing we dont even really consider CBA unless we have to as their rates are running circa 9.3-9.45 (really we arent considering CBA for much unless we have to use them). Its funny I still remember my cba guy saying they're really well positioned to ride the storm out the best for our customers (probably replace customers with shareholders and that would sound more right). I'm just waiting for them to post a massive profit even in a bad time.
You can still run thru westpac/st george sub 9 (barely) and nab a touch over.
But if you hold a concern with the economy then yeah cash up. From the reading of the thread sometimes it might be a better option to fix, sit pat and ride the wave, and have the spare cash if you can hammer someone if we get into a South Florida pricing situation.
New loans with a fixing we dont even really consider CBA unless we have to as their rates are running circa 9.3-9.45 (really we arent considering CBA for much unless we have to use them). Its funny I still remember my cba guy saying they're really well positioned to ride the storm out the best for our customers (probably replace customers with shareholders and that would sound more right). I'm just waiting for them to post a massive profit even in a bad time.
You can still run thru westpac/st george sub 9 (barely) and nab a touch over.
But if you hold a concern with the economy then yeah cash up. From the reading of the thread sometimes it might be a better option to fix, sit pat and ride the wave, and have the spare cash if you can hammer someone if we get into a South Florida pricing situation.
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No argument about being a newbie Sunfish, but my 4 steps to financial freedom has been proven. My old man used this strategy over 20 years without forums, without books, without seminars, without tax experts and being of European descent and him finding it difficult to sometimes communicate in the early days, I can tell you he has done very, very well for himself.
Bought good properties in good locations, held onto all of them and now he is worth millions. No doubt there are ways to make property work for you in a shorter period of time, but this strategy works well I believe as I have seen it first hand.
Times have changed no doubt, but the fundamentals are the same.
PS. Only sharing my experiences, not saying this is the best way to do things.
hi all
cba are one group that have been hit least out of all the banks and the reason is that there lending stops at 75% of anything they run at around 70%lvr's so not alot of risk there and have always been a very conservative lender.
yes they have not been the flavour of the month for me for a very long time but as others are dropping there lvrs, that inch closer to the cba model and they are one lender with alot of money in there kitty and may well decide to start to gain market share and then would have a sticky beak at them again.
from my understanding there ledger is on the positive side in a big way with not alot of the baggage of the others dragging it down
I could be wrong but thats my view.
so they may well turn to be a shine light for alot of the banks.
cba are one group that have been hit least out of all the banks and the reason is that there lending stops at 75% of anything they run at around 70%lvr's so not alot of risk there and have always been a very conservative lender.
yes they have not been the flavour of the month for me for a very long time but as others are dropping there lvrs, that inch closer to the cba model and they are one lender with alot of money in there kitty and may well decide to start to gain market share and then would have a sticky beak at them again.
from my understanding there ledger is on the positive side in a big way with not alot of the baggage of the others dragging it down
I could be wrong but thats my view.
so they may well turn to be a shine light for alot of the banks.
What really annoys me is that the RBA left rates low for far too long. The RBA is really good at testing the extremes. Borrowers frollicked and danced with the tulips while they were paying 6% interest rates, no one was complaining then. But the wheel has turned now and its time to see how people will deal with higher interest rates - and remember they might again test the extreme the other way.
Its exactly this reason why in my opinion if you have not invested in property and you are borrowing a substantial amount you should keep well away from borrowing in this part of the cycle. I just think there are far to many variables against than for. Especially considering parts of the housing market are already slowing. I think its much more worthwhile now to hold out to see how it pans out - if you have no idea what your doing.
The thing about it is, is that most think that long term rates are high now. Well, over the last 50 years they actually arnt high at all. They are just average. This is exactly why i dont have a positive view on housing (when u exclude immigration and microeconomics). Currently there are australians with so called mortgage stress, yet this is just an ordinary scenario so far. What happens if rates stay (or go up) and costs continue to rise - and remember that we may have already reached peak employment? I will be keeping an eye on NZ, because they are starting to slow and they were also smoking the green stuff while rates were low. I think that will give us a better idea to what might happen here - excluding certain factors.
I think the call by the banks today (anz?) to lower taxes on deposits is the signal that they strongly believe that rates are going higher overseas. They are desperate to entice deposits so they dont have to get funds from offshore. Im a stockmarket player, and im keeping completely away from the financials - i cant see any reason why anyone would be buying them (but you'll get asked a million times). It would be far safer to pay a higher price when all this blows over - which will be in years IMO (cant see anything good before 2010- and thats only 18months away - either we will have higher inflation or a recession).
I would be interested to see where you have heard consumer spending is up in the states? I havnt come across that - been away though - and last i heard it was slowing-and dramatically.
Im keeping my mind on the previous questions i posted before. what will the RBA try to avoid, high Inflation (and risk it spiraling with wage rises) or possiblilty of a recession?
One thing is for sure, im glad im not a central banker during these times because its a tough call
. You cant keep everybody happy.StinkTier
= Skunk
luv it
ta
rolf
= Skunk
luv it
ta
rolf
I agree rates were left too low for too long but if you were smart you would have bought property than and fixed for as long as possible instead of avoiding property.
It's been proven at my end of the last 20 years.
Yes, you have shown it was a good move 20 years ago. That's OK with me. But the Bludger has yet to prove his skills and timing. He may find he has stepped of the pier but missed the boat.
I object to constantly being told I'm doing it wrong by beginners who have yet to test their mettle though. I have tried to make the point that the last decade was atypical and as such will not be repeated in the next. Alexlee was a master at calling me a failure.
I have proven myself a survivor though and that is more than the Pups here can claim.But were you one of the group on SS saying I was stupid for talking about Townsville when "everybody" knew all the cap gain was in Sydney?
Have you browsed the member's list here? There are thousands of lapsed members. Do we have a few survivors telling us it's all good while thousands of others have slinked away, locked into non-performing investments such as "ordinary" Syd property bought in '02 -'03?
