Peter Spann Seminar

Anyone attend the Peter Spann Wealth Magic Seminar in Sydney over the weekend?, interested in your views on Peters current position on residential property. Peter commented that with the exception of land banking he now preferred shares to property, he even went as far as to say that he would not invest in res property again (with the exception of land banking).
 
That might be best for him, but I doubt he would be recommending landbanking to most of his clients rather than residential or even commercial property.

GSJ
 
Rixter went along.

Peter has said for some time that he believes that it's not, in his opinion, the right time for resi property- and that in a few years, the "cash cycle" (aka recession, or even depression) many be coming.

However, I do note that Peter is selling share investments. And that people who are promoting property are selling property.

For what it's worth.
 
Historically, looking at the averages, don't property and shares perform at about the same level per year? Not sure exactly what it is but around the 13 odd % (capital growth + income).

Obviously with a bit of skill, some may be able to select individual properties and get higher returns, but on the other hand some may be able to select individual shares with higher returns.

If we assume the averages, they are pretty much the same over the long haul.

So what's the difference?

Leverage.

You can generally leverage to a higher LVR with property than shares. At least for the first few million until you hit the servicability barrier, and then you will need to reduce your LVR to around 50-60% before you can progress with more properties.

You can normally conservatively gear shares with margin loan to 50-60%.

So if you obtain similar leverage, and the returns are similar over the long haul - why would you bother with the maintenance on property, dealing with tenants, etcs.

It is much easier to deal with shares.

I recall Peter saying that by the time his property portfolio was around the $20 mill mark - his lvr was down around the 50-60% mark.

Thus property is good for the first few mill as you can get higher leverage, and more bang for your buck.

That's my take on it anyway :)
 
Leverage & ease of use are his main arguments for shares.

With leverage, it is possible to get 100% capital protected share loans with little declaration required. Property applications will require lots of paperwork and healthy cash flow position. There is no glass ceiling as to how much your exposure to the sharemarket is.

Liquidity is easily obtained and accessed via margin loans, again with little paperwork.

Share investors can take advantage of the property growth cycle by investing in property related industries/companies, such as banks, construction companies, building materials, developers, etc.

Properties can be "bought" via property trusts (office buildings, shopping centres, infrastructures...).

Share currently has positive cash flow return with another good year to go while property return is dismal with little prospect for capital growth. (I know this is a broad brush statement)
 
agreed Leandro.

I can remember doing Money Magic some years ago now and PS saying that was a major factor in choosing property - you have the ability to add value and can often add value far in excess of the cost to do so.

OSS
 
agreed Leandro.

I can remember doing Money Magic some years ago now and PS saying that was a major factor in choosing property - you have the ability to add value and can often add value far in excess of the cost to do so.

OSS

At this recent seminar, i don't think i heard him say that. I guess his memory of when he started out investing is starting to fade as it was over 20 years ago.

I should have asked at the seminar "If you had to start again today but with the knowledge that you have, how would you do it? Would you still use resi property initially but switched to other forms much before the 10 years when you reaced your peak in resi property". Has anyone asked Peter that question before?
 
PS made the comment that value adding was the only real advantage of Res Property over his other investments, he made the point that res property requires too much effort and energy compared to other investments (not to mention excessive fees and frustrations such as valuers and LMI).
 
PS made the comment that value adding was the only real advantage of Res Property over his other investments, he made the point that res property requires too much effort and energy compared to other investments (not to mention excessive fees and frustrations such as valuers and LMI).

Thanks Daz,

i must have not heard that ;-)
 
I don't believe it is just ordinary shares which are being touted as "better" than property. I do agree with PS in certain respects that as an asset class in general, property appears to be overvalued in most capital cities. His point if I'm hearing correctly is that there are potentially other more lucrative asset classes out there. This can be anything from exposure to top companies listed in BRIC economies, the environmentally friendly Al Gore'esque style alternative energy funds, commodities, overseas properties, emerging markets infrastructure and even pure punting hedge funds. The list goes on.

There is actually a myriad of investment opportunities out there which you and I can't ordinarily tap into. eg. I wish I could've bought into the Vietnamese and Phillipines market in the last year. It had to take off just like the rest of SE Asia which it did. Same also for overseas property trusts, especially buying in when the AUD was at 0.90. That was a no brainer - for me anyway. Unfortunately I couldn't just log onto my Commsec trading account to buy these sorts of alternative investments.

I suppose thats where PS comes in to provide that service in accessing these types of investments for clients who are your traditional property investors. Its not for everyone but then again, you make your own choices.
 
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