Shares vs Property

H

Harro

Have had Investment Properties in the past. Now it is Shares ONLY after bad tenant problems (not paying rent, damage to property) etc.
Just wondering how people are going to service loans when interest rates rise? Because inevitably they will. There will be a lot of For Sale signs go up very quickly I suspect! If correct analysis is done of the Share Market, gains will exceed any property investment. Shares are relatively liquid. Try selling a property overnight!
 
Harro said:
Have had Investment Properties in the past. Now it is Shares ONLY after bad tenant problems (not paying rent, damage to property) etc.
Just wondering how people are going to service loans when interest rates rise? Because inevitably they will. There will be a lot of For Sale signs go up very quickly I suspect! If correct analysis is done of the Share Market, gains will exceed any property investment. Shares are relatively liquid. Try selling a property overnight!
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I have only the last couple of months come off 7.10% and this was affordable for me so now they are lower is a bonus,when investing in property you need to factor in your sums at least 2% more than current rate to make sure you can cover increasing rates.
Sometimes shares do go up quite quickly but you can also lose a fair bit too,I was into shares before property and I can say my circumstance I have gained a heck of lot in property than what I lost in shares.
Macca446
 
My understanding is that shares generally outperform real estate, however it's cheaper to leverage your way into RE (interest rates on a home loan being cheaper than a margin loan). I'm sure there are other things to consider - if anyone would like to correct me or add to this I'd love to learn more.
 
For me Macca the opposite has been true. Made reasonable Capital gains however nothing like what I have made trading shares. Agree whole heatedly with factoring in Interest rate rises, but, how many actually do? Over my lifetime I have seen many For Sale signs go up because the borrowers were over committed. You want to hope Interest Rates don't hit levels like they have in the past. That would make life interesting.
 
Leveraging for shares is very, very risky! What's wrong with using your own capital to buy in the first place? If you realise Shares outperform Property then why invest in property?
 
When you are returning this amount every 10 or so days obviously shares. But commercial property is good and investing in good established businesses. Beats sitting and collecting $400 rent from a residential property and hoping no damage is done to the property.
 

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Harro said:
Leveraging for shares is very, very risky! What's wrong with using your own capital to buy in the first place? If you realise Shares outperform Property then why invest in property?
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Because I can borrow 100k with just 20k (without LMI), and double 100k is 200k.

Double 20k cash is 40k.

Leveraging is important.
 
I agree that Commercial real estate is the most viable of all Property Investment. Investing in businesses, isn't that simply buying shares, either directly or indirectly? Many, many people have come unstuck from leveraging.
Compare any data on performance (graphs, tables) over the last 50 years and shares have outperformed property well and truly. Once again, what happens when Interest rates rise? They have in the past and will again!
 
Harro said:
Have had Investment Properties in the past. Now it is Shares ONLY after bad tenant problems (not paying rent, damage to property) etc.
Just wondering how people are going to service loans when interest rates rise? Because inevitably they will. There will be a lot of For Sale signs go up very quickly I suspect! If correct analysis is done of the Share Market, gains will exceed any property investment. Shares are relatively liquid. Try selling a property overnight!
Click to expand...

What will you invest in after a bad shares problem?
 
As outlined before if correct analysis is done of the Share Market and the correct strategies are put in place you can limit any losses.
As for leveraging, any losses are magnified, to the extent that at times people not only lose their capital but have a debt to service as well. Fortunately, WHEN interest rates rise I will be able to snap up property cheaply from those who can't service their loans, from money I have made from the Share Market. I am old enough to know that rates have risen in the past and CERTAINLY will again.
 
Harro said:
As outlined before if correct analysis is done of the Share Market and the correct strategies are put in place you can limit any losses.
As for leveraging, any losses are magnified, to the extent that at times people not only lose their capital but have a debt to service as well. Fortunately, WHEN interest rates rise I will be able to snap up property cheaply from those who can't service their loans, from money I have made from the Share Market. I am old enough to know that rates have risen in the past and CERTAINLY will again.
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I would be interested to know who is saying interest rates won't rise... because I have a bridge to sell them ;)
 
Harro said:
Just wondering how people are going to service loans when interest rates rise?
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On my current salary, I can comfortably service my loans at 12.5% interest. I also have a buffer in case that happens that could push this out for 6 months or so. If interest rates went higher than 10% and rents did not increase during that time, then I would look at selling one of my properties. I would not need to sell in a rush though.
 
Stock market crashes are simply major corrections when stocks are overpriced. Great opportunities abound for those who are cashed up to purchase stocks at very low prices. Similarly, when Mortgage rates rise and borrowers can't service their loans, property becomes cheaper.
I am all for diversification. Diversify within SHARES.
 
Harro said:
Fortunately, WHEN interest rates rise I will be able to snap up property cheaply from those who can't service their loans, from money I have made from the Share Market. I am old enough to know that rates have risen in the past and CERTAINLY will again.
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I will be able to do the same with money I have made from property. What's your point?

You seem to be missing the point by saying that shares outperform property. As mentioned you can have $100k of property with your $20k outlay. If your $20k goes up 5% you've made $1k. With my $100k portfolio even if it only goes up 3% I've made $3k.

Why are you on a property forum? Trying to enlighten us?
 
What happens to Share/ Property prices when we have a recession?

Sorry to take this off topic, but I have been thinking lately that what will happen to share prices and property prices when we have a recession in 12-18 months?
Just curious as I have never lived through a recession before
:)
 
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