Time to sell? Time to get out of debt?

[Piston Broke]

according to Alan kohler because of the increased rent demands and the decreasing of new construction.

Kohler has no idea about finance, he would'nt know why if it bit his rear end where most of his commentary actually comes from lol.
And where is Schiff and his EU grandiose predications and predictions?
Dead and buried with all his followers profits...again

As for that link Belbo, Lehman failed because hey were made to fail ie not bailed out, Citicorp was and is just as bankrupt.

As already stated, if it really goes pear shaped and we have a credit crunch, the RBA will do its thing and get the cash rate to 3% or lower. At that point you should, like I will, attempt to grab a low rate 3 or 5 year fixed loan at 5% or whatever and your cashflow will improve markedly.

The banks will only pass it on if there is risk of mass default.

Also the federal government will step in and just blow FHOG and other stimulus schemes around the place as they want to economy to keep on moving ahead.

And that will lead to an even worse scenario.

 

[TomW]

All these posts about the RBA and the Government saving us remind me of a recent interview with the famous American short seller Jim Chanos:

Chanos on his recent trip to Hong Kong and Australia:

"I think we probably came back a little bit more bearish….Our concerns about what we saw in Australia: an economy clearly tied to China has hitched its wagon to the tail of the tiger. In terms of the general complacency, what we heard over and over from investors and clients and potential clients is, 'yes, yes, there are some excesses, but the government will figure out a way. That the government is this all-knowing, omniscient basic entity that will prevent me from losing money."

Read more: http://www.businessinsider.com/jim-...-and-this-is-what-i-saw-2011-11#ixzz1gsu3i3MT

 

[roger horton]

The banks will most assuredly pass on RBA rate cuts not so much because Wayne Swan will bully them but more due to a different reason. More and more of their overseas funding source (currently 40% or total funding) is being replaced by local deposits as we speak given the panic exhibited by local investors wishing to steer away from volatile stockmarkets and pump money instead into term deposits. Newly retired CBA chief, Ralph Norris, was recently quoted saying "I think given we're obviously in a situation where banks are focusing more on local deposits more than raising funds, I think you'd expect to see a lot of very competitive interest rates going forward". The major banks currently enjoy huge margins on mortgages of between 2.2 to 2.8% on top of the cost of money. They will not risk defaulting the mortgage market on mass (and risk losing a bunch of money making clients forever) when all they have to do is to lop off some of their extravagant margin.

 

[VYBerlinaV8]

My position is if I get to the position of hitting the wall there will be another 97 out of every 100 people in front of me. If that time comes, I would be buying a gun and making a fortress of my house, stocking up on food and battening down the hatches as there would be complete anarchy I would imagine.
If you have been investing in property for a while, you have made plenty of CG to get you over the bad times. Rents are increasing, according to Alan kohler because of the increased rent demands and the decreasing of new construction. The RBA have plenty of amo left, and if things get real bad rates will go down and before you know it, that NG property you own will be cash flow positive. Even if you havent been investing for a while, things will improve just as they did after the mid 90's. That was the last end of the world as I remember

I'm bit of a glass half full guy so not all doom and gloom from my perspective.
Remember that Australia is largely a culture of whiners, whingers and losers. If you take some risk, and know the fact that life isn't a cakewalk and if you want something, make it happen. If you aren't earning enough, earn more. Skills deficit, figure it out. No one owes you anything, and I'm sure not going to just give it to you.
Keep the faith

This is spot on. People with assets and cashflow, while vulnerable to losses, are still typically miles ahead of those with nothing. I doubt Australia is going to have a genuine deep depression, and if it does the rules of the game change anyway. What will all those people with nothing do?

It's easy to run with the crowd, who at the moment are telling us the sky is falling, and harder to form clear opinions as to your own position and way forward. As stated earlier, I plan to hold onto what I have, let my tenants pay rent, slowly reduce my debts and ride this time out. Once we get to the other side (which could take several years) there will be opportunity galore.

 

[evand]

Are you saying investors dont get nervous? In my experience being nervous is a good sign.

Smart - and successful - investors know when to get out. Dumb - and broke - ones usually hang in there and get the biggest haircut. Sometimes finishing them off.

The name of the game is to stay in the game. As the rich say, 'never, ever run out of money'. Because, then you're out of the game.

If you think ignoring what's going on will work for you, all the best.

If you're that nervous, I really don't know if you're cut out to be an investor in all honesty. You have to 'get a grip', IMO. Otherwsie buy a gun, and a farm, and some gold.

It will all be OK.....really it will.

 

[Aaron_C]

Yes evand I agree that, without cashflow, you will die. Even if your LVR is insignificant.

 

[Indifference]

I must admit I am getting nervous now. House prices look to drop over the next few years, as growth in USA is minimal, europe is going to go into a depression, and china is also slowing. Are we on the edge of the great collapse?

I don't know, Ive diversified enough into gold and cash to hedge against some worldwide financial implosion. But its getting really scary. If the ECB allows europe to collapse, a 20 - 30% fall in house prices here is not unrealistic.

Is everyone here still bullish? Im prob. going to keep the properties and hope for the best, but if the world spirals into a deflationary environment, the leverage in houses will collapse, and it will ruin anyone with large amounts of debt.

What is the position of the posters here?

Firstly, if you were serious about an asset class transfer of wealth, IMO, the window closed about 12 months ago for those up to their eyeballs in property.

If you have been around for a little while & have some decent equity, then that is a solid buffer right there. If however, you are a new investor or like to live closer to the edge with 90+% leverage across your entire portfolio, then yes, you are probably now in a risk-on position, IMHO. It is not all D&G, it just means now is probably a good time to be prudent and ensure you have an adequate buffer/reserve.

As for my position, I'm not the type of person to be loyal to only one thing, all of the time. I jumped ship 18 months and got into another asset class, with about 1/2 my meagre lot in life. I believe I saw something before the average punter and acted accordingly. It was a very tough decision.

Many of my fears have now come to pass & I am feeling more confident every day that I did the right thing for me, as every financial indicator seems to be pointing in one general direction for many years to come.

I will convert back into property when the time is right. For now I am comfortable with my very low LVR on my one CIP. It is the right way..... for me.

 

[jaycee]

Daniel, you've been posting your 'nervous Nelly' stuff on the forum here for years

Back in 2/2010 - almost 2 years ago, you posted this:
http://www.somersoft.com/forums/showpost.php?p=632885&postcount=1
under the heading of "Is the property market about to bust?"

If you're that nervous, I really don't know if you're cut out to be an investor in all honesty. You have to 'get a grip', IMO. Otherwsie buy a gun, and a farm, and some gold.

It will all be OK.....really it will.

Is it just me or am I noticing opinions on things not asked for a lto more latley ?

Maybe we have more authority and power than I realised and therefore we have a God given right to tell people how things are - i.e. the way we see it , especially when we haven't been asked for our opinion, just cause we're the best

When we don't know them or their experience level, but are still so **** sure to tell them they probably aren't cut out to be investors (like us ! even though tby defintion, they are, like us), I can't help be surprisded by the confidence displayed, but also can't take what's said too seriously.

 

[The Fence]

You on the drink again jaycee...?

 

[Propertunity]

When we don't know them or their experience level, but are still so **** sure to tell them they probably aren't cut out to be investors (like us !) ....

I've been reading the OPs posts for years and I read an underlying tone of nervousness / fear about the future. Meanwhile the sky did not fall in GFC V1. It probably won't fall in now either.

 

[jaycee]

You on the drink again jaycee...?

No why ?

 

[jaycee]

I've been reading the OPs posts for years and I read an underlying tone of nervousness / fear about the future. Meanwhile the sky did not fall in GFC V1. It probably won't fall in now either.

Fair enough I suppose

If somone has been an investor for a number of years he may be cut out to be an investor (?)

As evand said, a lot of investors get nervous.

 

[Propertunity]

As evand said, a lot of investors get nervous.

If enough of them get nervous, I suppose it could be a self-fulling prophecy

I don't really have that 'herd' mentality.

 

[contrary]

You have to be able to read yourself. Maximise worry that changes the outcome and let go of worry that doesn't change the outcome. For me, when I'm nervous I think it's probably too late to sell. It's probably a good time to buy when I'm panicking and puking in the wastepaper basket. The best investments for me have been when I've bought then had a good puke in the wastepaper basket. I don't think we're quite there yet. But everyone is different I guess.

 

[jaycee]

If enough of them get nervous, I suppose it could be a self-fulling prophecy

I don't really have that 'herd' mentality.

Yeah ? Cool

 

[Alex P Keaton]

It's completely up to your personal situation.
If you have a high LVR and poor cash-flow. Sure have concern.
If you have a high risk of being made redundant and a neg cash-flow portfolio.
Again concern is warranted.
If you are just a few years off retirement or have poor health that could effect your work ability. Show concern.
But if you have an investment view beyond 5-10 years.manageable cash-flow, secure job or easily replaceable job, many work years ahead of you and buffers in place.than any of these should see you through. I'm not saying property is the best investment in coming years . I'm not saying people won't get burnt. I'm saying most will survive this. Things will recover and life goes on. It's just your personal situation that must be considered and everyone is different.

well said!

======

 

[Piston Broke]

If enough of them get nervous, I suppose it could be a self-fulling prophecy

I don't really have that 'herd' mentality.

If enough of them buy overpriced assets that have pispoor returns hoping they will go up forever all on borrowed money, they will eventually crash.
You can call it whatever type of "prophecy" you like.