Recession? Time to bring all my USD and Chinese yuan back and buy AUD at 40c, although I'm pretty happy at 83c already.
Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
All my properties are in south east queensland, so with any luck they should get some CG before anything happens. Then I can reduce my holdings and realise a profit on 1 or 2 properties.
It's funny when a bad economy emerges in a country all the population parties more. The same thing happened in America when I was there in 2010.
remember the 'roaring' 20's...then crash of 1929.... (I know , not personally..historically)
don't get lulled into a false sense of security..
It can always stop, at any moment.
Personally, I think if one had that mindset of 'it can always stop at any moment' whilst investing, its unlikely they will achieve any great mount of wealth, IMHO. yes, yes I know 1 or 2 ppl might get lucky and still create great wealth with those beliefs, but for the rest of investors, I don't think it would happen. Personally I believe there is a big difference between savvy-based investing and fear-based investing. The destination where you end up can be night and day.
Cheers
leo
I think there's also cautious investing . We've geared up heavily on two occasions and on both occasions started cashing out well before what we thought was the peak . Our previous sell off enabled us to be cash buyers when the GFC hit and our recent sale put us to a much stronger position , so if we want we can make further purchases out side Sydney without overexposing our selves.
Cliff
Personally I wouldn't recommend it as a general strategy to sell off when one thinks they are at the peak. Just my opinion and what works for one wont for others I agree.
leo
Leo,
Just curious as an investor how many boom/bust cycles have you actually been buying into??
MTR
Why not go to onthehouse.com.au to check the price history from the end of 2008 until today?
There are plenty of similar cases in Sydney. For example, I am told that the houses close to Epping railway station was selling 1M not long ago. They are selling 3.5M now.
Personally, I think if one had that mindset of 'it can always stop at any moment' whilst investing, its unlikely they will achieve any great mount of wealth, IMHO. yes, yes I know 1 or 2 ppl might get lucky and still create great wealth with those beliefs, but for the rest of investors, I don't think it would happen. Personally I believe there is a big difference between savvy-based investing and fear-based investing. The destination where you end up can be night and day.
Cheers
leo
It certainly didn't stop us...we went gung ho for 6 years and amassed all the properties we wanted.
But just because you don't want to believe a recession/depression is coming...just doesn't make it true.
Leo
When we go from boom/bust cycle the risk is that in the downturn/bust cycle investors will be stuck with stock that goes backwards. In other words no growth and it could take 7-10 years before it starts to get back to its original price and starts rising. Precisely why its crucial to buy under intrinsic value AND have scope to add value. You made my point for me even clearer.
Not only this but in the main investors will be feeding the debt monster because they are holding negatively geared property. Again, if a portfolio is property built, then the investor needs to understand the importance of a balanced portfolio, fixed loans, buffers etc. This is part of the 'properly' investing.
Another major risk in downturns is the loan may become greater than the value of the property, therefore they can not sell, they are stuck. Again, buying under intrinsic price and adding value will reduce the chance of this. Of course there is risk in investing, but this mitigates a lot of that risk.
For example we had a downturn in Sydney, Perth, Brisbane, Melb (as much as 7 years) - markets all started rising about 2-3 years ago, however prior to this they went backwards depending on the area/location. I have said before many times and I say again, its so important to buy something that you can add value to, that's fits in your portfolio and balances the cash flow situation. And bought below market value. All these factors will greatly reduce risk on every front IMO.
My point is SChange's strategy is very smart because he gets in when the market is rising and bails prior to it peaking, he is maximising his returns and finding other opportunities/markets to play in and reducing his risk/debt. Perhaps holding 50% of the stock, this makes sense. I agree that he has done well and I told him so in the thread. I have no problems with his strategy, I just wouldn't recommend it to everyone. See change is not the 'average' investor by a long shot, I have spoken to him and hes massive on the 'adding value' and buying below market value front .
When you have been through many cycles then the idea/notion of holding properties forever sounds great in theory but don't try it at home unless you have your bases covered. MTR IMHO the problems start to arise when a portfolio is not built property, from the ground upwards. Cash flow needs to balanced, certain loans needs to be fixed, each purchase needs to be bought under market value, scop to add value, in the right demographical area etc IMO. Very few ppl approach it this way from the beginning, and that's why problems will come later on IMO.
Cheers
leo
MTR[/QUOTE
It certainly didn't stop us...we went gung ho for 6 years and amassed all the properties we wanted.
But just because you don't want to believe a recession/depression is coming...just doesn't make it true.
HI MTR,
Ive been though a few mate. Because I don't only invest in one state. So as u know different states/suburbs/areas have different cycles at same time. Its not my first rodeo of a cycle, that's for sure The problem is ppl can and do get into trouble at 2,3,4,5,6 o clock of a cycle if they didn't properly (and there is a lot involved in 'properly' IMHO) buy at the 6,7,8,9, (perhaps 10) of a cycle IMO.
Leo
Hi Leo
While you may consider investing in different places at relatively close time frames as going though different cycles , I'd probably disagree with you .
The big variables are the economic / financial ones and those are generally Australian wide and these tend to have a greater variation , rather than state to state . In the last cycle , we had a PPOR and commercial property in Sydney , and investments in Logan , rocky , Townsville and Hobart and all of those investments followed a similar pattern .
This cycle has been different , in particular in Sydney to last one .
Cliff
Kathryn
I think it also helped that you were purchasing cash flow properties from day 1, am I right? Huge one
I love recessions or downturns in the markets.
That's where the best deals are gotten by savvy investors