whoops just lost +200K

over the last 6 months, a solid 5% drop of my total property portfolio of $4m+.

Fortunately, the 18 months before saw a rise of about 15% so that would mean I'm 10% up, less inflation, less my small NG component +the devaluing of my debt against inflation etc. Fortunately, I've been in the game for a while so a couple of years does not yield a trend.

Unfortunately, I cant see much up side this year but I have a fair amount of work on to keep me going for a little while. Just have to work out how to pay private school fees :(
 
over the last 6 months, a solid 5% drop of my total property portfolio of $4m+.

Fortunately, the 18 months before saw a rise of about 15% so that would mean I'm 10% up, less inflation, less my small NG component +the devaluing of my debt against inflation etc. Fortunately, I've been in the game for a while so a couple of years does not yield a trend.

Unfortunately, I cant see much up side this year but I have a fair amount of work on to keep me going for a little while. Just have to work out how to pay private school fees :(

Pieman some things i consider when looking at the future for residential property prices.

Pro's

- Increasing incomes: This makes property easier to purchase (I work in public sector and we have guaranteed increases of 3.5% P.A until 2014)

- Increased costs to build (from increased wages, possibly increases in materials)

- Supply/Demand: This could go in either column (Pro or Neg) which would be number of new dwellings added vs increase in population.

- As Negative as some people are on this forum, alot of average joes and janes are still buying and they personally see good value.

- Areas which are increasing facilities/infrastructure (this gives value to properties) eg. New shopping malls, transport links etc.

- Favorable tax treatment (No CG tax on PPOR, 50% discount for investors if held for longer then 1yr)

Negative points:

- Source of funding from banks being overseas (being offset at the moment by strong deposit growth)

- Mindset shift (possibly people now/in the future may drift towards renting rather then ownership)

- China bust

- Interest rates increasing (decreasing affordability) As alot of new entrants to the property market are already feeling the pinch putting downwards pressure on prices.



As i've said before, their will be good years, bad years and ones which stink the joint out.
 
over the last 6 months, a solid 5% drop of my total property portfolio of $4m+.

Fortunately, the 18 months before saw a rise of about 15% so that would mean I'm 10% up, less inflation, less my small NG component +the devaluing of my debt against inflation etc. Fortunately, I've been in the game for a while so a couple of years does not yield a trend.

Unfortunately, I cant see much up side this year but I have a fair amount of work on to keep me going for a little while. Just have to work out how to pay private school fees :(
If you could go back in time, would you sell one before the drop?
 
mmm, maybe one that's been an ordinary CG performer, but if I did that I would have definitely replaced it with something else. Maybe something like one of my favourites, a land value only with a crappy house to update with the view to do a dual occ in the future.
 
4m...cant pay school fees?
My heart bleeds for you poor rich people

This is the type of comment we expect from the poor with the resentment chip on their shoulder about the rich....

I thought you were an aspiring rich and successful person PB, and surely above that mentality?

I think Pieman is asset rich and cash poor at the moment by the sounds of it.
 
This is the type of comment we expect from the poor with the resentment chip on their shoulder about the rich....

I thought you were an aspiring rich and successful person PB, and surely above that mentality?

I think Pieman is asset rich and cash poor at the moment by the sounds of it.

But chosen lifestyle must not be beyond available means- I know you would agree Marc.
 
But chosen lifestyle must not be beyond available means- I know you would agree Marc.

Agree totally,

but some people ARE actually not living above their means, are asset rich, and have no cash.

Of course, in Pieman's case there are the private school fees - which can be deleted by moving the kids to a Public/Gubbmint school (don't know his circumstances and he may be able to cope quite well).

I have seen numerous times people I know who have continued to escalate the standard of living to fill the income as it increases, and find it VERY difficult to go the hard yard and take a lifestyle cut when times got tough.
 
Cashflow versus equity

over the last 6 months, a solid 5% drop of my total property portfolio of $4m+. If your IP's are near where you live, I'd say the softening would be more than 5% :(

Fortunately, the 18 months before saw a rise of about 15% so that would mean I'm 10% up, less inflation, less my small NG component +the devaluing of my debt against inflation etc. Fortunately, I've been in the game for a while so a couple of years does not yield a trend.

Unfortunately, I cant see much up side this year but I have a fair amount of work on to keep me going for a little while. Just have to work out how to pay private school fees :(

Pieman, it sounds like cashflow is the issue here and not equity softening. These properties that have given some ground, would still be returning you the same rent..............unless you were counting on servicing school fees from equiy (LOC or offset or similar). Not sure on your strategy.

If it's cashflow then, perhaps look at trading a high cap growth asset for more of a yield play.

I have sold our former PPOR close to your parts and let me tell you, the softening was more than 5% over the past six months. Sentiment of the herd even in bayside Melbourne is watch this space............

It's precisely that sentiment that has stalled much of the Melbourne market that I am familiar with. Herd mentatlity and all that.....there is (perceived) safety in numbers. The buyers are in well and truly in control now and are pulling the puppet's strings.

We sold as those (cash) funds will seed opportunites up north, Brisbane specifically to further increase rental income for us. To have rented it out, and copped a circa 2.5%-3 % gross yield and the disproportionate land tax impost whilst worrying about the tenants looking after pool, gardens etc, would not be prudent for our situation. I don't see that market moving for a couple of years and, that excludes any other black swan event, flying PIIGS and other global speed bumps.

I still have exposure to properties that are of the capital growth ilk nearby, so will ride those coat tails during the next major upswing, which may take 5-7 years IMHO.

I am pleased we have quit two high land worth properties in Melbourne, one a year ago and our recent sale. Yields will remain ordinary for now in Melbourne.

Your further post will help your situation less. If you are looking for an old box to eventually bulldoze on good dirt you will be impacting your cashflow further in negative gearing costs from your pockets using after tax dollars.

If you want/need cashflow (as your OP indicates) you will need a different asset and more than likely a different location. The growth swings are (as you would no doubt be aware having been in the game for a lengthy time) par for the course. If LVR's are sensible, there should be no problems on that score.

Good luck with your future strategies :)
 
What type of private school is it? If it's a Catholic school they are usually very understanding when you're having financial difficulties. Speak to them and set up a payment plan! It's very easy to say move your kids to a government school but that can be really disruptive depending on what year level your children are in, schools are generally pretty understanding of that and will do what they can to help you.
 
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