You know the property market is overheated when...

[Aceyducey]

The latest Shares magazine (July 2003) is recommending property investment.

It says that:

Macquarie Bank research has found that in the ten years to April, the return on listed property were 11.7 per cent a year compared with 10 per cent on listed Australian equities (the old All Ordinaries index and the ASX 300).

"If you took all the other 10-year periods, month by month since January 1976, you will find that listed Australian equities have outperformed listed property in 59.1 per cent of those periods", says David Shirlow, Macquarie's head of technical services.

Article: "Why going negative can be a positive", pp38
Shares July 2003

Overall the article still tries to spin that you are better off buying shares, cause there is an oversupply of inner city apartments, however it's pretty clear reading between the lines that they don't have much of a case to recommend shares over property right now

The article encourages margin lending (in shares) because now you can get insurance to protect against downturns.

It also says that it is easier to manage a $50K-$100K share portfolio than a $400K property.....hmmmm - not in my humble experience.

Cheers,

Aceyducey

 

[Garry K]

Acey, its the age old argument property v shares.

One of the traps these articles nearly always fall into is assuming Listed Property Trusts behave the same way as residential retail property. They don't.

There will always be opportunities somewhere in residential, provided you know your stuff and do your homework.

I think both property and shares have their place. I do both, but with different objectives.

Currently people are nervous about the lack of control they have with shares in companies. I'm referring to what some of the "clowns" who are running these companies are doing with shareholders money and how much they are getting paid. Plenty of examples around.

At least with property, investors feel they are in control. Which is okay, provided you know what you are doing.

There are just as many "scammers" in both markets looking to make a buck at someone else's expense.

Geekay

 

[D.T.]

Hi all,

Acey: I didnt think ya had to margin-lend into shares to get insurance against them going down, I figured a few options could do the same trick.

Garry: I agree there is a place for both in everyones portfolio. Though in my own opinion, property is alot easier to make wealth out of, even including some bad tenants, bad agents, insurance costs etc.

-Regards

Dave

 

[Rickardo]

I think it's easier in property because if you buy in a fairly decent area your property should go up pretty smoothly. You can also usually lend more to purchase a property, where as shares usually have an 80% LVR max. People also feel more comfortable lending to purchase property, which can increase their return.

Even some of the safest companies have been through some serious volatility in the last few years. But you can make a hell of a lot of money out of shares pretty fast with a bit of knowledge and luck.

 

[Will1]

Tenant grief, body corporate excesses, maintenence fees slow sales, estate agents < sorry asy>

vs.........

dividend imputation, low entry/ exit costs, no stamp, duty heaps of available research, ability to cover with options, ability to sell short ability to diversiy easily, ability to invest in any amount


I know this is a property forum folks and the the above posters are well experienced, but I wouldn't want property beginners to write off equity markets too lightly.

Will1

 

[Jimmyjamjars]

I was pointing out to Mrs. Jimmyjamjars only yesterday about an article that appeared in the "Smart Money" section of the local paper. You can send in your questions about finance and Noel Whittaker will answer them for you. 2 of the 3 letters sent in were questions about how they should go about buying investment property: ie "have 100k cash, should I buy 1 or split deposit to buy more". Noel proceeded to spruke about how they could do better with shares etc. This wasn't even what they were asking. They have obviously taken some time to decide about where they could best invest their hard-earned, but didn't get their question answered very well IMHO. I feel that a lot of these people should be called "Share Advisers" instead of financial advisers as they are reluctant in many cases to steer people towards IP's.

These views represent the opinion of ME
Jim

 

[Aceyducey]

Originally posted by Jimmyjamjars
I feel that a lot of these people should be called "Share Advisers" instead of financial advisers as they are reluctant in many cases to steer people towards IP's.

I agree Jimmy!!!

I've spoken to 5 financial advisors over the last six years. All of them recommended managed funds & share portfolios...not one considered property a good deal.

Guess I know who pays their commissions....but it tells you who they are really planning finances for - themselves!!!

Perhaps it will soon be a new endeavour by RE Agents & developers - to pay kickbacks to Financial Planners who recommend property (via their agency of course).

Cheers,

Aceyducey

 

[Rickardo]

Acey,

Why would an advisor recommend direct property when it provides them with no commission? Property isn't most advisors specialty anyway, and it's a hard area to give advice on because every property is different, where as shares/managed funds are exactly the same (one property may be completely different to the one next door, but an AMP share is exactly the same as the next AMP share).

Did you ever go to a fee for service advisor? Maybe they would be more inclined to give direct property advice.

 

[jahn]

quote:
--------------------------------------------------------------------------------
Originally posted by Jimmyjamjars
I feel that a lot of these people should be called "Share Advisers" instead of financial advisers as they are reluctant in many cases to steer people towards IP's.

Jimmy
I recently went to our accountant for specific advice on "what to do" and "how to go about" our next IP purchase, and ended up paying $180 to here about his recommendations ."Now is the time to get back into the stock market" - "Just recently I had a client who lost lots of money in property when interest rates sky rocketed"
(That was in 1988 for crying out loud.)

'Not happy Jan"
Seems like everyone is jumping on the "Financial advice" band wagon
jahn

 

[Wannabe1]

Hi, all,

Recently I posted a similar story in another section of this forum. I'm still trying to get my first IP, and my accountant charges me $100 to try to steer me AWAY from property. And whilst his advice probably wasn't wrong, it wasn't complete, either. He also gave me the impression that PIA software should not be treated too seriously.

After watching this forum for many weeks now, I KNOW where I want to go...I just need an accountant/adviser to take my money and steer me in the IP direction.

So if I may ask the question....does anyone know of a 'good-one' on the Gold Coast ?

Many thanks,

Will

 

[Mr. Fabulous]

Wannabe1,
Don't know any accountants on the Gold Coast, but I do know there are a lot of sharks, so watch yourself, ha ha. Okay, as far as accountants go, ya might wanna try Dale who posts on here, his website is www.gatherumgoss.com he is in Melbourne, but with internet and email, ya don't really need an accountant in your area, unless you really really want that hands on feeling (although to get that, maybe you should go elsewhere...).
As far as financial planners, well ya can't go wrong with Mr. Steve Navra, super financial planner extraordinaire. He is based in Sydney, but he has an office in Brisbane and he does seminars up in Brissy every couple of months. I think they cost about $286 these days for a two day deal, so it ain't expensive at all.
Check the archives for Navra or cashbonds, you'll be hard pressed to find any bad publicity anywhere, cause there ain't any! And on this forum, where it seems that some people are always itching to cut down those tall poppies, that's a pretty impressive feat. Check him out - you won't be disappointed, believe me!

Mark
'no hat, some cattle (but the herd is growing...)'

 

[brains]

A friend of mine is a FP and he dont have a clue about direct property investment. But Noel Whitaker might be recomending shares over property only in the current economic and property market conditions where every one is predicting a market correction and the stock market rally continuing for a couple of years.

btw: Yesterdays SMH had a lead story on fixed &/or variable interest rates dropping below 5% this year to be in line with world markets. Scary what that might do to the property market when rates eventually have to rise with all the additional punters the drop in rates will bring in.

Mark, have you heard the new White Sripes CD? Undecided wether to buy it but heard a couple of songs. Maybe you can give me a review

 

[Bill.L]

Mark,

"Check the archives for Navra or cashbonds, you'll be hard pressed to find any bad publicity anywhere, cause there ain't any!"

That's not entirely accurate. Some(including myself) have questioned the strategy of cashbonds given a period of no or negative growth, especially if the investor bought poorly in the first place.

Now getting back to the topic, I find it interesting how they only refer to LISTED property, as if the rest doesn't count.

bye

 

[Alan H]

Which is more time consuming........shares or property?

Well.......it really depends a LOT on how active you are in each area and what your overall strategies tend to be doesn't it?

Personally, I find property less of an overhead than shares. With property I self-mangage, do a bit of renovation etc. but still find I spend less time on property than shares. With property, I may go for weeks without having to do anything.......with shares, I seem to be doing 'something' almost every day.

If I added up my profits from shares and divided that by the number of hours I spend then maybe it's not a brilliant hourly rate.........but damn it..............I enjoy it! While I take a fairly conservative approach to shares, I find it both exciting and fascinating to what makes prices move. The associated reading I do, I find both educational and interesting so I feel I often get a lot of 'non-monetary' payback too. Mind you.....I'm always willing to accept both.

Horses for courses and personal taste can make up a lot of what type of investment best suits different investors.......

 

[Will1]

FPs are not perfect, but they are being increasingly regulated, and from next year with the new FSRA, they will be highly regulated < thank goodness>.

The same is not true of people who spruik real estate development as investment advice not sales talk. This is IMHO a disgrace that should be regulated highly.

As I mentioned above, please do not dismiss equities too lightly because this is a RE forum. DIVERSIFY!

I have made more on my equities this year than my IPs, and have not had maintenance, high transaction costs etc. Many people are not honest about their IP performance because when real property is doing poorly, supply just dries up, people do not sell, and avoid believing their property went down. Few properties are identical and so you do not have to say I lost money. In share markets you see the price of your shares all the time and have to deal with that.


Note, not all FPs work on commission, some charge fees for service eg x$ per hour, and if you have the skills and knowledge, use discount brokers and pay no comissions to anyone. There are books forums etc on shares and, just like most people here learn about RE buy putting in the research, the same goes for equities.

Would you all be happy with a FP telling you which IP to buy. Not me! same goes for other investments.


Btw I'm not an FP!

Will1

 

[Mr. Fabulous]

Brains,
Can't give you a review on the new White Stripes CD, I've never liked them.

Bill,
I wouldn't consider questioning the cashbond in that particular situation as bad publicity, merely debating the topic and looking at it from different angles.

Mark
'no hat, some cattle (but the herd is growing)'

 

[geoffw]

In regards to stories about Shares vs Property- there will be another in July's Personal Investor magazine (from what I can gather)- due about this time next month.

I understand will include a case study of a person who did not do well in property investment, but who did very well in shares, and one who has done OK in direct property investment after not doing well with shares. So direct propert investment is being looked at- not just property funds.

 

[Steve Navra]

Originally posted by Bill.L


". . . you'll be hard pressed to find any bad publicity . . . "

That's not entirely accurate. Some(including myself) have questioned the strategy of cashbonds given a period of no or negative growth, especially if the investor bought poorly in the first place.

Hi Bill.L

I wasn't aware that your opinion constituted bad publicity.

The sum of the parts is always greater than the individual components:

FYI, applying 'Rental Reality' . . . will avoid periods of no or negative capital growth. Also, on what basis would an educated investor 'buy poorly' in the first place?

Feel free to attend one of my educational courses if you wish to ascertain the workings of the entire structure.

Sincerely,

Steve

 

[Steve Navra]

Back to the Topic

You know the property market is overheated when...

. . . when you cannot find any property that is priced within 'Rental Reality' value . . .

Regards,

Steve

 

[Bill.L]

Steve and Mark,

Mark made the statement "check the archives for Navra or cashbonds.....", then proceeded to imply that no-one on this forum had ever said anything bad about them. This is not what I remember from some other threads.

Yes Steve, I know I gave cashbonds some good publicity in one thread which was based on my beliefs about what will happen in the next couple of years. But there have been other threads where forumites have discussed situations where cashbonds could be a poor choice. I know it would not be following your whole strategy, but that was not mentioned by Mark when he stated how good cashbonds were.

DISCLAIMER : All disclaimers from Nominee's disclaimer thread apply.

bye