Courses For Real Estate?

[ThingyMajiggy]

Yeah ok, i don't have much knowledge about futures or CFDs. I thought that CFD brokerage was fairly high? You pay for the margin loan on CFds though don't you?

But small accounts on stocks you are almost setup to fail especially in AUS the US isn't so bad.

Depends on what you're trading and how long you're holding for, in both CFDs and futures, can up the prices a fair bit. But short term intra-day stuff is pretty reasonable

Agreed, small account on stocks in AUS would definitely be a no go for me!

 

[darkhorse70]

They may be more of a killer on shares, but not so much on CFDs or futures? AMP do $500 margins for the ES and usually around say $2.50 RT to trade it, with 1 tick being $12.50USD, literally 1 tick and you're in profit and covered brokerage? And CFDs it depends what you're trading, but usually 1 point spread and no comissions at all on indices. Doesn't get much better/cheaper.

Well on cfd I was out of the money at around $6 when I initiate a trade and then another 6$ when I exit the trade. That is on 1 lot. 2 lots = $10 = $20 RT (for MINI CL)

I cant remember exactly what the case was for amp but im sure its more than $2.50.

Atleast 5$ RT but when you do 3 or 4 trades a day, that racks up quickly lol (atleast for a small sized account).

 

[darkhorse70]

I think treasuries were $2.5 RT per lot on amp .

 

[darkhorse70]

That being said, it wasnt the reason for my demise. It just sped it up slightly haha

 

[Roller_1]

That being said, it wasnt the reason for my demise. It just sped it up slightly haha

But still makes it extremely difficult even to break even!

 

[ThingyMajiggy]

Well on cfd I was out of the money at around $6 when I initiate a trade and then another 6$ when I exit the trade. That is on 1 lot. 2 lots = $10 = $20 RT (for MINI CL)

I cant remember exactly what the case was for amp but im sure its more than $2.50.

Atleast 5$ RT but when you do 3 or 4 trades a day, that racks up quickly lol (atleast for a small sized account).

Wow if that's the case, you were with the wrong CFD provider! I trade the DAX on CFD and there's no commissions, just the 1 point spread, which can be better than what you get in the futs market anyway.

Whatever the commissions were on AMP, my point is with 1 tick you're in profit. But yeah not the main reason for your demise, was just replying to the previous post about needing 24% to break even.

If you're trading didn't work out because of a small account, how on earth are you going to make property work? Surely that requires a much larger outlay to begin with?!

 

[darkhorse70]

I agree Roller.

Wow if that's the case, you were with the wrong CFD provider! I trade the DAX on CFD and there's no commissions, just the 1 point spread, which can be better than what you get in the futs market anyway.

Whatever the commissions were on AMP, my point is with 1 tick you're in profit. But yeah not the main reason for your demise, was just replying to the previous post about needing 24% to break even.

If you're trading didn't work out because of a small account, how on earth are you going to make property work? Surely that requires a much larger outlay to begin with?!

Thingy, I am with IG and yeah, the spreads were a few ticks wide. I thought it looked reasonable as I figured that if brokerage from a broker was around $6 or slightly more per RT, then i assumed that cfd would be a bit higher?
To make things worse, I remember flipping like 3 or 4 times in one trade because I felt the market was at a cross roads but was not sure which way it would turn!

In regards to the property stuff, to be honest I wanted nothing to do with it but my dad is considering investing in property especially now that he's entering his late 50's. My dads saying stuff like the family should work as a team etc etc so i'm like well I might as well try and be useful and add value. The other part of the equation is that, if we ever do sell our house and move away from the city, then we will have a lump sum of cash and not many people at my age get to be part of some thing like that. So I need to pull my head in and educate myself about RE. Im not trying to convince my dad to do some thing like that but it's not as irresponsible as advising my dad to invest in the markets or futures. As long as you're not a complete moron and dont have the worst luck, then property should be safe enough?!

 

[Roller_1]

I agree Roller.



Thingy, I am with IG and yeah, the spreads were a few ticks wide. I thought it looked reasonable as I figured that if brokerage from a broker was around $6 or slightly more per RT, then i assumed that cfd would be a bit higher?
To make things worse, I remember flipping like 3 or 4 times in one trade because I felt the market was at a cross roads but was not sure which way it would turn!

In regards to the property stuff, to be honest I wanted nothing to do with it but my dad is considering investing in property especially now that he's entering his late 50's. My dads saying stuff like the family should work as a team etc etc so i'm like well I might as well try and be useful and add value. The other part of the equation is that, if we ever do sell our house and move away from the city, then we will have a lump sum of cash and not many people at my age get to be part of some thing like that. So I need to pull my head in and educate myself about RE. Im not trying to convince my dad to do some thing like that but it's not as irresponsible as advising my dad to invest in the markets or futures. As long as you're not a complete moron and dont have the worst luck, then property should be safe enough?!

In my view property doesn't turn me on much, such a massive outlay (especially in the cities) and the time taken to gain a decent ROI can be large. In saying that it's been booming lately. If you can buy property where the rent covers all expenses it is ok..

I am gathering that your are mid 20s? If you had a decent account + strategy and start compounding profits now then by the time your 40 you could have a huge nest egg. That's my plan

 

[darkhorse70]

Hey Roller, yeah im 24 in a few weeks.

No decent account size and yeah it doesnt excite me much either but thats because I havent made money off it. If you generate some profit, its motivating and exciting.

And yes, positive geared properties is the way ill be going. Less pressure financially and it wont burden me if the economy does turn slightly south. Just need to make sure youre buffered enough from risk.

 

[ukulele]

Real estate has many positives and negatives, just like trading. You have to decide which vehicle suits your personality, or a mixture of both (which is what I am now doing)

A bit about me, I'm 31 and own two properties, one is ok one is a dud. I'm now starting to get back into the share game and also trade a little bit.

Here is a real life case study (this is my "good" property)
I bought the property for 370k 3 and a bit years ago, it is a duplex so has 2 units on it returning 255 a week each. Now on face value that seems like a good yield 255*2*52 / 370 = 7.17%. However let's dig deeper... On the buy side, you are not actually outlaying 370, you have to add a touch over 5% for stamp duty and closing costs. On the rent side you pay 6.6% or 7.7% rental management fee. Let's say you have 2 weeks of vacancy, which is actually really common, what is the yield then: 6.13%

Not only vacancy but then if you have to lease it out to new people, thats a two week fee (normally) and advertising costs which could be 300 bucks. Then, you have water rates, council rates and insurance, not to mention maintenance costs. Then you have tenants which are always late in paying. All of a sudden a 7xx% yielding property is now yielding 5xx%; plenty of shares in that space.

It ****s me when people talk about the yield they simply multiply the weekly rent by 52 and divide it by the advertised price, this is completely wrong, no one even counts stamp duty in calculations; especially in the media.

Ok so now for the positive side; it is an easy block to develop and it has been revalued at 500k. I've never sold a property so let's assume selling costs of 4%. Profit = Sell - Buy (ignore holding costs for now) = 500000x.96 - 370000x1.05 = 91500. I think I had 80k deposit so i've basically doubled my money in less than 4 years, much better than my trading. Holding costs are basically 0 because it is cashflow neutral, slightly positive now with the interest rate cut.

The good thing about property is the fact that the initial transaction cost is so high. This forces you to think long term. Shares can go up and down massive amounts quickly and on the downside that effects you mentally. On the upside you feel like a king but in all honesty that is probably just luck on your side. Property is for sure less volatile. You are also basically forced to use leverage which can be good and bad, but you are forced to work hard and pay it down.

The bad thing about property is the same as the good thing; the fact that the initial transaction cost is so high, how long will it take for you to save 50k? Trading indices I pay a 1 point spread and AUD/USD 0.8 pips normally. No way the real estate game is that efficient

Good luck with the journey mate keep us posted.

 

[darkhorse70]

Hey Ukelele, appreciate your time posting your personal experience.

You had great points. I think I would fall victim to the "hidden" costs and I think thats why my dad gets mad at me when I propose these investing ideas as he knows that its not always as good as it seems.

I think what both trading and investing in RE have in common is understanding cash inflow and out, before you start not after. They are both risk vs reward in the end of the day.

In a perfect scenario which in this case is not too hard to ask would be to have a hand in both pies.

The best case scenario would be to get a positive geared property that was below 200k which are still around (not sure about the positive gearing though). That way I could gain the experience of what its like to manage your own property and all the costs and stresses that come with it. After all free experience is priceless.

I'll keep you guys posted but its a life journey so I guess it will take years to find out the end results.

Kind Regards

DH

 

[tech/a]

To me real estate seems a more reliable investment in a long term. It is not affected by economic turmoils as much as stock markets. Also short term rentals promise you decent returns - about 5-7% yields. Hiring a management company helps to avoid problems with finding new tenants . Its service costs 20−25% of the total rental revenue but the expenses will be rewarded with higher occupancy rates. So you just choose a one-bedroom apartment somewhere in the city center popular with tourists. If you consider overseas investments, look at Barcelona, it is a good option as it is a top-notch touristic destination https://tranio.com/spain/catalonia/barcelona/

http://www.spanishpropertyinsight.com/spain/catalonia/barcelona/investment/

Was over there a couple of years ago.
Occupancy rates were massive
Pries have fallen 70% In some parts
In others 100s of vacant property with no
Chance of sale.

In my opinion it will take 2 generations to return to any form of normality

 

[Klogg]

The good thing about property is the fact that the initial transaction cost is so high. This forces you to think long term. Shares can go up and down massive amounts quickly and on the downside that effects you mentally. On the upside you feel like a king but in all honesty that is probably just luck on your side. Property is for sure less volatile. You are also basically forced to use leverage which can be good and bad, but you are forced to work hard and pay it down.

In the interest of continuing the conversation, just a couple of points here:
- Where do you allow for stamp duty in that calculation?
- What about the risk for leverage?
- Shouldn't you be looking at return on the asset instead of return on equity? You can leverage up almost any asset...

 

[aaronmoonpropertymanagers]

Apply to work for experience in a reputable company and make your way from there. No better learning than from the best!