Inflation

[divs4ever]

View attachment 172919

Only took 18 months but we got there eventually.

and here i was thinking bond-traders were 'the smartest guys in the room ' starting to look like that room is in a 'special needs facility '

but maybe AI was giving them advice ( not to look at history )

 

[divs4ever]

But I was thinking more like reits holding a diverse range of income producing property, like CLW. Not direct property.

am tilting ( slowly ) that way as well , but there will be extra risks/buying opportunities , since most rely on more than 20% gearing

although i do watch selected niche REITs as well , and also tangible assets as well

 

[Chipp]

gold will take 11 months to sell too, if you price it above market.

But I was thinking more like reits holding a diverse range of income producing property, like CLW. Not direct property.

That can be sold quicker than physical gold, but also as I said because it throws off about 7% income, it’s not really required to sell, but if you retired with $1 Million of gold or about 500 ounces, you have to sell 1 or 2 ounces a week and burn though your capital base because it generates zero income.

Bitcoin is the new gold and i think this is why the volatility of gold has fallen away , the new goldbug is a crypto bug . Anything with zero yield needs capital gains and bitcoin can provide more potential there and yes i know its all a double edged sword . The point is they are both silly assets in their own way and a little cult like . But i will say this Bitcoin is way more tradable but you definitely need a systematic approach 100% based on technicals

Edit chart attached showing the decline in volatility since BTC became a thing , thats 200period weekly ATR as % fwiw

 

[Value Collector]

Bitcoin is the new gold and i think this is why the volatility of gold has fallen away , the new goldbug is a crypto bug . Anything with zero yield needs capital gains and bitcoin can provide more potential there and yes i know its all a double edged sword . The point is they are both silly assets in their own way and a little cult like . But i will say this Bitcoin is way more tradable but you definitely need a systematic approach 100% based on technicals

Edit chart attached showing the decline in volatility since BTC became a thing , thats 200period weekly ATR as % fwiw View attachment 172936

Bitcoin is not the new gold, gold has a real world industrial value, bitcoin has no real world value. (By the way, I own zero gold except for my wedding ring and whatever is in my electronics)

I do agree that Bitcoin has replaced gold in terms of being the current speculative fad, but it can’t replace gold long term.

Bitcoin is going to end badly, because the main reason people are buying it is speculation of capital gains, this will eventually fad away and It will return back to its base value which is pretty much zero.

 

[Value Collector]

am tilting ( slowly ) that way as well , but there will be extra risks/buying opportunities , since most rely on more than 20% gearing

although i do watch selected niche REITs as well , and also tangible assets as well

20% gearing isn’t a problem, think about if the underlying properties throw off 5% net returns, at 20% gearing interest rates need to rise to 25% before they eat up all the income, and the leases are inflation adjusted so go up every year.

 

[divs4ever]

20% gearing isn’t a problem, think about if the underlying properties throw off 5% net returns, at 20% gearing interest rates need to rise to 25% before they eat up all the income, and the leases are inflation adjusted so go up every year.

some let gearing creep over 40% then property valuations become the elephant in the room ( not just interest rates )

interest rates ( for property loans ) will increase because the lenders ( usually ) won't want illiquid assets on the books ( even if they are likely to have solid capital gains over the next ten years ,

 

[Value Collector]

some let gearing creep over 40% then property valuations become the elephant in the room ( not just interest rates )

interest rates ( for property loans ) will increase because the lenders ( usually ) won't want illiquid assets on the books ( even if they are likely to have solid capital gains over the next ten years ,

I don’t consider 40% gearing to be a problem either, what is important is whether the cashflow coming in from rents covers the interest and leaves some extra to be paid out to the shareholders.

if property values dropped a bit because interest rates changed the markets income expectations, and that made the loan to valuation go up higher than 40% for a while, I see that as mend of artificial, and over time that will correct as interest rate expectations moderate and rental income continues to grow with inflation.

 

[divs4ever]

I don’t consider 40% gearing to be a problem either, what is important is whether the cashflow coming in from rents covers the interest and leaves some extra to be paid out to the shareholders.

if property values dropped a bit because interest rates changed the markets income expectations, and that made the loan to valuation go up higher than 40% for a while, I see that as mend of artificial, and over time that will correct as interest rate expectations moderate and rental income continues to grow with inflation.

40% makes me nervous , and commercial property values could plummet ( in certain sectors ) and the underpinning loans are often collateralized on the property valuations

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms​

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

now this might be a California ( and New York ) thing , or the beginning of a trend

 

[Chipp]

40% makes me nervous , and commercial property values could plummet ( in certain sectors ) and the underpinning loans are often collateralized on the property valuations

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms​

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

now this might be a California ( and New York ) thing , or the beginning of a trend

Almost none of this CRE is marked to market and thats not the only asset valued wrong . This is the danger , when these ' margin call ' type events occur the knockon effect doesnt need to go that far to get right out of control . A margin call event marks it to market immediately . Whilst most of the market has no credit event on their horizon the danger is out there , its all great while markets keep rising .

 

[TimeISmoney]

40% makes me nervous , and commercial property values could plummet ( in certain sectors ) and the underpinning loans are often collateralized on the property valuations

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms​

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

now this might be a California ( and New York ) thing , or the beginning of a trend

I own a rental outright and some years I don't break even. Just out of covid, I had tenants who left their young adult kids in my rental after they bought, 16k later and 3 months without rent. They broke some stuff, paid for half and while I had the home off-line I did some long awaiting repairs but if I had to engage tradies for everything I would most likely double that figure. Some people just live in fantasy land, a lot of the money you get from rent you end up pumping back into the home in the long run.

 

[Value Collector]

40% makes me nervous , and commercial property values could plummet ( in certain sectors ) and the underpinning loans are often collateralized on the property valuations

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms​

Default: San Francisco Four Seasons Hotel Investors $3 Million Late On Loan As Foreclosure Looms | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

now this might be a California ( and New York ) thing , or the beginning of a trend

It all comes back to serviceability, if they rental incomes are strong and growing, there is real limits to how much valuations can fall.

 

[Value Collector]

I own a rental outright and some years I don't break even. Just out of covid, I had tenants who left their young adult kids in my rental after they bought, 16k later and 3 months without rent. They broke some stuff, paid for half and while I had the home off-line I did some long awaiting repairs but if I had to engage tradies for everything I would most likely double that figure. Some people just live in fantasy land, a lot of the money you get from rent you end up pumping back into the home in the long run.

A single residential property is a far cry from a property of 100’s of diverse industrial, commercial, retail and social property like CLW.

Most of CLW’s assets are triple net leased for a start, and very long term.

for example they own the Arnotts factory in Sydney on a 30 year lease, with the e tenant paying 100% of all outgoings and maintenance, and annual rental increases. borrowing 40% against something like that is not a problem.

I mean take a look at that, prime industrial realestate, in Australia‘s largest city, no outgoings at all, and rent that increases each year. And that’s just one property in a diverse portfolio.

 

[qldfrog]

I own a rental outright and some years I don't break even. Just out of covid, I had tenants who left their young adult kids in my rental after they bought, 16k later and 3 months without rent. They broke some stuff, paid for half and while I had the home off-line I did some long awaiting repairs but if I had to engage tradies for everything I would most likely double that figure. Some people just live in fantasy land, a lot of the money you get from rent you end up pumping back into the home in the long run.

There is a reason many investors are selling while rents are supposedly so high...even with these rents, hardly money worthy...

 

[TimeISmoney]

A single residential property is a far cry from a property of 100’s of diverse industrial, commercial, retail and social property like CLW.

Most of CLW’s assets are triple net leased for a start, and very long term.

for example they own the Arnotts factory in Sydney on a 30 year lease, with the e tenant paying 100% of all outgoings and maintenance, and annual rental increases. borrowing 40% against something like that is not a problem.

I mean take a look at that, prime industrial realestate, in Australia‘s largest city, no outgoings at all, and rent that increases each year. And that’s just one property in a diverse portfolio.

View attachment 172956

There's a lot of money to be made from commercial leasing, but I tell you from experience it's much harder than residential. Your holding costs are way higher and the vacancies can be anywhere from 3 months to 3 years and then you have the problem that most businesses don't survive past 10 years. There are very limited laws protecting owners, long leases like Arnotts are like hitting the jackpot.

 

[qldfrog]

There's a lot of money to be made from commercial leasing, but I tell you from experience it's much harder than residential. Your holding costs are way higher and the vacancies can be anywhere from 3 months to 3 years and then you have the problem that most businesses don't survive past 10 years. There are very limited laws protecting owners, long leases like Arnotts are like hitting the jackpot.

At the individual level:
I have owned:
Warehouse, unit in town and holiday unit.
#Best Money earner was on warehouse but once vacant, can take forever to find new tenant..and yes some very short term tenancy as Business collapse..or grow.

#Std rental.unit in city...not really money worthy..and recipe for headaches and Covid style/defaulting..no rent whether legal or not.
Never again especially after the last laws in Qld about pets and tenant freedom to redecorate....

#holiday unit: high rotation and maintenance costs , if on Airbnb, was a real money earner but now council SC are piling up troubles...
I am out and very happy to be so

 

[Value Collector]

There's a lot of money to be made from commercial leasing, but I tell you from experience it's much harder than residential. Your holding costs are way higher and the vacancies can be anywhere from 3 months to 3 years and then you have the problem that most businesses don't survive past 10 years. There are very limited laws protecting owners, long leases like Arnotts are like hitting the jackpot.

you can by CLW shares on the share market any business day of the week and take part ownership of that Arnotts factory, and the rest of the diversified long lease portfolio.

i am not suggesting people go out and buy property directly, I am saying invest in through reits, and earn 7% of so income, with no stress of tenants or maintenance etc etc.

 

[divs4ever]

you can by CLW shares on the share market any business day of the week and take part ownership of that Arnotts factory, and the rest of the diversified long lease portfolio.

i am not suggesting people go out and buy property directly, I am saying invest in through reits, and earn 7% of so income, with no stress of tenants or maintenance etc etc.

i hold CLW and several REIT rivals but still watch , gearing , vacancies , rising costs ( acquisitions and sales )

REITs have their charms but don't ignore the risks

 

[Value Collector]

i hold CLW and several REIT rivals but still watch , gearing , vacancies , rising costs ( acquisitions and sales )

REITs have their charms but don't ignore the risks

I don't ignore the risks, I just weigh them up rationally and when the market is over stating the risks I take advantage of that

I equal amounts of CLW and CHC, so have exposure to both the property holding and property management side.

 

[over9k]

RBA holds. Exactly as expected.

 

[Chipp]

RBA holds. Exactly as expected.

Was never going to be anything different