Opportunity -- Property -- After 20 yrs its here again

[Humid]

Yep, cash is king at the moment.

I don’t feel like a King with what Westpac are giving me for mine

 

[SirRumpole]

I don’t feel like a King with what Westpac are giving me for mine

Neither do I , but at least it's safe.

 

[tech/a]

Is it?

Cash sitting doing nothing
Erodes in buying power.

 

[aus_trader]

The economic rhetoric via the media is without depth. Businesses are in trouble and closing, workers are losing work hours. The latest interest rate move down has been dressed up as the saviour but analysis of political and business spouting lacks tangible value. Base materials etc., exported are doing well but do not feed back to assist our economy.

I would hold off on buying a home or investing in property for awhile yet.

Thanks for the run down on the "pulse" of the economy at the moment. IMO property is a very long term thing and I cannot see how it could be bought and sold like shares for shorter to medium term gains. So I'll be happy to wait for the time being. Besides it's a huge sum of money that needs to be put up for property investment.

However there are ways to benefit from the current return to the appetite for property using the share market. There is a whole host of beneficiaries who ride on the back of property booms the most obvious of which is the banks who lend out the mortgages. Banks have rallied back up fast, so I am looking for other beneficiaries. Therefore I try to align myself with such in my share purchases at the moment, as mentioned in my earlier post.

 

[tech/a]

Aus
If you have equity you can build a property portfolio
With no $s down
Did it myself!

 

[sptrawler]

interest rates still due for 1 or 2 more cuts, prices still falling.... good opportunities now perhaps even better in a year or 2

Catching the bottom is always difficult, by the time everyone recognises it, it is too late.
IMO much easier, to understand your market and picking the distressed assett sale when it presents.

 

[tech/a]

Don’t care if it’s a bottom or not it’s about the NUMBERS

 

[againsthegrain]

Catching the bottom is always difficult, by the time everyone recognises it, it is too late.
IMO much easier, to understand your market and picking the distressed assett sale when it presents.

I agree with that but isn't it better to catch the knife on the recovery rather then on the way down not knowing how deep the hole is?

 

[sptrawler]

I agree with that but isn't it better to catch the knife on the recovery rather then on the way down not knowing how deep the hole is?

IMO property is a bit different to shares, if you know your market you keep your eyes open, there wont be many opportunities in really good quality areas. You have to be ready to grab the opportunity w hen it arises.
It may be a property that you can buy now and rent out for several years and then move in.
In top areas they only take massive hits a couple of times in a lifetime, shares happen much more often.
Just my opinion

 

[Smurf1976]

IMO property is a bit different to shares, if you know your market you keep your eyes open, there wont be many opportunities in really good quality areas. You have to be ready to grab the opportunity w hen it arises.
It may be a property that you can buy now and rent out for several years and then move in.
In top areas they only take massive hits a couple of times in a lifetime, shares happen much more often.
Just my opinion

Also with RE you're dealing with one seller for any given property. It's not like buying shares where for anything other than an extremely illiquid stock there's going to be multiple sellers.

You're in a better position to negotiate the price down so long as that seller perceives that the bottom hasn't occurred yet and that every week they don't sell is costing them money.

 

[qldfrog]

Is it?

Cash sitting doing nothing
Erodes in buying power.

Sitting in cash erodes at around 2pc a year, i can wait 10y and lose 20pc
Or the same as a 2 months minor share correction, 1 or 2 years minor correction RE
The fact is: Australia has an unusual recent run, not matched in any other economy
You also have to realise you hear of course of the successes, the losers are not here on that forum.
The mortgagees of the bowen basin recently but also the real estate investors of the 1980s
I bought my first home here in brisbane in the early 90s at the same price as it was sold to the previous owners in the 80s, 10pc interest rates or more, inflation 4 to 5pc a year at least, and 0$ increase for 10y , if you add stamp duties and costs, see how good real estate has been then for these investors
You know the " can not lose b" mortar assets...
So i for one do not believe RE is that solid an asset and while you can sometimes get some return, it has a cost and is very inflexible
BUT i do believe that indeed it could be a good bet now, but a bet it remains
And no stop loss
As I see it in brisbane outer ring, for houses, market has been reasonably flat

 

[Smurf1976]

One thing can be said with absolute certainty.

RE in Sydney, Melbourne or Perth is a better bet now than it was at the height of the boom in those cities. However good or bad it is to invest now, it's better now than it was previously.

The other capitals haven't had any real decline and for regional areas it will vary.

 

[aus_trader]

Aus
If you have equity you can build a property portfolio
With no $s down
Did it myself!

There might be pocket of the market that may offer good value, so will monitor any good investment opportunity.
But I am in no rush to invest in property. To put it into reality most properties are double the price of what they were only 5 to 10 years ago, despite the recent decline since last year.

 

[tech/a]

Yes that’s very true and 4-6 x what they were 20 years ago.

The numbers work and like all business decisions the numbers have to
Be right.

I felt the same as you from 2006 sold all properties over the next 10 years
I had 10
In retrospect my fear of loss cost me around $150k a property.

We all make our own decisions and live by them.
I get them as wrong as anyone else.

Back 15 -20 years ago I was buying $90k properties which did double
Making $90k
Today a $450k property has to increase 20% for the same $90K
Scale! I don’t need them to double!

 

[CBerg]

Yes that’s very true and 4-6 x what they were 20 years ago.

The numbers work and like all business decisions the numbers have to
Be right.

I felt the same as you from 2006 sold all properties over the next 10 years
I had 10
In retrospect my fear of loss cost me around $150k a property.

We all make our own decisions and live by them.
I get them as wrong as anyone else.

Back 15 -20 years ago I was buying $90k properties which did double
Making $90k
Today a $450k property has to increase 20% for the same $90K
Scale! I don’t need them to double!

When you say it's all about the numbers tech/a what sort of analysis do you do?

I read you're preferring growth over cashflow buying bigger blocks close to the water.
Are you buying with high or low LVR? Does negative gearing come into it? I think you said houses but would you buy apartments/units in the right circumstances?

I'm just starting out with property investing and I'm trying to consume as much as I can.

 

[Trendnomics]

Back 15 -20 years ago I was buying $90k properties which did double
Making $90k
Today a $450k property has to increase 20% for the same $90K
Scale! I don’t need them to double!

Right....but you don't see a problem with risking 5 times as much capital for the same return? Or are there no inherent risks with property investing (same bias perpetuated by every muppet out there)?

Not much of an opportunity, nor is it an equivalent opportunity compared to 20 years ago.

 

[tech/a]

While it’s a similar $ return it’s not a similar %

In the case I’m looking at it’s a distressed sale bought in 2017 for $520k
Have offered $460k
2 have sold in the same vicinity for $535 and $510 respectively in the last 4 mths.

It needs about $20k to bring it to premium
I have Tennents I know at $450 a week sorted
That’s about 5% and growth in the area over the last yr is
8% happy with 3%
I’m not saying EVERY sale is an opportunity
But they are there.

Yes there are problems with most everything to do with Investments
But you can’t let challenges STOP you.

 

[Austwide]

Property has been my form of investing for many years. I only see one creditable risk - HAVING to sell in down times. Houses go up mostly but down at times. Population keeps rising, we all have to live somewhere. The old supply and demand. I suppose i am stuffed if we all go and live on Mars.

The only expensive house to buy is the one you live in. The rest only cost the difference between rent and costs.

As Tech says, do the numbers. Rent in less cost like interest, rates, maintenance, insurance, land tax, etc means a house may only be $100 per week out of pocket or even less. Most of that cost is principle repayments which is really forced savings. A few years later those numbers are even better.

Rule 1 Most important is to have a buffer so even if the house is empty for 6 months you don't need to sell.

Land appreciates, buildings depreciate. More land (house vrs unit) generally equals better capital growth but lower returns.

Rule 2 Don't take any advise from anyone (real estate wise or anything wise) unless they do what your planning to do.

Some say there not liquid enough. True but once set up, that makes them better as you can just borrow against them.

Example in 2000 I got made redundant. Prior to finishing work I set up a line of credit against my house. 40K payout = deposit on 2 houses at 95K ea. I possibly had to chip in a bit for a year or 2 (not much as I was unemployed). Houses have been paid off 10 years ago, worth K600 ea or maybe only 500 now in this down market but who cares. Rents haven't fallen and I don't need to sell. the fact I could borrow against them to invest elsewhere kept the capitol growth happening.

Back then you could buy any house for that to work, but I think today you have to be a bit more creative and find an opportunity

 

[aus_trader]

If you take the same analogy as shares for property, how much risk would have to be taken for a potential 20% upside ? I kind of lean towards Trendnomics's argument.

Not saying property is a bad investment or anything, in fact I would be willing to buy investment property at lower prices with all the leverage that comes with it by putting a small deposit down. But if you look at the last part of the Aus property chart (the exponential part), it's in unprecedented territory. We can make all the arguments whether as to why Australian property should be so valuable but I think a 'reversion to mean' is also a possibility. By that I don't mean a collapse, but a more sustainable growth from a lower base formation after a period of decline. Since I believe property is a long term investment, I am happy to wait for the time being...

 

[tech/a]

Yes I agree that is a strong possibility
Almost a certainty.
I personally am hoping I will get my 20%
Before the longer term plateau.
At sometime there will be inflation
At that time I’ll want some property