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

sptrawler · 20 July 2019

moXJO said:
It's funny like that. If you find the right places you can get stuff manufactured for half the price of what it is out of Sydney. Yet the installers are often twice the price and slap it up. Rents and homes are ridiculously priced and I just don't see them coming down much inner-city (unless it's a condemned block of units).

It is the old supply and demand, if all the buyers walked away, there would be some distressed sellers and prices would fall. Then the bank's would be asking for more collateral, which would mean more distressed sellers and so on.
While there are people prepared to pay the prices, they won't go anywhere.
My son just bought a rural block, had to sell his 3. X 1 in Perth, at the peak it was about $350k, just accepted the only offer $220k had to take it.
He was lucky he bought it when he was 19 for $65k.

explod · 20 July 2019

The big dry, particularly inland appears to have no end.

People will have to follow the water.

tech/a · 20 July 2019

Wow
That’s the biggest drop
I’ve heard in Aust % wise

Friend in the UK bought a condo in Spain 20 years ago for £350k
Sold it 3 years ago for £68K

That hurt as he is retired now

Miner · 20 July 2019

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

I will open a reward account with the bank offers most. That will fetch better cash rate and easy availability. The only conditions are some regular cash inflow monthly (even $5 will do) and the month you draw, do not get the bonus rate. But consider you get filtered through getting nothing on normal accounts and have cash to blast when you need.

aus_trader · 20 July 2019

qldfrog said:
My apology tech/a asked the price. After you gave it..missed posts.. thanks for your openness
I come from a time where purchase at $xyz thousand would translate to $xyz a week rent.
Is that not true anymore?

The good old days are well behind us in terms of getting a good rental income IMO.

Actually tech/a's purchase is not bad as an investment or even if bought as a live in by owner occupier. It has nice spacious living areas and luxuries like a theatre room and gazebo for entertaining.

aus_trader · 20 July 2019

Miner said:
I will open a reward account with the bank offers most. That will fetch better cash rate and easy availability. The only conditions are some regular cash inflow monthly (even $5 will do) and the month you draw, do not get the bonus rate. But consider you get filtered through getting nothing on normal accounts and have cash to blast when you need.

Even with bonus interest added, the rate you get is very low as an annual %. Can't complain I guess since the official (RBA) interest rate is near zero. Let's say you can squeeze out 1.5% with all the bells and whistles added to today's highest paying interest savings account, it still takes 47 years to double your money in such an environment (see below). There'll be trees growing on my grave in another 47 years.

Miner · 21 July 2019

aus_trader said:
Even with bonus interest added, the rate you get is very low as an annual %. Can't complain I guess since the official (RBA) interest rate is near zero. Let's say you can squeeze out 1.5% with all the bells and whistles added to today's highest paying interest savings account, it still takes 47 years to double your money in such an environment (see below). There'll be trees growing on my grave in another 47 years.

View attachment 96284

@aus_trader
100% agreed on your point regarding 47 years to be double.
I was responding to a situation when cash money is to be parked temporarily in a volatile market for short term as a risk mitigation exercise than not getting anything out of cash.
I will be real optimistic to have a game plan to double my money in 47 years

aus_trader · 22 July 2019

Miner said:
@aus_trader
100% agreed on your point regarding 47 years to be double.
I was responding to a situation when cash money is to be parked temporarily in a volatile market for short term as a risk mitigation exercise than not getting anything out of cash.
I will be real optimistic to have a game plan to double my money in 47 years

Yes Miner, we do have to have a game plan and gone are the good ol' days of doubling your money safely in cash every 14 years at a reasonable rate of 5%.

What a difference, 47 years at current interest rates compared with just 14 years in our younger days (or our parent's retirement days).

That's the scenario at ~5%, a lot of retirees planned for in terms of protecting and growing their money as well as drawing an income from their nest egg in their golden years.

It's a whole new ball game now, with interest rates at the lowest levels since mankind has invented lending. We have to diversify our investing into areas like cash, shares, gold, bonds and even real estate if prices become affordable again. So don't feel bad, we have to roll with the punches and find ways to survive and prosper in this new era.

InsvestoBoy · 22 July 2019

tech/a said:
Contracted by me at $465K + Stamp Duty
Interest only say 3.5% Approx $330 a week.

This was pretty interesting, I wanted to run the numbers, can you help me understand?

It seems stamp duty on this property would be $19,580.

So you fork out $19,580 and take out an interest only loan for $470,000 at 3.5%, costing ~$315 a week in interest payments and rent it out for $400 a week?

Then tack on some expenses like $1500 a year in council rates, and $400 a year of land tax, not to mention any maintenance or anything else you might spend on the property?

Is that about right?

So it's not really an "investment" in the sense of returning a meaningful yield or providing a surplus to you, you just lever up with an IO loan from the bank and hope to sell it off down the road for a profit?

sptrawler · 22 July 2019

aus_trader said:
Yes Miner, we do have to have a game plan and gone are the good ol' days of doubling your money safely in cash every 14 years at a reasonable rate of 5%.

View attachment 96297

What a difference, 47 years at current interest rates compared with just 14 years in our younger days (or our parent's retirement days).

That's the scenario at ~5%, a lot of retirees planned for in terms of protecting and growing their money as well as drawing an income from their nest egg in their golden years.

It's a whole new ball game now, with interest rates at the lowest levels since mankind has invented lending. We have to diversify our investing into areas like cash, shares, gold, bonds and even real estate if prices become affordable again. So don't feel bad, we have to roll with the punches and find ways to survive and prosper in this new era.

To explain how bad it is for older people these days, my MIL recently asked me how to buy $100k of CBA, to put that in context I couldn't get her to buy $100k of CBA in 1994.
When they were $10.
Now she is scared how fast her savings are going down and she is 80+ years old.

aus_trader · 22 July 2019

sptrawler said:
To explain how bad it is for older people these days, my MIL recently asked me how to buy $100k of CBA, to put that in context I couldn't get her to buy $100k of CBA in 1994.
When they were $10.
Now she is scared how fast her savings are going down and she is 80+ years old.

That's the irony.

I can't give any fin. advice but perhaps ask your Mother-In-Law to consider spreading the risk rather than buying just one company. I know as we get older we are hungry for yield and shares can offer a very much attractive yield than cash at the moment. But at least ask her to kindly consider spreading that money across multiple stocks in multiple sectors to mitigate the risk of one company taking a huge dive and wiping most of her life savings.

sptrawler · 22 July 2019

aus_trader said:
That's the irony.

I can't give any fin. advice but perhaps ask your Mother-In-Law to consider spreading the risk rather than buying just one company. I know as we get older we are hungry for yield and shares can offer a very much attractive yield than cash at the moment. But at least ask her to kindly consider spreading that money across multiple stocks in multiple sectors to mitigate the risk of one company taking a huge dive and wiping most of her life savings.

Yes she has had the money in term deposit for 20 years, since the FIL passed away, she is only talking about it ATM. If she gets serious, I will suggest possibly AFI, or ARG something like that.
But it just shows, how easy it would be to prey on older people, in low interest times like these.

aus_trader · 22 July 2019

sptrawler said:
Yes she has had the money in term deposit for 20 years, since the FIL passed away, she is only talking about it ATM. If she gets serious, I will suggest possibly AFI, or ARG something like that.
But it just shows, how easy it would be to prey on older people, in low interest times like these.

Yes this is an environment that retirees can get sucked into high risk assets by financial advisors and fund managers with the yield carrot on the end of the stocks.

Those diversified listed funds you mentioned are much better at spreading the risk than buying into a single share. They also offer a good dividend yield way above cash rates at the moment.

Humid · 23 July 2019

tech/a said:
Land 700 square meters say $250k bargain at $200k there is land available in the same few streets.
Building single story 350 square meters low end $1500/ square meter
But say bargain built $1200 a square meter so $420k
Bargain total $620k but likely high $600ks
That doesn’t include landscaping/driveways enclosed garage in the rear.

I paid $470K last sale was $520k

Under 500k halve the duty?

Junior · 23 July 2019

InsvestoBoy said:
This was pretty interesting, I wanted to run the numbers, can you help me understand?

It seems stamp duty on this property would be $19,580.

So you fork out $19,580 and take out an interest only loan for $470,000 at 3.5%, costing ~$315 a week in interest payments and rent it out for $400 a week?

Then tack on some expenses like $1500 a year in council rates, and $400 a year of land tax, not to mention any maintenance or anything else you might spend on the property?

Is that about right?

So it's not really an "investment" in the sense of returning a meaningful yield or providing a surplus to you, you just lever up with an IO loan from the bank and hope to sell it off down the road for a profit?

A couple of points to add here:
- Rent will rise over time with inflation.
- Tax benefits are significant and should be factored in. i.e. as this is a recently constructed home there will be a deduction for depreciation.

I'm sure tech/a will have more to add.

tech/a · 23 July 2019

Doing tenders so flat out
Ill comment when I get my head out from under
the mountain of paper work.
Anyone got some codine!!

Junior · 23 July 2019

aus_trader said:
Yes this is an environment that retirees can get sucked into high risk assets by financial advisors and fund managers with the yield carrot on the end of the stocks.

Those diversified listed funds you mentioned are much better at spreading the risk than buying into a single share. They also offer a good dividend yield way above cash rates at the moment.

This is an issue with some stockbrokers and advisers.....a loophole where they can still be paid upfront commission on investment recommendation.

The LIC market has rapidly doubled to $45 billion since 2014, when the Coalition government watered down Labor’s Future of Financial Advice (FOFA) laws to allow advisers and brokers to resume receiving commissions for selling listed securities.

FOFA was intended to end conflicted remuneration for financial advisers, but some advisers are receiving commissions of up to 3 per cent to sell LICs and LITs to mum and dad investors.

The low-interest rate environment has enticed some investors to chase higher yielding and riskier investments, while they are also seeking to diversify beyond domestic shares.

LICs in recent years have become more exotic beyond traditional listed shares to include hedge funds, private equity, direct loans and junk bonds.

https://www.afr.com/personal-financ...ushed-into-risky-listed-funds-20190710-p525x6

sptrawler · 23 July 2019

Junior said:
This is an issue with some stockbrokers and advisers.....a loophole where they can still be paid upfront commission on investment recommendation.

https://www.afr.com/personal-financ...ushed-into-risky-listed-funds-20190710-p525x6

It is crazy, when you can buy LIC's on the market, why the hell would anyone pay an adviser to buy them?
Also there is plenty of low cost, low risk, well established mature LIC's around, like AFI, ARGO and Milton.

jbocker · 23 July 2019

sptrawler said:
It is crazy, when you can buy LIC's on the market, why the hell would anyone pay an adviser to buy them?
Also there is plenty of low cost, low risk, well established mature LIC's around, like AFI, ARGO and Milton.

Some folk need an advisors opinion as they simply don't trust their own opinion / or lack knowledge. Some advisors are very convincing seem trustworthy and sell you up. Unfortunately along with them are the scammers.

john5 · 27 July 2019

qldfrog said:
Bony rabs?
Could not find in urban dictionary.
Please enlighten me @john5
I can have a guess but...

back when he first became pm, on a few forums, tony abbott was prescribed the nickname "bony rabbit" which i did find humorous, and subsequently shortened it myself to bony rabs ...

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

sptrawler

explod

explod

tech/a

No Ordinary Duck

Miner

aus_trader

aus_trader

Miner

aus_trader

InsvestoBoy

sptrawler

aus_trader

sptrawler

aus_trader

Humid

Junior

tech/a

No Ordinary Duck

Junior

sptrawler

jbocker

john5

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