Even if it's cashflow positive, at least where I live the yield absolutely does not justify the capital risk.Absolutely. Investing in property can be a fantastic investment, and has been for many. Fact is you have to pick your timing. Now is most certainly not the time. Sure you can get in, negative gear your way through, and eventually get your investment cashflow positive.
Really? so you guys think the aussie housing market moves as one across the nation. And the strategy I am limited to making money is buy an ip.Absolutely. Investing in property can be a fantastic investment, and has been for many. Fact is you have to pick your timing. Now is most certainly not the time. Sure you can get in, negative gear your way through, and eventually get your investment cashflow positive. In some cases do the research and you can even pick up something already cash flow positive Im sure. Why do this when the risk of your IP crashing in price is so high at the moment?
Identifying bubbles is key to making big money in RE(imo). I could buy now and set up a portfolio but there are far better opportunities, and yields will be far greater against capital outlay once it pops. The US rents are rising and prices have crashed(and will continue to).
pbut I firmly believe worldwide we are in a state of private deleveraging, balance sheet recession, and we are all mini Japans
Really? so you guys think the aussie housing market moves as one across the nation. And the strategy I am limited to making money is buy an ip.
Investments create income, personally I can't stick that word in the same sentence as the term "cash flow negative", that belongs with the word speculation. Investments should make sense on their current merit before any potential capital gain is considered. JMO
Even if it's cashflow positive, at least where I live the yield absolutely does not justify the capital risk.
There's also the risk of the IP not being fully tenanted. Lots of empty rentals around here, regional coastal Qld, and they're only rentals because they have failed to sell. I've never seen such a soft market.
Might be different in capital cities.
Spain's Housing Market Faces A Huge Oversupply Of Properties
It will take until at least 2015 for the Spanish property market to absorb the 1.5 million properties currently on the markets, according to consultants.
There are around 1.5 million homes on the market, comprising of 683,000 new builds of which 473,000 are completed and 210,000 are still under construction, between 620,000 and 720,000 resales, plus another 200,000 that belong to banks, the annual Spanish Property Market Situation report by consultants RR de Acuña & Asociados shows.
This is much larger than official government estimates that currently stand at 688,000 homes on the market. But what is perhaps more worrying is the length of time it will take to clear this backlog.
According to the report it will take the market until 2015 to absorb the current supply but in some of the worst hit areas it could be 2017. The estimate is based on the premise that current demand takes up between 240,000 and 280,000 properties per year.
http://www.nuwireinvestor.com/artic...es-a-huge-oversupply-of-properties-56685.aspx
Spain, a housing bubble and who knew what
And it wasn't just the housing boom itself -- Garicano estimates there may be as many as 1.5 million empty housing unit
http://www.thedeal.com/thedealeconomy/spain-a-housing-bubble-and-who-knew-what.php#ixzz27ADbmzED
China‘s Central Bank has reported that thousands of corrupt Chinese officials stole more than US$123 billion and fled overseas between 1995 and 2008.
The report also cited Associated Press as saying that the United States was a top destination for the looted funds.
The report, released this week by the People‘s Bank of China, says between 16,000 to 18,000 government officials and executives at state-owned enterprises smuggled about 800 billion yuan (US$123 billion) out of China within the period.
The study says the officials smuggled money into the US, Australia, Canada and Holland, using offshore bank accounts or investments such as real estate or collectibles. Officials masked the thefts as business transactions by setting up private companies to receive the money transfers.
Corruption is often a focal point of protests by ordinary Chinese and is seen as a major threat to political stability. But corruption among Communist Party officials is still common.
The report warned that the corruption was serious enough to threaten China‘s economic and political stability.
Interesting article, Tyler, but I don't see how anyone can make automatic assumptions about the origins of the money in any particular Real Eastate transaction. Would 123 billion USD actually cover the purchase costs of all celestial R.E. purchases in US, Canada and Australia during the period in consideration?
I haven't read the last 464 pages, and I did a search and nothing I am going to post about came up, so I am assuming this has not been raised yet.
Corrupt Chinese officials in China have been stealing money and basically use it to bring and settle their families in Canada, US and Australia. I read about it in an article a friend sent me a while ago, which I can no longer find (it may have been from Zero Hedge, but I did a search there and nothing came up). My own search found a similar, yet not as detailed article:
http://www.chinauncensored.com/inde...nds-in-13-years&catid=25:real-china&Itemid=57
Two experiences which support this theory:
1. My friend told me he went to an auction, where there were two main bidders - an Asian gentleman, and a Middle Eastern gentleman. The latter owned the property next door and so really had his heart set out on winning the auction so he could join the two properties, but no matter what he bid, the Asian gentleman just out-bid him with ease and money did not appear to be a concern.
2. There is a family of some Chinese official who lives near me. Originally, they were going to buy a unit within an apartment (contains about 6-8 units) when it was built, but they ended up buying the whole apartment...for just one family (no, not a big family).
I also saw on the news recently that said 25% of first time property buyers in Australia are Asian. I'd bet a lot of these are ones who came here recently, rather than the ones who are 'Aussie-born' or grew up here as a child.
Please don't take this as a post against Asians (let's just say I was born overseas).
Interesting article, Tyler, but I don't see how anyone can make automatic assumptions about the origins of the money in any particular Real Eastate transaction. Would 123 billion USD actually cover the purchase costs of all celestial R.E. purchases in US, Canada and Australia during the period in consideration?
http://brontecapital.blogspot.com.au/2012/06/macroeconomics-of-chinese-kleptocracy.htmlThe Chinese property market as a savings mechanism
Chinese people have very few savings mechanisms. The major ones (bank deposits and their life-insurance contract twins) have sharp and consistently negative real returns.
Beyond that they have property.
Bank deposits have sometimes 5 percent negative returns. If you got 1 percent negative returns from property – well – you would be doing well. Buying an empty apartment and leaving it empty will do fine provided you can sell the property at some stage in the future.
It is commonplace amongst Western investors to view the see-through apartment buildings of China as insane. And they may be a poor use of capital. But from the perspective of the investors – well they look better than bank deposits.
Over the last few weeks I've received a few text messages about properties for sale that are not being advertised, why would anyone do this? If you want to sell surely getting you property listed in all the relevant places is paramount (although I suppose you would save on advertising).
If the vendor knows what price they are willing to accept then the real estate agent just needs to find a buyer who is interested in paying that price. The real estate agents know who the buyers are and they can contact them. Some people want their privacy. Why let dozens of people all through your house who are not genuine buyers but nosy neighbours and tire kickers only to have the house passed in at auction and end up negotiating with the two or three genuine interested buyers?
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