Forum Replies Created
- gmh454 wrote:emptyvessel wrote:The market is not crashing. It will be fine. End of story.
you need to add "imho"
and if everyone's opinion is the same as yours , …. then you are right, ….if however everyone's opinion is otherwise, then down we will go (not arguing about the gradient of the slope here) , but down it will be, for how long …well that is my opinion
it all lies in perception,
forget loans, earnings, returns, unemployment rates it is all in the expectation ," imho"Wrong. I don't "need" to do anything. It wasn't an opinion, it was meant as an absolute. Now, we could get all existential, but what would be the point? (Get it?)
That said, I do understand completely what you are saying. And do agree with you.
Tired of the D&G and trying to put an end to it. Just gets tired and boring. More interested in how we can help each other create wealth. Even though sometimes I get swayed by the negativity more than I would normally like.
Nothing good can come from being negative. Nothing.
That's a bummer. Steers me away from NRAS for the next few purchases. Just won't help me use equity growth to fund further purchases.
That said, they could fit extremely well in the portfolio later once I have the base growth engine ticking along nicely. i.e. NRAS tackles the cashflow side of the equation nicely and could offset the significant tax I will be paying on rental income in later years. 2 of these in about 3 years will round out the portfolio nicely.
Great thread and thanks for sharing.
No, I am having no problems renting. Just finished putting rents up.
Johnny1974 wrote:Hi all Just my thoughts…… I to agree the world financially is pretty toxic at the moment and has been since 2006. Seems everyone, every sector, in every country is being hit hard. The only shining light is the worldwide mining industry. We have strategically sold down our portfolio of six properties to two since 2006. Taken the profits and walked away
We now have no debt, work less, have less stress. Hard work and property gains have enabled us to do this. For now I will keep all that cash fixed at 7% in the bank, don't have to worry about tenants, rates, insurance, repairs and the possible removal of negative gearing tax breaks. Maybe its time we all looked at other avenues to invest?Nice, well done. I would love to have that much cash. I am guessing inflation doesn't factor much into your strategy for now?
Strongly suggest you do look at those other avenues. I have been doing them for years and haven't done quite as well as you have with property. That said, made much more than I lost, which is doing pretty good.mattnz wrote:emptyvessel wrote:Choir, I am aiming to emulate your success.For my part, I am about 73% LVR'd into the "game" across my entire portfolio. About 50/50 property and equities. Then various diversification splits under these. Likely to go 70/30 property and equities over the next couple of years.
Wish I got into gold 10 years ago. But I wish I got into property 10 years ago WAY more. Property I can leverage the hell out of. Gold I can't. No matter how "standard" gold is, the bloody banks won't give me a 80% LVR on it to buy more gold. Damn unreasonable of them I reckon.
And another minor gripe –> They won't recognise the income I receive from renting out my gold! And for some reason, no matter how long I wait, the rent on my gold doesn't seem to increase.
My missus likes to wear gold. It's real purdy.
You can leverage into gold at 50:1 leverage or higher if you wished, just buy gold through an online broker.
Good to know. I am intrigued to understand this as a path better;
Is there a way for me to rent it to another investor for a yield?
Will the bank recognise this yield? (I bet the taxman will)
Is there a way for me to "add value" to the gold? (I suppose they would send me some of it and I could put a diamond on it and sell it down the markets. At which point the taxman takes at least a third of my gains, damnit.)
Can I take that leveraged gold and use it as security on purchasing more leveraged gold? (Without selling it and incurring CGT. Cause that CGT is just a killer)mattnz wrote:emptyvessel wrote:The market is not crashing. It will be fine. End of story.Thats what they were saying in USA, Spain, Portugal, Ireland, UK etc before their markets crashed in the past few years and before that, Japan in 1990s. The common theme between all of these countries is high levels of debt financing the property bubble, just like in Australia.
I am intrigued. Please compare and contrast these debt levels. I would like to see the quantification of "high debt" levels in this comparison so I can make an objective analysis. I am keen to see if the following feature in your comparison for the Australian market;
1) Proportion of low-doc, no-doc loans with a large proportion of lending to people that were never able to service the debt at any interest rate.
2) Non-recourse loans. How much did these feature in the markets you mention? Particularly the largest, the U.S. How much did they feature in Australia?
3) The "catalyst" for turning a moderate market correction into a full-blown catastrophe: Unregulated sales of extremely complex financial engineering instruments to individuals, corporations, 401k's, and entire sovereign nation funds. All of which were underpinned by the "fundamentals" created by (1) and (2).
4) Which one of these comparison countries was experiencing an economic boom (driven by resources, manufacturing or otherwise) at the time they collapsed?We all desperately want to look at all economies and see commonalities that can be applied as rules and trends for other economies. This is what very intelligent expert economists think about all day everyday. The problem is, with all this knowledge, almost all their predictions are plain wrong. Most didn't see the collapse coming. Those that did, most had been proclaiming it for so long that it tells us more about their negative view of the world than it does about objective. Most didn't see the upswing that came in the stock market after, despite the fact that it has happened after every single collapse. In this case they ignored their own trending of history.
swampy30 wrote:I'm not spooked, I'm bemused. And of course, we're talking about negatively gearing property only. Approx 70% of individual investors use NG to fund their purchase. Around 1.6 million taxpayers used NG year ending 2010, generating a net rental loss of $6.5 billion. In my opinion, not a huge cost compared to providing about one third of the housing stock required for people who want/need to rent ~ one third of existing stock @ $ 3 trillion = $1 trillion? Genuinely, what's the alternative? Remove NG and with no new investors in the market, would history repeat, a la 1985, without a corresponding increase in supply? The estimated undersupply of homes nationally is already about 200,000, but I can't see government embarking on a social housing building spree anytime soon. Didn't the Henry Review recommend NG be retained? However I am sympathetic to the view that NG does encourage investment into an unproductive asset. Perhaps it should be quarantined to new builds only. Affordability IS an issue in my opinion, but isn't it the inevitable end result of capitalism, growing population/demographics, lax lending previously…etc…all things that are hard to tackle/unwind? Personally I'm close to neutral geared, so not bothered either way. The projected tax payable on my rental income in future years is horrifying, but that's why mr ato gave me NG breaks upfront – fairly likely over time that income will exceed costs. But what's scary is a) no-one *really* knows how to stop speculation/lower house prices without affecting other things;and b) it's in the hands of politicians! But we do live in interesting times. I am hoping the govt hold onto the default policy…do nothing!Thanks. It seems most folks are not spooked by this NG prospect. Either they don't understand the impact or the impact is trivial, as in your case.
The statistics of tax revenue deserve a detailed analysis. So I took a basic look at some ABS stats;
Total Tax Revenue (all sources and levels of gov in 2009-2010) = $332b
Taxes on Property (all types) = $31b (~11%)
Taxes on Individuals = 38% ~$126bSo, if 1.6m tax payers are generating a $6.5b loss from NG, this represents 2% of total tax revenue and 5% of the individual income tax revenue. Doesn't seem significant to me. Especially looking at the massive 11% we pickup through property taxes, most of which are state based.
Seems to me, that if you want to make a real impact on affordability, you need to target the big numbers first. (1) Reduce personal income tax, thus increasing serviceability and (2) Reduce those state based property taxes. Together they make up almost 50% of all revenue.
The added benefit of (1) is that most average families will spend the income tax break on more tv's, petrol and food. Thus the ATO picks up more tax revenue in this area. It just makes the average muppet "think" they have more money.Let's face it, removing negative gearing targets a minority that are doing something real about financial independence and thus not bludging off the nanny state in retirement. I can't see how nerfing that is a good thing in any way.
Something else that is forgotten in this whole affordability argument; Not everyone wants to get a mortgage and own their own home on day. It just isn't in their psychology and we should stop assuming that it is. Stop trying to "nanny" people that don't want to be helped.
bumskins wrote:I say cut property free and let it stand on its own 2 feet without the tax incentives.
Ludicrous argument unless you support doing the same for every other type of investment-associated tax incentive. Shouldn't this then extend to equity margin loans, franking credits, business R&D, business operating losses and so on? If not, why not? Don't give me nonsense about these being "productive" parts of the economy. I see that excuse wheeled out unsubstantiated with evidence every other post.
Why not PPOR CGT? Right now it is fantastic way to inflate the price of property.
Why not take away the 50% 12 month CGT holding reduction on all investments, business or otherwise?
That said, thanks very much for taking the time to respond.
MikeLewis wrote:Unfortunately reigning in the growth states thru higher interest rates will punish the slower states but it may be a reality the way things are going. interetsing times, as they all are. It's different this time, just as every new day is. When any boom is in progress, there's always the "I can't see any end to it" mentality. Step back and think about it. It has to end – there's nothing surer. Nothing grows at extraordinary rates forever. You know, whether it be property or shares sometimes there are just no more buyers left to keep pushing prices higher. Then the music stops.Flipside: When any bust is in progress, there's always the "I can't see any end to it" mentality. [And that is what fuels the bust. Markets are driven to extremes by emotion.]
I cannot understand, under any circumstance, why someone would want to fuel the bust with more negative sentiment. No matter how factually correct you are, it can only be a bad thing, for everyone. Who exactly is it helping and how?
Infinitely better to fuel the positive sentiment and the prosperity boom, under all circumstances. [This doesn't mean taking stupid risks. Rather, being incredibly positive about the future]. Rose coloured glasses are best kept securely on and in 20/20 focus.
Choir, I am aiming to emulate your success.
For my part, I am about 73% LVR'd into the "game" across my entire portfolio. About 50/50 property and equities. Then various diversification splits under these. Likely to go 70/30 property and equities over the next couple of years.
Wish I got into gold 10 years ago. But I wish I got into property 10 years ago WAY more. Property I can leverage the hell out of. Gold I can't. No matter how "standard" gold is, the bloody banks won't give me a 80% LVR on it to buy more gold. Damn unreasonable of them I reckon.
And another minor gripe –> They won't recognise the income I receive from renting out my gold! And for some reason, no matter how long I wait, the rent on my gold doesn't seem to increase.
My missus likes to wear gold. It's real purdy.
The market is not crashing. It will be fine. End of story.
I am impressed that you got hold of the full valuation from the lender. Mine won't give me a copy, no matter how nice I ask.
A couple of ideas for you to take or leave;
1) Call some other panel valuers in the area and ask their opinion about NRAS properties. Do they have a similar view?
2) Call some valuers in other areas and have a chat. Try and find out their opinion.Would be a fatal flaw in NRAS as an investment option if this turns out to be a standard opinion in the valuer/bank field.
I don't understand why the valuer is using the "limited pool of buyers" argument. My understanding is that you can take the property out of the NRAS scheme at any time and put it on the general market with any other property. The only loss being any of the tax benefits directly related to NRAS. Perhaps if you show the valuer that this is part of the NRAS agreement you are signed up to? Maybe they simply don't know this.
fWord wrote:emptyvessel wrote:Usually by the time everyone is talking about buying something specific around the watercooler, the time has passed to get in.Precisely right. And this is why I so sarcastically questioned in a previous post whether anyone has actually already bought gold or silver. Looking at the graphs it appears the boat has long since sailed. I find it very humorous to read some of the posts here by the property bears who consider other alternatives to be better investments, or they would have bought property before a certain date and didn't. Or maybe they wanted to buy a certain share, or short the AUD at a certain SOMETIME.
Trouble is, they 'wanted' to do so but didn't actually 'do it'. It's easy to talk about things that have occurred in the past. But it's harder to actually commit money and put your butt on the line to actually do something productive.
Here's another point we should probably consider. If gold or silver, or some other commodity has had such a good run recently and property is actually starting to look comparatively cheaper, then it's property that is yet to see a boom, and the comparative investment has yet to see a bust.
Agreed.
Back to Shepparton. I had a friend that purchased a great place there recently that is neutral or close to CF+ day one. They know the area very well as they have family there. This may have helped with buying in a better position. Also adds to confidence levels.
I have heard that the crime rate there is quite high, but have not verified this myself.
Shepparton is definately on my radar. Alongside other regional areas like Wagga, Mildura, Nowra, Toowoomba, Wangaratta, Orange, Moe, Bundaberg and a whole bunch more. "Boring", affordable areas that grow slowly and steadily with the occasional "boom".
I really want to "trust" mining boom towns, but I don't. I reckon I have missed some great growth not buying in them at the right time. But you can't get it right every time! Just get it right more often than not and keep it moving in the right direction! Up!
My research tells me that most of the money to be made in Gladstone property has already been made. Unless you are a developer with a "funnel" feeding you out of town investors that don't do their homework.
Apparently the mining/energy/construction companies have "wised-up" to inflated rentals and have found a better return on investment using the following options for workers (as opposed to having them rent in town);
– Fly-in/Fly-out from Capital cities (we all know this one)
– Fly-in/Fly-out Coach-in/Coach-out from surrounding smaller towns with lower rents
– Locking in long-term rental contracts before the boom at lower rates. (No real difference to locking in favourable energy contracts or exchange rates. These massive multinationals have alot of expertise with doing this.)Don't get me wrong, I think there is money to be made for the average investor, but I think it will be very, very hard to find a good long-term CG+/CF+ deal, even with a great buyers agent on their side.
Just my opinion. And I have looked hard at many of these mining/energy towns.
I am keen to keep buying. "Feed the fear"! Puts me in a better buying position every day and I know it can't last forever.
That said, I am currently spooked by all this talk about the government removing negative gearing. This would seriously damage my cashflow situation. See my other post on this in the finance area.
Usually by the time everyone is talking about buying something specific around the watercooler, the time has passed to get in. When I subscribed to Fat Prophets a few years back, they had been bullish on gold since around 2001. Then again, they were bullish on lots of commodities and equities.
On another note, Warren Buffet is famous for never buying gold and has rarely bought silver. Apparently once, but I don't know for certain.
I found this article from the UK about UK house prices, gold, sterling and inflation; http://www.moneyweek.com/investments/property/uk-house-prices-in-ounces-of-gold-02110
The most interesting stuff is in the comments section. My personal favourite is the "mars bar standard". The author writes;
Can I just say as the originator of the 'mars bar' method of house price measurement. That the whole point is that mars bars, gold, shares, wages and houses etc have all inflated together.If everything including wages has/have gone up then there is in effect no bubble because relatively mars bars, gold and houses still in effect cost the same as they always have done ( in the case of houses factoring in that women now work ).
Furthermore gold has no special place, apart from perhaps that it pays no income/dividend and in fact costs you money to store, compared to stocks gold has to rise by 10% a year just to stand still.
My instincts tell me that gold and silver are in a bubble that has a litlle way to run yet.
Here is one perspective on the bubble; http://www.businessinsider.com/reasons-why-the-gold-bubble-will-burst-2010-10#
Long time reader first time poster?
Sorry, no experience with this. Although I do doubt it is as simple as this.
Change lenders.
Yup. Stay in the market, get/manage good cashflow, don't overcommit, create equity if you can, let time take care of the rest.
The sky is not falling in and the cycle will swing up again. Not sure when. But I am absolutely certain I will make lots of wealth when it does.
Here is are a couple of early warnings in 2011;
Property prices will go down somewhere, property prices will go up somewhere at the same time.
Gold will go up.
Gold will go down.
AUD will go down.
AUD will go up.
Commodities will go down.
Commodities will go up.
etc etc.There we go. I am the ultimate predicting machine. An oracle, if you will.
I love the alarmist arguments going around about fiat vs gold and the "inevitable" super cycle repeating. I don't buy into it, but I do know I am going to get wealthier either way.
Some thought; Chicken Little thought the sky looked dodgy from the first time he could see. His mum and dad should have given the poor little chook some rose coloured glasses.
We now have no debt, work less, have less stress. Hard work and property gains have enabled us to do this. For now I will keep all that cash fixed at 7% in the bank, don't have to worry about tenants, rates, insurance, repairs and the possible removal of negative gearing tax breaks. Maybe its time we all looked at other avenues to invest?
