Forum Replies Created
Pipelinebuilder
An excellent post mate. Makes people stop and think out side of the box. A few comments on A, B ,C.
A: "The one comment that didn't come through was, how many people do you personally know that are financially free from property investment?, lets be honest about it!!!!, or is i have a friend that made so and so during the boom time!!!"
From the Section 32s (Vendors Statements) I look at not many people own their PPOR or Investment property out right. I understand most people are still paying interest on them till they retire and hope to pay it out with their super, hey, what super. I meet people that stick out their chest and say " we made 100,000k on that place" brought in 1999 sold in 2006. I call them the bogan rich. Sure they made money but it was all luck due to timing and the bank lending money to anyone with a head that could write their name. It was not skill or smart investment knowledge. This was the boom time. Now its over. Also you only hear about the money makers not the money loosers. Why do they have mortgagee auctions, its not because the vendor is financially free.
B: "My wife used to work for one of the largest property companys here in aus, from what we have seen most people dont make it, the professionals will and do because they have cashflow, the rest just hope and speculate based upon the opinions of others. Thats the truth and bottom line."
Agree, If you have to borrow 70 -80% of the value even at 5% you are behind the 8 ball. If historically property rises at 7-10% and you are paying 5% interest, net profit is too small for me. Yes "Cash is King" this means being debit fee. eg Not borrowing a cent.C: "My personal opinion is this, you need to decide how you want to live, ie how much do you need and what would you like to do with your time then go after it, maybe it is property, shares, business, they seem to be the main three that people follow."
Its my opinon life style is a choice and a big part of an investment strategy. You are a long time dead and you don't want to be the richest man in the cemetery. Eg. open a cafe, be there 7 days a week, lock up at 11.00pm each night and be back at 10.00am the next day for lunch service. Shares, buy ANZ at $17.00 then see them drop to $12.00 (have not looked lately) You have no control over the directors or the running of the business. Business, Imports buy with US dollars at .80 cents Aust. OK great, but try it at .65 cents, your down .15 cents in the dollar before you start. Then no one has the expendable income to buy the stuff off you anyway. Retail is down shops are desperate to sell you something. Then you have to compete with the big guys anyway.
Any one can make money in the good, Boom times. But it takes allot more guts, determination and self confidence in the hard times. Getting over the fear you mentioned. Lets not be too hard on our selves we are in one of the most uncertain, unpredictable economic times in history and its global.
This is only MPO as we are exchanging ideas & brainstorming. I don't believe you will get rich in the next 5 years on property. In fact more chance of loosing money or breaking even. Some late comers are still hoping to catch some of the wave of 2 years ago and get the high returns. If you buy well and I mean really well, location, price, type and have some luck & allot of cash as well then you can still make better than bank interest after tax.
Just one more thought for tonight, some of the most happiest people I know don't even own their own home, they rent. They are not under financial stress or going grey with worry about interest rates or falling share prices. They Spend quality time with their kids & wife and live with in their means. They are certainly not worried about "missing out" on a bloody FHOG of 17,000 to end up with a 25 year bank loan. Conversely some of the biggest pretentious assholes I know have 2 or 3 investment properties and a 2 story McMansion with pool and the RV. They work 2 or 3 jobs and are the meanest, penny pinching so and so,s I know. What Im saying is its not all about making money its about enjoying it also.
Cheers & regards to all.
T……………
Pipelinebuilder
"Just a thought – is property the answer or is just a method to get wealthy that happens for a few?"This is more than just a thought its a reality, a trueism. Ive only met 3 people that will always tell you that you will make money on property, the Vendor, the Agent and the Mortgage broker. There is no consistent correlation between the prices of houses going up and making money or more importantly a net profit after tax on them. Granted we have seen some great gains from 2000 to 2006 the old "double your money " days are gone. However, currently most Vendors are still are under the old "double your money " mentality in particular those that brought say 2 years ago. Yesterday I called on an agent. I told him it was my opinion that houses purchased 18 month ago would not bring any more that what they paid for them, he agree totally. Very happy to take my offers. So, 18 months of no growth, plus loan interest, stamp duty, rates, maintenance, selling costs. Even if you where renting it out and it was naturally geared, you still loose.
On $350,000 you would be out of pocket by say $15,000 stamp plus the selling costs about $9,000. Some people call that an investment.Many other factors come into buying property, if its your PPOR, Opportunity costs, if you have the cash or you need to borrow, your expectations, cash flow, socio economic changes in your live and the market, etc etc. Its like the couple who open a cafe with the mentality of "people always have to eat" believe me you have to pour a lot of coffee before you cover the rent. "People will always need some where to live." This is true, but not a guarantee for an investment. Just have a look at whats happening in our great country, people 55 to 60 are now returning to the work force, why, because they have no money to retire on. Mum chucks the 2 kids in a child minding centre at 7.00am to 5.00pm so she can go to work because if she does not work, they cant pay. More older people retuning to work less jobs for the young 25s to pay that 400,000 back to the bank. Unemployment on the way up. If you want a good investment for the future make it an Education a Degree.
The growth we have seen is not sustainable and most times is followed by a correction its those that brought 2 or 3 years back that have to sell that will loose big time.
As mentioned property is a long term thing, you will make some money long term. I think of it this way average house say $330,000 + stamp & other $350,00 (only an average house) interest only pa. @ 5% = 17,500 / 52 = $336 per week, living costs food, petrol, utilities $350 minimum. Total $686. Principal & Interest is $471.80 per week. and this if over 25 years. So you start out with an investment idea at 25 you get to 50 and have paid $263,326 in interest. Total cost of your 25 year old plus home is $613,326 with no maintenance. If it was to double every 7 years you would have to sell it for $2,146,641. Now this is not profit its gross and not likely, forget about historical figures. Providing you can keep 2 wages coming in, a job, not get pregnant, get ill, or need to shift for work, interest rates stay at 5% over 25 years (not likely) Think about it. This is a slog, a struggle, a real sacrifice, a near impossibility that will take its toll on owners & disillusioned investors. This is provided you do it at 25yo not 35 or 40.WJ
"However, I do not have the answer and probably no one else has it either, things will change much quicker into the future, countries will crash, the weather will get worse, diseases will increase, wars will increase, I think I will just shoot myself…….bang………….."
WJ the world is indeed a changing place and I'm afraid its not for the better. I like you, and all others inc. K Rudd & Co. don't have the answer. People are becoming desperate. However, I would not shoot myself just yet. If you have a few bucks left hang on to it for a while. A lot more sh – t will indeed hit the fan in the next few years as our Government has no idea what to do, except throw money at people, until its all gone then run us into a debt (this is their answer) . There goes my old age pension. The market has softened and prices have come down, I would say from the above example must come down, as a buyer of a PPOR, there still may be hope. As an investor I would look at other limited options in a recessed economy. As the Government is so keen on immigration "people smuggling" may be the a growth market, invest in hydroponic equipment and grow dope to sell to depressed investors to cheer them up or we could print our own money, to stimulate the economy. lol……..Cheers
T…………………
On $350,000 you would be out of pocket by say $15,000 stamp plus the selling costs about $9,000. Some people call that an investment.
As mentioned property is a long term thing, you will make some money long term. I think of it this way average house say $330,000 + stamp & other $350,00 (only an average house) interest only pa. @ 5% = 17,500 / 52 = $336 per week, living costs food, petrol, utilities $350 minimum. Total $686. Principal & Interest is $471.80 per week. and this if over 25 years. So you start out with an investment idea at 25 you get to 50 and have paid $263,326 in interest. Total cost of your 25 year old plus home is $613,326 with no maintenance. If it was to double every 7 years you would have to sell it for $2,146,641. Now this is not profit its gross and not likely, forget about historical figures. Providing you can keep 2 wages coming in, a job, not get pregnant, get ill, or need to shift for work, interest rates stay at 5% over 25 years (not likely) Think about it. This is a slog, a struggle, a real sacrifice, a near impossibility that will take its toll on owners & disillusioned investors.
This is provided you do it at 25yo not 35 or 40.
lol……..
