I have a conundrum [blush2] that has probably passed through everyones mind at one stage or another over the past few years.
My conundrum is –
What happens to all our property investment/development strategies when the property market begins to really level out, or, at worst – drops off? [confused2]
Over about the past 5 or so years we have seen the property market sky rocket and many people I speak to simply don’t want embrace the subject of a decline, or, at worst – seem to put their head in the sand and say that the property market will continue to rise forever. I’m a middle aged man and am wise enough to realise that things don’t last forever. Sooner or later property will drop off. When that does happen – what contingency plans do people have in place? Are you going to put your money into shares (dread the thought) or simply weather the storm and wait 10 years for things to improve.
This might sound like a negative posting but it wasn’t my intention to make it so. In actual fact I’m just trying to protect my hard earned money (like everone else). Afterall, it’s what I’ve worked for for my whole life, other than to become married to the most wonderfull woman in the world and to raise a happy family together.
What are the best strategies to look at “before” (i.e. not “when”) the time comes. Is it best to hang on to your investment properties or do some quick upgrades in order to make a quick turnover?
I’d be really interested to hear from anyone who has some good strategies for either the “soft” or slightly “harder” landing that may be in store for all of us.
Thanks for any help given. [biggrin]
Even though I have arthriris – I’m always willing to be flexible – HA HA. [biggrin] [biggrin]
I suppose we are all going to do exactly what the older folks amongst us did the last time..[blink]position ourselves to weather the imagined ‘storm’, and then get set for the next ramp up. Kaching kaching…[cigar]
Cheers,
Dazzling
“Go hard or go home”
Hi Johnny1, I sold up 2 IPs leaving me with just a PPOR & beach shack in late 03. I pumped most of my profits into shares until early this month which did rather well. Now I am dabbling in speculative investments (only with what I can afford to lose) and holding cash and hard investments. I think this ‘storm’ is going to be far bigger than just property being a (largely / generally speaking / on average) losing proposition, and am positioning myself to make the most of any and all falls in currently overpriced investments.
Cheers, F. [cowboy2]
I expect lean times ahead too. I am consolidating. I am a very good loan/equity ratio ie. I am not over geared.
I will wait for opportunities and as Jan Somers says – buy when you can afford it.
I can afford it now but would rather wait for prices to fall a little like they will when interest rates rise again.
Those that have a PPOR mortgage and investments loans will start to sweat a little i reckon.
I’m just going to earn more money to support my investing habit.
cheers
brahms
CALL NOW…adults only (boys and girls ask mummy or daddy first) ~~ 1900 HOT BROKER ~~Originally posted by Johnny1:
This might sound like a negative posting but it wasn’t my intention to make it so.
Hmmm…posting the same thread 3 times….[blink] nahhhh that’s not negative, it’s just making damn sure no one misses your message which btw is not heralding any new fears that haven’t been painfully repeated in EVERY forum and by EVERY novice!!![blush2][blush2]Why worry about a market that you obviously don’t understand fully. There are inevitably highs and lows with ANY market, any investment vehicle; it’s just a fact of life (sorry, business rather).
My advice, do what you feel is right for you; there is no right or wrong way, just different strokes for different folk, and just how different will depend on your goals, preferences and risk tolerance.
Even though I have arthriris – I’m always willing to be flexible – HA HA. [biggrin] [biggrin]
Oh well guess you won’t be able to RUN then, but hey, you should be able to handle a very very fast walk, maybe even work up a sweat!!! [laugh4][laugh4][laugh4]Enjoy!!! [biggrin]
Cheers,
Jo
ahhh, the rapier sharp wit of monoples, you have my respect and continuing obedience…he he..nice to see some Uhumrr (thats a bit of k and k humour)
cheers
brahms
CALL NOW…adults only (boys and girls ask mummy or daddy first) ~~ 1900 HOT BROKER ~~Dear Johnny,
Markets go up and down, thats a fact. The important thing to do is ensure your not overly exposed ie that your loan to value ratio is in good check, that you can afford an interest rate rise of 2%-3%, you properties are in a well located position, attractive to tenants, you have some cash reserves. If you are not on top of all these things this increases your risk to outside forces. Unfortunately some people have left themseves exposed and may suffer the consequences.Any investing is risk taking but there are ways to minamise risk and damage.Good luck[biggrin]Martin
Hi all,
A risk not mentioned so far is the ‘risk of doing nothing’ for your future. Note that isn’t advocating a foolhardy, poorly researched, ad hoc approach but carefully measured and considered decision making is going to put you in good stead.
PS Johnny – Have deleted the multiple posts – hinders the discusion flow.
Derek
[email protected]
0409 882 958
Property investment advice and researched property in quality locations available.The strategy that I am employing is one that Robert Kiyosaki advocates and that you make your money when you buy (ie I buy when I find property below market value). I am using this to create a buffer for any drops in value, therefore if I had to sell I would hopefully just get my money back.
Buying below market value though has its challenges, ie when the market value keeps droping, it’s like a moving goal post !
Regards
SimonTwo simple approaches that I will/have employed over the last year
1. Land (plus dwelling) that you are able to subdivide (will – within next 6mths)
2. Bought off builder on small development first property which he needed to sell beofre developing. (Effectively bought 10% under sworn valuation) (have)You have to be able to create the value or be able to buy it at a discounted rate….
Thanks everyone for your kind advice even “Monopoly” who noticed that I posted my same thread 3 times (before the other 3 were deleted out of the forum). Also, “Monopoly” sounds like a very knowledgeable person when he/she says – “Why worry about a market that you obviously don’t understand fully” and that I (meaning myself) “won’t be able to run” but “should be able to handle a very very fast walk, maybe even work up a sweat!!!” in relation to my arthritis.
It’s obvious that “Monopoly” doesn’t “understand fully” my situation because I’ve got arthritis in the hands – not the legs. I could also probably give you a very good “run for your money”.
Regards – Johnny1 [aacool]
Johnny1, it is me who should be saying thank you. Thank You. Really, thank YOU.
cheers
brahms
CALL NOW…adults only (boys and girls ask mummy or daddy first) ~~ 1900 HOT BROKER ~~Originally posted by Johnny1:
It’s obvious that “Monopoly” doesn’t “understand fully” my situation because I’ve got arthritis in the hands – not the legs. I could also probably give you a very good “run for your money”.Firstly, I am a psychologist not a psychic; I don’t know (nor care) where your arthritis is, and before you gasp with horror….I am empathetic of arthritis sufferers generally, I for one should be, I have osteo-arthritis myself, and having already had one total hip replacement and requiring a full knee reconstruction within the next 12-18 months as the result of a car accident and past sports injuries, I do understand; so please spare me the violins!!! [wacko]
As for giving me a “run for (my) money” in depends in what sense Sir, but I daresay you more than likely could, perhaps even out running me in many ways, especially physically as although I go for a run every morning to keep the joints pilant, I am hardly able to accelerate to the same speeds as in my youth!!! [glum2]
As to my comment re your “understanding fully” it is merely my way of saying, confidence in ANY market will lessen your anxiety. I make no apologies if that does not sit well with you, but it is (IMO) fact, that if you do your homework and exercise a little commonsense ANY mistake can be remedied in the long run. Research and educate yourself as much as possible, stay positive, by all means look to the past, verse yourself with the present, and above all keep an open mind about the future; it’s that simple. [whistle]
Good-day to you Sir, and FYI I am of the female gender (as per my avatar)!! [kiss]
Jo
Hi Johnny,
Just wanted to weigh in with a few ideas back on the topic of the market. It is vitally important that you are aware of macro forces like interest rates and the effects of fiscal policy on the property market. You also need to be aware of confidence in the assest class and what the other people around you have done and are doing right now. It is probably more important that listening to what people say they might do or advocate to others.
.
Everyone in this forum is located in a different parts of the country/planet. It is partly for that reason that they all have different views on the property market (and rightly so).
.
The idea is that there a many many different markets. Of course there are general trends but different things are going on in different places.
.
The cost of debt is different all over the world. Entry and exit costs are different. Yiedls vary from one town to the next.
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If you think that you have some “dogs” in your portfolio then now is as good at time as any to get rid off them.
.
If you are holding gems hang on to them unless you really need to sell.
.
Strategies:1) Sit down with the family (by the way making them happy is the most important job in the world) and do a plan and set some goals. If you are serious it is not an easy process
2) if you are worried then debt reduction can never be a bad thing. Obviously your cash flow will increase and the “peace of mind” effect may be worth its weight in gold. (There always a little fat in the budget somewhere)
.
3) Get out the paint brush and start adding some value to your properties. Source some second hand materials (good quality). You want your property manager to think of your properties first when a well dressed tenant with good references walks through the door. Good tenants won’t live in dumps.There are millions of things you can do.
.
Good luck.Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Thanks “Don & Liz” for your intelligent, sensitive and inspiring response to my initial posting.
Also thanks again to “Monopoly” for her response. I would however be concerned if you really were a psychologist [confused2]. I also believe that you’ve managed to wander too far away from the essence of my original topic. [blush2]
Regards – Johnny1
Always the same posts of gloom and doom. I say goodie!!! for where others see problems, I see challenges to solve.
I buy entry level properties and do renos and hold them. I get ok returns and currently have a 64% LVR over all. I agree with some of the other posts, doing nothing is going backwards. Never be afraid to have a go, and if you fail you have experience and knowledge to move forward again.
To Monopoly, hi and wow hip replacement and a pending knee reconstruction. I have had three(yes first one failed)knee recos and since had 9 arthroscopes on both knees. Ive been told by someone its a failure to accept authority to have knee problems, you go girl!!! Leave the rest behind.[biggrin]
DD
PS146 Certified Financial Planner
Don’t sweat the small stuff,and it’s all small stuff!!I like your attitude “DD”.
You sound like me – a 17 year old mind in a middle-aged body. Terrible – isn’t it? HA HA [biggrin][biggrin]
Best Wishes – Johnny1
Originally posted by Johnny1:
Also thanks again to “Monopoly” for her response.
I would however be concerned if you really were a psychologist [confused2].
YOU should be, most minds such as yours tend to be apprenhsive (to say the least) of those in my profession.[biggrin]
You sound like me – a 17 year old mind in a middle-aged body. Terrible – isn’t it? HA HA
(BTW…you should be so lucky to be of the same callibre as DD).I also believe that you’ve managed to wander too far away from the essence of my original topic.
You mean because I didn’t buy into your naysaying, and tried to make light of your rhetorical doom and gloom. In reality Johnny, I’m actually pleased you have that attitude / outlook; it makes investing sooooooooo much more profitable for the rest of us. After all, I didn’t earn a 6 figure passive income off the backs of go-getters, so really THANK YOU.[laugh4][laugh4]Oh what the heck, although you have continued to have a dig at my light hearted response to your original (“I don’t mean it to sound negative”) post, I will tell you MY strategy, and that is to invest as much as possible in a market that I am confident will survive. Sure it will have its down time, all markets do, but it will pick up eventually but it may take many years. I know “bricks & mortar” and although I don’t expect the immediate voluminus returns of yesteryear, I am confident that high/good returns are not a thing of the past. If you don’t feel comfortable with property (and I say this with no sarcasm intended) you may be better off re-assessing your investment strategies and preferred vehicles, because really, making money is for many a “fumbling through” exercise, but for the serious players, creating massive wealth is about CONFIDENCE (but I’m sure I have already said this somewhere before)[blink]
Good luck, and happy investing!!!
Originally posted by DD:
I have had three(yes first one failed)knee recos and since had 9 arthroscopes on both knees. Ive been told by someone its a failure to accept authority to have knee problems, you go girl!!! Leave the rest behind.[biggrin]Ouch!!! [shocked] That’s awesome – 3 recos!!! [shocked] Thanks for that DD, I plan too [winking] I never say “can’t do” even from my hospital bed I was phone bidding on an Auction (which was passed in btw). I am a great believer that success is not just about hard work (that’s the obvious part) it’s about mental agility and attitude; without the right combination you may make money, but you will never be successful!!! [tongue] Keep up the good work DD; I know YOU have the stuff that will outstrip the likes of me!!! [thumbsupanim]
Cheers,
Jo
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