Will property bust or will there be a second cycle?
how high do interest rates have to go up before most investors get there hands burnt? say 10%?[:0]
Some will start to feel the pressure if interest rates rise between 1.5 to 2%.
I know I would not be too happy if that happened. And I am fairly conservative, but my loans are fixed for 5 years.
I know I am paying a little more but at least I can sleep at night.
All my loans fixed for 3-5 years and I am sleeping well at night.
I never worry about interest rate, but I only take a look at it when I am going to purchase property.
Warm Regards
ChanDollars
[The bridge between where you are right now & where you want to be tomorrow is knowledge]G’day again…
The US and GB are leading the way for a Bust , not only in Real Estate but you can now add the Stock Market to the list. Bank Shares will tumble as the R/E Mkt tumles along with the Dow Jones.
There are other opportunities to be had…. time to think outside the square. Yes I did predict the Dow Jones to break through the 10,000 barrier…and it did… but current economic events in the US and the recent decline in British R/E will make Docklands and the like fall another $100k.
Me Negative? Not at all. Just look around you and if we ran our finances like the NAB, Docklands, US economy
we would all see our net worth fall. Even the demand for loans will dry up and the rates will fall much to the dismay of those with fixed rates.Interest rates alone do not drive our markets… peoples perceptions, fear and greed will do it.
Until my next post.
Billfromoz
Bill O’Mara
Well, a 1% interest raterise on a $1 million loan would be… ummm…. an extra $10k a year, or $200 bucks a week.
Whilst we might not be *overly* concerned about interest rates, there would be few smaller IP investors who would be able to pay IR’s of ten years ago.
I don’t think this means “crash” though. I think it means some people will lose everything, some people will lose out a little, and some people will make huge capital gains- in *whatever* market.
kay henry
Originally posted by realdeal:Will property bust or will there be a second cycle?
how high do interest rates have to go up before most investors get there hands burnt? say 10%?[:0]
There will always be a cyclic effect to investments, have a look historically, though over time things improve..
And do you remember the days of interest rates of 17%, i certainely remember paying 13%
I’m like Chan$.. we’ve fixed our rates a while back on the IP’s, knowing that things were good and the wheel would eventually start turning again..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
If there is a boom, there will alway a bust.
Whatever happen to the property cycle one should prepare and take precaution steps toward there investment decision.
If you already done so, good on you. If not then you better dig out for answer.
Kind regards
Chan Dollars
[Retire Young, Retire Rich]Hi Guys,
nice way to put it, but i dont wanna get on anyones bad side on this, but in theory people believe and are told.
“wheres there is a boom, there is always a bust”
in reality, this is quite the opposite, we have been booming and then steading out, booming again and then steadying out more, theres no real bust at all, its weaker investors and first time investors, who dont play down their cards right and panic occurs and then all sorts of media is released.
im not just talking from my short experience, but my partners and people i have dealt with, have all got more than 25 – 30 years experience minimal, and were i was taught by my rich dad (friend of my mother) whos got well into 40 years experience, the opposite is quite often told by them, as they have lived through both boom and bust and have learnt to capitialise and lose money, interest rates are still reletivaly low and still it wouldnt hurt to much if the rates were to rise another few percent more.
Cheers,
sisps, Chan$, if the interest rates rise, trust me, your in the right position to capitialise, you should be hoping for rates to rise… [:o)][:o)][:o)]
Originally posted by Still in School:ps, Chan$, if the interest rates rise, trust me, your in the right position to capitialise, you should be hoping for rates to rise… [:o)][:o)][:o)]
SIS,
At this stage I am not hoping for rates to rise coz the other property not settle yet!
Kind regards
Chan Dollars
[Retire Young, Retire Rich]Hey Chan$,
lol… i wouldnt worry about that, you’ll get a nice honey money rate, but it all out honesty if interest rates rise, weekly rentals begin to increase, now lets say 3 months later after a rental increase due to interest rate rise…
and the interest rates begin to fall, and lets say if you tenant still has another 9 months or even signed a 24 month lease, weekly rentals dont drop… and even when the interest rates drop low again, and your weekly rentals are upped and increased…. you be gettin a lot more cashflow….
other thing too Chan$, remember what we talked about before about -ve geared properties during an interest rate rise?
…. you be definietly capitilasing if you jump and jump out in the right time…. [
]anyway when the time comes, were both in the same boat… lol [:o)] …. bit scary [8]
Cheers,
sissis,
I don’t think IR rises are good for *anyone* who is investing in RE. Whilst it might make some people jump from their investment (those who have gotten in over their heads), even if you buy their properties, you are still paying higher IR’s on that mortgage. And we can’t just increase rents merely due to an IR increase- because the IR’s may go down against next month.
IR’s generally remain stable though, sis- not up and down like a yoyo. Economic conditions are longer-term than that. the only real reason IR’s went up in their first movement recently was because people were spending more than was good for them :o)
kay henry
Oh by the way…
Chan, i will admit, you got one of the most best property portfolios i have seen, so diversied, but not only that, you have so much flexibility in your portfolio, you have one of the greatest flexibilities to attack or handle any property market, either be it boom or bust… [:o)] and still be able to capitalise… [:o)]
keep up the good work, not too long before your sitting back and enjoying your long relaxing days… [^][^][^]
Cheers,
sisHi Kay and All,
your right in some way, but i know your a little against what im gonna say, but “buy in doom when in gloom”
some people might not like the idea, that the weaker investors, will have to put up their investment property for a quick sale, so they dont go bankrupt or default on their loans, but really in a time when interest rates are high and people begining to panic, i know many of us, who will be preparing but also cashing up, will try to reap up the bargains of other weaker investors.
… it might sound wrong and the rates are high and were property is selling at a song, that this is the best time to buy and capitalise, but in a weaker market, you really do need to take advantage of this if you really want to make some big dollars.
… real estate is a big money game, if you let a deal go by, dont be surprise if someone else snatches it up… and capitialises on it.
Cheers,
sisOriginally posted by Still in School:Oh by the way…
Chan, i will admit, you got one of the most best property portfolios i have seen, so diversied, but not only that, you have so much flexibility in your portfolio, you have one of the greatest flexibilities to attack or handle any property market, either be it boom or bust… [:o)] and still be able to capitalise… [:o)]
keep up the good work, not too long before your sitting back and enjoying your long relaxing days… [^][^][^]
Cheers,
sisSIS,
Actually I got a problem. I want to sale one of my IP now, but I can’t coz I lock the interest rate to sept’05. If I sale now I will get a penalty for $4000 to $5000 for early exit.
So I just have to wait to next year or buy more +ve CFP
Kind regards
Chan Dollars
[Retire Young, Retire Rich] [strum]If you think it will or you think it wont you are probably right.
Property is a long term savings plan (super) I have not met an overnight millionaire, you can make money in any cycle, in fact I hope the interest rates go to 10% tomorrow because I will be picking up some great bargins. Regards Phil
Hi residentialwealth,
if interest rates rise tomorrow, ill come along and join ya… [rambo2]
Cheers,
sisSis, i agree, buy in doom!!!
Bill, “the recent decline in British R/E”…
meaning, a great time to start looking there for deals?
Excuse me, folks, but there is a question you are perhaps overlooking.
How are people going to keep buying real estate at the higher prices considering that they can’t afford to buy at today’s prices?
By “they” I mean home buyers. The affordability is now at a record low. In short, “they” have run out of money.
It’s all over folks, it’s the time to sell or hold for a few years.
For those who have not bought, it’s the time to watch from the stalls.
It’s going DOWN baby, down. In a tailspin.
Apologies to the Jayhawks for stealing their lines, but, gee, they sing it well.
Bec’s Band
<edited – [offtopic] Guys you were doing so well[glum2]>
<edited – [offtopic] Guys you were doing so well[glum2]>
Bec
]
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