Just read steves book and thoght it was great. A bit curious tho’ If over 50k people have read it and if only 10% act on it thats 5k people plus say another 5k who’ve learnt similar stuff from other seminars etc thats 10k people trying to buy cf+ re. Isn’t this going to dry up supply and drive prices up artificially?????????????
watchful
Hi Watchful – it already has dried up supply and driven prices sky high. Have to be a smarter investor these days.
A.
Hi Watchful,
I wouldn’t think like that – be positive and just go for it. Try not to think of too many ppl investing and don’t delay – Procrastination is deadly – Trust me I know!
Hey Anubis,
just out of curiosity, what made you choose that nickname?
Kind Regards,
George.“If You never never ask, you’ll never never know”
watchful,
Let’s see…
Using some very rough figures (drawn mostly from the ABS)
Australia has 20 Million people (actually about 20,090,000 last time I looked at the population clock). This equates to about 9 million households (2.1 people per household).
From the book, 5,000 people decide to invest in property (you said CG+, but leave that for now)…..and you count another 5,000 investors. These figures are actually about 1% of the actual total, but we’ll get to that.
70% of residential property (we’ll ignore commercial property at this stage) is owner-occupied therefore 30% of market rentals are available realistically to be purchased and rented out by investors. This is about 2.7 million residences.
Divided by the 10,000 investor figure, that allows each investor to own 270 properties.
Now, say 10% of these properties are CG+, therefore of the 270 properties you can reasonably buy as rentals, 27 or so are CG+
Is that enough properties for you to start with?
Now looking at more actuals on the number of investors….
According to the ABS, the number of households that own an IP besides their residence is up around the 12% mark….it was 6% only about 10 years ago. (I expect it to fall once more)That means that there are about 1 million landlords. At 2.7 million rental properties that’s only 2.7 properties each. Bugger!
BUT of those landlords about 90% only own one property….therefore 900,000 households own 900,000 of the rental properties…
That leaves 1.8 million for the other 100,000 investors…or 18 a piece.
Of that 10%, most (let’s say 70%) only own 2-4 properties. Let’s be pessimistic and say that those 70,000 households each own 4 properties, equalling 280,000 properties.
So realistically you have 30,000 investors owning the bulk of rental properties, the remaining 1,520,000 rental properties. That leaves each of these investors with an average 50.6 properties each. If 10% are CG+, that’s 5 of them.
Does that make you feel any better?
Cheers,
Aceyducey
Geo,
Used to be Polar Bear but someone joined and used the same name in a different case. Chose Anubis as he is the egyptian god of the underworld.
et al
thanx for the feedbackwatchful
Hey Anubis,
good choice then – egyptian god of the underworld…i like it…
“If You never never ask, you’ll never never know”
Sounds to me like being in the same category as being the boss of the Mafia.
Plenty of power but where is the glory ?
Pisces
watchful, good question. You’ve asked if prices will be driven up “artificially”. I think if there has been demand, then there is no such thing as artificiality. Demand is a real concept.
However, it will be interesting to see how the prices of CF+ hosing stock goes now that the market has changed somewhat. The RB has officially declared the “bubble” over, and vendors are being urged by RE’s to ask for more “realistic” prices for their properties. If middle-range properties (say 250k) fall back to 200k, I wonder what will happen to 50k properties. The simple answer is “well, if the 250k property might have a 20% fall, then so will the 50k property, so it might now market for 40k. Well, that’s one perspective, and has its own validity. Anyone got any ideas about what might happen to cheaper properties in a less active market?
kay henry
at times of budgets and possible elections, people tend not to spend.
nsw has been hit pretty bad with the land tax threshold and the stamp duty addition, so we have a cooling off or crash or slump whatever you want to call it, but this is like a share market in many ways, there are people out there cashed up ready to go again.
they wait for the falls, or even more to come and then pounce, the more that pounce the more they lend to market demand, its all cyclic anyway
as for whats out there? if it isnt then go make it available, kinda like creating your own job eh?
elves
” a blind man may see what a sighted man may not”
Fantastic stats Aceyducey!!!!
Rgds.
Lucifer_auBaa humbug and poppycock. If you run out of PGeared property coma and see me. Ill find you something.
If all of those stats are right, arent we all the clever ones not stopping at one each. I like candy..da de da de da I like candy!!!
23 in 3 years, Hmmm im happy![biggrin]
Hi all,
This is such a tiresome proccess is it? (building wealth), surely doing a bank job would be much easier..ha, ha, just kidding..im tired of delaying gratification…………[hmm]The real price for the property is directly attributed to what it returns, therefore if you find a +CF property it is underpriced for the amount that it earns. If there are no +CF properties like as is the situation in the cities it is because the majority of the market shops for capital gains, THIS IS THE ARTIFICIAL PRICE RISE. Capital gains are subjective and influenced by the mood of the market. Buyers of +CF properties do no artificially raise prices, they just raise prices of underpriced houses to their proper level.
Dali
Originally posted by dalilama:
Buyers of +CF properties do no artificially raise prices, they just raise prices of underpriced houses to their proper level.Dali
I have to disagree wholeheartedly with this statement. People desparate for CF+ have driven very ordinary property way over it’s true value. Wait and see what happens in the next 2 years to the value of the CF+ house in a town of 200 people you were so happy with in 2003.
Anubis,
Isn’t the point that with CF+, a lot of people are not actively seeking CG: they are seeking CF, and CG is a bonus? That’s the difference between neg gearing and pozz gearing. But if there is no substantial growth for CF+ properties, well, the rental yield will still be there- unless the tenants leave- and why would they unless there’s an entire economic downturn. Remember, economic growth is healthy right now, so we’re not looking at recession kind of conditions, where people would up and leave to the capital cities. Of course, country areas usually have younger people leaving them for educational and employment opportunities- but that’s a fundamental and probably not relevant here.
Ok- let’s say there’s an overall reduction in “values” of properties. It means CF+ *AND* CG properties decline. The CF+ prpo[perties will still be able to cope with an IR rise (the return just becomes less percentage wise), but with the CG prop, value is lost, yield (on value) reduces, and an IR rise means serviceability is under threat.
We all lose with price drops (unless we’re buying).
kay henry
Kay – agree that CF+ is mainly about cash flow and not CG. My point was more that the value of many properties in towns of several hundred people have been pushed far beyond true value – and that pursuers of CF+ do not automatically make property prices reach true value equilibrium and stop rising as the Dalai Llama has suggested.
If CF+ values sink does it not still affect your ability to borrow – equity drops even though cash flow may still be there.
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