MasterREL, a lot of property investors don’t like to think about real life events like interest rate rises and bad tenants. It ruins the optimism that they hold for that “perfect” IP that runs like clockwork. You know, just like in a game of monopoly! I roll the dice, collect titles for each street that I land on, build lots of little green plastic houses, all as I pass GO to collect my $200. You can’t lose when you’re using play money or as some investors may tell you, “other people’s money”.
if you don’t think about interest rates, vacancies, potential bad tenants and so on, then I would suugest you are gambler more than an investor. Just like me buying shares at the moment – I openly admit I know nothing about them and it is purely gambling. I may as well play the chocolate wheel at the casino really.
I think Spanky’s comments were within the context of buying a reasonably researched investment property presumably around the current median price with due consideration for your circumstances and contingencies etc etc, I don’t think he meant just throw some money at any over priced piece of rubbish and expect a genie to appear
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Let me give you some more information on myself:
-I live in a relatively large regional city.
-Yes, I am young
-No I am not gambling – I was just using a “general” scenario, as that seems to be what everyone likes and can understand. Just like those generalisations I have been critical of.
-No, MasterREL, I do not want to buy your house for a peak price, as I have already found one considerably below its current market value.The regional city I live in has certainly felt the recent property boom, however, not to the extremes of the capital cities, and anyone who knows what they are talking about will tell you the same of most other inland cities. So, if there is a serious crash in property prices, I feel any capital loss on the property I am looking at will be cushioned not only by its geographical location, but also by the fact that I am buying well below its current value as the vendor is seeking a sale as quickly as possible. It is a strata unit for $135k – there is another one for sale in the same block for $155k. The more expensive one is closer to the main road running past it, it has less privacy as a result, while the cheaper of the two is the very back unit and has security screens, a new kitchen and a new bathroom (installed within the last 6 months). I have spoken to the Strata Manager (who is independent of the selling agent) and there is nothing structurally wrong with either unit, nor do they plan on raising a special levy in the foreseeable future. Of all 9 units (spread out over a large area, all at ground level), 7 are owner-occupied, so as you can imagine, the place is fairly tidy. It is on the main route between the CBD and the local university, so moving in myself and renting out the 2nd BR for a decent proportion of my mortgage repayments at this time of year (uni going back) won’t be difficult. Now try telling me that it’s not a good time to buy any property at all.
Age doesn’t negate effort – you can never be too young or too old.
I mostly agree with you spanky. IMO anytime is a good time to invest. Sure if you jump into the market at the top then you MAY lose some profit if the market increases dramatically. But on the other hand if you jump in too late (like most people) then you are sure to lose money aswell. Or if you tie your money up in other honey pots eg the US then you may miss out on the honey truck that just went by.
If I had not bought my first house 10 years ago then I may not have the equity to jump into the house I live in now. The media drives most of the uneducated investing done in property.
I love it when the media tells doom and gloom stories about interest rates or falling property markets. It drives prices way down so we can pick them up cheap. Most people still have to rent.
We are looking now at houses that are cash flow neutral that we know will only come up in value in the future but pay for themselves for now.
The tall and short of it is this: Don’t miss the buck you can make today waiting for the two bucks you MAY or MAY NOT make tomorrow.[biggrin]
You will always miss 100% of the shots you don’t take!
Another thing that enforces my point, especially on a more personal level to me, is the number of people I speak to who say “I wish I did what you are doing when I was 19”. Now, these people vary greatly in age so even though they wish they did it at 19, there must be some of them who were 19 when the market was not an ideal place for buyers, especially not for beginners.
While I am fine with people being critical of my perspective, I would like you to first consider these few questions, especially if you have been investing in property for more than 20 years:
1) Do you wish you began investing in property at age 19?
2) If yes, what was the market doing back then? Was it an absolutely ideal marketplace to buy in at the time? Were interest rates really low? Were prices very attractive for the era? I bet you are thinking “No” to most of these questions, BUT, if you compare prices then to prices now, you would say “YES, it was an ideal time to buy when I was 19. I wish I bloody did it then!!!”
Age doesn’t negate effort – you can never be too young or too old.
Spanky,
I think you’re on to something here. I for one, was originally going to post a word of caution about investing at the peak of the market, but I don’t think that’s what you’re talking about. Regardless of the total market picture there is always individual properties that represent good buying. It sounds like you are making an informed purchase decision giving due consideration to all the potential downside. That’s not gambling, but informed investing.
I guess, the caution goes out to those who might not be as careful in their selection criteria as you. There are a lot of properties now that are overpriced and do not represent good buying.
I believe that so long as you do your due diligence well and apply a strict test such as Steve Navra’s rental reality, then you can still buy good value properties at any point in the market cycle. Its just harder at the top of the cycle. If these are the properties you are talking about, then YES, I do recommend buying at the peak. For those who suggest buying any old property without doing their homework, then NO, I do not recommend buying at the peak and riding the trough. There’s better ways to lose your money…
Cheers,
Michael.Originally posted by Michael Whyte:Regardless of the total market picture there is always individual properties that represent good buying.
Michael, I think you have hit the nail on the head!!!
Age doesn’t negate effort – you can never be too young or too old.
Originally posted by Michael Whyte:Spanky,
I think you’re on to something here. I for one, was originally going to post a word of caution about investing at the peak of the market, but I don’t think that’s what you’re talking about…
Cheers,
Michael.Well, if you go back to Spanky’s original post, I think he was advocating just that:
Originally posted by Spanky:What is the problem with buying property now, (at the top of the cycle) if history shows (and history generally repeats itself if you look at the price fluctuations of almost any asset or commodity) that in 10 years’ time, (remembering property is a LONG-TERM ASSET) that property is going to be worth considerably more than it is today – especially if it is managed well??
Who cares if prices are high now? Barring radical changes to Investment Property laws from the Government, prices will go even higher in the long-term
I think that’s why some of us had to jump in and slap him around the head a little.
Spanky, in the realm of predicting the future, (this is what everyone is trying to do here) I can only tell you that it is very difficult if you don’t have a magic crystal ball.
The alternative to the crystal ball is listening to what others have to say, or … making your own [magic] predictions.
Usually people who strike it big are the one that don’t give up and that can see what the majority does not. This does not necessarily mean to go against the current just for the sake of it.
So, sometimes the majority have it right other times they get it wrong and by the time they change their mind the horse has bolted, one example is negative gearing versus positive.
I can only tell you one thing, and that is that the only regret I have, is that I was so picky in my purchases, should have bought all the one I did not like as well.Would be a few millions better off.
Can you use this?
Of course not! the future is a big unknown and I am talking about the past.
You will have to take your risk. Just take only as much risk as you can handle if things go the worst possible way.May God prosper you always.[biggrin]
Marc
You must be logged in to reply to this topic. If you don't have an account, you can register here.
