The Property/Investment/Shares Thread

[Rhino Racing]

You can NEVER have too much property, never.

WTF I never started this thread!
AZZKWERE (sp?) Started this thread and posted this info over???

Mate i am with you 100% there!
You would be able to set up finance for a couple of good propertys with that.
Keep building wealth i reckon! Make that property portfolio nice and fat and juicy for early retirement!

[minux]

Mate i am with you 100% there!
You would be able to set up finance for a couple of good propertys with that.
Keep building wealth i reckon! Make that property portfolio nice and fat and juicy for early retirement!

Exactly, I plan on buying a nice euro car with Cash. That is one of my goals in life...sad huh

[Shounak]

Bwahahahaha, actually, i'd rather do that ^^^, man would that be awesome! Walk in to buy a Lambo in a pair of stubbies, a singlet, thongs, a beer in hand and say: "Gday knackers, i'll take that Diablo over there" *plonks cash on desk* "And hurry it up, i have a local footy game to get to"

The Australian take on Exit Wounds?

Agree with Minux, I'd always go a house. Why would you spend that much money on a liability. Your money will be ****ed away ultra fast.

Except I'd put the whole thing in a geared share managed fund. That way I can buy a $500,000 house in a coupla years.

[minux]

The Australian take on Exit Wounds?

Agree with Minux, I'd always go a house. Why would you spend that much money on a liability. Your money will be ****ed away ultra fast.

Except I'd put the whole thing in a geared share managed fund. That way I can buy a $500,000 house in a coupla years.

In that couple of years your 500k house will be worth 800k

[sixshooter]

Ok lets go off topic and turn this into a real estate thread...

@Minux... what is a fair percentage of the loan on a house that the renter should pay?

If I put $150,000 into a house deposit, what value house should I look at?

Should it be a house in value that the rent will finish paying off quicker or long term?

[BANKS]

Ok lets go off topic and turn this into a real estate thread...

@Minux... what is a fair percentage of the loan on a house that the renter should pay?

If I put $150,000 into a house deposit, what value house should I look at?

Should it be a house in value that the rent will finish paying off quicker or long term?

did you win some $$'s? sounds like it to me

[Shounak]

If you really want property, don't go retail. Commercial real estate will give you more stable returns, a higher cap rate and will probably be easier.

$150,000 will barely get your foot in the door so enter through an LPT or syndicate (if you can afford one).

But if you can hold off your money for 7 years. Put your money in an index fund.

But if you want even more return, put it all on the red.

[minux]

Ok lets go off topic and turn this into a real estate thread...

@Minux... what is a fair percentage of the loan on a house that the renter should pay?

If I put $150,000 into a house deposit, what value house should I look at?

Should it be a house in value that the rent will finish paying off quicker or long term?

We don't work it out on what our mortgage is, we base it on current value within an area. I could have a 1 mill mansion in the middle of some Bogan infested criminal empire, you could not lease the property for as much as you could in a quiet hillside low crime area. That being said, you wouldn't buy in a known bad area anyway. Where you buy and inject your money is up to you, but I'd be using that large a deposit to purchase two properties.

We try to make sure that at least 50% of the mortgages are covered by rent. Currently with the rent shortage this is no issue.

We have friends who have just increased their rent from $260 week for a 4 bedroom double garage fairly nice home to $410 week. This is what the tennants wanted to pay to make sure they could lease this property. They even signed a 2 year contract. No idea why they didn't just buy...property is really all about location, but with location comes more expense.

Shounak did give a good piece of advice regarding commercial property, problems are, cost and you are seeing more and more failures(seems due to people investing in companies who have no real background) in this area!!

[sixshooter]

If you really want property, don't go retail. Commercial real estate will give you more stable returns, a higher cap rate and will probably be easier.

$150,000 will barely get your foot in the door so enter through an LPT or syndicate (if you can afford one).

But if you can hold off your money for 7 years. Put your money in an index fund.

But if you want even more return, put it all on the red.

Commercial/Retail real estate is worthless in times of high interest rates... no-one bothers spending any money on goods... business suffer and foreclose... guess where we are in the economic cycle...BOOM...whats coming next... downside !!!... it's inevitable !!!

Domestic housing is always in demand... how many people are being forced into renting now that they cant afford to buy with high interest rates and costs going up???

Funds etc are crap... what will you get at most 10% on a good year ??? after they take their management fees or worse they'll loose it all on the stock market... but what do they care they got there cut for mismanagement... been there done that !!!

Gambling on the red ??? well may as well buy a gun before you gamble so you can shoot yourself afterwards when you loose.

Still haven't seen what car you'd buy Shounak ???

[Shounak]

Commercial/Retail real estate is worthless in times of high interest rates... no-one bothers spending any money on goods... business suffer and foreclose... guess where we are in the economic cycle...BOOM...whats coming next... downside !!!... it's inevitable !!!

Domestic housing is always in demand... how many people are being forced into renting now that they cant afford to buy with high interest rates and costs going up???

Funds etc are crap... what will you get at most 10% on a good year ??? after they take their management fees or worse they'll loose it all on the stock market... but what do they care they got there cut for mismanagement... been there done that !!!

Gambling on the red ??? well may as well buy a gun before you gamble so you can shoot yourself afterwards when you loose.

Still haven't seen what car you'd buy Shounak ???

I would personally go for something that people will always use. Macquarie has a monopoly on a few major airports, I doubt anyone would threaten the major airports.

If I had to invest in property in a period like this, I would invest in a business dealing with non-elastic goods. The ASX LPT's index has heaps of good options.

I'm personally not a fan of domestic housing due to the amount of work involved, the uncertainty and I don't think it's justified by the return. You only get an income return of about 4% a year, provided you always have a tenant. The capital gains are also hard to come by, due to high selling costs and huge illiquidity.

And come on Shooter. Join through an online Investment place and it's awesome. I'm geared into the ASX 50 with a gearing ratio of about 50%. I pay about 0.7% in commissions PA, with most of the other schmucks joining directly paying closer to 4%. I earned about 30% last year, but I'm down hugely this year. But it's just volatility, rather than actual risk.

Index funds are historically the safest option. Nothing has given returns like the share market in the last 150 years. Housing? Nowhere near. How many houses can produce a consistent return and capital gains for a period of 60 years, not many domestic ones. If you average the ones that can, I think you'll find the ASX100 would be doing better over the same period.

I'm probably too share biased. I'm still dumping all my cash into the fund, despite it going down 20%. Although 7 years is observed as the amount of time taken for the market to correct itself to give an above average return.

The red gives a huge return. Try get that at ING.

With $150,000, I'd buy an SS/XR8 for a daily and do up an old MG as the weekender. Possibly a bug eyed Austin Sprite, of course I'd have full leather interior, climate control, cruise, etc. I've seen a few of these cars and they're "da shizz"

[sixshooter]

And come on Shooter. Join through an online Investment place and it's awesome. I'm geared into the ASX 50 with a gearing ratio of about 50%. I pay about 0.7% in commissions PA, with most of the other schmucks joining directly paying closer to 4%. I earned about 30% last year, but I'm down hugely this year. But it's just volatility, rather than actual risk.

<edit>

I'm probably too share biased. I'm still dumping all my cash into the fund, despite it going down 20%. Although 7 years is observed as the amount of time taken for the market to correct itself to give an above average return.

That's the worst thing you can do... buying in on a loosing asset to average the investment cost... all the time your waiting for it to turn for the better... inflation is driving the value down further... when that money could be making compound interest elsewhere. It's better to spend time yourself learning how to play the stock market and the economic factors that drive it than relying on someone else to buy stock for you. Then you can be in and out at the right time and not buying into worthless stocks. Believe me !!! I seen my C++ tutor at TAFE turn 150K into 1,000K within 6 mths of online trading buying the right Resource stocks all by himself.

[minux]

I'm personally not a fan of domestic housing due to the amount of work involved, the uncertainty and I don't think it's justified by the return. You only get an income return of about 4% a year, provided you always have a tenant. The capital gains are also hard to come by, due to high selling costs and huge illiquidity.

The return in the last 4 years for us has been a heck of a lot more than 4%. We were able to sell 1 property to buy 2 outright. We do not want massive amounts of money right now, we want to retire before 50. By owning property in suburbia that is close to developing cities and public transport it will be worth a fortune in 20 years time. Tenants are no issue atm, doubt they ever will be again. At the end of the day, when we sell what we have, we will be left with a lovely retirement package. Buying land close to cities is almost impossible now, making it harder is people not selling up developed land either.

Oh also, not much work involved on our end

[Shounak]

That's the worst thing you can do... buying in on a loosing asset to average the investment cost... all the time your waiting for it to turn for the better... inflation is driving the value down further... when that money could be making compound interest elsewhere. It's better to spend time yourself learning how to play the stock market and the economic factors that drive it than relying on someone else to buy stock for you. Then you can be in and out at the right time and not buying into worthless stocks. Believe me !!! I seen my C++ tutor at TAFE turn 150K into 1,000K within 6 mths of online trading buying the right Resource stocks all by himself.

I'm not putting in money to average my investment cost, I'm buying low to sell high later. I've got another 6 years before I'll need the money and the market has always taken an average of 7 years to beat any other major investment class.

I'm a Finance/Economics major at Uni and there are no real ways to make huge profits in the stock market without an enormous amount of risk, unless you know something someone else doesn't. Playing the stock market can often be akin to gambling, whereas investing in the stock market as a whole is safer than a house.

I know the market will correct itself and it's only a matter of time when.

BTW, compound interest usually doesn't keep up with inflation, not after tax anyway. If you're on a good tax bracket, you're probably losing money in a bank account. I'm just mildly playing the volatility to maximise my future gains without a too great investment of my time.

There's not a great deal of decision making in an index fund like mine either, I'm just taking advantage of the wholesale transaction costs involved.

[Shounak]

The return in the last 4 years for us has been a heck of a lot more than 4%. We were able to sell 1 property to buy 2 outright. We do not want massive amounts of money right now, we want to retire before 50. By owning property in suburbia that is close to developing cities and public transport it will be worth a fortune in 20 years time. Tenants are no issue atm, doubt they ever will be again. At the end of the day, when we sell what we have, we will be left with a lovely retirement package. Buying land close to cities is almost impossible now, making it harder is people not selling up developed land either.

Oh also, not much work involved on our end

I find buying and selling houses to be more like gambling, but it's restrictive with the huge transaction costs involved anyway. I put most of the risk on the illiquidity of the whole thing.

Retail real estate cap rates are generally about 4% of the market price. My parents 2nd house in Highton is worth $290,000, but we could only get rent of about $200-250 a week. That's not including the 7% fee from the real estate agent, or the repairs, upkeep, bad tenants etc.

If you're trading houses, you're looking at more profit. But simply buying a house for it's rental income is usually not the go.

But on a sidenote, I wonder how many % house prices in somewhere like Hawthorn have changed relative to the ASX50 over the last 20 years? If I have more time I'd love to calculate it, hell it might even change my whole investment perspective.

[sixshooter]

I'm probably too share biased. I'm still dumping all my cash into the fund, despite it going down 20%. Although 7 years is observed as the amount of time taken for the market to correct itself to give an above average return.

I'm not putting in money to average my investment cost, I'm buying low to sell high later. I've got another 6 years before I'll need the money and the market has always taken an average of 7 years to beat any other major investment class.

I'm a Finance/Economics major at Uni and there are no real ways to make huge profits in the stock market without an enormous amount of risk, unless you know something someone else doesn't. Playing the stock market can often be akin to gambling, whereas investing in the stock market as a whole is safer than a house.

<edit>

Your buying shares of a managed share fund no ? Thats like paying other people to "gamble" with your own money (using your analogy of the share market). Do you know what companies your asset is made up of... how can you follow it then??? You're just relying on others to make decisions for you... it's easier to take big risks with other people money... less care factor on their behalf... Like I said they get payed their cut no matter what happens.

Quitting while your ahead is a good maxim !!! You were up 30% now your sitting on 10% and the value of the fund is falling further... don't you have any stop limits / exit strategy ? You've got to have big balls to keep putting money into falling assets... it's better to sell short than to go long in a falling bear market place.

[sixshooter]

Lets say for arguments sake I had $150K worth of Elfin Streamliner what would it be worth in 10 years time ??? LMAO !!!

[CSP]

Buy land... God aint making any more of it...

I have my deed of title for 10 acres on the moon too

[Rhino Racing]

WTF I never started this thread!
AZZKWERE (sp?) Started this thread and posted this info over???

[Reaper]

I find buying and selling houses to be more like gambling, but it's restrictive with the huge transaction costs involved anyway. I put most of the risk on the illiquidity of the whole thing.

Property is just another asset class, as are securities and bonds etc.

Their great advantate is their relative safety. In most cases they rarely diminish in value and (on average) slowly appreciate in value at a modest rate. Property value is not necessarily proportional to the rate of rental return. Generally the cheaper properties will attract a much higher rental return (as % of property value) than a much higher valued property. There are many reasons for this which can be explained later if people are interested.

Probably it's greatest disadvantage is that they can be relatively slow and cumbersome to dispose of (especially if you need the money in a hurry). Disposal (and aquisition) costs are quite high when compared with other asset classes.

But on a sidenote, I wonder how many % house prices in somewhere like Hawthorn have changed relative to the ASX50 over the last 20 years? If I have more time I'd love to calculate it, hell it might even change my whole investment perspective.

Would be an interesting study. My gut feel is that over the short term (if you picked a term that suited the findings you were looking for) housing prices in such areas will probably exceed the return of shares but over a longer 10 - 15 year timeframe shares will be still a fair way in front.

Reaper

[Reaper]

Your buying shares of a managed share fund no ? Thats like paying other people to "gamble" with your own money (using your analogy of the share market). Do you know what companies your asset is made up of... how can you follow it then??? You're just relying on others to make decisions for you... it's easier to take big risks with other people money... less care factor on their behalf... Like I said they get payed their cut no matter what happens.

Quitting while your ahead is a good maxim !!! You were up 30% now your sitting on 10% and the value of the fund is falling further... don't you have any stop limits / exit strategy ? You've got to have big balls to keep putting money into falling assets... it's better to sell short than to go long in a falling bear market place.

Diversifiying your share portfolio can be a great way of reducing your risk. It also reduces your rates of profit. In general the more you diversify amongst the ASX top 50 (or whatever they are called these days) the closer to the return of the all ords you are going to get.

Reaper

[Shounak]

Your buying shares of a managed share fund no ? Thats like paying other people to "gamble" with your own money (using your analogy of the share market). Do you know what companies your asset is made up of... how can you follow it then??? You're just relying on others to make decisions for you... it's easier to take big risks with other people money... less care factor on their behalf... Like I said they get payed their cut no matter what happens.

Quitting while your ahead is a good maxim !!! You were up 30% now your sitting on 10% and the value of the fund is falling further... don't you have any stop limits / exit strategy ? You've got to have big balls to keep putting money into falling assets... it's better to sell short than to go long in a falling bear market place.

No gambling, they're buying what I would normally have bought with access to commercial discount I have no access to. Just think how much it would cost you to buy the ASX50 in a reasonably fixed proportion, if you only have $15,000 to invest. You'll pay $5g in just brokerage.

They don't trade, they just buy and ride.

You're missing the point of my investment. I'm not interested in trading, I plan on sitting on an investment to ride it out. I will bet you everything that this investment will have outperformed any other major class in 10 years. It's done this for the last 150 years and will continue to do so.

If I sold and left it. In 7 years I'd be kicking myself for not throwing money in while the unit prices were so damn low.

[sixshooter]

......... nevermind