One last hurrah for property

Discussion in 'Real Estate' started by MichaelW, 25th Jan, 2006.

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  1. TryHard

    TryHard Well-Known Member

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    Money where mouth is ?

    What sort of sticks out for me in that article is Bernard Salt's answer to
    "Do you have any investment property?"
    (No, but I plan to develop an investment portfolio over the next three years...)

    If he's a 'trendspotter' as the article suggests, might he not have spotted some trends in the property market before the last few years ?

    He lists his greatest achievement as predicting the Sea Change phenomenon, but says he didn't invest in any coastal property.

    What the ... ?

    Regardless, he still likes the coastal areas :
    http://www.abc.net.au/goldcoast/stories/s1389535.htm
    http://www.coffscoastadvocate.com.a...D=3663965&thesection=localnews&thesubsection=
    http://www.echonews.com/1148/#boomers

    If anyone sees him as the Prophet of Property, they might find his presentation interesting :
    http://www.atug.com.au/docs/BernardSaltPresPhonewareBreakfast6Sept05.pdf

    Personally I'm sticking to my plans and taking his ideas with a grain of 'salt' ;-) I'd just rather act on advice from people who have actually 'done it' - I think the world has more than enough academics.

    :)
     
  2. MichaelW

    MichaelW Well-Known Member

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    Dave,

    Where's the kudos button when you need it! I wish I could have made that point as eloquently. Spot on!

    I'm currently looking around my own hood for that elusive first IP. I've settled on this area for a number of reasons:

    1. It's Sydney's Northern Beaches so should benefit from any Sea Change phenomena still to play out.

    2. Specifically its an under-valued pocket of the Northern Beaches that I've settled on relative the rest of the strip. You can buy in here with a house and land for under $600K. There's not many of those on the Northern Beaches.

    3. Being a local, I can become expert on the market by just reading the weekly real estate rags and attending open houses and talking to agents. There's a lot of potential benefit to be had from being an expert on an area.

    4. Prices have come off quite a bit from the 2003 peak and rents are starting to creep up. I'm looking at a place this weekend which is on the market asking $550K. It needs some work, but I think its a mortgagee in possession and is going to auction. Who knows, I could snaffle a bargain and pick it up for around the $500K mark! :eek: Now, THAT is cheap! (Sorry for any inter-staters that reckon $500K is a tad expensive... ;) )

    Cheers,
    Michael.
     
  3. Glebe

    Glebe Well-Known Member

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    Michael,

    You come across as a numbers man rather than just gut feeling so I'm curious how do you determine good value? Will you be looking at a potential rental yield, or price per square metre or something else? One measure I often think of is it's discount compared to 2003 prices - but then I tell myself that's a terrible measure because 2003 was so overvalued. It'd be like buying dotcom stocks after then crash and assuming they're good value simply because they're cheaper than before the crash. So yeah, I'm not saying you're doing that just curious as to what you look for?

    I think in a years time I'm going to be in your shoes so want to prepare my hunting gear ;)
     
  4. Jacque

    Jacque Jacque Parker Premium Member

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    Michael, SSHHH! You're ruining our plan of a Northern Beaches takeover in the quiet period of opportunity- now stop!! ;)
    How are we going to source good deals if we're competing with savvy investors from this forum?!!
    But, seriously, you make a very valid point of the benefit that comes from being a bit of an expert on one area. I feel this is a sales point that works well with my industry, as there are many BA's who claim to know the entire Sydney market but I have my reservations about this :) It's a big city!
    I was born in Carlingford (Northern Districts), went to school in Epping and Parramatta, did my tertiary studies at Castle Hill, have worked and lived in Baulkham Hills for a long time now. In between, I've also travelled with a Defence Force husband and had the privilege to live in such lovely places as the Hunter Valley (NSW), Brisbane and NZ.
    I have a passion for retirement in your part of the world, but love the Hills and all that this terrific area has to offer Sydney. I also have a penchant for looking at those lovely grand old homes in Turramurra, checking out the beautiful acreage places out at Annangrove and Dural and enjoy the added benefit of having most of my family spread out in both Hills and northern suburbs. Nothing quite like local knowledge- I agree :)
     
  5. Steve Navra

    Steve Navra Well-Known Member

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    What "Boomer retirement effect"???????

    I'm a "boomer" and see myself buying property for the next 20 years and beyond!!!

    The only effect that might occur is that when the boomers exit the work force, then a huge amount of 'Income Tax Revenue' will disappear...............simply because the highest income earners will be living off their capital / equity / retirement benefits.

    However tax systems do metamorphasize to 'catch' the greatest share........... for the benefit of the majority. The answer will be a move away from taxing income (Income tax) towards taxing consumption. (GST)

    Envisage ZERO income tax and a 30% GST. The boomers (after paying Income Tax all their lives!) will suddenly find they are being taxed on what they spend!! (GROAN)

    So probably a lowering of Income Tax with and Increase of GST will adequately solve the problem.

    Recognising Opportunity in Property:
    I well remember 1991...................the situation was very similar to 2006. Most everyone was pretty gloomy about property..........It was NEVER going to go up again!! (And for all the same reasons as mentioned in this post :) )

    Yet noting the latest Residex Report, property in Sydney experienced a slight increase this past quarter and rents are definitely on the increase. (1991 all over again)

    Rental Reality in Sydney is starting to become viable again........ NOW is the time to start looking for property!!!!

    Yes many will wait a couple of years BEFORE doing anything…………until they see that the market has increased to about a quarter to a third in upward trend.

    Personally I will be very grateful to these that wait.........they will be making all the "Early Worms" extremely wealthy!!!

    My Baby Booming IP portfolio is 'HALF FULL'

    Regards,

    Steve
     
  6. Glebe

    Glebe Well-Known Member

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    Go for it Steve, but I think you'll get better returns if you wait another year and stick to equities for a further 12 months. We'll see :)
     
  7. Tropo

    Tropo Well-Known Member

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    "What "Boomer retirement effect"???????

    I'm a "boomer" and see myself buying property for the next 20 years and beyond!!!

    The only effect that might occur is that when the boomers exit the work force, then a huge amount of 'Income Tax Revenue' will disappear...............simply because the highest income earners will be living off their capital / equity / retirement benefits.

    However tax systems do metamorphasize to 'catch' the greatest share........... for the benefit of the majority. The answer will be a move away from taxing income (Income tax) towards taxing consumption. (GST)

    Envisage ZERO income tax and a 30% GST. The boomers (after paying Income Tax all their lives!) will suddenly find they are being taxed on what they spend!! (GROAN)

    So probably a lowering of Income Tax with and Increase of GST will adequately solve the problem."


    Steve,

    No matter what you do your back is always behind you. :eek:
    If this happens, migration from Australia might be the only option...
    :cool:
     
  8. Jacque

    Jacque Jacque Parker Premium Member

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    I remember 91 well- Steve and I bought our very first IP, and then sold it 6 yrs later for roughly what we paid for it (given inflation at the time) :)
    Would I do it again? Yes, but quite differently given what I know now.

    I honestly don't believe in the benefit of buying in a slump unless.....

    YOU BUY WELL. This can only happen with THOROUGH RESEARCH, EFFECTIVE NEGOTIATION and the knowledge that you have ticked all the boxes, so to speak. With the last boom, buyers who didn't do any homework still gained! It was the type of forgiving boom from which you could profit by picking a doghouse :) And didn't we think it was all too easy?!

    The tide has turned, naturally, and so now is the time to do your homework and join all those other prepared individuals seeking for the right property. Concentrate on the fundamentals, do your DD, your sums, have a buffer etc
    It's all about SMART BUYING now.

    PS: JUST TRYING TO COMPETE WITH STEVE'S OVERUSE OF CAPITALS :D
     
  9. MichaelW

    MichaelW Well-Known Member

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    Steve,

    I know, I'm looking right now! ;) But, I'm applying all the robust due diligence that Jacque referred to. I don't think we'll see significant capital gains for a few years yet so will be picking the eyes out of the current market.

    Cheers,

    Michael.
     
  10. TryHard

    TryHard Well-Known Member

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    Michael Yardney's latest

    http://www.propertyupdate.com.au/ar...ke-advantage-of-the-forthcoming-property-boom

    I think he'd agree with your choice of the Northern Beaches Michael.

    "Sydney has almost run out of land because of its geographic boundaries. In Melbourne the perimeters of our city cannot grow because of town planning boundaries...

    One thing to remember about scarcity is most people want to live in the most desirable locations. In Melbourne it is the inner south east suburbs and near the water. In Sydney the most desirable areas are in the harbour side and water suburbs."
     
  11. Jacque

    Jacque Jacque Parker Premium Member

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    That may be the case with property closer to these features, but not all Sydneysiders want to necessarily live there. The expansion of both Greater Western and South Sydney through the linkage of fast freeways such as the recently opened M7 are decreasing the distance to the more "desirable" features such as beaches and city centres every day.
    With new land releases being planned for the South, West and North West (come and check out Rouse Hill and beyond one day- you'll be surprised by the amount of new housing being built!) I think it gives a false impression to generalise by saying Sydney is running out of land.
     
  12. MichaelW

    MichaelW Well-Known Member

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    Sydney is, GREATER Sydney isn't....

    You can live in Greater Sydney if you want but there's still the lack of a decent transport infrastructure plan to make living in the fringe burbs viable long term. Rail is inadequate and more "M" roads just adds to the tolls to get to Sydney.

    My parents still live in Castle Hill, and I think they said it costs them something like $20 in tolls for a return trip to the airport down the M2 across the bridge through the ED and back again. Now, if you add the M7 to that series for those further out plus fuel and parking and time in traffic and... well its not too long before "moving" to Sydney becomes the more viable option.

    :D

    Cheers,
    Michael.
     
  13. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Or you could just avoid living in Sydney altogether and come live in beautiful, sunny Queensland where the beer is always cold (I love it up here - just as easy to get VB here as down south, 'cept the 'new' Original Ale, bit hard to find - anyone else tried it? It's a taste sensation!) and the ladies are always underdressed!

    Mark
     
  14. MichaelW

    MichaelW Well-Known Member

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    Mark,

    Stop it! You know I'd rather live in Brisbane!! Just trapped by that fat salary I'm on for now... Once I get into full time active investing and out of the rat race then I might just join the crowd relocating north of the border.

    I'll look you up for one of those beers too! :D

    Cheers,
    Michael.

    PS Loved the link over on SS to Intellectual W....s, kinda really resonated true to me. That was a good thread too until it got shut down, pity...
     
  15. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    hahhahaa Intellectual Whores is one of the most awesome sites ever in history.

    Next time you're up, just give me shout and we'll go for a beer.

    Mark
     
  16. KevinH

    KevinH Well-Known Member

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    Thought I might revive the topic...

    Is Bernie being serious that he predicted the sea change phenomenon ??
    Its a global disease that has been happening for years !
    Dolf de Roos advocated it years ago and the difference is he acted on it.
    There are websites dedicated to the idea.
    Try www.InternationalLiving.com, dedicated to ferreting out the best ( and cheapest) beachside destinations to invest in.

    This guy has to be dreaming...and even funnier is that he never acted on it ?
    I would be too embaresed to admit that.

    I read a recent article highlighting the story of a successful RE agent and listing his tips on property selection. But when it came to investing, same thing. He didn't have any, instead declaring that he had 'invested in the family home'..

    I guess it must be a mindset thing, making the choice to actually buy and keep buying.

    I find it easier to surround myself with do ers. Its makes the property investing journey so much easier to bear and helps keep the motivation up.

    Kevin H
     
  17. D&K

    D&K Well-Known Member

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    Hi Kevin,

    Not sure if Bernard Salt actually predicted the BB sea change but he definately popularised the concept in this country. I can only imagine that as a KPMG partner advising developers, government bodies and property funds for lots of $, that he didn't need the risk / loss of time for direct investment.

    Many of the basic figures are also based in the ABS research, who don't invest either! We have another census this year which could prove interesting in analysing the 5 year trend on population shift, family / household size and age composition, and therefore housing demands. It may not predict the future but it can point to pressure areas in the market.

    Sometimes an external view of a situation can reveal answers that cannot be seen when you're deep in the process and only dealing with like minds - which leads to groupthink. Hence I prefer to take in a variety of views and glean what I can from each. I question more the real estate agent who's trying to sell me something (or RE researchers trying to promote the market) than someone who does not have a personal financial interest in what I buy. Each to their own. ;)

    Dave
     
  18. TryHard

    TryHard Well-Known Member

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    Dave, in his article the first thing he mentioned that "Makes him mad" was the fact he failed to follow his own 'predictions' and buy coastal property.

    I totally agree in wide-ranging research before jumping in, as long as someone like Bernard Salt isn't seen as the all knowing guru and allowed to influence the market :)

    I'm with Kevin - "Those who can, do. Those who can't, write about it ..." ;-)

    Actually I'd rather cogitate over 12-15 opinions from real people and investors on the forum here, than follow some of the stuff in the papers. I think the people who write about things on here are also 'doers' - a powerful combination ;-)

    Cheers
    Carl
     
  19. D&K

    D&K Well-Known Member

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    Hi Carl,

    I agree with you mostly but I guess I'm trying to say that I like a range or variety of sources, RE, investor, and even non-RE/investor in order to feel comfortable with where and what to buy.

    State governments and councils are good sources, particularly for infrastructure and what that may do or bring to an area. But unfortunately governments usually react to a trend that's already happened.

    The problem with forums like this is that we're all often a little cagey about exposing where we are looking and why, it's just like inviting intelligent competition. OK, pointing out the Norhtern Beaches is an exception, but they're safe from me, too expensive even though I know I will look back in a few years and think they were a bargin :eek:

    Take the QLD government for example; the decision to stop suburbia from Surfers to Noosa and keep green belts is a great source - they're going to limit supply where there is considerable demand, that should equal price rises. Unless of course the BBs migrating North want to give up their beach side dreams for a motorway siding in the Ipswich corridor - I think not :cool:
    But it could also mean more good times for the NSW north coast.

    Commentators on demographics, like B. Salt, are just another source. The challenge is to consider the merit of their arguments and see what can be learned, investor or not. Does this mean one last hurrah for property, maybe it does ... somewhere.

    Dave
     
  20. TryHard

    TryHard Well-Known Member

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    Nice one :D
     

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