Is 2016 the year you’ll make a killing in the property market?

Usually desk top vals from your broker or from an RPdata subscription or similar.

 

Empty portfolio currently but for my projections I took 5% per year, this seemed to be a pretty conservative view on what has happened to my PPOR and also when I checked a few other suburbs / states for median growths. I then compounded it YOY. I didn't account for any increased % through boom periods as I can't realistically predict when and for how much, at least this way any boom is a bonus against my conservative projections.

I factored in 30% of all rental incomes for holding costs and I also factored a rental return growth (also on the conservative side) to be 3% per annum.

FInally I didn't account for any Negative Gearing so any is a bonus and can go straight into the offset lowering the interest costs and I calculated CGT to be 49% of 25% of the growth (close enough to 12.5% of growth.

I have tracked the value of my PPOR for the last 7 years since I bought it using a combination of the area and "similar" properties for sale and proper valuations. I did use Onthehouse at first but I found it to be quite inaccurate at times.

 

2016 will be the end of my property investing career which lasted a long time. Hope to unload the last one till the end of the year. No more bricks and mortar.

 

I have started doing my 12 year plan based on very similar nos as yours. Now stuck because after 1 year my loan serviceability doesn't allow me to buy anything.

What yield did you consider?

 

There would be a few different ways to monitor it.
commbank had an app which gives property values, and recent sales. It seems good for a quick check.

Otherwise you can monitor the median changes over the years (re.com.au graphs) and look at % changes

Or just search your area on re.com.au to look at comparible properties for sale and recently sold. I like that way as you can work out where yours sits with a few others currently on the market or recently sold

 

To be honest I can't remember what the initial calcs were on on Yield but I know that again I was conservative, for some reason 4% is ringing a bell but I might be wrong.

I am in a fortunate position, without going into too much detail, I currently pay $3,500 a month above the scheduled payment on my mortgage so the yield is not going to be a crippling factor for me. If I need to sub in more funds post rent then so be it.

When calculating the numbers I also accounted for the rentals being empty for 2 months of the year (again conservative).

My line of thought is the more conservative my figures are, the safer the gamble.

One things is guaranteed though, this is one VERY exciting time in my life . Butterflies in the stomach type exciting . I can't wait to get going but I did promise the missus no purchases until I come out of my reversal surgery, this has now been booked for May 18, I would like to make IP1 purchase happen on May 19 (just because it would make an AWESOME story ) but in all reality I think it will probably be around June, I would like to be an "investor" by my birthday at the latest which is in July.

 

I am pretty similar to your financial position. I was doing my spread sheet based on DSR according to More Wealth from Residential Property by Jan Somers. I am either doing some mistake or the DSR Calc according to book is not what banks follow.

I know exactly what yo feel. Sign the contract now and settle on the IP on May 19. You get to keep the promise too mate.Good luck.

I might start conversing with you by PM. Dont want to hijack the thread.

 

Nice, congrats . Hope the journey was awesome .

 

Yeah it was nice. Now it's time to short it.

 

Don't believe the Aussie big short

 

After you short the property market, will you continue to visit and post on PC?

Or is that dependent on your success? If successful will you come back and rub it in the rest of our faces and brag how you were right / if unsuccessful will you never return due to your incorrect prophecy for fear of being labeled just another troll?

 

I will leave this forum after I'll sell my last IP - end of the year hopefully. If you would like I can return. But the short I'm talking about should be complete. It means I would need to buy several IP's for a lower price than they are today. I don't think that I'll return to property investing in the future. I just don't believe in it anymore.

 

I don't really care if you stay or not, just wondered considering your strong anti debt, anti property and doomsday views.

I am little confused by your post you would need to purchase IPs when they bottom out but you don't think you'll ever return to property investment??? Does this mean you don't think the market will tank to a point that you would see value or you think that post this crash event it won't return to current levels?

In my mind if you correctly call the crash and exit the market completely 3-18 months out your a genius but if you then don't capitalise on this event by being poised to buy prestigious properties in Brighton andbToorak equivalents throughout Australia then your no genius.

By the way a Crash in my mind results in mass selling driving prices of all property down by at least 30% from the point it was 12 months prior to the peak leaving a massive portion of the market holding negative equity combined with some form of economic disruption causing defaults.

 

I see a crash if the prices fall at least 30% to the peak, but it doesn't mean it should happen in 12 months time from the top, it can take 3-5 years.
I stated clearly that even a fall in price for 30% or more may not give me enough reason to jump back in buying IPs, I may and hopefully will have other investments doing a whole lot better. That's all I wanted to say. Time will tell. And by the way - I don't like Brighton and Toorak.
I have a question. Do you always state people who have a different opinion to yours a troll?

 

@barnes I understand that everyone has to do what's right for them. Have you ever had a critical look and examine objectively some of your positions to see if in fact there is room for adjustment in order to get you closer to your financial goals?

 

Of course, you are spot on. When I was doing only property some 12 years ago and it was starting to slow down I understood that I should teach myself something else. After 2005 I had bought only 3 IPs. A decision to leave property investing comes from a critical look at some of my positions. Unfortunately properties cannot be offloaded straight away, it took me a lot of years.

 

Curious. Why?

 

Is it that debt is too risky for your risk profile, or you genuinely believed that post 2005 the overall Australian property market would not be a good enough investment/return for you to rationalise taking on more debt?

 

I had never used debt to buy properties, only cash. About 2005 I understood that prices (not only in Australia, but all over the world) were climbing beyond my comfort level, that's why I changed strategies and started doing something else, but to do something good with something else - you need years and years of preparations and learning.
Property boom cannot go forever. Some countries like USA, Ireland, Russia had big crashes since 2005 and some didn't, but they will. It's all a matter of time, no one is immune. Australia didn't have a crash because of China, now China is going down - hard.

 

Prices are too high, debt is too cheap. It has to end someday...