Is property really a good investment?

I just can't seem to make it work, most IP don't provide a net return, so are costing you to hold, and it especially doesn't seem to make sense to live in a home you buy, holding costs seem to be around 35k/yr for a modest 500k property once you include rates, insurance, maintenance etc. Not to mention the large deposit locked up. I don't mean to sound negative because obviously lots of people make/ have made money on property but I have spent so much time looking into it and it just doesn't add up to for me at the moment I feel like I must be missing something?

 

Persist with it and you will see results I imagine.

I actually completely agree with you if we're talking about the 97% of properties or so that are just 'normal' properties. The trick is finding the 3% or so that are investment grade.

 

Yeap, a lot of people are speculating property value will always go up, which make sense even negative gearing, as capital appreciation in the long run provides fat profit compare to little scarify along the way. Having said that, no one can truly predict the future but can only make educated guess + risk management base on their own financial situation.

The Risk management here is not predicting the market is going to go up or not in a short period, but will you be able to survive when the GDP goes -ve for extended period of time.

The fundamental of Australia is, in the long run population is increasing very quickly and the demand of housing is greater than the supply provided. That make it in general value of property will always go up. i.e. 30 years+. Please don't mention japan, you know the population is decreasing there.

You can never short a housing market, as you can't borrow $ that cheaply to short a housing index, compares to owning a property through a mortgage. Just think of the borrowing cost + % of leverage through mortgage, compares to you do CFD at longing a REIT.

What I really think you are asking is, is it the right time to go investing in property right now. My recommendation is and will always be if you can afford it, and is a place you need to live in, and is your first property, you can always go for it regardless of the cycle. Where as if you are using property as an investment tool, then you will really need an well educated guess. Having said that provided the fundamental of Australia, provided you have the finance, over the long run(30 years+), property will always provide greater profit compares to any investment product/tool you can find.

 

it does feel that way when its not growing in either CG or rent. But be patient is a key aspect of realestate investment as time in the market can ride out mistakes in the past. I've seen people buy in or near the peak and when they are not seeing to growth they anticipated after holding for a few years they sell it at the same or lower price than they brought in and missing out on next boom around the corner(few more years later). I really think RE is a game of patience and finance.

 

Not as good as the spruikers make it out to be, but still a great long term investment if you take a passive approach, and even better if you’re an active investor with creative skills.

 

You can tell the downturn has begun when you start getting threads like this.

 

Residential property is not a perfect investment. It doesn't stack up againt most other investment options in many ways in my opinion but it has that magical ingredient of (relatively) easy access to 90% leverage that allows everyday folks to get control of an asset base worth a couple of million dollars. The important question then is - what and where to buy.

 

Youve been jumping on every cool thing and avoided all the basics. Because its boring and you think it should be exciting. You want to feel excited about it every day? Go trade fx.

 

Start studying bank shares and the companies who own large commercial sites.

What about a funeral company?

 

Invest your money in a bank account and see how wealthy you are in 30 years time .

 

Hi, I know how you feel and I was there myself but persevere and it will eventually payoff. Property is boring and people seem to want a quick return or see quick progress.
Good deals are always hard to find but they are out there.
Also, time in the market is critical. The longer you hold on to a property the better off you will be. In saying this there are still duds out there so be mindful about what you hold on to and what you keep for the long term.
You will also need to work out why you are wanting to invest in property as opposed to managed funds, shares etc. Do you want to retire early? have a better nest egg when you do eventually retire? live off the rent? etc
I'm not the sharpest tool in the toolbox, although I have been called a tool before but I've managed to build quite a large portfolio that will allow me and my family a very comfortable retirement as well as leave a significant legacy to my kids.
Keep on doing your research and keep educating yourself. Most people on this forum are very approachable and are willing to help. Just reach out to them, you'll be surprised with how many people will respond.
Lastly, if property isn't for you then that's ok, just make sure that you continue to invest in income producing assets. Don't give up thinking it's too hard. Don't be part of the 99%.
Best of luck.

 

Property is not a 'get rich quick' investment. You need to start somewhere and slowly chip away at it. You won't see the results overnight.

 

Yes, for me property has been a good investment. It has accelerated my wealth faster than if I had not invested in it. But, I have dedicated time, effort, resources & made sacrifices for it to work. Also, my expectations are rational. I know it's a long term game - so I don't expect immediate results.

 

I have been investing in residential property in Australia for 18 years now and in the US for 7 years. I don't see value in the Australian housing market at this time (as an investment). I feel markets are overpriced (sydney and melbourne in particular, with brisbane being my preferred market at this point of the cycle) and the cashflow achievable does not make sense to me at this time. The US markets offer tremendous value where the cashflows are substantially higher than the AUS markets so you are not relying on capital growth to make your money.

I just bought a property in the US for 52k today with maybe 6k rehab that should rent for $750+ a month. Returns are much better in the US. Essentially I am not concerned if the prices go up or not as I am not relying on capital growth to make my money. The rent will return my capital outlay to me in years to come. Any capital growth is a bonus. Own enough of these cheapies and they can replace your income.

 

agree with the others who say its a long term investment and would add its also a good idea to diversify with other investments.

 

Where are you looking and what are you looking at? Property can/does work, but it's mostly a long term play and the short term returns are probably not 'sexy' enough for some people.If you're investing, then the first one needs to be a good one (easy to say), as this will enable you to invest again a lot quicker. Yes, there will probably be some holding costs, but after tax these can be dwarfed by the capital growth.

Can you afford a PPOR where you want to live? In the early years of debt reduction it can seem like not much is happening, however your home can eventually be a fantastic platform to access equity for further investments. I've heard arguments against buying a PPOR based on number crunching, but there can also be emotional benefits that go beyond pure logic. I'm yet to hear a client with a PPOR tell me they wish they were renting.

 

Ya, a 20 year time frame

 

This is fair observation. Personally, I don't think it is that easy to make money from property unless you buy at the start of a mega boom like the recent booms in Sydney or Melbourne.

My last investment took around 12 months to find and I would have shortlisted more than 100 properties an inspected probably 50. Out of all of them I only found one that worked for me. You can't just buy anything, wait and hope for the best unless you bought at the start of a mega boom.

 

Haha - excited/horrifically depressed, you mean?