Property prices beginning to drop

Always good to hear different points of view. Alot of the incumbent posters here are property heavy so you were always in for a tough time.

I don't think your concerns were entirely invalid. At that time, we all had zero info on the virus, it may have well been much worse.

 

I'm assuming when you factor in depreciation and low interest rates, they would all be quite PCF too.

I think each home I kept brings in about $1800/month PCF.

 

yes, no point selling

 

+1!
Hence why I sometimes just switch off from various sources. It is so much more important now 'to stand guard at the door of our minds' as our mentor JR said.
Whatever information we’re feeding our mind on a daily basis and our focus upon consistently, whom we listen to what we let in, we’re going to experience as being what life is really about – and if we don’t discipline our fears and control our focus, the world will gladly do it for us. It’s OUR choice what to focus on.
IMHO, many don't understand to be selective as they don't realize what impact it has on their mind.

 

@Sackie

Are you P&I on your IPs or I only or they are already paid off?

I know its a Broad question Im in my late 30s and still feel i have a few more years in accumulation.


Can you share your strategy.
????


Cheers

 

Thanks. It certainly was and still is in a way a very strange time. There were many, even a few property heavy on here that could not predict this boom.
I have noticed high interest bank accounts are down to around .5% on a rough average. Lowest I have ever seen. Not even close to the interest rates they are offering on home loans.

 

Well, we had the boom going prior to Covid and no prop investor in their right sense (vast majority of prop investors are very logical & reasonable people) would have guessed a 'boom' in midst of the biggest event to befall humanity since WW2.

The question everyone was pondering about was around the quantum of the potential damage - certainly I felt quite nervous even with an LVR of below 30% and with a significant portfolio.

What we don't like is the 'seasonal-crickets' only coming out from wherever they call home, to lecture us on the pitfalls of this ponzi scheme, then revel in the glory of negative news commentary, posting 100 links a thread, proving that there will be blood on the streets, then re-post the same stuff another 100 times reaffirming the same point... And then as soon as the tide changes, disappear without a tiniest bit of whimper - no trace - tail between their legs.

I mean no disrespect to some genuine and concerned individuals without malice but over the past 20 years (since somersoft days of 2002), 99% of naysayers I have seen on the forums only emerge momentarily, tend to have very very short life span, spreading negativity and gloom incessantly and then doing the disappearing act - till another prop fall/ stagnation appears on the horizon!

 

I have not really seen these "seasonal crickets" as I have not been around as long as yourself. In fact most of the advice I have read on here is people trying to be positive and sharing some of the best advice going around. Some people also disappear from forums or what not because of other reasons then be a seasonal cricket, I fall into this bracket, I have had some more important concerns over the last few months.
Any how chin up, things look good and as Sackie mentioned, time for more investing and less predicting.

 

Hi @Illusivedreams, at the beginning I think most of my loans were IO. I was very aggressive and wanted to grow as quick as possible so I leveraged as much as I could. I was pretty obsessed. When it made sense to go P&I. I know some loans were changed to both but that's the Mrs. department. She's the CA in the family so she takes care of reviewing the loans. Currently I do believe the majority of our loans are P&I. As of January this year, we are just under 20% LVR.

Re strategy, in the beginning I think like most people it was a bit of trial and error. I did adopt a value add approach right from the beginning though, mostly through renovations, then some JVs with developers then my own developments. I do have holdings overseas, some commercial for good CF and some for long term hold and wait for developers to buy up the land to redevelop, which actually is quite common in China. Folks will buy in dilapidated buildings in good areas and wait for redevelopment.

But my main strategy has been to add value where ever I can, rinse and repeat. I have sold quite a few properties over the years in order to get all my money out and roll it onto new ventures. I think I have had a lot of 'luck' too. I do believe some level of 'luck' is important. I have never really been bitten badly with any venture so I was always eager to continue doing what I was doing. If I had a bad encounter or two, I may have been more shy and risk averse and grow slower.

I was thinking about this the other day, growing aggressively vs Enjoying your life and growing slower. I think its really as tough one. All depends on what you want out of life and how much you are willing to sacrifice, without any guarantee you will ever do well. I do think its important to enjoy your life in the present, even if you want to go hard with investing. Life really is too short my friend.

 

I was the opposite growing slower but can relate to your comments, I too was obsessed just wishing to accumulate.
Currently all loans still IO as our LVR is OMG around 20% (like yours), hence for tax purposes favours IO loans, pulled out another title, extended buffers, and ready to invest again.

 

I guess at the end of the day for the most part, you can only grow as fast as your equity/serviceability allows.

Congrats on reaching 20% .

 

Congrats back.
I agree at certain point in time but it can become also possible that the actual portfolio of assets, alternative incomes etc... is so large that incomes generated can be used to invest again, not done but many but can be, the issue is large enough.... depending upon your thermostat level.
And this is where I had to grow to... to increase my financial thermostat and that was thanks to my mentors as I became satisfied and comfortable yet maybe unfulfilled? For me was a mental block where can see myself say worthy of 'XX'M but cannot see myself worthy of 'XXX'M or more.
I realized I can continue to accumulate as I can do more good with it, can give more away, fill more fulfilled, and so on... hence why constantly learning, knowing and reflecting on what one wants is extremely important in my view!

 

Nice to see you back around here @Sackie and glad to see your well.

With your LVR at 20% - is your goal to get this down to 0 or do you think you will always take on leverage?

I know @kierank loves using the banks money! Low LVR seems like a waste but I guess if you get to the point of having enough cashflow and no need to get richer it makes sense.

 

Hey @Codie, great to hear from you!

Would love to organize another night out like last time, when I'm in Brissy next. Hopefully us Sydney folks will be able to enter Brisbane without quarantine soon! If @kierank behaves himself, we can consider inviting him. But he's gotta bring the ladies

Re LVR, we're pretty comfortable at this level. For us, the main reason for having a high LVR (early on) was to be able to leverage to the max in order to potentially grow as fast as possible while accepting the risks of the loan exposure. As my portfolio expanded in equity via active means, i didn't need as much loan exposure to continue with my investment strategies to attain the goals I wanted. So having a higher LVR than is necessary really doesn't make sense for us. As long as the current level of LVR allows us to execute our strategies. Then there is no need for extra loan exposure. It basically comes down to that. Having more debt is simply unnecessary for us at this point in order to continue along the path we set mate.

 

I think rates are very low in so the taxation benefit of losses on interest maybe minimal as well.

So if one has capital that is free and can be deployed it may make sense.

 

Thanks buddy.

I kind of expected your reply as I have been following you on PC for years.

MY LVR is around 40-50% at this stage.

Although my income is highly geared towards my business venture as opposed to property. Property has been a bit more of a passive vehicle where i bought added value usually through renovations small developments /GFs and so on and got good long term tenants in .

 

Growing a business while investing in RE through active and passive means sounds like a good recipe to me. Can't argue with that as I'm doing the same

 

Good to hear its working out well for you

Covid hit...... and was ready to sign with my builder, I got a tad nervous and held back a couple of months

Suddenly government throwing money at developers so I decided to take punt and sign up, house will be demolished in Feb and hoping for completion by Dec. The smaller builders have much shorter time frames for completion

 

So what are the banks now predicting. In the beginning when Covid hit I remember people like Matt Comyn predicting up to and over 30% drop in house prices if we were to have a sustained period of high unemployment.
Well the high unemployment obviously did not materialize, so would be interesting to know what the banks current thoughts are.
Also if we did sustain the high levels of unemployment predicted due to Covid would we still be having this boom?

 

"House prices are set to bottom out by June after a 2.3 per cent fall before bouncing 15 per cent, according to Westpac’s economics team, who believe low mortgage rates and a less severe recession than feared will stabilise the market before a solid recovery"

House prices in for 15pc ‘surge’: Westpac economists.

Don't take it as gospel though, anything can happen. But the growth forecasting by the banks is interesting.

What ever happened to our so called " recession" ?


Gotta love the markets.