Property Values

Discussion in 'Property Market Economics' started by MTR, 3rd Feb, 2019.

Join Australia's most dynamic and respected property investment community
  1. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World
    You probably don't realise, neither am I....this was just an open thread to educate
    Not sure why those who are not so interested keep posting..
     
  2. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    6,487
    Location:
    Brisbane
    Just recalling my father told me 40 years ago that five paid off houses would support them through their retirement (using figures for inner Brisbane properties and the rent they threw off - I realize five cheapies in a rural town may not do the same thing).

    That still holds true today. But land tax is the big problem.

    And obviously there are plenty on this forum who want much more income stream than this. But plenty of people would be happy with this.
     
  3. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    6,487
    Location:
    Brisbane
    Just trying to explain why we have differing ideas.

    Whatever you are doing works for you. What we are doing works for us.

    There’s more than one way to skin a cat.
     
    MTR, TMNT and kierank like this.
  4. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World

    I agree with you completely and its a forum,
     
    Last edited: 6th Feb, 2019
    TMNT likes this.
  5. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

    Joined:
    25th May, 2018
    Posts:
    465
    Location:
    Sydney
    Insane to purchase a property after the sharpest fall in decades in the fastest growing demographic major city in the world? We should be licking our chops at the deals out there.

    Need to be careful buying high yielding properties. I get the advantage of the cash flow, but a property yielding 7-8% is the real estate equivalent of a junk bond.

    Low risk meaning very (potentially zero) vacancy, growing rent, plus resi is no bells and whistles, no fuss.
     
    wylie and kierank like this.
  6. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World


    Aussie shares would be lucky if you achieved 6% yields?? but may be the way to go. Property is on the nose, unless you have a skill set where you can add value etc.

    MTR:)
     
    Last edited: 6th Feb, 2019
  7. Ross 355

    Ross 355 Well-Known Member

    Joined:
    25th Apr, 2017
    Posts:
    56
    Location:
    Sydney
    You have some very lucky kids.
    Yes,I'm sure that's the case.all the best.
     
    kierank likes this.
  8. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,187
    Location:
    Brisbane
    Totally agree. I find that weird ;).

    As I posted above, I track Net Worth. I calculate it at the end of every Quarter and have been doing so for the last 15 years.

    Over that time, I have seen property booms and busts, I have seen the sharemarket go up and down, I have seen interest earned on cash deposits go up and down, I have seen interest charged on loans go up and down, I have seen my businesses made roaring profits and (smaller) losses, I have seen really scary world events (GFC, 9/11, ...), I have seen multiple changes of government, changes in policies, ...

    The list goes on and on. But that is just the environment we live in. Of course, we should be aware of that environment but it shouldn’t drive our lives.

    My goal is to grow our Net Worth; that other stuff is noise, don’t let it became a distraction or, even worse, a driver of your decisions.

    Now that we are retired, I also now track what I call available cash. This excludes the cash in our SMSF and our Offsets.

    I calculate this number twice a month (after our rental monies have been deposited) by adding up all the cash in our bank accounts (and their are a few due to our trusts, etc) and I subtract all the invoices not yet paid (credit cards, rates, etc).

    This shows me how much available cash we have to fund lifestyle and to hold all of our assets, without dipping into our cash reserves, our Offsets and our SMSF.

    I graph both in Excel and both bounce up and down a lot.

    The Net Worth graph goes up and down due to property prices, the sharemarket, valuations of our businesses (when we owned them), our available cash, ...

    The available cash graph bounces up and down due to our annual SMSF payments, medical expenses (had some big ones recently), travel (especially overseas trips and cruises), ...

    While both graphs bounce around, the trend on both is up and the gradient of these trend lines is rather steep (which is very pleasing).

    I feel tracking Net Worth every Quarter is frequent enough. It takes a while to value all the assets (1+ hours) and asset value don’t change that much (although some may say shares do) to warrant more regular tracking.

    Available cash is a different thing. If it ever started going down in a serious and sustained way, I want to know about it ASAP so I can take corrective action.

    I find it scary that a lot of people do not know their Net Worth and do not track it.

    I find it weird that a lot of/most people do not know their available cash and do not track it.

    If/when the s_hit the fan, most will not see it coming even though the warning bells could have been ringing for ages.

    IMHO, listen out for these bells, not all that other noise from the environment we live in.
     
    Last edited: 6th Feb, 2019
  9. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World

    Thats nice....but What's this got to do with the title of the thread... I find this weird :p

    You could always start your own thread

    This is the subject matter....

    Property values only matter if you are buying or selling a property, this would also include refinancing as well.
    So no need to panic in falling/flat markets if you don't have to sell.
     
    Last edited: 6th Feb, 2019
  10. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,187
    Location:
    Brisbane
    You probably don’t realise but I am here to educate as well.

    I am very interested in this thread and hence I keep posting.

    I find it weird that you don’t/can’t see the connection between my posts and your OP.

    You posted “Property values only matter if you are buying and selling ...”.

    I can see where you are coming from and I sort of agree.

    But I also sort of disagree.

    My previous post shows that for those tracking their Net Worth (my view is that everyone should be but that’s another thread) provides a different viewpoint.

    In that post, I was trying to educate people that property values matter more often. In my own personal case, every 3 months.

    I thought it was fairly clear. I am sorry that you weren’t able to comprehend that.

    I included the information about tracking available cash, as it completes the picture.

    Tracking Net Worth is about the big picture, tracking available cash is the grass-roots stuff.

    The grass roots stuff enables one to achieve the big picture stuff.

    I trust my heads-up has clarified this for all those who I have confused.
     
    kitdoctor, wilso8948 and wylie like this.
  11. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World
    I disagree, nothing to do with this topic
    I agree Managing risk is important but we know this.

    As you pointed out thats another thread another day.

    Why not start a new thread... tracking net worth and cashflow, I for one would be very interested in this topic. Managing debt to me is critical especially when markets turn.

    Its also probably a good idea to refer to your first comment on this thread, post 5??? Seems you are very interested in this topic???? ;):confused: seems I attract trollers.
     
    Last edited: 6th Feb, 2019
  12. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

    Joined:
    25th May, 2018
    Posts:
    465
    Location:
    Sydney
    Such a fantastic post.

    There is very little to add in this post, but one thing I would say, is that relying solely on capital appreciation is not the only way to grow one's net worth. People under-state the value of having some investment debt on P&I as a way to grow your net worth. Yes, it leans on cash flow, but debt reduction and equity is important also, and it gives you choices down the track.

    Good one.
     
    kitdoctor, wylie and kierank like this.
  13. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World
    Never heard of this either.
    However we did have a forum member who owed $6M that could not repay... that's another story
     
  14. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,187
    Location:
    Brisbane
    I disagree.

    As I have already pointed out twice (in great detail), it has everything to do with this thread.

    As I have already posted, I am sorry you can’t comprehend that.

    If I posted earlier that property values matter every 3 months, you or another PC member would have posted “Please explain”.

    So I posted my explanation at the same time I posted my differing point of view.

    As I already posted, I am here to educate.

    I have already posted my thoughts on Net Worth tracking more than once on PC, including a copy of the graph I use.

    If you are interested, can I suggest you use the search facility.

    Thanks for the heads-up.

    I already posted that I was so I don’t understand the “????”.
     
    kitdoctor and wilso8948 like this.
  15. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,020
    Location:
    My World

    I am sorry you cant comprehend what I am saying

    So lets agree to disagree again.... and this time.... leave it at this...

    Please can we get back to topic. ……
     
  16. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,187
    Location:
    Brisbane
    I do comprehend what you are saying.

    I (and anothers) have a different point of view. I have tried to explain that POV.

    I am loving this thread. I believe we are on topic.

    My intentions are to educate PC members to different POVs.

    It is a pity you want to end the discussion.
     
    kitdoctor and wilso8948 like this.
  17. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    3,712
    Location:
    ..Brisbane..
    I know you would be able to do better then ^6% once you combine the franking credits ..Cba may have been just below 10% when it was in the $65-$66 dollar range ..Then there is one that I have a interest in once it comes out of a trading halt may go above the 10% mark if the data is correct,could also go nowhere..
     
  18. kitdoctor

    kitdoctor Well-Known Member

    Joined:
    31st Jul, 2015
    Posts:
    136
    Location:
    Darwin
    @kierank great posts on how you track progress. What use are strategies/plans if they are not monitored??? So many of us fall into the trap of not regularly reviewing our financial situation.

    If posts drift slightly away (and I'm not saying yours have) from OP, so long an they contribute to the overall objectives of having a forum I don't care and look for the value in someone's contribution.

    Let's be more tolerant on this forum but pull me up when I randomly say "I like pizza" in the middle of a serious discussion.
     
    kierank and wilso8948 like this.
  19. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,111
    Location:
    canberra
    +10,
     
    kierank likes this.
  20. Illusivedreams

    Illusivedreams Well-Known Member

    Joined:
    3rd Oct, 2017
    Posts:
    1,516
    Location:
    Sydney
    Banks are easily doing that and Div are fully franked.
     
    kierank likes this.