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:
    16,431
    Location:
    My World
    OK.
    So OP mentioned 10% is that possible??
     
    Illusivedreams likes this.
  2. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,594
    Location:
    Brisbane
    Totally agree.

    People may not know but planes on auto-pilot are more “off-course” than “on-course” during their flight but they still arrive at their destination.

    A pilot sets a course (the flight path/plan) and, when on auto-pilot, the plane is regularly monitoring its progress by checking its current position against the plan/flight path and takes corrective action, if required.

    I believe we should do that same thing on our investment journey and, with our lives as well. Develop a plan, monitor your progress against this plan and take corrective action when required.

    Sadly, not enough people do this and we have too many people ending up in a sad financial situation on retirement and many of these lead a fairly meaningless life. What a waste.

    I spent most of my career in the project management space and I was heavily influenced by the Project Management Body of Knowledge (PMBoK). This document was originally written in 1996 (22+ years ago) and is a living global document, with updates on a regular basis. It is now into its 6th edition which was released a little over a year ago.

    It is the “bible” on project management and can be applied to any project including developments, constructions, renovations, IT projects, business projects, ... I just expanded its use to my investment journey and to my life.

    Totally agree.

    If one writes a post that has a different point of view to the OP, that to me is not side-tracking the thread but it adds value to the thread.

    We have a number of properties owned in a number of trusts. These trusts have an 80 year life.

    To me, it is nonsensical to say that property values only matter when one buys and sells (in our case, up to 80 years later).

    I presented a different point of view and attempted to provide in detail my reasons.

    My focus is not the OP. It is all the newbies and less experienced investors who read this thread and think it is the only point of view. That to me is dangerous and I felt a huge responsibility (as did others) to present a different point of view.

    Totally agree.

    I will have to say “I like pizza” as I have sidetracked this thread with my above discussion on auto-pilot, the PMBoK, ... but I trust I have added value.
     
  3. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,594
    Location:
    Brisbane
    ... and the whole dividend and, in most cases, the franking credit ends up in one’s bank account.

    ... and there aren’t any expenses such as PM fees, maintenance, rates, land tax, ... to reduce one’s bank account.
     
  4. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,594
    Location:
    Brisbane
    We own direct shares in three banks. They are (in alphabetical order), with first purchase date and dividend return:

    ANZ, May 2008 (10+ years), 9.30%
    CBA, Feb 2010 (9 years), 8.29%
    MQG, Feb 2010 (9 years), 9.64%

    I believe all three had FF dividends over period of ownership.

    So, the answer to the question is a resounding YES.

    I only wished we had bought more MQG shares in 2010 for $50. Today, they are priced around $122. That is, compounding growth of 23% pa.

    In Dec 2013, they were priced at $18!!! Why didnt I buy more?

    The magic of highsight. We all would make better decisions if we had hindsight.

    (all the above data was pulled from ShareSight)

    “I eat pizza” as I contributed to the sidetracking of this thread.
     
    Last edited: 7th Feb, 2019
  5. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World
    My g/friend has completed apartments in Perth recently, some of the investors/buyers have actually failed to go ahead with contracts as bank values did not come in.

    So they have lost their deposit, which was anywhere from $40,000-80,000. She has now relisted these, tough gig.

    I wonder how many have been caught out like this. It happen
     
    Travelbug likes this.
  6. TAJ

    TAJ Well-Known Member

    Joined:
    10th Oct, 2017
    Posts:
    535
    Location:
    Northern NSW
    Another example of OTP purchases not stacking up.
     
    kierank likes this.
  7. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    6,772
    Location:
    Brisbane
    She keeps the deposit? If so, then she can sell slightly lower and still be up on the deal?

    A developer friend had this issue a few years ago, one buyer pulled out. Another case the buyer went to a different bank and it valued up. Nothing like $40K though. Still caused him some angst.
     
  8. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World

    Yes, I doubt she would be going down the legal route either, no point.

    There was a forum member from Perth that posted here some years ago, he had 3 OTP projects in Perth, with one of the bigger builders, I think no mercy here they took him to the cleaners.
     
  9. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,252
    Location:
    canberra
    the new reality full impact of which is yet to be realised.
    OTC defaults will play in its fully glory this year and the next across Australia.

    Imagine the damage opal tower episode will do to high rise purchases and pending settlements.
     
    TAJ likes this.
  10. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World
    Not sure? Apartments in Perth have been hammered big time. I would post the link but I cant, they are very special, with city views, but not even this is helping.

    These are 19 apartments in boutique block, inner city prime location. She has to date sold 9

    Sales price impact significantly on bank values.

    Another trick is buyers pay xx to keep values higher but she gives the cash back.
    Don't ask me more about this because I don't know exactly how it works.
     
  11. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    6,772
    Location:
    Brisbane
    Sounds illegal.
     
    kierank likes this.
  12. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    4,243
    Location:
    Melbourne
    With your $, you would have to go to a logarithmic scale? :D

    The Y-man
     
    kierank likes this.
  13. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,252
    Location:
    canberra
    rebate rather then discount :)

    Mirvac giving Sydney apartment buyers rebates up to $18,888 in Chinese New Year deal
     
    The Y-man and MTR like this.
  14. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    4,594
    Location:
    Brisbane
    If only ...
     
  15. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World

    Don't know, no idea?? Some developers offer furniture etc as a sweetner

    I would not like this problem in this market at the moment.
     
    Last edited: 7th Feb, 2019
  16. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World
    Yes, Opal Tower disaster, poor buyers, feel for them.

    Those values will be slashed, what bank will touch these??
     
  17. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    4,243
    Location:
    Melbourne
    Must be some tax implications if there is a cash rebate. What was the purchase price for CGT etc.

    Even more hidden if its unrelated goodies like velocity points, car, etc etc.

    The Y-man
     
  18. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World

    No idea, I did not get into the finer points.

    I think keeping sales prices at a certain point was so buyers did not have issues sourcing finance. Whether this is illegal or not I have no idea and no idea of tax implications either. Not something I have ever done or want to do, I will stick to vanilla projects I think.

    Perhaps some developers on PC may know the answer to this??
     
  19. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World
    Airbnb???? Not sure whether this is possible, with new laws?? not looked closely at this perhaps someone here knows the answer??
     
  20. MTR

    MTR Material Girl Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    16,431
    Location:
    My World
    If you have the cash flow who cares, just hold, you can weather the storm regardless.
     
    Perthguy and TheSackedWiggle like this.