Should I buy now or later?

Did I touch a nerve here?
It was a straight forward question, was there a way to measure if FPs advice is worth the cost?

 

It's easier to ask to see their bank balance.

 

Depends on the planner, but yes they can be well worth it.

Sounds like you may have been abused by a financial planner as a child?

How do you measure advice such as
- get some life insurance for $xx with YYY
Client dies and family looked after
client doesn't die until 80 after life insurance cuts out = wasted 30 years of insurance payouts

What about advise to pay super death benefits to the estate
- could be some tax savings, but most of the benefits are estate planning such as asset protection, controlling assets from the grave etc

What about invest in index funds or LICs
- nice long term low risk gains, but if they had invested in XX instead they could have doubled their money, or in ZZ they could have lost the lot?

 

Thank you all for your insights.

I guess I am afraid to pay overprice for the IP as it involves huge chunk of money and debt.

an interesting point though @TheSackedWiggle if getting loan gets harder, interest rate hike, and some could not pay their mortgages, etc what will then increase the property price? So the price will either rise little bit or decline (we won't know how sharp is the decline)

Also if I buy a more expensive property, in the future I might get less potential buyers who can afford to buy my IP due to the lending restriction.

Looking historical chart of Aus property, the worst happen between 1890 until 1950 (60 years). I am not a statistician or mathematician but looking the Aus property's graph for the past 10 years it looks weird, I meant the price increase ridiculously. Compare with let say the US stock market, the worst period is around 12-15 years before investor gain from their investment, I guess it is still better than waiting for 60 years to break even.

That's my amateurish thinking, what are some strategies then to approach this current market? Thank you, Ben.

 

Keep in mind that even if property doesn't increase in value it could be still a good idea to get a main residence.

 

Thank you Terry, I own my house but planning to invest for my grandchildren and that's the reason looking for IP.

I read somewhere the purpose of borrowing to invest. The growth from the IP should exceed the interest I pay the bank. How will I know if the growth from my IP will exceed the interest hike? Or the better question will be what can cause the IP growth exceed the interest hike. At the moment it is sound like gambling for me.

I guess the current market is more for astute/experience investors who can identify value in IP not for an amateur. It will be a very expensive price to pay if I make mistake from the current market I guess.

 

You always need a first time. Everybody needs to be an amateur first before they become an astute investors. If you pull the plug, you may win or lose. If you do not do anything, you gain nothing which is actually losing. Of course, don't rush into the game until you know your goal, risk profile and set a strategy.

 

have I insulted you? Was I rude?
I don't understand what I asked made you so worked up? How sick one has to be to use child abuse as a joke to score a point.

 

You don't. Markets can go up and down. A savings account for your grandchildren is another possibility.

 

You can't know this, other than to make an educated guess.

Work out the cash flow position of the property and then you can see how much the property has to grow pa to make sure you are not going back wards - it might be just 1 or 2% pa.

Then consider how likely it is for this to happen.

 

Come on mate - it was a friggen joke!!!

Have you ever heard of financial planners abusing children?

Sorry if you were abused as a child.

 

you are right, An IP has to make its holding cost plus the loss of income on the capital invested, just to be in money. Being a highly leveraged asset it can be a double edge sword. I guess there is no guarantee, it's all about risk reward

 

I m a starter as well. I am wondering what driven the market growth?If the RBA will increase the rate and Royal Commission which makes people hard to get loan. Does it means less people will going to investor or purchase property. Will it impacts the market, will the price drops because of that??

E.g. Melbourne experienced significant price increase on property for the past few years. It is cooling down now because the policy keeps many international investors away from market. Would you guys think nowadays price is over-priced? ? Would the prices drop in some heat area which is over-priced by international investors? (not include apartment)

 

Hi Jimkee, welcome. I agree with one of the posters above, if we have the capacity to purchase IP then why wait. My strategy at the moment is to understand what is considered a great IP and work my budget around that. In regards to the market, Melbourne East is still hot and a lot of overseas buyers still prefer this area even in further east. I am not sure about the West, North or South, @melbournian may be able to point some directions on this.

 

Thanks for the reply.
Read all posts, looks like most of people here are agreed with start investing something right now when you have ability to do it. It look like people have confidence into this still. I should start getting into it sooner or later.Actually I am quite interested in western area, such altona north, altona meadows or pointed cook. Not sure what would happen if I put my first IP there.

 

+1. There are always opportunities if someone is financially capable and its in line with their risk profile. Way too often advice is being given to others based on the profile of the giver and may not necessarily be in line with the person asking .

There is just so much bloody opportunity in markets Australia wide (and RE markets across the globe), its not funny .

 

dont know about that, and even if they do might not spend the time researching the supply/demand and macroeconomic equation in australia ...rich parents most likely have the main driver of getting the money out of their country, and via their student kids is a good way.
Worked very well for many international students in sydney and melbourne.

 

Chinese money? That's being slowed by a combination of anti corruption moves in Australia and capital controls on the Chinese end. Lots of political will bilaterally to slow it further.

 

In my opinion the market will still be fairly healthy and we won't see any massive decline due to the following:

1. Over the last 5 years property in Australia as a whole has gone up on an overall scale, obviously some area grow more than other.
2. There are still plenty of baby boomers that are either down sizing or passing on their wealth to their child.
3. When the baby boomers benefit from the recent property boom, even if their child's servicing has gone down, the boomers have the ability to assist with more contribution to close the gap.
4. Like I've mention in my other post, owner occupiers will still be emotional regardless of the market, if they like something they are happy to pay top dollar for it. If property price does come down, it will just get supports by first home buyers and owner occupiers that are looking for an upgrade.
5. Not all investors are actually that financially critical, we do hear horror stories but they are 1 our of so many. They are entertaining to read while we all felt a sense of fulfilness knowing some idiots out there made a mistake and have learnt a tough lesson while we in this small community are glad that we share ideas and have not made any of those mistakes.

So to answer your question, the best time to buy is always when you have the ability to buy, unless you know someone with a crystal ball that can predict the future.

 

My analysis of the market is that it is slowing. It did show a massive uptick in price in 2017. I'm not convinced it is sustainable.

I do think the interest rates will increase. Lenders will have to increase rates due to a healthy US market and cost of capital increasing. The RBA will probably increase rates to keep the AUD in a healthy range.

Lending is tightening and will negatively affect price. Good properties will always sell well. Old properties in poor repair can likely expect the greatest slump in prices.

Baby boomers will not be the dominant market in the next few years. People in their 30s are demographically the largest cohort of Australians who will have the political power in numbers. Politicians will be forced to ensure the market remains sustainable