WA Steve McKnight - 1 day Seminar Perth

@mitsui thanks for the update, interesting indeed. Agree that it is a tad to early to predict which way Perth will go, seems sentiment is on the rise which is an indicator of future market conditions, subjective as it is.

 

Thanks for sharing, great stuff

 

Awesome take aways and Steve is always entertaining. His got lots of great stories to share, especially the most recent ones in USA when he was there buying hundreds of properties.

Also what I love about Steve's education is that he focuses on due diligence (which is what you mentioned above) and he teaches you how to minimize the risks involved any property deal.

 

Sydney event was good

1. Sydney is not going any where
2. Melbourne ia not far behind
3. Brisbane was his favourite
4. Hobart was 2nd
5. Brace your self for possible shocks
6. He rated Perth a D said stay away
7. He is starting a new venture Selling Carbon credits( he is starting a tree plantation)
8. 1.25% rise in interest raye would have the same effect as 18% rates of the 90s

 

Thanks

 

3. Did he give more insight into Brisbane of where he believes will do well?
5. Did he mean global shocks? if so what sort if he mentioned/eluded to any

 

So he got ot right

I dont understsnd point 8, anyone??

 

I think he meant that because most people have higher debt loads than in the 90s that rates don't have to rise as much to create the same amount of strain on borrowers

 

Ok makes sense now

 

Point 8 is really interesting - I have to say I agree. It wouldn't have to go far for things to get very tight for a lot of people, and not just in Sydney. There's lots of people over here who would struggle big time if rates went that high.

 

Correct this is what he meant.
He said he did a calculation and this is what he worked out. I don't remember what parameters he described

 

That's about 40% no top of repayments, why it truly is scary stuff for investors whose loans will be reverting.

Problem its not as simple as refinancing, still will mean you have to have house revalued and be able to service debt, going to be much tougher to do

 

It depends how many years you did IO for. If it was just one lot of 5yrs and you know you can't service a new loan application then your roll to P&I will be softer than if you had been IO for 10yrs.
And of course there is the added "bonus" that you're actually paying down principle rather maintaining debt. And P&I interest rates are lower than IO.
But yes every change to interest rates whether it be by the bank or changing from IO to P&I needs to have some forward thought. Interest rates will eventually increase and people need to be prepared for that if they are already tight.

PS My roll overs from IO to P&I were almost 2 years ago now so I'm well into my new groove.