Strategies that went pear shaped over last decade

Was thinking about the strategies some investors were or have advocated over the past decade that came unstuck. Hindsight is a good thing, and I guess we can all learn from this moving forward.

One significant strategy that comes to mind is the LOE model. Many will recall that this was discussed on many occasions and caused many heated debates on SS and PC.

The reality is this was never going to work because there were too many risks IMO.

The nail in the coffin was the change/tightening of financial policies around 2008, lo doc and no doc loans were pretty much abolished over night.

No doc loan - Wikipedia

The gurus advocating this strategy pretty much closed shop as this strategy was totally dependent on continued property growth (CG), accessing equity and banks providing ongoing loans while in retirement mode/LOE.

Another strategy that went pear shaped - buying in mining towns for cash flow. I think we all know how that ended. Properties in WA/QLD (mining towns) have fallen back as much as 50%+.
This strategy would have worked if you jumped in this market around 2001 and exited around 2007, close to the peak of the mining boom.

Here is my thread on the Real Pain in mining towns, just to give you an idea on how far the values have fallen. Have not looked recently.

Real Pain - Australian Mining Towns

The next one that comes to mind is buying in one horse towns for cash flow and I am not talking about regional centres, with more than one industry.

This is specific to those chasing cash flow of perhaps $2000 pa and end up in the red because the properties they buy are so old maintenance becomes the killer. Chasing $2000 pa and missing on opportunities where markets are rising/outperforming wont make you rich.

MTR

 

Some people failed with plays in the US market, primarily due to lack of knowledge and poor guidance as well as spruiker tactics. Finance to me sounds like it would be challenging.

Of course with a knowledgeable team on board the story can be quite different.

What sort of LVRs are used for these deals by most beginners???

 

I think Off The Plan purchase is still playing out and there is more pain to be felt by a lot of investors. It's already started to hurt some people but give it another 2-3 years for it to fully take effect.

I had some friends that made a killing in off the plan purchases in the early 2000's. One development come to mind was a waterfront development in Balmain.

 

Yes, lets add USA investing to the list.

Buying USA properties that were over priced perhaps by as much as 100%, they did not understand the tools required to search properties and view comparable sales etc, just what we do to buy in Australia.
They were also buying in the wrong locations, block from block can vary significantly. Also I think vital to actually travel to USA to understand the basics. But at the end of the day it also comes back to networking with the right investors, same as in Australia.
You wont get finance, not what US citizens are getting. You need credit score.

Hard money lenders 12%

Some finance around 8%, but its dependent on the deal. You will not get a loan if your Australian Trust is the member of the LLC (limited liability corporation). Its also dependent on the quality of the property, and the deal. Its not as easy as it appears, many hurdles to jump you are quite right.
Not sure LVR 65-70%??? these are in the main refinancing not buying properties, not sure whether you can do this???
I am not interested in this product whatsoever, not to say others wont be.

 

... and on the flip side I have seen investors make a killing on OTP product, comes back to timing and product, if you buy at the beginning of the rising market the end value on completion can be significantly higher.
I know investors who have successfully used this strategy.

MTR

 

I wonder if people that bought in ChCh (NZ) been burned due to all the terrible natural disasters.

 

don't know?
But I do know that NZ has experienced a property boom, in particular Auckland

Perhaps those on PC with local knowledge can answer this question

 

Chch values have not moved much. Auckland yes big time. Wellington a bit but chch is too smashed. Will be a while. . Having said that those who bought a property immediately after the big quake have done pretty good a mate of mine who lives there bought himself a house soon after the earthquake and he's seen some good gains. But that was off a low base he didn't buy extremely below market but for a little while property values did take a dip.
Christchurch is always going to be cheaper than Auckland or Wellington but at the moment it's still got a bit of catching up to do a lot of people left town

 

A decade ago owning several taxi licences was a guarantee of a comfortable retirement!
Marg

 

Along with ATMs, shipping containers, ostrich eggs and part ownership in pine forests......

pinkboy

 

The Hybrid Discretionary Trust HDT - the interest on these set ups could never have been deductible.

Trusts in nSW and land tax. Around 2006 the interpretation of the law changed and trustees were suddenly being given large land tax bills.

 

What? Didn't know you could own ATMs.

 

Of course you can, who do you think gets the $2 fee you pay when you use them?

 

And then they started to get with land tax in NSW as well!

 

Buyers agents disguised as selling agents pocketing commissions from developers whilst "acting" in the interest of investors.

Property coaches / mentors offering recommendations for properties in dud locations.

 

Also lucrative for the land owners, All those ATM's in large shopping centers are being charged a small fortune to have prime location, sometimes over $30kpa for one machine. When you see a row of 5 machines next to a food court in a big centre plus the other 10 scattered around the place it's a significant income stream for an owner.

 

They are mostly bank owned ATMs