Strategies that went pear shaped over last decade

Discussion in 'Investment Strategy' started by MTR, 23rd Feb, 2017.

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  1. Lacrim

    Lacrim Well-Known Member

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    Noone's immune and nothing is guaranteed MTR but it pays to buy well - I've NEVER had a property worth less than I paid at any time - 2004, 2009, etc. Might be luck but I think it's because they were picked up for less than market in the first place/I got the timing right....like loading up on Brissy and Gold Coast in 2013/14. I was always 'in the money' from day 1. And from a property cycle perspective, the writing is usually on the wall if one cares to notice.

    I would have bought in the US as well and nearly did around 2011 or so but didn't have much cash to inject (and lacked the cojones) - it was either severely deplete the buffer during a precarious job market and buy in US or stay safe. I chose the latter. Missed opportunity (of a lifetime)/one I could not partake. Ah well we live and learn.
     
    Last edited: 23rd Feb, 2017
  2. Lacrim

    Lacrim Well-Known Member

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  3. sash

    sash Well-Known Member

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    ...NRAS......poor invesments....bought by people who were sold the manna to heaven.....in 10 years they will find the asset is worth the same....the tax free payments just covers the shortfall...
     
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  4. MTR

    MTR Well-Known Member

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    You would need to wait for the signs of mining ramping up, I don't have the stomach for this strategy, but I do know some investors who killed the pig buying in Karratha around 2001 for as low as 200K the median for this mining town went as high as $1M in 2012/13
     
  5. Gockie

    Gockie Life is good ☺️ Premium Member

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    Buying in Sydney in the last 10 years was terrible.*

    *Disclaimer: If you bought in 2007 and decided to sell in 2008 there's a good chance you may have lost money. Then watching prices take off over the next 9 years would been a lot of fun...not.
     
    Last edited: 25th Feb, 2017
  6. MTR

    MTR Well-Known Member

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    GFC 2008

    Timing is everything
     
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  7. sash

    sash Well-Known Member

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    Having FOMO syndrome and buying an OTP property now....in Sydney...crazy but seeing people do it....
     
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  8. Simon Hampel

    Simon Hampel Founder Staff Member

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    Buying OTP using deposit bonds and then expecting to on-sell before settlement for a sizeable profit.

    Deposit bonds were a huge thing back in boom of the late 90s / early 2000's and allowed you to secure a property for a much lower figure than the usual 5% or 10% deposit required. It was basically an insurance product offered by some insurance companies and marketed to OTP purchasers so they didn't need significant amounts of cash tied up for long periods during construction.

    The strategy was negotiate a "discount" from the developer (usually done for you by a spruiker), secure the property using a deposit bond (very small outlay on your part), then once the market goes up during construction you on-sell / flip at current (higher) market rates at or before settlement and pocket the difference.

    It was all fine until the market crashed, banks started refusing to finance (especially tiny studio apartments), and the insurance companies took a huge hit. Lots of people ended up with properties they couldn't get finance for and couldn't flip.

    I believe this strategy was what Henry Kaye was teaching at his every expensive courses (and he was taking finders fees and presumably a cut elsewhere along the way) - How Henry Kaye fuelled the property boom - www.theage.com.au

    Lots of discussion on Somersoft in the early days - but I just did a Google search and found no mention of the term on the site at all past 2009 and even then they were only mentioned in passing - certainly nobody advocating OTP flips using deposit bonds for a long time now.
     
  9. Marg4000

    Marg4000 Well-Known Member

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    Popular on the Gold Coast, sold particularly to interstate and overseas buyers. Around the time of the "white shoe brigade" developers.

    Locally it was known as "the bigger fool" strategy. Basically meant that it did not matter if you were a fool to buy the OTP, so long as you found a bigger fool to on-sell to. Some changed hands 3-4 times, at ever inflating prices, before the building was actually completed.

    Along the way, many made tidy profits without outlaying much money. Of course, when the merry-go-round finally stopped, those who were left to complete a sale were badly burned.
    Marg
     
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  10. mrdobalina

    mrdobalina Well-Known Member

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    there's more to life than working
  11. Hwangers

    Hwangers Well-Known Member

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    how about the strategy of buying a property, any property first without giving a damn about structure, goals, strategy, repayments, income, rates, economy, maintenance, vacancies, comparables, management, leverage, buffers, education, hotspotting, depreciation, cash flow, tax et al ... oh man my hands are tired just typing all this out ...
     
  12. hammer

    hammer Well-Known Member

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    This is how most people do it.

    I suspect this is how most people will always do it ad infinitum....if only they knew about this forum....
     
  13. Gockie

    Gockie Life is good ☺️ Premium Member

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    Oh yeah... did I mention we bought our previous PPOR in the second half of 2008? :D
    #TimingIsEverything
     
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  14. wombat777

    wombat777 Well-Known Member

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    If you are a new investor and you put your mind to it, approach it systematically, you can educate yourself, source finance and sort through all the above in 3-4 months. That's how long it took me to work through all this for my first IP in 2015.
     
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  15. MTR

    MTR Well-Known Member

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    Most of these should be the check list for those wishing to use the services of a BA
     
  16. beachgurl

    beachgurl Well-Known Member

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    Rent by the room/Airbnb cash flow strategies, either by purchasing or subletting properties. Potential tenants are offering above market rents and long term leases to sublet.
    Councils will eventually crack down on the loopholes of rent per room and strata committees will ban airbnbs in their complex. For those holding multiple sublets or units with normally low yields, they could end up in some financial pain, particularly if they are no longer working and living off the proceeds of these currently high yielding properties.
    I see this as today's LOE strategy.
     
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  17. sash

    sash Well-Known Member

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    Yep......100% agree.......should be interesting when this happens....the sob stories will make rivers flow....
     
  18. MTR

    MTR Well-Known Member

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    Wonder how holiday rents go, I am talking fully furnished beach shacks? My guess they will only rent out for 8 weeks of the year
     
  19. Gockie

    Gockie Life is good ☺️ Premium Member

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    I think you might be underestimating, though I can't say for sure myself.
    I will say if you short term let near the city you can get near 100% occupancy.
     
  20. MTR

    MTR Well-Known Member

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    you could be right

    Christmas holiday period (4-6 weeks)
    Easter holiday period (1 week)
    School holiday period (6 weeks) ?

    with the short term stay I believe very competitive?? everything has to be new and clean and shiney??
     

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