Sydney prices still falling...

Discussion in 'Property Market Economics' started by Oliver Shane, 4th Jun, 2019.

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  1. Oliver Shane

    Oliver Shane Well-Known Member

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    Some quite good insights in this article, particularly around commercial property... actually surprised why brokers don’t recommend commercial more on here compared to downside risk of residential housing markets....

    Still not time to buy residential investment property
     
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  2. D&J

    D&J Well-Known Member

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    Can you please post the article?
     
  3. scientist

    scientist Well-Known Member

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    Paywalled
     
  4. paulF

    paulF Well-Known Member

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    Disable javascript on your browser to read the article ...
     
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  5. scientist

    scientist Well-Known Member

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    This is amazing. Why would anyone subscribe to anything. Thank you sir.
     
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  6. Simon Hampel

    Simon Hampel Founder Staff Member

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    1. brokers don't recommend investments - they advise on finance options

    2. commercial is a very different risk profile to residential, lower LVRs and potentially much longer vacancies - so much deeper pockets required to manage that risk.

    3. residential tenancies are covered by legislation - everyone largely knows where they stand and there is a tribunal to sort out disputes. Commercial tenancies are entirely up to the parties to agree on, and are only ever as good as the lease that is agreed to and disputes typically require legal action to sort them out.

    Not saying commercial isn't worth considering, only that it is a very different game to residential investing.
     
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  7. paulF

    paulF Well-Known Member

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    Pretty crazy considering they had this issue for years now from memory and still haven't fixed it.
     
  8. Depreciator

    Depreciator Moderator Staff Member

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    Because if nobody pays for content, the quality of content diminishes and in some cases disappears.
     
  9. Oliver Shane

    Oliver Shane Well-Known Member

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    Hey the baby boomers need to spend their franking credits on something :)
     
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  10. Oliver Shane

    Oliver Shane Well-Known Member

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    Thanks Simon... great context... plenty more due diligence required but seems like the reward is there if so inclined.
     
  11. Car tart

    Car tart Well-Known Member

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    I used to be a commercial buyer but I find the returns are no longer worth the risk. These are some of the deals I’ve done.
    4 yo Hungry jacks store in Belmont sold at 6.5% net about $1.5 million, so I could invest in land. Very long lease of 8+8+8., two years after I sold, the head lessee, Burger King demands that the new owner slices 30% off the rent, as they are closing down stores leased to Burger King. Owner agrees so is getting 4% on his money, two years later the first 8 years is finished and lease is not renewed. Land is worth about $400,000.
    A wholesale retail outlet on main road, after 17 year tenancy the tenant stops paying rent and I’m out of pocket $130,000 in rent and legals to get him out. Company is closed, I lose.
    Brothel legally moves into commercial retail space where I own 44% of the units. Insurance goes up from $8,000 per annum to $110,000 per annum, I pay 44% of this, brothel pays only 3%.
    Two factories in girraween used to store my car collection. Neighbour has cameras and steals cars, trailers anything I leave outside whilst I’m not looking. He runs a trucking business. Somehow the cameras were accidentally turned off every time something of mine was stolen. After the police leave, I receive a visit whilst I’m there from 6 of the truckers, one punches me in the face, black eye and busted lip ensues, he then rings the police to claim he has been bashed by me and he has 5 witnesses. I end up being cautioned by Police.
    Courtney’s restaurant in Parramatta was sold about 15 years ago for $3 million, tenant moves out within a year and property is advertised for rent or sale for over 10 years. I offered $1,150,000 5 years ago and owner sells losing over 100% of her $3 million once all costs and loss of rent is taken out.
    Commercial is very high risk with Shopping centres, internet shopping and new a grade property popping up all the time.
     
  12. ymmf

    ymmf Well-Known Member

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    Why did it take me so long to realise!
     
  13. Oliver Shane

    Oliver Shane Well-Known Member

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    Wow, you have lived an interesting property journey!
     
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  14. Car tart

    Car tart Well-Known Member

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    My ex wife summed it up as, most people buy and sell 4-5 properties in their life, and maybe own 2-3 cars at the same time. You have 78 cars in the garage and swap properties as often as most people wash their jeans. So you’re not unlucky, you just have a bigger playing field.
    I have also found two dead bodies in home units I looked after.
     
  15. Big Al

    Big Al Well-Known Member

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    That’s why I didn’t go into direct ownership of commercial property. Stuck with property trusts. Mostly unlisted ones but also a few listed. Let the expert property managers deal with managing the property. Plus having the scale they buy assets in a price range individuals can not which means a better quality of tenant.
     
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  16. sash

    sash Well-Known Member

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    Yep....yet sooo many inexperienced newbies.....reckon this is better than resi.......the other side is when a review of the loan is done...the bank can call the loan in....unlikley in resi...
     
  17. jprops

    jprops Well-Known Member

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    I'm sure they are well aware. Disabling cookies works for some sites, clicking a link from a google referral works for others.

    It's not suppose to be fool proof. The choice is either block all visitors from reading any content without logging in, or have rudimentary measures to provide limited access.
     
  18. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Unlikely also in commercial if the finance risk management for the borrowers comes in ahead of "rate mate"

    ta

    rolf
     
  19. Oliver Shane

    Oliver Shane Well-Known Member

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    Yes REIT’s looking decent value at the moment.
     
  20. Oliver Shane

    Oliver Shane Well-Known Member

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    Unless they get the advertising model right... industry under pressure though... I know some journalists in Australia who haven’t had a pay rise in 8 years!!