The Psychology of Declining Markets....

The possible upside is that if the prices correct a bit further; the yields should improve as often times rents don't go backwards in cities.

 

agreed this exactly what happens when yield becomes acceptable the floor is found for price

 

People who do not have another cashflow stream are not ready.

It's not about being ready to buy more when prices go down.
Whether it's a crash, correction, downturn whatever you call it, when house prices drop people lose money. I've seen it happen before, @barnes, @MTR @BigKahuna @Kate Moloney have all seen it happen before. We've been in the game for more than one market cycle.

It's not the markets, it's the entire false fantasy of leaving your job and becoming "retired" that makes people lose money.

Work your butt off and create multiple streams of income - then investing, developing will be a safer game to play irrespective of market trends.
Only when you are cashed up can you look at opportunities when markets fall.
(Or correct)

 

agreed divesification is very important but cashflow is even more important. a lot of excess is what will pull you through plus a handy mil or so in the bank to sit on sidelines if all goes to hell in handbasket

 

it is a process of deflation bargains will be the but 18 to 24 months away. just a normal part of the sydney cycle

 

question what happen when all of a sudden you can buy closer in? will mt druitt still lock attractive??

 

Here's the thing, you can't call yourself "retired", lying on the beach with a card that says "Im a sophisticated investor" in your pocket and expect to have multiple streams of cash flow at the same time. It takes work and effort and WORK and long hours and did I mention WORK?

 

that is true retired in the sense you do what you love i will always do something with property

 

I doubt it will be sub 600k for a house anywhere a lot closer in.... demand will keep those prices unaffordable, so there are no other alternatives except to rent or choose a unit (which is still bloody expensive). There may be forced sales but I don't see a huge drop in the East happening.

 

Kudos
This is one of the best posts I have read for a while.

MTR

 

So, are you saying that if a person who works 9 to 5 on a single job is not ready to buy if he or she doesn't have other income streams like shares, business, side jobs, uber etc? There are people who may be cashed up (from inheritance etc) but does not have other income streams or cashflow streams, whatever you call it. If what you are saying is correct, most people would not be able to invest in properties.

 

how about pet sitting as a side job - ok i'm ready to take opportunities.

 

Yeah i agree.....@xenia post seems wrong. Ofcourse people who have no other sources of income other than their day jobs can be just as well qualofied tto buy real estate compared to those with multiple sources of income.

 

I have been through about 3 real estate downturns from 1983 onwards in Brisbane,where one from 1991-1997 that was the big one,properties that were bought in 1991 were still selling for half the purchase value in 1998,and inbetween it wiped out so many property investors,there is this gentleman at one of the bank's agm's i talk too each year,and he says the same one liner each year ,i hope you understand the power of 10 when it goes the other way,and i do from several different angles,and you replace lies with truth..

 

I read that multiple times trying to understand?
you are asking me if someone working 9-5 can purchase properties?
question for mortgage broker maybe and it would depend on their own personal financial situation.

 

oh - got it now. OK they probably would.

 

But those "sophisticated investors" who are "retired", mortgaged to the max, left their job because they own property will be worse off than someone who works 9-5 has cash savings and has never invested in properties.

A 9-5 job depends on someone else providing that for you. Nothing wrong with that but I like to be at the effect of what I create, more money, more wealth the more I work. I like to be financially independent of another person providing me a job and then treating me fairly. Hence why I like multiple streams. But yes a 9-5 job does work for some people - all good.

Tailor your goals to your own circumstances, what is risky for one person is not for another.
more properties are not better.
Be an individual not a someone who follows someone else's financial goals.

 

You should re read your post and I wasn't sure what you were saying.

 

all good
do what works for you.

 

LL
This is how I interpret what Xenia has posted.

Its all about strategizing, creating income streams/cash flow is key. There are many ways to do this, just pick a way that suits you.

If investors use strategies to create cash flow then they can continue to grow a portfolio and income streams.

If investors focus on buying and ignore cash flow/income streams this is a riskier proposition when markets decline

MTR