What do you hate most about Property Investment?

I hate Somersoft!

I hate property chat!

I hate how I come here every day and post!

I hate how I have to wash after I wipe! So inconvenient!

 

Australia is just about the only mortgage market on earth where I/O resi property debt is common place. It became far too common place in fact, and started to represent a serious systemic risk to the Australian banking sector. No banking system where 53% of all resi loans are on long term I/O repayment schedules ( where the debt never has to be repaid ) is stable in the event that a credit crisis evolves and securitisation markets tighten. Not when Australian lenders rely on securitisation markets to fund the majority of that debt.

I say this with all due respect; they arent penalising you . They are protecting you...and me... and everyone reading this, and everyone who has any money sitting in a bank account in Australia.It's APRA's job to protect retail deposits and keep the banking system safe from too much risk.

Perhaps be grateful you have been able to enjoy the benefits and advantages of long term I/O lending at a zero premium to P&I for so long. Like many here, you used that your advantage, to accumulate a portfolio and chock your offset accounts with cash.... good for you, but investors entering the market today will have no such benefits or advantages afforded to them. They dont get that free kick like you and I and many others did.

Perhaps be grateful you were able to accumulate a portfolio using servicing calculators that didnt treat I/O debt any differently to P&I debt... unlike you and I, investors entering the market today don't get that free kick either.

Perhaps be grateful you were accumulating pre APRA where OFI debt was calculated at "actual" repayment levels , rather than sensitised P&I levels.... investors entering the market today have had their servicing cut in half compared to what you and I enjoyed. There's another free kick they dont get.

Eventually some of these restrictions will ease, as APRA comes to believe that the imbalance in long term I/O lending represents less risk to every Australian's retail deposits. But for now and for a few years to come at least - it just is what it is. So if you can afford P&I, perhaps use it if that's the only option available to you. It's not the end of the world. It's a first world problem, to be fair. Many readers here cant get any more dollars at all....

 

True. I remember way back when I was a n00b with all this stuff almost 20 years ago and I first learnt about IO loans I was gobsmacked you were able to get a loan an not have to pay back any principal.

 

Anything you don't hate?

 

I don't hate you.

 

phew!

 

The biggest free kick I ever got (in the guts) was when the same Government/APRA let interest rates increase to over 17%.

Can’t wait until they do that again .

 

Slight overtone of sarcasm .

 

bloody hope so....

 

The rates were even higher if the bank manager thought you were a risk and did not like or understand the business you worked in ,and would pass you onto their linked company at 21% ..

 

Yes but prices were also MUCH lower. Sydney's median was @150K in 1990 when rates were at 17%

And it was at this time, @ 1990...when deregulation brought Aussie, Wizard, and others into the market. Rates fell aggressively. LVR's expanded as LMI became common place - all boats rose with the tide. Servicing calc multipliers exploded . All boats rose with the tide. Lines Of Credit evolved. LO Doc, No Docs etc evolved... and so it went. All these things were expansionary. A generation of investors benefited from that expansion for the best part of 25-30 years. Property prices were driven by that expansionary environment. One fed the other.

Fast forward to 2017 . The arguments about interest rates being X or Y arent the point . Today's new generation of investors wont see any of those expansionary evolutions is the point

 

refinancing/obtaining finance at good rates. Thats the only issue I have

 

Invest in a bidet and do both at once.

 

bad tenants
repair bills

 

That's some great advice, I like the attitude you've got. I'm a big fan of Jim Rohn myself!

 

I got out early! Hat's off to anyone who can handle talking to a brick wall for a couple of hours a day.

 

I hate the high transaction costs. You can make a profit but lose it because of buying and selling.

 

There is a lot more I like about property investment than I hate about it. Keys for me have been:

• mortgage broker. I had one dodgy one who just about sent me broke but my present one I couldn't be happier with.
• agents. I had two that I sacked but my current ones are great.
• tenants. Overall my tenants have been great. Only had to evict one. One tenant I had for 20 years. Others have stayed with me for over 10 years.
• tax advice. Never had any problem here.
• maintenance. Hard to get reliable people here because the good ones are so busy. I'm trying to get a plumber at the moment who will charge me a reasonable price for a fairly simple job but so hard to find one. I've got a great handyman at the moment who gives me priority over other clients because I try to look after him.
• painter - after many years have found a great painter who does all my work.