What if the market tanks??

We have been running hot, property around Australia enjoying double digit growth in many States, investors riding the boom.

Eventually the **** will hit the fan, have you considered your fall back position over next 12-18 months?

MTR

 

Fall back position is just to wait. All properties bring in surplus cash every week, all projects and businesses can continue along as is.

Position wouldn't be too jeopardised I don't think.

 

Property only ever goes up and it doubles every 7-10 years. Stop scare mongering.

pinkboy

 

Next thing you will tell me is blue chip properties are bullet proof.. Lol

 

Have 5 properties total net position is 4.3m all in offset, i couldn't care am in it for the long term.

 

I think it helps a lot if you've actually experienced a slump/total recession. We went through this in the UK a few years ago but we were only holding one IP at the time. We didn't lose our jobs so we would have been okay (though some in other industries weren't). The plus side for us was that more peeps were renting as they were unable to get deposits and mortgages so our IP was always rented out and rents increased a lot over the period. Interest rates also fell through the floor. So we were okay, but it happened overnight. People had been 'predicting it' for ages, but many including us never really thought it would happen and it was just media hype. Always have an exit strategy/contingency money. Mega mega important for any investor.

 

So each property provides cash flow $ after all expenses and when markets crash your property will be continue to rise????

 

Start a business selling foreclosed and mortgagee in possession signs.

 

No not rise, obviously, but still bring in income every week. Happy to keep earning money during market tank.

 

When market tank properties fall back as much as 20%+, not scAre mongering just calling a spade a shovel. Dreaming is Ok, but niave.

BTW interest rates are on the rise? Cash flow positive means you have real money in your pocket.

 

Whether prices go up, down or stay the same, I should be able to make my goal of being able to retire by 40. The only real risks are big increases in interest rates and decrease in rents.
I hope that neither of those is going to happen and don't really think that they will.

 

Well unless you sell before the fall, you just lose some equity right?

If rent yields fall and vacancies and interest rates rise, that would cause some trouble, but could that happen?

 

I don't think I'd be too worried if the market tanked; I'm in it for the long term. The short term worry for us would be if the market tanked and interest rates returned back to where they were in the early '90s. One day I wake up thinking not jumping in atm with the cash we have on hand may be a good thing in 12 months time, other days I wake up thinking we're only going to end up 12 months behind the game.

Anyone have a working Crystal Ball they want to unload?

 

Our IP did lose around 20% of it's value and it just getting back to where it was after about 8 years. I guess you just need to know that you can manage those drops across your portfolio if they do happen. We couldn't have sold our house either, you basically couldn't sell them at the time as no one was in a position to buy. It was no mining town either. It's just so important to keep this in mind, without letting it hold you back too much of course.

 

So you have cash coming in the door, not negatively geared, not worried if end values fall back, no need to tap into equity?.

 

Ditto. I am looking forward to the market falling. Presents good opportunities for those who are cashed up.

 

All properties revalued in June & equity release done and now funds parked in offset. Only hold 5 residential properties including PPOR.

Less is more.

 

If you have a property portfolio of $5m and falls back 20% that is $1m paper loss, it won't happen, even blue chip? It does and has happened just check this out. Syd market tanked big time 2004 blue chip Got hammered,, recovered 2012-13.

My point is perhaps your particular investments may fall 10-15%, but you will be holding these for 7-10 years for another rising market. If you are negatively geared there will be pain ahead, interest rates are rising.

MTR

 

No one has a crystal ball, but we must pay attention to what is happening today

 

That situation would not have much affect on our position, would not be too bothered.
A couple mil paper loss would make very little difference overall.

Only those who are in a vulnerable position in the current market should be worried if things go bad.