What if the market tanks??

The share market is due for a big correction IMO.
1. Current AU share market is not reflecting the status of the economy.
2. US interest rise => share market correction (globally?)
Judging from above, housing market may have a longer time to run.

 

I was watching a doco tonight on Japans economic boom/bust in the 80's and how prices still havent recovered to those levels. Makes you think...

 

Personally, that's why I think its very important to have a diversified portfolio, properties in different states, different price points and catering to different markets, but generally bread and butter properties. Buying under value from day 1 and being able to add value further mitigates risk. When you add up all those factors it puts you in a safer position when markets rumble, imo. Plus of course cash buffers in place.

 

bread and butter properties.......buying under value............is that you Nathan birch.

 

I'll just wait it out. The port folio is spread out over Melbourne, Sydney and Brisbane so pretty diversified. In the even of a crash I'd expect interest rate to stay low or even go lower so cash flow should be fine.

naturally if there's indicators that there's a big crash and I can see it closely before the market does then I'll sell out. However, think that would be unlikely.

 

No its not.

Regardless, the benefits of buying BMV, being able to add value and then catering to a broad demographic is just simply good strategy. Doesn't matter who says it.

 

ace you are fortunate that you have a business to inject cashflow, most investors will not be in your position.

My concern is many new investors only understand or know a rising market, one cycle. Vulnerable if LVR is too high.


MTR

 

This is probably naive - but wouldn't many property investors simply carry on as normal, but not 'feel' as wealthy? The equity in a property isn't real until it's released or put to work through leveraging. A significant rise in interest rates could be a problem as some people wouldn't be able to meet their obligations, but values decreasing - that's just a loss on paper, right?

In the nicest possible way, I think a correction (particularly in a market like Sydney) would do a few invetsors good to test their committment to property as an investment and their judgement about what they've purchased, finance structure, risk mitigation strategy etc.

That's not to say that I wish to see anyone here lose their retirement nest egg etc, just that there's ups and downs with all investment classes so I think we could all learn from a slow period and how to manage / invest through it.

 

Go shopping at the sales

 

My 'many' states, you mean 'two' (sadly)?

I'd just ride it out, like I did post GFC. Didn't make any difference except on paper. My deposits hadn't come from equity until this year anyway.

 

When the median in Melbourne and Brisbane hits 1mil within 15 years time everything will be fine.....

 

My philosophy as well

 

Its actually event of survival, the one who have buffer, low lvr, insurance, and back up plan will do well. They should be able to sell if have to.

Run few scenario, like calculation of 1-3% interest rate more than today. See what impact do you have.

Run scenario like what happens if the price drop 15-20% overall.

 

[TQUOTE="Leo2413, post: 34939, member: 85"]No its not.

Regardless, the benefits of buying BMV, being able to add value and then catering to a broad demographic is just simply good strategy. Doesn't matter who says it.[/QUOTE] Every property I have bought I have had to pay more than what the rest of the market vaues it at, I buy a property on in its merits and if it will give me the most profit, not because some-one else might pay more than it is worth. All the best properties I have bought I was told your mad you paid too much. I have sold 2 properties to the losing bidder of a property for 4x what I paid after he realized property wasn't getting any cheaper and you have to pay for what you want. Having offers of $17k accepted on properties asking $30k in Ouyen 12 years ago, it wouldnt have matter if I paid asking price when I sold them 5 years later for 90k. people not willing to pay market price have done themselves out of a lot of money.

 

The only good item with Japan is they have total control over their money,unlike countries like Greece who are within the euro zone,very big difference ..

 

@Fargo


If that's working for you then keep doing what your doing. Different people's goals, timeframes, skills and level of aggressiveness is different. Your approach to my own goals, aggressive approach and timeframes and risk mitigation strategies wouldn't suit. And probably mine to yours wouldn't suit. Gotta do what's right for you.

 

The truth is sometimes more complicated,and more unknow,or value is what people perceive it to be because the Government does not want any out of nowhere surprises..

I went along to a auction last week,,Brisbane waterfront large block only one of it,s kind undeveloped the value range was huge and we are talking over 4ook from three different valuers ..

26 people in the room maybe 6-7 registered to buy,and this property had several full page add's Australia-SEA various upmarket well read papers for several weeks,property number comes up you could have heard a pin drop apart from the person with the hammer,no one bid passed in
and while walking past one of the people in the estate,and being a good listener I heard one say that they have paid already over 8 something k to get the property too this stage for auction,just add 0 too the 8 big money for nothing..it will sell they always do after an auction like this but the question is why did it not sell at auction..

 

@MTR
unless investors ares forced to sell, they will keep holding portfolio. Lower IR will make it easier to service the debt,

if we face significant higher unemployment, it could be bloodbath situation. haven't seen such situation as yet, so cant comment.

out of all, perth investor should have better idea!

 

If I was sufficiently convinced that the markets I have properties in were going to drop by 20% and then take 8 years to recover - then I'd definitely be selling up for whatever I could get today.

However, I'm not even close to being convinved about a crash like that - seems just as much chance that growth will slow down and stay down for a period of time.

 

Well, as long as the negative gearing component is not taken away by the Government, it should be fine for all majority of the investors.