What is Really Happening Around The States??

Quite a few people have made good six figure equity gains (in the last 3 plus yrs) in Brisbane with nothing but a buy n hold strategy in place.
@MTR is right. It's the tightly held ones in Brisbane that have done well in terms of cg...and maybe some investor suburbs if they have a cheap buy in price.

 

Nice tip Scott. They actually raced at Caulfield today but that horse (Vibrant Rouge) had a great win @ 11-1 odds Lol.

 

How so?

Sydney and Melbourne have doubled in each of the last two decades, and buy and hold certainly worked there in the last couple of years.
Brisbane and Adelaide have not, but have trebled in 20 years, and we are all awaiting their respective 'turns'.

 

@Foxy ***** - #4 in the 3rd at Warwick Farm got up too.

 

That's 10% yearly gain. Not enough for me.

 

But you're not using leverage. If you were you could be making over 200% gains on your cash in no time.

 

Parts of QLD - not only Brisbane - have moved nicely the last 12 months.
South Coast NSW continues to move along.

 

You think so? What about interest on that leverage. The standard variable loan is around 5% yearly. If I was using leverage to buy in Adelaide for the last 5 years, according to stats that were given by MTR, I would be pretty much in the red.
Let's say I have bought a house in 2011 for 400k + 23k government charges (80 deposit - 320 loan) that loan IO would have costed me 80k for 5 years (16k a year). In case I was renting it out (which I don't do anymore) it would netted be on average around 13k a year (385 a week - minus the outgoings - 65k for 5 years, maybe less (maintenance and other related stuff).
The growth of median in Adelaide was 10% for 5 years. - 440k
I would still be at least -15k (negative in rent) + deposit gives me nothing, but those 80k could have given me at least 3,2k a year as a bank deposit.
Let's ad up. +40k as growth + 65k in rent (-80k IO loan, -16 that I would have made as a deposit in the bank on 80k) -23 government charges on purchase:
105k in plus, 119k in minus. That is minus 14k on holding a property for 5 years with an 80% interest only loan renting it out for 385 a week without any problems.
I don't take any taxes into account as well, but they would be on the minus side anyway.
So tell me what is the advantage of leverage in the last 5 years in Adelaide?

 

That's your problem.

Refer to the post you referred too... you were talking about Sydney and Melbourne here... you were talking about 10% annual gains, not a flatish Adelaide market. Anyway, long term even Adelaide should go up... if you put a little bit of money in, it will grow. Then pull out equity and rinse and repeat. Could be self sustaining in the big cities. Helps if you buy before or early in a boom though so you don't wait too long for it to go up.

 

That is the problem. Adelaide 'SHOULD' go up. What if it DOESN't, how many years more I should be in the red? No one knows.

So my numbers are correct - aren't they? Using leverage doesn't help you much and in flat markets it even sets you back instead of cash (which still gives you some smallish profit). When I understand those numbers I see no point in real estate investing.
Real estate investing (buy and hold) is good only with at least 15% yearly capital gain, when it's lower it's just a waste of time and money.

 

Do buy in hold in places where it works and do other strategies in places where it doesn't.

 

You keep talking about the mystical 15%. Care to share how you've got it?

My brisbane properties have done 15%pa for the last 2 years btw (or at least that pro rata - given I've only had one 18 months, and one 6 months).

 

Why not?
I think you are dreaming of a return of the high inflation environment which was present in earlier decades.

 

Can you please educate me on how to get 15% yearly? You really should start a thread to educate others on alternative investing, I mean, that's why we are all hear isn't it? To share, learn, help others?

 

Some are here 2 flog / sell a service....jus sayn'

 

If you buy a house at sub 5% yield anywhere, you are going to be losing money. Not exactly a smart investment choice to buy rubbish yield in the "nothing" price range (too high for yielders, not enough for a decent CG suburb) then use it as an example of a typical Adelaide investment.

Heres a real world example to offset your ficticious one. I bought in Tranmere just under 2 years ago for $540k, when it was still reasonably quiet but lots of new development starting. Its been renting at a terrible 3.62% gross yield. Land demand has gone ballistic and its now worth about $680k having done nothing to it. CG has more than offset cashflow losses.

 

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Not that simple, you still need to buy in the right markets. Try doing this in Perth, Darwin or capital cities where there has been no growth over the last 10 years and it wont be that pretty.

 

That's true.... and so I used the word "could". Not "will"

 

Agreed.
LVR can be very dangerous, I know investors that have loans that are now greater than the value of the property. It works both ways, you can make a bucket load of money and you can lose a bucket load of money if you buy in the wrong market or at peak and it starts to fall.

Though if you are an active investor you can buy and sell stock that has already had growth/capital gains, reduce debt or build/develop etc and turn negatively geared property into positive cash flow and hold new stock which is easier to rent and less maintenance.

Do this in metro areas which attracts more than one market, you also have depreciation, cash flow/income stream.

The point is it wont matter too much about the 15% growth pa because you already took your money off the table and now you are living off the income.

 

Now its time to cough up and tell us where exactly you are buying