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macca

Property Investment

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Just wondering if anybody has had any experience with property investment companies like those you hear advertised on the radio, social media etc. You know the ones that are urging us to plan for retirement, not to put it off any longer. Contact us and we will put you on the right track.

I've started down the track with one of them, haven't signed up or given any money yet although the pressure was put on. I can't see how they can make me a profit as well as make money for themselves. They explain it that they make their money from commissions as agents for the banks & real estate etc. but I see them as large companies employing lots of professionals in high rental premises that are there to make money for themselves first with me being their conduit for cash flow.

Has anybody had good or bad experience that you wouldn't mind sharing to help make my decision on the best path to follow?

Cheers

Macca

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Hi Macca

My background is finance.

I work for a large Corporate and high wealth family, so 'individual' tax/retirement planning is not my expertise...but I know enough to keep me out of trouble.

Rather than pasting lots of 'motherhood' type advice, I am happy to have a chat over coffee or a phone call if you think this is helpful.

Regards

Darren

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Hi Macca,

I am a Chartered Accountant and Partner in an accounting firm and deal with a lot of these from clients who are 'pushed' in to them.

Do not touch this stuff. Seriously if you are looking to invest in property, this is not the way to go.

If you have any questions feel free to PM me.

Thanks

Mark

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Hi Macca,

I am a Chartered Accountant and Partner in an accounting firm and deal with a lot of these from clients who are 'pushed' in to them.

Do not touch this stuff. Seriously if you are looking to invest in property, this is not the way to go.

If you have any questions feel free to PM me.

Thanks

Mark

 

Thanks Mark. This is the kind of advice I thought I might have got if I spoke to the right people. Thankfully its not too late.

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I will follow this as I am also looking at property Investment.

 

I have been looking at Defence Housing as I was in the defence a few moons ago.

 

But I have sat back on the fence for a while with the economy that has me worried at the moment.

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This type of investment is to benefit others and not you,A word of free advise is buy your first property solely in your name,or the loan,work hard to pay it of,then the second gets easy and so on.Nothing is not achievable if common sense is used.

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Dont go near any of those idiots. If its a network sale i.e they are pushing some idiot deveopers low qual off the plan high density future slum, you are paying a huge commission and way way over market value. Victoria is building a record number of units per capita than anywhere in the world. Image trying to sell some crap 1 bedroom unit when rates go through the roof in a couple of years when there are 1000's on the market. Estab property now sits at some 8-11 times average income...its cheaper in hong kong and london. Property is officially a crap yeild return and on the balance of probability will not deliver the previous capital returns...it cant. Ask someone who invested in a similar market that was the gold coast some 20 years ago (not me)

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Once you factor in inflation, interest and taxes, the return isn't so great relative to the risk.  However the right house, in a good location, for the right price can still be a reasonable investment.  But its not something to rush into without careful planning, limits and planned returns with everything factored in.

 

For example, the recent rate cuts have pushed up prices in a lot of area's, if rates go back up, there is every chance that prices will stagnate.  If they stagnate for 5 years you will have lost around 15% of its real value due to inflation and paid interest to the bank for the privilege.   If they don't mention risks like that run for the hills.

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Prop invest irks me. Everytime i pick a crash, the govt brings in new forms of credit i.e. Foreign investors, self managed super, first home buyer grants. Wont last

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We have not had a property crash for 25 years..... well over due..

The crash will come and artificially force house prices down when the interest rates hit 10% min.this exact method made or destroyed many 27 yrs ago.

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Basic investments for most people are a. Cash, b. Property or c. Shares. Most other exotic investments are derivatives of these three.

If profit is the reward for taking risk - everyone, as wisely put by Silent, needs to balance the amount of reward they are prepared to accumulate for the amount risk they are prepared to take.

The original question posed by Macca, needs to be assessed against the risk reward matrix of each individual. It's not a simple question of "good" investment or "bad" investment. The right answer is how much reward do you want to take for a given level of risk

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defo steer well clear as above and if your accountant / financial planner is seeming a bit pushy, in trying to talk you into investing in a particular development / developer, then axe them - they're chasing commissions. from personal exp, property has done me well over the past 10 years.  I've looked at heaps of properties before buying, got others to have a look before I buy (check i'm not just buying with the heart / missed something), had a realistic view of what my money will buy etc.  got a building inspection.  I like buying in a more expensive area, for the capital growth and young professional couple renting etc. also, try to buy a property that has something unique about it - eg a unit I have, has really good tree line views being on the second floor, 180 degrees and is a 1970's build, so larger rooms, with a hallway - unheard of in modern apartments. something about it, that not everyone may value, but something that some renters will like, and prioritise your property over others, when choosing where they want to live.

will the market correct?  of course it will.  But, to what extent and when, is anyone's guess. risk / reward, as above.  One thing is for sure, however, that unless you stand to inherit large sums, or earn $500k a year, you are not going to build a retirement income without assuming some level of risk; and relying on the pension - should it still be around - isn't something i'm up for. don't listen to those who are 100% bullish, but the nay sayers aren't going to get you anywhere, either.

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I can recommend Destiny, they don't sell property but they will educate you about all aspects of property investment including the risks. They charge an up front fee for the education and earn money if you decide to finance through them but that is entirely optional. It was money well spent for me.

http://destiny.com.au/

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Thanks Batfink. I'll check them out. That might be more what I'm after rather than someone who wants to do it all for me.

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I have had 1 or 2 rental properties for the past 15 or so years.

I have had nothing but single mothers as tenants.

I have just advertised on gumtree for a new tenant. Lots of single mother appling again.

If your close to a school they will stay while kids at school. Maybe 10 years plus.

They have regular income from centerlink.

Note, screening needed. The bad come with the good.

Not a huge financial commitment, improvers are available for $125k.(maybe get $240pw for it with a solid tidy up.

Note, buying a property investment is buying a job-hobbie.

 

There has been no property crashes ever in Australia, maybe some bad deals and flat spots but no reduction.

The property market is slow at the monment.

Government subsities have helped raise values since just pre 2000.

 

I have had properties double in value, and own my own basic, small, old house(195k) pretty much without ever making a personal payment. 

 

Macca, I see you can work. I saw you change Dacotas caravan tyre in the rain.

Buy cheap,, rent, improve, rent, improve, time, time. Sale and hope for a profit. 

 

???renthals in your super fund.(private)

 

This topic intersts me, I could go on and on.

 

Wish I had brought 10 when I was 20.

 

I think the bankn pays 3.5% for your money.

 

Property, at best 10% return with the banks money, with tax deductions on interst(rent).(10%covers costs)

The  money is to be made with capital gain.

 

Note, there is always costs and spending money. Learn the legislation.(ie no capital gains tax if you live in the house for 7 years) 

 

My property tip. Superfund payouts. Older working people will have money to spend on property when they get paid out. 

This is yet to come into full mode. Watch this space as the the average worker retires with half a million. 

 

Hope the legs healing up Macca.

 

The 9day was fun.

 

Cheers.

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Loans values are now 25% higher than just two years ago at record levels, interest rates at lowest rate on record, avg income to loan size is now 12 times at record levels (it was 8 during the once in a lifetime property boom from 1996 and was 3.5 before that). There are lots of other records like longest running 22 yr record without a recession, record building of property per capita which sees melb building more units per head than hong kong, london or anywhere. Record mining boom has stopped, wage increases are at record lows, foreign investment proping up said market at record highs,, Soooooo....its gunna crash :). I reckon on balance of probabilities and from prop crashes on gold coast in late 90's that looked smelled and acted exactly like this....its gunna crash :). The 2000s were a once in a lifetime market driven by increasing sources of credit i.e. Bank loans got bigger, more hisband and wifes working same time, then came self managed super funds then offshore investors who dont even live here. The gfc which we avoided (1 of only 2 countries) was caused by lack of more credit.

I'll wait a coupla years for all the smsf investors and crooked chinese hidding assets to dump property before i'd even think of buying and even then dont expect average returns of 11% over a decade ( which is still double ur investment < 10 yrs)

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Sorry, pet peev, im over this market...i didnt have to look it up either :). And the but theres a shortage nonsense wont save us as if a price is too expensive people cant pay it. I couldnt afford 12 times my income unless i rode a cheap yammy again lol

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Sh1t Fully. Do you think the whole banking system will collapse? Should I be stuffing my cash in my mattress?

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I'll wait a coupla years for all the smsf investors and crooked chinese hidding assets to dump property before i'd even think of buying and even then dont expect average returns of 11% over a decade ( which is still double ur investment < 10 yrs)

 

This is my exact thought. I too am holding off to (Which I shoudn't say) snap up someone's property because they cant fund it by overloading the mortgage/ household debt.

 

House prices are going through the roof at the moment from record low interest rates and another expected rate cut in August.

 

Time to sell your house and rent or move back in with the parents for a while. Then pick up a cracking deal or 2 in a couple of years.

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Sh1t Fully. Do you think the whole banking system will collapse? Should I be stuffing my cash in my mattress?

No, just saying buying something off the bat now is most probably the wrong time unless you got time to wait

And it almost did with the gfc :)

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This is my exact thought. I too am holding off to (Which I shoudn't say) snap up someone's property because they cant fund it by overloading the mortgage/ household debt.

 

House prices are going through the roof at the moment from record low interest rates and another expected rate cut in August.

 

Time to sell your house and rent or move back in with the parents for a while. Then pick up a cracking deal or 2 in a couple of years.

I've been waiting at least 10 years for this to happen but there haven't been any cracking deals to pick up. Prices I think have stagnated at times but in general they keep going up. Def. not at 10 -11 % but they haven't come down either. I think that if I am going to do it now is as good a time as any. Just need to keep researching to find a deal that I am happy with. At the moment I've got plenty of time.

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i cant see there being too much of a collapse... i can see it stagnating but i cant see it going backwards any great deal.... at least not in established areas. 

 

for 4 or 5 years now there have been people holding off on buying waiting for good deals when the market collapses - even if it was to "collapse" now and go backwards a bit it would have to be a very big bit for those people to buy at a lower price than they could have 4 or 5 years ago..

 

if there is going to be deals to be had I believe it will be in the "newer" suburbs where there's lots of first home buyers that have gone for McMansions with multiple flat screens, fancy furnishings, flash sound systems etc etc and 2 new cars in driveway - these are the people that will hurt when the rates begin to raise again... (NOTE - I know that's a stereotypical comment and i"m not saying everyone in newer suburbs is like that so please don't take offence if you live in one and don't fit the description I've just given!)

 

again, I don't believe there will be any dramatic across the board collapse in housing prices - when rates do go back up and some people do struggle and need to offload there will be plenty of people waiting in the wings to try and snap up a "bargain" - and this will result in stagnation of the market as opposed to a collapse...

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