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Interest only property bunnies at greatest risk - 89% think they don't have to pay off capital
Topic Started: 9 Sep 2014, 06:35 PM (8,435 Views)
miw
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John Frum
10 Sep 2014, 02:44 AM
You're misundersting the concept. Ticket clipping is a not profiting from capital gains - which are volitile and illiquid - it's gains acquired through services provided to speculators. Unlike a speculator, my money is guaranteed. I contract in the retail banking industry. I'm getting inflated rates because the banks are making inflated profits from speculators paying inflated prices for property.
Rubbish. Only one post ago you were rabbiting on about 20% deposits and rich relatives. Both totally unnecessary to a strategy based on accepting an inflated wage whatever the source.

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My strategy is pretty simple and well worn. What is it about it that bugs you so much? Are you a little jumpy about your own housing exposure at the moment?


There are many simple and well-worn strategies. Which one exactly are you using? Something about accepting an inflated salary and waiting for a bust so you can accept a big redundancy package and retire? ............ oh wait. No redundancy packages for contractors.

Thanks for the concern about my housing exposure. If things do get bubblicious in BNE I will be having a shot at reducing it profitably. If I don't succeed and it crashes, then no doubt my ability to do new things will be curtailed for a while. It won't really impact my cashflow in any significant way. (The previous pullbacks actually improved my cashflow somewhat because rents went up and interest rates went down.)

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Calling the top is always hard, but most are now coming round to the fact that things are not going too well currently, and the short term outlook is bleak. But far from being doom and gloom about it, I'm positive that this will be the moment that bumps people out of their property obsessed stupor, and we'll soon be able to get to work building a new economy based on something else.


Nah we won't. The property cycle IS the cycle. It is what it is, not what you want it to be. Whether you like it or not, Australians have $5.5T tied up in property and that matters. If/when the shit hits the fan, I hope you have more than a 20% deposit salted away somewhere.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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goldbug
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89% of ALL investor loans are IO

No wonder all the bull socks have cranked it up on this thread, the lie is exposed and they have moved into the final stage that comes before the truth is accepted. The full denial stage.

IO loans didn't even exist 15 years ago, they are a total con job and the dull cow herd has taken the bait and used them to bid up the price of houses to unheard of levels.
All shadow's fundamentals are bullshit. Prices have gone up for no other reason than all the speculators bidding against each other are borrowing money at historically low rates and NEVER EXPECT TO HAVE TO PAY IT BACK.
:lol
PONZI


Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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miw
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goldbug
10 Sep 2014, 03:37 AM
IO loans didn't even exist 15 years ago, they are a total con job and the dull cow herd has taken the bait and used them to bid up the price of houses to unheard of levels.
Rubbish. There have been IO loans forever.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Bardon
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John Frum
10 Sep 2014, 01:37 AM

No, the market becomes illiquid because the credit system is jammed up and banks require higher deposit ratios. So prices keep falling until they're at levels where buyers have deposit ratios that the banks find acceptable. It can take a while, but I'm patient.
Dearie me, you really don't know that much about it do you.
John Frum
10 Sep 2014, 01:42 AM
Oh that's ok. I have wealthy relatives who can stump up collateral.
I'm aware that it's going to take a long time to kill the dream for Australians that rising property values was a way for everyone to get rich. I'm prepared to wait another 4 years to buy.
Four years this will be fun watching you slowly burn to a cinder over that period. Is four years the turning point or is that the low point?

I guess your parents will gladly forego receiving the low rent that you pay them and sub you a large deposit to buy a joint given your low income means that you cant raise enough to buy a house on your own steam.
miw
10 Sep 2014, 03:45 AM
Rubbish. There have been IO loans forever.
But this dude is a ticket clicker on the high finance bus, he should know what the passengers are doing.
Edited by Bardon, 10 Sep 2014, 07:37 AM.
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John Frum
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Bardon
10 Sep 2014, 07:30 AM
Dearie me, you really don't know that much about it do you.

Four years this will be fun watching you slowly burn to a cinder over that period. Is four years the turning point or is that the low point?

Wow, ad hominems. Is that all you've got left? That and some more of your vague and incoherent ramblings about a macroeconomic theory of cycles.

Must be tough for ya.
miw
10 Sep 2014, 03:30 AM
Rubbish. Only one post ago you were rabbiting on about 20% deposits and rich relatives. Both totally unnecessary to a strategy based on accepting an inflated wage whatever the source.


What on earth are you taking about? Have you been drinking?

The job provides me with the money for future downpayment. The rich relatives will supply collateral should i need it in a credit wary market.

Do you understand the difference?


Quote:
 

There are many simple and well-worn strategies. Which one exactly are you using? Something about accepting an inflated salary and waiting for a bust so you can accept a big redundancy package and retire? ............ oh wait. No redundancy packages for contractors.


I explained the strategy. It was simple. It is you that's trying to complicate it.

And as for waiting for a bust - are you joking? Open the window!

Quote:
 
Thanks for the concern about my housing exposure. If things do get bubblicious in BNE I will be having a shot at reducing it profitably. If I don't succeed and it crashes, then no doubt my ability to do new things will be curtailed for a while. It won't really impact my cashflow in any significant way. (The previous pullbacks actually improved my cashflow somewhat because rents went up and interest rates went down.)


You sound like you have of a enough return on capital already to keep you going through a bust. Good for you.

We're probably not in the same league financially - on top of this I have several young kids to suppprt. So perhaps you shouldn't assume what's good for the goose is good for the gander WRT strategies.

Quote:
 

Nah we won't. The property cycle IS the cycle. It is what it is, not what you want it to be. Whether you like it or not, Australians have $5.5T tied up in property and that matters.


BINGO! You've summarized the mum and dad BBQ conundrum perfectly - that housing will keep on rising and making money for people and the broader economy by sheer will power alone.

Now in this we clearly have an investment strategy that's been shown time and time again throughput history to have a 100% failure rate.
Edited by John Frum, 10 Sep 2014, 09:18 AM.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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Dr Watson
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John Frum
10 Sep 2014, 08:48 AM
I have several young kids to suppprt.
several

/ˈsɛv(ə)r(ə)l/


determiner & pronoun

determiner: several; pronoun: several

1. more than two but not many.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Bardon
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John Frum
10 Sep 2014, 08:48 AM
Wow, ad hominems. Is that all you've got left? That and some more of your vague and incoherent ramblings about a macroeconomic theory of cycles.

Must be tough for ya.

Spare me the crocodile tears.

Anyway, we both have something in common with your extended buying window in four years time. Yes, there will be a mid cycle correction about then, before the next mother of all booms, so get in their son. The only problem for you though, is that the low price then will be far higher than the price is now.
Edited by Bardon, 10 Sep 2014, 09:51 AM.
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goldbug
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miw
10 Sep 2014, 03:45 AM
goldbug
10 Sep 2014, 03:37 AM
IO loans didn't even exist 15 years ago, they are a total con job and the dull cow herd has taken the bait and used them to bid up the price of houses to unheard of levels.
Rubbish. There have been IO loans forever.
Bullshit. Don't try and dismiss a fact just because some obscure exceptions to the rule. Average Australians never had access to IO loans prior to the last leg of the housing bubble here in Australia. Before deregulation banks were a lot more prudent. Here is what other coutries think of them.

In Singapore, interest-only mortgages had been dis-allowed since 14 September 2009. The reason for this was because this type of mortgage encouraged property speculations. 

It is possible, though extremely rare, to obtain a Canadian Interest Only payment or first few payments on a standard amortizing mortgage.

In India. .. These loans are given provided that the borrower hands over a security (like gold ornaments) or the documents of the same (house papers) to the bank. Gold loans are the most common interest-only loans in India.
http://en.m.wikipedia.org/wiki/Interest-only_loan

Gold given as security. Now why would a bank want a useless relic like gold miw :lol

In the US they call IO loans "loser loans"

Loser Loans
Having dropped this ominous prognosis, let me explain exactly how these interest-only loans make it so much more likely that an individual investor will default. Let’s begin with this basic truth:
interest-only loans were invented by mortgage lenders who know that fewer and fewer folks can afford homes in the hottest locations using a standard 30-year fixed rate mortgage, but who, with all the money being made in these boom markets, are desperate to hook people into mortgages any way they can. So they came up with a loan to make you feel as if you can afford to buy, by requiring that you pay only the interest in the early years of the mortgage.

The catch, of course, is obvious. In a way, it sort of reminds me of the tobacco industry: selling glamour and gratification up front, at the heavy risk of dire problems down the road. With interest-only mortgages, the risk is to your financial health.
http://biz.yahoo.com/pfg/e38home/art011.html

Nearly the whole nuvo Australian investment community rides on the back of Loser loans. Classic, Classic.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Foxy
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Zero is coming...

Infinite return for banks.
Peter
They check in but they never check out.
THE BATES MOTEL MODEL.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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goldbug
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silverman47
9 Sep 2014, 06:53 PM
Generally speaking property will double every 10 years or so.

over that time rents will rise, and more than cover your mortgage costs + maintenance + insurance + body corp fees and everything else.
:lol :lol
Straight out of the property seminar spruke book. And you still believe it, after 7 years of near fuckall capital gains and years of falling rents in many capital cities. Amazing.
Mustapha Mond
10 Sep 2014, 11:35 AM
Infinite return for banks
And when all the speculators default? Well the mortgages are now in the hands of the public via bank bonds, aka residential backed mortgage securities.

" Sorry sir but we are forced to forclose on your home. And by the way, your superannuation provider owns it now amd even though it has crashed in value you are still liable to them for the balance of the original purchase price. Have a nice day sir"
Edited by goldbug, 10 Sep 2014, 11:49 AM.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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