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Rising bond yields threaten sharemarket's safest stocks
Topic Started: 19 Nov 2016, 09:07 PM (7,436 Views)
Jon Snow
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foxbat
29 Nov 2016, 06:05 PM
http://www.realestate.com.au/property-apartment-wa-mount+lawley-123297450
$367,500 is the price it fetched in 2009
Now
Price Reduced... Be here first! Townhouse at Unit price in the Avenues!
Now from $359,000.

1) Strata fees, water rates and council rates, insurance. Council Rates: $1,470, Water Rates: $1,090, Strata Levies: $400 P/Q Insurance???
So $4,600 p.a. for a total of $32,200.
2) Settlement fees. $16,239.10
http://stampduty.calculatorsaustralia.com.au/stamp-duty-wa

3) Repairs maintenance and improvements of say $5,000 per year?? Total $35,000
Running total $83,439.10

4) agents commission at list price plus settlement agents costs... $12,000??
http://whichrealestateagent.com.au/real-estate-agent-fees-wa/
running total $95,439.10

5) Cost of capital at say 5% $20,000 p.a. $140,000
running total $235,439.10

So what kind of investment is this over that time??
Good analysis. I would say that $5000 per year for maintenance is probably more than most landlords would spend on it, and there are a few other modifications I would make to your calculation. e.g. FX is only relevant to a foreign investor.

Let's say you borrow $294,000 @ 5% on a 30Y term and throw in $73,500 of your own capital at outset.

These are your cash flows over the 7 year period (all numbers rounded)

Cash Flow Analysis
YearCash Flow OutCash Flow InNet Cashflow
1-12161414680-106934
2-2838414680-13704
3-2789414680-13214
4-2740414680-12724
5-2691414680-12234
6-2642414680-11744
7-251341373680122338


IRR : -6.67%

That's without a depreciation deduction on your taxes. Difficult to calculate without knowing the age of the building, it's original cost, marginal tax rate and so on, but even being generous with a deduction of $2100 per year, it is still an IRR of -4.94%
Edited by Jon Snow, 29 Nov 2016, 09:17 PM.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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skamy
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Jon Snow
27 Nov 2016, 08:17 PM
All exogenous energy this planet has ever received has been free. Unless there is some kind of celestial banking system I am unaware of.

Energy is free and abundant, but ultimately, in a given time-frame, finite. Hence, Snow's law:

A given population will expand to consume the available energy.

And it's cororally :

A given population will destroy each other until the population is able to consume the available energy without contention for it.

We will probably have thorium reactors before fusion, and the energy will be so abundant and cheap that the population will explode, driving every natural ecosystem on the planet to the brink of extinction.
Gosh you are in a miserable mood predicting Armageddon all over the place.

Don't you ever look on the bright side?
Jimbo
27 Nov 2016, 09:18 PM
This is the logical outcome in the longer term, but in the short to medium term, it will allow man to occupy spaces which we currently don't bother with (except to marvel at when we visit them for our holidays).

We mainly live in centralised cities because we currently have no other option. Generally built around a natural harbour or latterly a railway or main road junction.

We are constrained by the cost of energy. Free or very cheap energy allows us to transport goods at low cost. This is exactly what oil did. Oil and the internal combustion engine made the world smaller, allowed us to eat fresh fruit grown in another country, allowed us to live further away than a walk to work.

The extraction of oil takes up vast amounts of other resources (steel, land, human endeavour).

Once an alternative is found (it will be, of that I have no doubt), a lot of the worlds problems will be solved. Many will be lifted out of poverty, our options in life will grow.

Slaving away to give half of your income to someone who happened to buy a centrally located house 20 years ago will no longer be required.


We will always value some homes more than most - We are like any other pack animal we will gather together when we can. City living will always be with us.

It really is quite crazy IMHO to use this futuristic speculation to justify wasting years and loads of money on renting someone else's house.
Edited by skamy, 30 Nov 2016, 12:55 AM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Jimbo
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skamy
30 Nov 2016, 12:52 AM
We will always value some homes more than most - We are like any other pack animal we will gather together when we can. City living will always be with us.
The vast majority of people pack themselves into central locations due to proximity to work. Once free of the need to work, they choose more lifestyle oriented places to live. When was the last time you heard someone say they were going to retire to a tiny unit in the city?

Quote:
 
It really is quite crazy IMHO to use this futuristic speculation to justify wasting years and loads of money on renting someone else's house.


I'm not wasting money on rent. I have the utility of the place I live in without the on costs and shackles which go with ownership.

Renting is pretty cheap at the moment in Perth, cheaper than buying when you weigh everything up. The simple fact is Skammy, I have a fair bit more money than I had two years ago and houses are a fair bit cheaper than they were two years ago. Can you explain how I have "wasted money"?

Quote:
 
futuristic speculation
What's futuristic about thinking that technology will continue to improve at a similar rate to that of the last 100 years? It's simple basic common sense as far as I can see. Not sci fi at all.
Edited by Jimbo, 30 Nov 2016, 06:07 AM.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Rufus
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Jon Snow
29 Nov 2016, 09:16 PM
Good analysis. I would say that $5000 per year for maintenance is probably more than most landlords would spend on it, and there are a few other modifications I would make to your calculation. e.g. FX is only relevant to a foreign investor.

Let's say you borrow $294,000 @ 5% on a 30Y term and throw in $73,500 of your own capital at outset.

These are your cash flows over the 7 year period (all numbers rounded)

Cash Flow Analysis
YearCash Flow OutCash Flow InNet Cashflow
1-12161414680-106934
2-2838414680-13704
3-2789414680-13214
4-2740414680-12724
5-2691414680-12234
6-2642414680-11744
7-251341373680122338


IRR : -6.67%

That's without a depreciation deduction on your taxes. Difficult to calculate without knowing the age of the building, it's original cost, marginal tax rate and so on, but even being generous with a deduction of $2100 per year, it is still an IRR of -4.94%
Please tell me that you're not an analyst.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Jimbo
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Matthew
29 Nov 2016, 04:41 PM
You had a window where you could have been a god to the bears.
Being an anonymous god to a bunch of keyboard warriors on a little read property forum is not something I aspire to.

It is plain that you crave god like status. Your matthew blog spot, where you are king of your own universe is testament to that.

The universe where you have power over everything from house prices, horsey worsey races and the mrs.

Me? I couldn't give a rats whether people read what I write, listen to what I say.

With no skin in the game, my shirt not on the line, why would I care?

Over to you matey...
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Rufus
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Jimbo
30 Nov 2016, 05:40 AM
The vast majority of people pack themselves into central locations due to proximity to work. Once free of the need to work, they choose more lifestyle oriented places to live. When was the last time you heard someone say they were going to retire to a tiny unit in the city?
Which begs the question, why don't people rent accommodation where they need to live, and buy where they intend to retire to.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Matthew
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Jon Snow
29 Nov 2016, 09:16 PM
Good analysis. I would say that $5000 per year for maintenance is probably more than most landlords would spend on it, and there are a few other modifications I would make to your calculation. e.g. FX is only relevant to a foreign investor.

Let's say you borrow $294,000 @ 5% on a 30Y term and throw in $73,500 of your own capital at outset.

These are your cash flows over the 7 year period (all numbers rounded)

Cash Flow Analysis
YearCash Flow OutCash Flow InNet Cashflow
1-12161414680-106934
2-2838414680-13704
3-2789414680-13214
4-2740414680-12724
5-2691414680-12234
6-2642414680-11744
7-251341373680122338


IRR : -6.67%

That's without a depreciation deduction on your taxes. Difficult to calculate without knowing the age of the building, it's original cost, marginal tax rate and so on, but even being generous with a deduction of $2100 per year, it is still an IRR of -4.94%
That is without doubt the most childish, flawed analysis I have ever witnessed.
Jimbo
30 Nov 2016, 05:40 AM
When was the last time you heard someone say they were going to retire to a tiny unit in the city?
Not only do you hear it often Dimshit, you witness it daily.
Jimbo
30 Nov 2016, 09:21 AM
Me? I couldn't give a rats whether people read what I write, listen to what I say.
Your herculean daily posting rate here and need to force your opinions down the throat of everybody on every topic whether you know a little bit or f*** all about it beg to differ Dimshit.

You are truly the king of the hypocrites. And an almighty flog to boot.
Edited by Matthew, 30 Nov 2016, 10:17 AM.
My only hope for my three boys is that they turn out nothing at all like Chris.
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Foxy
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Zero is coming...

Jon Snow
29 Nov 2016, 09:16 PM
Good analysis. I would say that $5000 per year for maintenance is probably more than most landlords would spend on it, and there are a few other modifications I would make to your calculation. e.g. FX is only relevant to a foreign investor.

Let's say you borrow $294,000 @ 5% on a 30Y term and throw in $73,500 of your own capital at outset.

These are your cash flows over the 7 year period (all numbers rounded)

Cash Flow Analysis
YearCash Flow OutCash Flow InNet Cashflow
1-12161414680-106934
2-2838414680-13704
3-2789414680-13214
4-2740414680-12724
5-2691414680-12234
6-2642414680-11744
7-251341373680122338


IRR : -6.67%

That's without a depreciation deduction on your taxes. Difficult to calculate without knowing the age of the building, it's original cost, marginal tax rate and so on, but even being generous with a deduction of $2100 per year, it is still an IRR of -4.94%
Owner occupied??


Matthew
30 Nov 2016, 10:14 AM
That is without doubt the most childish, flawed analysis I have ever witnessed.

Not only do you hear it often Dimshit, you witness it daily.

Your herculean daily posting rate here and need to force your opinions down the throat of everybody on every topic whether you know a little bit or f*** all about it beg to differ Dimshit.

You are truly the king of the hypocrites. And an almighty flog to boot.
Mathew, such insight.


skamy
30 Nov 2016, 12:52 AM
Gosh you are in a miserable mood predicting Armageddon all over the place.

Don't you ever look on the bright side?

We will always value some homes more than most - We are like any other pack animal we will gather together when we can. City living will always be with us.

It really is quite crazy IMHO to use this futuristic speculation to justify wasting years and loads of money on renting someone else's house.
Just for you Skamy, oh and your sidekick Mathew.

Poor silly bastards....

http://www.zerohedge.com/news/2016-11-29/aussie-housing-market-collapses-building-approvals-crash-25

Tick tock...
Edited by Foxy, 30 Nov 2016, 02:27 PM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Matthew
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foxbat
30 Nov 2016, 02:05 PM
Just for you Skamy, oh and your sidekick Mathew.

Poor silly bastards....

http://www.zerohedge.com/news/2016-11-29/aussie-housing-market-collapses-building-approvals-crash-25

Tick tock...
So let me get this straight - you think a collapse in dwelling starts will crash the housing market?

You are an idiot of the highest order.
My only hope for my three boys is that they turn out nothing at all like Chris.
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Rufus
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Matthew
30 Nov 2016, 02:38 PM
So let me get this straight - you think a collapse in dwelling starts will crash the housing market?

You are an idiot of the highest order.
Perfectly summarised. The fall in approvals will stimulate prices in the future.
Take risks - if you win you will become wealthy, if you lose you will become wise
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