Alarm call after call, unemployment rising and what's worse is you don't know the half; Smudged unemployment rates in a slowing economy, yet inept bulls scream to load up on debt!
And I would encourage you to collect a dozen more in the coming 2 years, especially in Canberra. Maybe we will be the last generation to work. The next generation will derive their income from buying and selling property to each other.
Perhaps eventually property could become a form of currency - a pretty good idea seeing as nobody will have any fiat money left in 20 years when they need 50 year motgages which suck up 80% of their net income for a shithole in bumfuck.
You could have your land conveniently perforated, and break off a chunk or two before heading up the street to get your pint of milk or loaf of bread.
"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.
Perhaps eventually property could become a form of currency - a pretty good idea seeing as nobody will have any fiat money left in 20 years when they need 50 year motgages which suck up 80% of their net income for a shithole in bumfuck.
You could have your land conveniently perforated, and break off a chunk or two before heading up the street to get your pint of milk or loaf of bread.
And I would encourage you to collect a dozen more in the coming 2 years, especially in Canberra. Maybe we will be the last generation to work. The next generation will derive their income from buying and selling property to each other.
Nice try.
I'm consolidating at the moment. There's no reason to buy continuously. I'll wait a few years until the current stagnation is over and we're in the next big upcycle which is stil a number of years away), then buy a few more, so a few years after that I can sell down the lowest yielding and hold the rest without debt.
There's no reason to buy continuously. I'll wait a few years until the current stagnation is over and we're in the next big upcycle which is stil a number of years away), then buy a few more, so a few years after that I can sell down the lowest yielding and hold the rest without debt.
Hi stinkbug. I have a sketchy idea about the dynamics of propety investment but you don't really know until you are there I guess. If I bought now say, how much of the initial mortgage repayment and other expenses does the yield from an average IP cover? and how much does the rent have to increase from day one, in percent terms say, before it covers all costs. I'm just after a ballpark figure which I guess is also dependent on being in an upcycle. But pretending we were in one what would your guess be. Thanks.
Hi stinkbug. I have a sketchy idea about the dynamics of propety investment but you don't really know until you are there I guess. If I bought now say, how much of the initial mortgage repayment and other expenses does the yield from an average IP cover? and how much does the rent have to increase from day one, in percent terms say, before it covers all costs. I'm just after a ballpark figure which I guess is also dependent on being in an upcycle. But pretending we were in one what would your guess be. Thanks.
Interesting question.
There is no such thing as an average IP. Don't make the mistake of thinking that any old property will work well as an IP. Some don't work at all.
Also, you can't buy any old location at any time in the cycle, you need things to line up reasonably well first.
The rules I generally use for buying property are: 1) Should be within 2 km of major amenities 2) Should be priced within the range of (suburb median) and (suburb median - 20%) 3) Should rent for price/1000 x 1.3 per week 4) Should have a clear reason for rent to increase (either though improvement to the property or 'overdue' increase)
I've done these things and it's worked pretty well. Initially, your rent and tax deductions should cover all your interest and most (if not all) of your costs).
Bear in mind you may not be able to find a property that meets all these requirements in your area at the moment. You may need to look furtrher afield, or wait for a year or two for things to settle again. Property generally only increases naturally for about a third of the cycle.
Oh, and NEVER buy a unit off the plan unless it's a very hot market. I've never bought off the plan, and likely never will. And nothing is risk free. This is not a guaranteed way to make money, although it has worked well for me.
Hi stinkbug. I have a sketchy idea about the dynamics of propety investment but you don't really know until you are there I guess. If I bought now say, how much of the initial mortgage repayment and other expenses does the yield from an average IP cover? and how much does the rent have to increase from day one, in percent terms say, before it covers all costs. I'm just after a ballpark figure which I guess is also dependent on being in an upcycle. But pretending we were in one what would your guess be. Thanks.
The amount that interest takes is highly dependent on interest rates and LVR, but you can usually expect other costs to take about half the rent, perhaps a bit less from houses depending on whether you have a good house on a small block or a less good house on a big block.
Most of the time you have to get the LVR significantly below 50% before you are cash neutral. But even that depends. Blue-chip renters (well located, always in demand, in an area that is increasing in desirability) will be harder to get cash-neutral than ones in more risky areas where you might have trouble getting a tenant or in regional areas where demographics could more easily move against you - in some places you could be cash positive at 60-70% LVR.
Bought a place with development potential? You paid for it, but nobody pays rent for development potential.
It's kind of how long is a piece of string?, really.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
about to begin? so you will take that bet and stop being a chicken shit?
Scared piggy? That's what happens when you build a house out of negative equity.....
stinkbug
16 Sep 2013, 09:26 AM
Interesting question.
There is no such thing as an average IP. Don't make the mistake of thinking that any old property will work well as an IP. Some don't work at all.
Also, you can't buy any old location at any time in the cycle, you need things to line up reasonably well first.
The rules I generally use for buying property are: 1) Should be within 2 km of major amenities 2) Should be priced within the range of (suburb median) and (suburb median - 20%) 3) Should rent for price/1000 x 1.3 per week 4) Should have a clear reason for rent to increase (either though improvement to the property or 'overdue' increase)
I've done these things and it's worked pretty well. Initially, your rent and tax deductions should cover all your interest and most (if not all) of your costs).
Bear in mind you may not be able to find a property that meets all these requirements in your area at the moment. You may need to look furtrher afield, or wait for a year or two for things to settle again. Property generally only increases naturally for about a third of the cycle.
Oh, and NEVER buy a unit off the plan unless it's a very hot market. I've never bought off the plan, and likely never will. And nothing is risk free. This is not a guaranteed way to make money, although it has worked well for me.
Zzzzzzzzz more spruiking, stop encouraging others to pay or the real estate mistakes of others.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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