The endgame in stacking.

20-20 hindsight is a wonderful thing.

 

I stand by my rationale that if it didn't take much business accumen - what are you saying about the people who saw it and/or didn't act?

According to ABS (http://www.abs.gov.au/AUSSTATS/[email protected]/D2524EE26888EFFACA2570EC00114196) in 1997 only 889 900 people owned a residential rental property (sorry for early data but couldn't find any later RELIABLE source). Out of a population (over 18years of age) of just over 13mil this equates to 6.8%. Even if we say that more people have "jumped on the bandwagon" and double the % of people it still equates to less than 15%.

If this was a guaranteed winner - how come so few people recognised it and acted upon it?

malachii

 

Because in 1997, we were still on the tail end of the Recession we had to have, combined with 11% interest rates, 9% unemployment and No FHOG on the table top to lure in the bottom feeders.

The Block wasn't even thought of and Hot Property was probably still an idea relating to stolen goods.

This market had to play out over time mate and looking at pre-2000 is really not going to give the most accurate figure. The market paradigm has been building since that period and you're better off looking at the thinking heading towards stage 3, rather than way back at the start of phase 2.

That said, how many of those intellectual investment giants would have made it with property without the government support I ask you?

FHOG, Tax cuts and Negative Gearing?

Remove all that even today and let's see just how the market holds up?

 

Personally, it was because in 1997 I was earning $15/hour, single, living away from home and in no position to buy property no matter how good the deal...

 

I wouldn't have invested without all the govt support, but when it was introduced I put uni on hold, got a full time job and bought a home and an IP as I knew from all the research I'd done that it was going to kick off a property boom. My friends still tell me I was lucky even though I was telling them to do it also. Only my brother listened. Were both now heavy in PM's. Is this luck also?

 

Auspm has it right about being in the right place at the right time.

Australia has certainly had a bull market with regard to housing but what happens when you are in the wrong place at the wrong time. EG USA , UK or Ireland. Are all the people who bought houses dumb in these countries while us Aussies are too clever by half?

There are already bad signs in the RE market on the Gold Coast especially at the top end.

IMHO I would not be buying RE full stop.

I'll just keep stacking silver.

Regards Errol43

 

You incorrectly define the notion of luck in the equation mate.

As I just said to Machii, the 'luck' isn't defined by seeing the undervalued investment opportunity.

The 'luck' was a pocket big brother who would back you on your freeroll investment and ensure you beat the house, no matter what the odds!

If you think the government is going to start handing out first silver buyers' grants or cut you a nice fat tax reduction because you're invested in silver or gold, you're dreaming.

The way the government handled the Australian housing market for your investment opportunity can be summed up easily mate :

'Here's your free money. No, no, you can pay us back later... trust us....'



'Now bet it all on RED'


The stage was set for this in 1987 when the government relented to lobby groups and put Negative Gearing back on the table.

This action simply couldn't be realised with the 80s crash & following recession over the next decade, combined with the heavily regulated lending industry.

Then starting in 1999, with the cuts to Capital Gains tax, relaxed lending laws and then the laughably corrupt FHOG scam (where people were claiming in KIDS' names!) it was VERY obvious that the government hopelessly rigged the market for what was to come.

Was it an astute investment that lead property investors to these paper fortunes?

With virtually zero risk and no up front collateral required in many cases?

Or was is simply the rigged market laying out the red carpet for anyone who wasn't afraid to spin the (rigged) wheel for the easiest 'no brainer' windfall of a generation?

Right place, right time ring a bell maybe?



Don't think you'll ever see an investment opportunity like that again in your lives folks.

The Australian property market circa 1987 to today had nothing to do with luck at all, it was a deliberately rigged game and all you had to do was be willing to step up and accept your piece of pie.

As long as you ticked the right boxes in the right place at the right time, you stood to cash in and if that's not the pure definition of lucking out, I personally don't know what is.

 

I think we are going to have to agree to disagree.

You see Government support. I see a tailwind. Yes it helps - but good investments work whether or not these tailwinds are there. They just may take a bit longer or return slightly less.

I can see and have seen many opportunities in R/E (and many other investment fields). Australia is not one big market but many - even in a SHTF situation some areas will go up and some will come down (just look at the US). If you do the research you can identify these areas fairly easily (as you keep inferring - R/E investors are not rocket scientists). It can be done ethically, profitably and most of all safely - even taking into account a SHTF scenario.

As far as finances go - I can also say it can be done any budget - we did a lot of ours on a $30 000 income with 3 kids living in Sydney. You just have to be persistant and imaginative!

I have nothing to prove. I've done it, got my hands dirty. Made some money and lost some money. I now have the experience and knowledge that I can carry with me no matter what happens and can pass onto my kids.

malachii

An after thought: You do realise it was the charities and renters who wanted the negative gearing laws changed back in 1987. When that all happened - rentals went to the moon because of the sudden selling of all rental properties. It was one of the most profitable times to be a landlord - IF you kept your head on!

 

There are cycles and there are cycles malachii.

The Australian housing market is not experiencing a 'cycle' as much as a ridiculous bubble.



Are you honestly going to sit there and debate that seeing where this was headed based on the last 100 years was based on any predictable result?

This wasn't a 'tailwind' in the slightest. Just from 2008 to 2010 the Australian government threw nearly 30 BILLION dollars of tax payer money at keeping this 'tailwind' up for investors to ride.

Your flippant characterisation of the biggest rigged market in Australian history honestly staggers me mate.

If you were (as you claim) a property investor on a 30k a year income, doesn't this speak volumes on the market in itself?

C'mon mate, be reasonable. The 'if I can do it, anyone can' arguement is a very poor proof in any context.

http://www.smh.com.au/articles/2003/08/24/1061663676588.html

The fallacies of assumed rhetoric are a common hotbed of counter debate I find with the 'investment' class.

The problem is malachii, is that they're most often simply untrue.


By all means, agree to disagree and I'm fine with that. But if we're going to debate the merit of the underlying facts, we need to be on the same page at least.

 

That's true. They got rid of negative gearing and quickly brought it back.

 

G'day Auspm

Sorry - what I originally wrote was not going to change anything and off the cuff - I should learn not to do that - I'll just say that I agree - we aren't on the same page.

malachii

 

No worries malachii. It's a touchy subject for most at the best of times.

Cheers

 

Is that correct? I remember receiving the FHOG, or equivalent government assistance program, back in 1981.

 

My parents got a housing "grant" in the late 70'. Think they said it was about $1500, but don't hold me to this amount.

 

I had no government handouts just a sizeable deposit & big interest rates , worked during the day then worked in my shed most nights sometimes till midnight to pay it off in under 7 years. buying selling cars ,motorbikes fixing peoples houses on weekends .thats not luck auspm its bloody hard work some people had a free ride but some of us actually earned it

 

I don't doubt some people did earn it mate. Not commenting on them.

I'm talking about those who rode the coat tails of the market boom, aided and abetted by a government who wanted this a 'sure thing' from the start.

There WAS a FHOG which extended back quite a way, but it wasn't until the substantial increases in the FHOG in early 2000 COMBINED with completely relaxed lending standards (even being able to use the FHOG as your deposit) that kicked the market into high gear.


Don't get me wrong fellas. I'm not pointing a finger at all and sundry here. I realise that some folks work damn hard for their investments and I can absolutely appreciate that. I work my arse off as well to buy the little silver I can after living expenses and certainly relate to the virtue of reward for real effort.

No, what I'm talking about is the bulk of the sheeple who were just along for the ride. Who wouldn't know their arse from their elbow in investment, who don't acknowledge or appreciate the risk and who indulge on borrowed money with next to no effort.

You know the sort I'm talking about. This dickheads around the water cooler at work who eat baked beans for lunch because they're so heavily leveraged, bragging about their investment 'prowess' for jumping into the market and talking up those massive capital gains like they actually put in any effort to achieve it other than existing. Yeah, those types who drive the BMW (also bought on credit) with NVESTA number plates who before 2000 were flipping fucking burgers at McDonalds with no future.

You sit down and ask a very large portion of these property investors how they got into the market, or if they could have even gotten into the market without having 20% down - very few I'd wager would honestly be able to say yes.

I have nothing but respect for those who work their arse to the bone to create a business or investment opportunity born of intelligent design, rational thought and taking on the risk 100%.

But that's not what the Australian property market is and it's important to draw that very obvious distinction in this discussion.

If we spent half as much time in this country investing on manufacturing or production businesses as we do sitting on our fat arses letting renters & tax payers pay off our investments, we would be a far better nation for it. Until people can realise that just because you can take on debt should mean you automatically 'win' in the investment game, it's still going to be the laughing stock that it is today.

Personally, I'll be delighted to watch the market crash and burn, dragging the idiots over the cliff of over leveraged dreams into the abyss.

The 'smart' investors will not go down with the ship and kudos to them. For the rest? No great loss IMHO.

 

Don't worry, those people who got lucky over the last 10 years will probably lose/waste any gains over the next 10. Making money is difficult and those who gain it easily, tend to lose it quick.

 

no worries auspm ..yes perthstack a fool & his money are easily parted they say

 

That's true and trust me, I don't lose sleep over the idea. Glad to see it happen.

What irks me most is who is being forced to pay for this and who's reaping the benefit.

The M3 exploded over the last decade, which was the first kick in the balls to the savers who were punished for being savers.

If this wasn't enough, then we started leaning on the tax payer to start paying off these investments (FHOG, Tax Cuts, Negative Gearing and Rental Assistance) - kick in the balls 2.

Then to finish off, we adopted the paradigm that if you didn't join the speculative frenzy, you deserved to be at the mercy of the market, with rents through the roof and substandard tenacy protection laws.

If this was an investment situation with 100% risk burden forced on the borrower, I honestly wouldn't care.

But the financial cost, risk and mistakes were socialised and THIS is what I have a very big problem with.

The risk/reward equation was a gross miscarriage of justice in my book and I know as much as any of you, as this market eventually crashes and burns, it'll be the responsible citizen who always lived within their means who will be forced to carry the burden.

As you all know, very little pisses me off more than forced austerity and this country has adopted it as the social norm.

 

This argument will go on forever so I'll conclude my part in it with this suggestion.

I suggest that those who are sucessfully managing debt for financial benefit should continue to do so.

Those who beleive that it is not possible should continue to dwell on how unlucky they are.

I don't have time to contribute any further here. I'm going over the contract for my next subdivision project.

Whatever you do don't wish me luck.

If I need to rely on luck then I shouldn't be doing it.


C