Property rocks

[Capitalist]

U think it is only my good self and MacDunk who believe this. About 2 years ago Belgarion said to Capitalist "What a fool you are to go into partnership to buy that 5 mil Coromandel coastal block - what with i-rates on the rise."

Well BWHAHAHHA!!! As Skinny has said property will last at least another 2 years. Property beats the sharemarket hands down.

[duncan macgregor]

What most people forget is that they dont make any more land than is already there. It must increase in price, higher than inflation. Buy an inner city section if you can, and lease it out as car parking to cover the rates, or a block of land and lease it out to a farmer to cover the rates. woopy doo you might be a dummy but you will be a rich one sooner or later. If you are a bit smarter you will borrow the money and build something, and have someone pay the bank for you. Long term investment until the market peaks, then sell. Definately beats shares, but not as much fun over the long term. macdunk

[Tim]

I start to wonder if shares are the best vehicle for wealth creation.
After investing in shares for a number of years and putting up with volatility, I am coming to the conclusion that the higher risk has not given a higher return.
Property gives a similar return, but holding property for
10 years,a no brainer, you are always ahead. The apetite for Nzers to hold property, its tax free status, and enhancing returns through easy gearing by
banks make property hard to compete with.
I look at funds like WINZ which is still close to 50% below its peak and wonder why invest in these funds or the sharemarket.
I still remember Brash saying property will always return what inflation is. What a load of rubbish, has he heard of supply and demand

[elfer]

macdunk - that's too simplistic. There are always winners and losers --> they aren't making land anymore in central Detroit, but that didn't stop it turning into a ghetto when all the car makers downsized (first example jumping to mind).

Japan has had years of property price deflation.

And as I posted only a couple of days ago, at best median house prices have increased by 4% over inflation, and 3% might be more realistic. Since rental yields are pretty low, together its not exactly a screaming return.

But there are winners within that group. I'm just surprised no-one seems to remember the last property crash (or the one before that). It can happen, and if you buy at the wrong time it can hurt (or at least confine you to waiting 5-10 years just to get a positive return).

I'll put it another way, at the gearing level on which many people approach investment properties, the requirement for capital gain makes it a risky investment - possibly (probably?) more risky that than the equivalent investment in other asset classes.

[duncan macgregor]

ELFER, I must disagree with you it is simplistic. Land in NZ rises faster than inflation and always will. One of the reasons why is an ever increasing population. Over the last 100 years, any town and surround land, increased more than inflation. It is like everything, some increases are much greater than others. If you had a 10acre block near any city in this country you could have leased it to a farmer, to cover the rates, and been well in front over any period in the last 100 years. That is simple, for simple people. If however you have a brain, you will do much better than that. We are talking to people here with a better understanding of property, and cycles in the market, who understand that certain areas will be in demand, and buy up in front, and make a killing. The sharemarket can never compete if you understand property. macdunk

[elfer]

quote:Originally posted by duncan macgregor

If you had a 10acre block near any city in this country you could have leased it to a farmer, to cover the rates, and been well in front over any period in the last 100 years. That is simple, for simple people. If however you have a brain, you will do much better than that.

I don't know that I entirely dispute that. What I'm suggesting is that the price for that land should already reflect the potential for it to increase once it becomes potential residential land (with attendant development costs, risks and margins).

If you are able to buy that land at a price which allows a much higher return (hopefully more than inflation plus a small percentage - that isn't my idea of good money), then you have to recognise that this is a risky return, otherwise it would sell for more in the first place.

I guess I think that people don't see the risk they take on in property. Especially once you take gearing into account, it is definitely not low risk, IMHO.

[duncan macgregor]

ELFER, You still dont get it. I showed that the greatest dummy on earth would be in front and you quible the how much factor. macdunk

[Tinker]

I agree with aspexs point. I tried a while back to borrow money from a bank against a portfolio but the clueless woman there wouldn't have a bar of it. Property does seem to offer a far easier way to leverage. And with gearing even 2 to 3% margins over inflation over a few years really crank up the returns.
One point though is that risk measured as volatility if taken over longer periods often substantially decreases the possibilty of underperforming lower volatility investments eg shares held for 10 years have approxmately the same chance of a loss as bonds.

Cheers
Tinker

[whiteheron]

A lot of money has been made and lost on property

macdunk is a staunch property man , that is plainly obvious --- no doubt he has done well from it
I understand that he has a building background and builders by and large have done well over the years from property , from both building and investing
I have a nice home and that is sufficient property for me --- no way do I want to be called out on a Sunday evening at say 8 pm because a tenant has blocked a toilet and there is poop all over the floor
Worse still , how about a tenant who decides to set up a "P " lab and knocks holes in the walls ( and doesnt pay the rent ) making the property uninhabitable and unprofitable

Just like all types of investments there are both good and bad

macdunk will no doubt take me to task on these comments but they are valid as they relate to me as I am not a handyman and at my stage in life there is no way that I want the potential hassle

[duncan macgregor]

WHITE HERON, No worries property is like investing in anything else. Buy into a car park building or factory. I only showed that a complete dummy will make money with property you cant say that about shares. macdunk