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  1. #1321
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    mackdunk,
    I have my own reasons why I have not been posting to my usual volume over the last few months...
    you can read into this all you like... the truth is Ive got big fish to fry, and internet posting is not going to set up my life......
    Im in a period of transition between moving from study to work, and Im doing it in the worst time ever, and I quite possibly have to relocate to Australia next year... Ive been told im a specialist, expert blah blah blah....
    I dont have experience to get a great position (dream position)... and I dont have a position to get experience.... catch 22...

    Ive had one interview and I gave a 30min presentation 15mins on CUE, and 15 mins or so on the markets and oil and US economy and all that...... I macked it with enthusiam and all that.... I cant find my dream job here as the companies are too small to take me on a specialist role.... Ive barely looked though... I will wait until the new year before I step it up.... so im humming and harring about what to do....to go to Australia or take an entry level job and wait on dream job that I know I deserve right now...

    I tried to show you how to do it but you know best.
    no,
    you have never showed me how to do it...
    You backed away from the stiff questions, and in the end we argue about medial topics, back and forward middle of the road opinions rather than you teaching anything that I can gain from...eg we debate about interest rates, debate about the medium term outlook on house prices... You do not actually run through the nuts and bolts of leveraging into housing....
    You run me down by saying house deposit increases are a detriment, when they have fallen 30k in value...
    You have told me to find the positives in any situation...
    you are a hyprocrite on many levels...

    Joeking came out and said he would teach us about Wraps, as soon as there was interest he was gone like jack flash... (for real)
    You have not taught me anything I cant teach myself... You have not taught me anything I did not already know, (or care too know about eg hands on property maintenance) though you have told us how it is which helps on some level...

    It does not matter that I got CUE wrong... it was out of my control, unlike other investments ive made... so im learning.... thats great......
    I feel I can control what happens in any other market condition...im happy... Ive now learnt to not take on such a market which we all new was coming...

    You have argued all this year about me staying out the market then gleefully say how you beat me with a minus 50% or whatever with a win when it was only you in the market.
    I did not give you much stick about being out of the market... not like others did... I did join you on the sidelines late last year...
    ... Ive said Ive beaten you every single year over the last 5 years apart from this one...
    I had many successes this year including RPM, AKK, WHN, LMPO (just sold LMP after it ran baggers and came back down), ran on MEO, and positive plays over the years on NWE, and AED, and PPP, and NZOOD, and TEX last year... and others.... ive done well like most others when many of us were hitting home runs for not much effort (including yourself), and now its changed... So I took one hit on CUE which was 60% of my wealth..... big deal... If I can make 1 mistake out of 10 then I will do well... and the one mistake was when the markets were against me.... So, Yourve told me too look at the positives in any situation....

    Ive lost on TEXO 100k holding, $500 on FAR, CTP and CTPOA a few k, URA, and UOGO, and WCP,and an AED CFD position, and I cant think of any others ever....
    ...
    real champions are here, and Im afraid ive not proven to be one of them this year...
    your teachings, and your postings have come across to almost torment me.... this death by a thousand cuts has also added to my withdrawl from sharetrader because I know how special I am and just how I can make it any which way I choose...
    ive come up from a small fry... and here I am.... Im very proud mackdunk... Im extremely chuffed daily even in this market... even with CUE... the only monkey on my back is you...

    congratulations to you and your predictions...
    merry christmas...
    Ho ho ho...

    .^sc
    Last edited by Crypto Crude; 25-12-2008 at 12:06 AM. Reason: santa came down the chimney distracting my thought
    Nakamoto means of Central origin ...

  2. #1322
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    Shrewd, toughen up mate, grow some hairs on your chest. Macdunk isn't on your back. He's engaging with you, if you like some of his ideas, then run with them, if you don't then say so - as you have. You should also realise that he's an old fella and has seen rain, hay and sunshine in his time. Please don't withdraw from posting because of a grizzly old bear. Now is the time when everyone needs to keep contributing and putting their two cents on the table, that way we all learn and grow, in the face of what is a pretty scary market.

    I hope you don't go to Aussie, we need sharpies like you to grow the economy here, Australia is stuffed, I was in Sydney earlier this month and all they could talk about was the recession, a few mates were umemployed. Jam a stake in the ground here in NZ and keep on engaging in the conversation.

    Enjoy the holidays.

    Mr D.

  3. #1323
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    Hi Mr Devine-nice post!
    I,m from Sydney and things are not looking good for those in the finance sector at the moment. People from Maquarie bank and the like are getting retrenched. These people have been on Million dollar incomes which support harbour view houses,holiday homes ,boats and private schools-they cannot find similar jobs in this economic climate. House prices in Sydneys most prestigous suburbs are hence predicted to fall!

    My suggestion, Shrewd is to go to CHINA- perhaps do an exchange program at a Chinese University--Ring AFS(American Field Scholarships) for more info.
    Speaking Chinese will be an invaluable asset in the business world!

    The other suggestion-which lots of people in sydney are doing -is to go and work in DUBAI........plus that would be lots of fun!!

    I enjoy the banter between you and macdunk-it is obvious he is very fond of you ..I hope he doesn't mind if I speak on his behalf--but I.m sure he didn't mean to offend you....sometimes you take his bait too easily!!!

    Shrewd.you are obviously a smart dude and will do well!
    All the best for your future
    BigMinty

  4. #1324
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    Talking Keeppostingyamug

    SHREWDY, you are one smart dude that gets it wrong sometimes. The real smart dudes take it on the chin, learn from their mistakes and come back fighting. The really really smart dudes, learn from other peoples mistakes, avoid making them themselves, and pick who are smart enough to listen to, and who are not. I only say it as i see it, open myself up for ridicule by saying in advance how i see the action playing out.
    Take notice of PHAEDRUS and his charts, start to realize that the market is like a manipulated can of worms, where logic is a non event. You were caught out simply because you failed to understand that PE ratios and future prospects count for nothing against market sentiment. Having an old bugger like me on your back will stand you in good stead later on when you look back and think it over. Good luck in what ever you decide to do but keep posting. When you get a few bob get into property that is the easiest and safest way to get rich. Macdunk

  5. #1325
    Member Ketel One's Avatar
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    Quote Originally Posted by Shrewd Crude View Post
    New Zealand is at the beginning of a first homebuyers crisis...
    lets assume NZ median house price is $330,000 .... and you pay a piddley deposit of $30,000
    -also assume interest rates are 8%
    -number of years to pay the loan off are 30 years
    -loan amount is $300,000, after deposit is paid

    you therefore get....
    Year 1 2 3 4 5 6
    Beginning principal bal 300,000 297,352 294,492 291,403 288,067 284,464
    payment 26,648 26,648 26,648 26,648 26,648 26,648
    interest component 24,000 23,788 23,559 23,312 23,045 22,757
    principal component 2,648 2,860 3,089 3,336 3,603 3,891

    -and so on, for 30 years
    -in the first year you are paying $24,000 in interest only... wow... and only $2,648 is coming off the loan balance at the end of the first year...
    -so, your house value has to increase 8% in the first year... (24,000/300000) just to break even and cancel out payment for interest only (8%)
    -year 2 opening balance is year 1 beginning principal balance less principal component
    and so on...
    -so for 30 years you are paying $26,648 per year or $512 per week, every week.....
    -total amount paid to the bank after 30 years is $799,440 ...[:0](26,648 * 30)
    -the above example doesnot include the benefits of what you save in rent by having your own house

    I have only ever been told to buy a house, by parents, friends, every single person I have gone to, to ask for advice has told me to buy a house... The housing success stories are all to common for people who are 5plus years older than me and beyond...

    but yet, I look at the above loan amortization table... and cannot see a path...
    I am 22, student, without a house (of course)... and cannot allow myself to be a 52yr old man, and have a house only... so I looked for another means... I spent two years just looking at shares, and the last 2 years playing high risk shares, with much success I add... I applied a simple strategy where I invested in high upside, low downside... trouble is finding a share with these characteristics... any way....
    It is always a goal of mine to have a house... but It will have to be paid largely in cash...

    Or I will need a combination of a few events happening...
    -house price falls dramatically
    -interest rates to drop, (not likely in the next year) but interest rates will drop in the medium term
    -rental rates to increase dramatically, so house buying becomes more attractive
    -wages to go up massively (yeah right)
    -large govt incentives...

    we are due for a housing fall... If you are a first time house buyer, dont be fooled into housing by others... let the numbers speak for themselves...the only way to make house buying attractive is large front end payment, or up weekly payments.up $500, yeah right...
    any more than 15years spent to pay for a house is far toooooo long!...(for me)

    at $500 per week for 6 weeks equals 3 thousand, a nice sized share parcel... we are going to be a generation of renting property, or inheritance... I want neither...

    they say there are risks in buying a house... no theres not... theres no risk in doing what everyone else is doing, because at the end of the day everyone will be in the same boat... and either all better off, or all worse off... there aint no risk in that...
    to get ahead in life you have to take risks....

    I have heard that many property buffs are changing their views on apartments... I heard of apartments selling recently as low as 55k in auckland...
    if you are pondering a first home, then all the best, wheather you buy a house or not, it will still be the largest decision you will ever have to make
    Thank you for taking the time to reading the above...
    Hey shrewd,

    Just starting at your first post, as I haven't had time to read all 90 pages that this monster of a thread has turned into, but:

    I'm in a similar position to yourself- i'm a student, have some capital but no regular income from a job yet (other than part time tutoring/scholarships/sharetrading income etc; nothing a bank would consider reliable!), and have been following the housing market for a couple of years. I have some vague thoughts as to how/when it's going to be possible for me to eventually buy property:

    - I think the aim for me initially has to be to buy a property to rent, and for it to be a cashflow positive arrangment, because: 1.) If you're buying to rent, the costs are cheaper; interest costs, depreciation, etc are all tax deductible. If you're buying a property to live in these things aren't. 2.) As others have mentioned (i think) you're using other people's money- the bank's for the loan, and the tenant's for paying off that loan. This takes some of the sting out of paying all that interest that your post focuses on!

    - Finding a property that brings in more in rent than the outgoings is pretty tough at the moment. However, I think things will improve slightly in the next couple of years, and I don't think the apparent difficulty should be cause for despair. Interest rates are lower than when you started this thread, and there's a fairly good chance they'll come down a bit more. Prices are likely to drop, or are likely to go sideways for a number of years- which is the same thing, as inflation at around 3% (say, it's actually higher atm) will eat away at those prices that are going "sideways".

    - Beyond this, I think it will probably require some creativity, and some hard work and patience to find the right kinds of properties. Being a student and having rented flats, it's a market I have some familiarlity with. Something i've seen a few times is houses that would have sold as 2 or 3 bedroom places, which have an extra lounge or something, that was turned into an extra bedroom with very little extra capital outlay and rented to students or the younger/flatting market. This is just an example (probably a poor one at that)- the point is you have to be creative when actually looking at properties, and finding a property that can be modified with modest costs to create a cashflow positive rentable situation. Finding properties like this is no doubt tough, and they're unlikely to be advertised as "GRATE INVESTMENT OPPORTUNITY" by real estate agents. Nevertheless I think it is (or will be) possible for someone who perseveres, is able to be fairly clinical in their assessment of properties and patient enough to only commit when the figures line up (this may be a few years away given the current market).

    - If you can manage to pull this off, you've got a property that has the tenants paying off your mortgage, it's costs are tax deductible, and the end result is each week that passes, you (and the bank) are getting a little bit richer. Any capital gains in the value of the property are just icing on the cake. And then you can start again and find another one

  6. #1326
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    Quote Originally Posted by Ketel One View Post
    Hey shrewd,

    Just starting at your first post, as I haven't had time to read all 90 pages that this monster of a thread has turned into, but:

    I'm in a similar position to yourself- i'm a student, have some capital but no regular income from a job yet (other than part time tutoring/scholarships/sharetrading income etc; nothing a bank would consider reliable!), and have been following the housing market for a couple of years. I have some vague thoughts as to how/when it's going to be possible for me to eventually buy property:

    - I think the aim for me initially has to be to buy a property to rent, and for it to be a cashflow positive arrangment, because: 1.) If you're buying to rent, the costs are cheaper; interest costs, depreciation, etc are all tax deductible. If you're buying a property to live in these things aren't. 2.) As others have mentioned (i think) you're using other people's money- the bank's for the loan, and the tenant's for paying off that loan. This takes some of the sting out of paying all that interest that your post focuses on!

    - Finding a property that brings in more in rent than the outgoings is pretty tough at the moment. However, I think things will improve slightly in the next couple of years, and I don't think the apparent difficulty should be cause for despair. Interest rates are lower than when you started this thread, and there's a fairly good chance they'll come down a bit more. Prices are likely to drop, or are likely to go sideways for a number of years- which is the same thing, as inflation at around 3% (say, it's actually higher atm) will eat away at those prices that are going "sideways".

    - Beyond this, I think it will probably require some creativity, and some hard work and patience to find the right kinds of properties. Being a student and having rented flats, it's a market I have some familiarlity with. Something i've seen a few times is houses that would have sold as 2 or 3 bedroom places, which have an extra lounge or something, that was turned into an extra bedroom with very little extra capital outlay and rented to students or the younger/flatting market. This is just an example (probably a poor one at that)- the point is you have to be creative when actually looking at properties, and finding a property that can be modified with modest costs to create a cashflow positive rentable situation. Finding properties like this is no doubt tough, and they're unlikely to be advertised as "GRATE INVESTMENT OPPORTUNITY" by real estate agents. Nevertheless I think it is (or will be) possible for someone who perseveres, is able to be fairly clinical in their assessment of properties and patient enough to only commit when the figures line up (this may be a few years away given the current market).

    - If you can manage to pull this off, you've got a property that has the tenants paying off your mortgage, it's costs are tax deductible, and the end result is each week that passes, you (and the bank) are getting a little bit richer. Any capital gains in the value of the property are just icing on the cake. And then you can start again and find another one

    It's all a little simplistic. All the charts and tables and various forms of analysis almost always ignore the huge costs of repairs and renovations and the occasional bit of modernising. All very well to talk of property doubling every ten years or so, but without constant attention can you imagine a house after twenty or fifty years? Especially one full of tenants - they are a little rougher on a dwelling than the owner (massive understatement) Of course repairs can be deducted from profit, but not so capital improvements. Residential landlords are a little like those who follow the horses - you tend to hear the good, and the bad gets forgotten. For many years I have made my living as a property investor, but flagged residential houses and flats away many years ago. Not a bad lark to get started in the 60s and 70s, when inflation was always in double figures and interest rates were low; mortgages were obtained through your lawyer, and were limited to two thirds of valuation. Those of us with no money always looked for a sale where vendor finance was a possibility. Most of the first few houses I owned were 100% financed. These days being a residential landlord is a mug's game. Commercial property offers miles higher returns and nowhere near the hassles. Get a copy of the old 1970s classic - Jones on property. The basic rules he covers are much the same.

  7. #1327
    Member Ketel One's Avatar
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    Quote Originally Posted by funguspudding View Post
    It's all a little simplistic. All the charts and tables and various forms of analysis almost always ignore the huge costs of repairs and renovations and the occasional bit of modernising. All very well to talk of property doubling every ten years or so, but without constant attention can you imagine a house after twenty or fifty years? Especially one full of tenants - they are a little rougher on a dwelling than the owner (massive understatement) Of course repairs can be deducted from profit, but not so capital improvements. Residential landlords are a little like those who follow the horses - you tend to hear the good, and the bad gets forgotten. For many years I have made my living as a property investor, but flagged residential houses and flats away many years ago. Not a bad lark to get started in the 60s and 70s, when inflation was always in double figures and interest rates were low; mortgages were obtained through your lawyer, and were limited to two thirds of valuation. Those of us with no money always looked for a sale where vendor finance was a possibility. Most of the first few houses I owned were 100% financed. These days being a residential landlord is a mug's game. Commercial property offers miles higher returns and nowhere near the hassles. Get a copy of the old 1970s classic - Jones on property. The basic rules he covers are much the same.
    I agree it is probably overly simplistic. But some of the main points are still valid I think:

    - It's cheaper to buy property for the purposes of renting
    - It's better to use other people's money for it
    - You're not going to be able to just buy something and start renting it at a profit. You need to do something to increase the potential for rental income, and as you point out, this will be a capital expense and so not tax deductible. What this amounts to will vary for each person depending on your skills, the kinds of property you're buying, what rental market you're looking at etc.
    - The market/conditions ARE moving in the right direction for things to become more affordable- even if they aren't there yet.

  8. #1328
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    Default Nice house Pittsberg USA $25,000

    Things must be pretty bad to get to this price level


    http://www.zillow.com/homedetails/photos/11453714_zpid/

    Last edited by arco; 01-01-2009 at 09:25 AM.
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  9. #1329
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    I have a friend in the US who just purchased a nice property near his home for $35,000 cash and is getting 14% rental return........now that more like it.

    Even Cheaper......................for $19,000
    3 beds, 1.0 baths


    21 Mckinnie Ave Mc Kees Rocks PA 15136



    http://www.zillow.com/homedetails/21...40478905_zpid/
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  10. #1330
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    Default Two Year Anniverasry

    Two year anniversary Shrewdy, so time to review your original post on buying a first home.

    Your original figure of $330k coincided with the REINZ median values for Nov 06. And you were right – property did nothing for a couple of months and then dipped to $327k in Jan 07.

    But after that the median went up 6.6% – hitting a high of $352 in Nov 07. Since then the median has dropped back 4.1% to $337.5K – still above your original value. So your prediction was right – but a year too early.

    So now to deposit rates – you sure could have looked at buying a house on pretty much zero deposit – but not any more. You’ll now be looking at a 20% deposit.

    And interest rates. The RBNZ had a floating rate in Jan 07 of 9.5% and two year fixed was 8.2%. We know you are against fixed rates – but you would have seen floating rates increase month after month to an eventual high of 10.3% in Sept 08. Some of us who like fixed rates would have sat back on 8.2% and watched you pay 2% over the odds following your view. Your view does have some merit if a person had taken a fixed position in Feb – April 08 when the fixed rate peaked at 9.6% but even by Oct 08 the floating was still 9.6%

    But in the meantime you have haven’t bought – but rented. So what have rents done? Back in December 06 mean weekly rents for a three bedroom home was around $290. Rent have trended up to around $325 a week - a 12% increase.

    Had you been working your pay would have gone up roughly 4% an annum – which would have seen you marginally ahead of inflation

    So house values up a bit, deposit requirements up hugely; interest rates around the same and rent up; wages and inflation up.

    You might have had a cash deposit – if it had been invested with a Finance Company there is a good chance you would have lost the lot over the past couple of years. As for shares the NZX50 has gone from around 4000 in Jan 07 to 2700 in Dec 08.

    Jan 07 would have been a good time to buy your first home. Had you posted in Nov 07 your thoughts might have been closer to the mark – but still a better place to park your cash and income than shares or finance companies.

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