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Old 06-01-2019, 13:50   #91
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Re: US property

You realize that Zero-Hedge is a propaganda web site doing the bidding of one particular government?

https://en.wikipedia.org/wiki/Zero_Hedge

You should double triple check any facts cited by Zero-Hedge.
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Old 06-01-2019, 15:02   #92
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Re: US property

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Originally Posted by transmitterdan View Post
You realize that Zero-Hedge is a propaganda web site doing the bidding of one particular government?

https://en.wikipedia.org/wiki/Zero_Hedge

You should double triple check any facts cited by Zero-Hedge.
Authors of all media have their biases.

Zerohedge isn't just one author but a collection of articles from a variety of sources.

Yes, one should read most media with a skeptical eye BUT that doesn't mean there's not truth written.

I'm bearish, wish this wasn't the case but I see examples such as Australian real estate all to regularly, eg in 2008 the RBA of Australia lowered the cash rate to the emergency level (RBA governors words) of 3.5%, after a ten year economic expansion they are at 1.5%! If 3.5% was an emergency rate, what is 1.5%?

We have a royal banking commission underway at the moment that has pointed to illegal banking practices that have led to easy credit and ballooning housing prices, banks are now tightening up and restricting credit, thus prices are falling 11%+ in Sydney, proving we had a credit driven boom.

There's a very strong argument that QE has directly led to massive over valuation if stockmarkets.

My point is Zerohedge and other sites writing about such things dosent make them a propaganda machine just because they don't write the narrative that we would like to hear.

It's difficult to look at the data surrounding Australian real estate debt, household to income debt, mortgage stress etc and not be bearish.

I'm at my parents house in Cranborne Melbourne at the moment, a 670k box built on a horse paddock with less than 6ft to the next box. My dad the electrician that become a millionaire (on paper) because he owns a house and has some super(401k). Worked no harder than his bricky/truck driver dad but hes rich (relatively) because his last house went up by a factor of 12.

Prosperity should build asset prices, asset bubbles don't build prosperity, it's an illusion.
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Old 21-01-2019, 15:46   #93
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Re: US property

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Our whole global financial system is a very fragile and precarious house of cards, propped up by hope, delusions and magical thinking
Yes, that's the basic design.

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All the goods required for most people's survival have super-fragile far-flung just-in-time supply chains.
I think (hope) this may actually be a strategy to avoid large scale war.

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... Real estate related investments like private equity or REITs can offer similar returns without the hassles.
They are certainly more liquid, easily researched, and managed. If I were in the "big pile-o-cash need income from it" boat, I'd lean in this direction.

Not by choice, but by circumstance, we owned some land which we recently sold via owner financing... it's a relatively low risk route to installment income with slightly higher than market returns on capital. The new owners may do something to devalue the land, but probably not more than the 20% down payment we were able to secure. The new owners may stop making payments (they actually bounced a check this month, but assure us that a replacement is on the way), but if that happens you repossess and go back on the market. The real kicker is finding buyers - for that you need to buy land on the cheap side (not actually that easy to do) and then hope to find buyers who need owner financing, which, in our experience, needs the market to heat up significantly, and this can take years - did for the sellers who sold the land to us with owner financing, and did for us when we went to sell. I would only recommend this route if the land is of some value to you while it is for sale.

As for improved rental property - I have relatives who play the cabin rental game in the mountains around Atlanta. There's a strong PM presence in the area, and strong demand for short term rentals coming out of Atlanta. The relatives also enjoy the property when it is not rented, similar to the "investment catamaran" scheme. IMO the risk on short term rentals is much lower than annual resident rentals, management is on-site a couple of times a week and the renters don't take any responsibility for upkeep of the property. Return may be better with the 12 month lease, but I've heard far more horror stories in that arena - and even if you take your deadbeat renters to court for non-payment and damage to the property, win the case and get a judgement for your losses, the odds of actually collecting that judgement from the type of person who would lose such a case are slim indeed.
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Old 21-01-2019, 15:56   #94
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Re: US property

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If 3.5% was an emergency rate, what is 1.5%?
The new normal. You remember the Real Estate debacle in Japan? I think that triggered zero and even for a time negative interest rates (I'm sure there's some special qualification and use requirements for negative interest rate loans...)

The USA followed Japan down, starting with low interest rates around 2003 sparking the real estate bubble and subsequent collapse in 2008.

When I was a child, my grandparents planned their retirement around guaranteed fixed income certificates of deposit with 5 year terms earning upwards of 8% APR, the bankers and government took those deposits, presumably invested them somehow, and provided the fixed returns. No such luxury available today - anybody who wants more than 0.5% APR on savings is required to invest at risk.
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Old 21-01-2019, 22:50   #95
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Re: US property

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The new normal. You remember the Real Estate debacle in Japan? I think that triggered zero and even for a time negative interest rates (I'm sure there's some special qualification and use requirements for negative interest rate loans...)

The USA followed Japan down, starting with low interest rates around 2003 sparking the real estate bubble and subsequent collapse in 2008.

When I was a child, my grandparents planned their retirement around guaranteed fixed income certificates of deposit with 5 year terms earning upwards of 8% APR, the bankers and government took those deposits, presumably invested them somehow, and provided the fixed returns. No such luxury available today - anybody who wants more than 0.5% APR on savings is required to invest at risk.
You say the "the new normal" as its ok! For a heroine addict ,shooting up everday is normal!

We dont know how the new normal will workout, thats the issue. Money needs a price, the distortions created due to such loose monetary policy which includes historically low interest rates ,easy credit and such things as QE have consequences such as driving up asset prices in the hope this results in prosperity, where prosperity should drive up assets prices. The wealth effect can and does work in reverse as well, look at the volatility occuring due to QT. Theres no free lunch, theres always a consequence. Lets not even get into how this current monetary environment destroys the middle class which is the work engine of an economy.

I wont buy anything where value cant be measured, buy and hope dosent work for me. I remember a guy on here last year telling (with a smirk on his face) about bitcoin becoming the new normal,the future and how I was missing out, fool me.....how'd that workout?

Value is hard to find now but it is there if one searchs hard enough. I was recently back in Australia which has some of the most unaffordable realestate in the world yet I managed to find some places that had value regarding rental return, unfortunately buying there right now dosent suit (bloody sailing .lol).

My point is just because something is now "normal" dosent mean it will end well, fundamentals dont change that much over the years, sure they can be ignored BUT not for ever.

Personally I believe its a time to be conservative, a return of your money not a return on your money!

How economic system is kept alive by easy credit, thats money brought from the future to now. This works as long as enough growth is generated to support the model BUT we are seeing less and less growth from more and more credit, more and more income is being channeled into servicing debt.

Anyway ,how will it end? Im not sure but I put more of my money into real things that cant go away and throw of income, Ive moved away from paper wealth. Tesla cant end well, the numbers just dont add up the underlying "assett" has to perform, fundamentals will hold true sooner or later.
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Old 21-01-2019, 23:35   #96
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Re: US property

Dale i adhere to your stratagem. I know guys who buy Rolex watches every couple of years and just put them in the safe and sell them 5 years later for a return of 5%/yr. I know contractors that buy thousands of dollars worth of copper pipes and store them in the backyard for a couple of years and make a decent return on them.

Remember Greenspan's statement ...irrational exuberance? It is going to be a bumpy ride...and that may be the way it is for many years to come...maybe things will never be long bull runs followed by 3-4 years of bear draw downs.
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Old 22-01-2019, 05:39   #97
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Re: US property

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Originally Posted by daletournier View Post
How economic system is kept alive by easy credit, thats money brought from the future to now. This works as long as enough growth is generated to support the model BUT we are seeing less and less growth from more and more credit, more and more income is being channeled into servicing debt.

Anyway ,how will it end? Im not sure but I put more of my money into real things that cant go away and throw of income, Ive moved away from paper wealth. Tesla cant end well, the numbers just dont add up the underlying "assett" has to perform, fundamentals will hold true sooner or later.
Late stage capitalism on a finite planet. We're running out out of the easy gains - new lands, cheap resources, low-cost labour. Tech, and maybe pharmaceuticals are about the only spots where money can be made from new ideas, and even that won't sustain growth without lots of cash around to risk. And we're getting close to the point where there won't be enough meaningful, decent-paying work for all who want it.

Low interest rates, quantitative easing, unrealistically low fossil fuel prices - all crutches to keep things moving forward, to delay the big readjustment to a sustainable (in all senses) economy.
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Old 22-01-2019, 06:35   #98
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Re: US property

Long term the consequences of our heedless folly may not be things that can just be "adjusted to".

But apparently most don't care what happens to the species as long as they believe it will be after their own (imagined) personal demise.
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