financial information - real estate, investing etc.

[Heretolearn]

Hey,

I have just started in this world of work after finishing University. I am 25 and started with nothing.

I currently save 40% of my net income each week and have been for 5 months now. I am considering my options such as real estate or shares etc.

I currently rent out a one bedroom apartment. I can buy a similiar apartment by getting a mortgage for 30 years with weekly repayments about 2.5 times my current weekly rent.

The housing market is going crazy right now here. With increases all over for 16 and 18 percent the last couple of years. It is predicted to keep going although interest rates are expected to increase later this year which I could meet.

My job security is good if I stay in my chosen profession but I do not know. I figure I shall work this profession for another 3-5 years at least and my job prospects shall always be good assuming the economy is strong which you never really can but do so for peace of mind

I know a lot of you are savvy in this area such as str8up in property.

What can you recommend for me?

especially in:

a) shares
b) property

I am not necessarily asking for specific advice on my situation, but please add some if you can, but more so lessons you have learnt with your own experiences.

* everyone says to travel but I am happy right now where I am and want to set myself up financially. * I will holiday in my work leave though

Please share whatever you can!

thank you!

 

[Bible_Belt]

Are you in the United States?

 

[Desdinova]

Ae....

 

[Skel]

Im curious on the increase in property values. Ive only been watching them this year so maybe this happens every year but the property values all over my area shot up and im curious why? Is it just a yearly thing that happens or is the actual ecnomy?

 

[Desdinova]

the property values all over my area shot up and im curious why?

What's happening in my area is there's a lot of people looking to buy houses, but nobody's selling. People have been getting into outrageous bidding wars and properties have been selling up to TWICE the listed price.

The interest rates here are low, the new zero down payment has been put into effect, why wouldn't people want to buy?

If I were to sell my house right now (which I bought two years ago) I could potentially get double what I paid for it.

 

[LowPlainsDrifter]

We (meaning humans in general) keep making more people, but no one is really making more land.
Real estate has to go up, although it may take occasional pauses, as it appears to be doing now in the NY area.

 

[Skel]

Well the funny thing is, even though you may be able to sell your home for double what you bought it for, it just means you will probably have to start over somewhere else and pay double for what that person paid for their home. I guess its a catch 22

 

[Not Quite There]

Before you do anything, check these links:

http://www.msnbc.msn.com/id/12239581/

http://www.housepricecrash.co.uk

http://www.globalhousepricecrash.com/

The whole western world is in one massive house price bubble right now, personally i'm not rushing into anything. I'm not sure if there will be a crash, but I think its highly likely, no matter what all the vested interests say. People are getting themselves into massive debts just to own a property.

If you can rent far cheaper than you can buy a house, why not just rent and save up as much as you can for a large deposit, then when you do buy a house, you won't be paying as much interest on a rediculously large mortgage.

If you have growth of 10% + a year in your area, and you think its set to continue, then maybe its worthwhile, but here in the UK those days are all over.

 

[Not Quite There]

We (meaning humans in general) keep making more people, but no one is really making more land.
Real estate has to go up, although it may take occasional pauses, as it appears to be doing now in the NY area.

Overtime yes, the trend is for it to go up, but house prices can also crash. This seems to happen in cycles over here in the UK, and i'm sure the US is not immune, just because it hasn't yet happened. I think the US house market is slighlty behind the res tof the world, I know Australia/New Zealand have had their booms, and now prices seem to be dropping.


I've never owned a house, but I would hate for my first experience in property to be one of negative equity....

Check outt hese links 2:

http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=1238&cat=44-0-0

http://business.timesonline.co.uk/article/0,,8214-1763282,00.html

 

[Heretolearn]

thank you gentlemen. I am in Australia, Perth actually where pricfes are skyrocketing

 

[Joe The Homophobe]

Is it an intelligent strategy to save our money for when the housing bubble bursts, and then buy real state at even cheaper value?

 

[STR8UP]

Is it an intelligent strategy to save our money for when the housing bubble bursts, and then buy real state at even cheaper value?

If you think you can outsmart the market. Anyone who is right 60% could be very rich in short order. Your guess is as good as mine...

I'm not going to tell you my prediction (it wouldn't do any good anyway since real estate markets are local) but I will offer up a quote that I once heard. A wise man once said:

"If you think real estate is expensive today....just wait 10 years".

That doesn't mean "Go out and buy everything you can get your hands on", but it does mean that if you buy the right things the right way you can make money in real estate pretty much anytime.

 

[Bible_Belt]

This is interesting, speaking of the financial world:

http://www.siliconinvestor.com/readmsg.aspx?msgid=22338922
Insurers Saw Record Gains in Year of Catastrophic Loss
They say the profits are a fluke, but the industry has worked to shift risk to clients and the public.
By Peter G. Gosselin

"U.S. insurers purchased disaster insurance of their own before the 2005 storms, much of it from overseas firms. Executives said that half — and by some estimates, nearly two-thirds — of the insured losses from last year's hurricanes ultimately will be borne by so-called reinsurers, many based in Bermuda and Europe."

 

[Not Quite There]

thank you gentlemen. I am in Australia, Perth actually where pricfes are skyrocketing

how long have they been rocketing for though? is this a new phenomena, or is it 4 or 5 years old?

What are interest rates over there?

 

[Not Quite There]

If you think you can outsmart the market. Anyone who is right 60% could be very rich in short order. Your guess is as good as mine...

I'm not going to tell you my prediction (it wouldn't do any good anyway since real estate markets are local) but I will offer up a quote that I once heard. A wise man once said:

"If you think real estate is expensive today....just wait 10 years".

That doesn't mean "Go out and buy everything you can get your hands on", but it does mean that if you buy the right things the right way you can make money in real estate pretty much anytime.

Although there can be a lot of truth in that statement, the thing is, what happens inbetween?

Its not much help to all the people who lose out when interest rates rise, and their mortgage payments increase dramatically, but the value of their property which they overstretched themselves for drops.

Also, germany hasn't seen house price rises since 1991, and in fact has seen decreases in property values.

Saying that though, if you buy at the right price and don't overstretch yourself, then yes, property is a good investment.

 

[TheMainMan]

Personally if I was you I wouldnt get into property right now.

The UK & US are way over priced based on affordability and historical prices.

Warren Buffet the worlds second richest man & most astute value investor believes that the property market is dead in the water. He reckons that the worlds stock markets are now going to go on a 20 year climb eclipsing returns on property.

 

[STR8UP]

Although there can be a lot of truth in that statement, the thing is, what happens inbetween?

That's why I said you have to buy the right things the right way. When you put time on your side instead of against you, sky is the limit.

 

[Heretolearn]

how long have they been rocketing for though? is this a new phenomena, or is it 4 or 5 years old?

What are interest rates over there?

Thank you everyone for the great replies!

Feel free to talk about other investment apart from property too! Shares etc. I focused more on property right now as I figure I am working here for at least 3-4 years so need somewhere to stay and rent is rising VERY quickly.

To answer the questions above, the suburb I am currently living in has property prices of:

Percent change from the previous year: 15.60%
5 Year Average Annual Growth Rate: 10.90%

It is a very nice area with lots of parks and most of the people who live there are University type persons (lecturers and PHD students). It is 4 km outside the CBD and about 2 km from the major university here.

I have rented there for 4 years and it has been awesome. No crime, nice neighbours, great bike commute to work etc.

I can buy in other higher growth areas for the same price but was thinking this was more of a blue chip investment. I am buying an apartment (probably one bedroom). Any comments on apartments vs houses and number of bedrooms etc.

This area is very established and lots of richer persons are coming and building massive houses as it is surrounded by all the mega rich suburbs and young yuppie suburbs. There are only a couple of apartments in my area.

THe other higher growth suburbs around the same distance (4-10km) mean I could get a 2 br house or apartments but they are in ****ty crime areas or apartment places (where the whole suburb is apartments).

I value my quality of life. I have lived alone for the last 8 years (with gfs for nearly all of it one live in for 4 years the others staying 90% of the time).

I could get a 2 br and rent the other one out but value my privacy. What do you all think?

Please share your advantages and disadvantages. Especially your experiences from doing the above eg. why living with someone as an owner is different to when you both rent.

thank you

 

[seagull]

Thank you everyone for the great replies!

Feel free to talk about other investment apart from property too! Shares etc. I focused more on property right now as I figure I am working here for at least 3-4 years so need somewhere to stay and rent is rising VERY quickly.

To answer the questions above, the suburb I am currently living in has property prices of:

Percent change from the previous year: 15.60%
5 Year Average Annual Growth Rate: 10.90%

It is a very nice area with lots of parks and most of the people who live there are University type persons (lecturers and PHD students). It is 4 km outside the CBD and about 2 km from the major university here.

I have rented there for 4 years and it has been awesome. No crime, nice neighbours, great bike commute to work etc.

I can buy in other higher growth areas for the same price but was thinking this was more of a blue chip investment. I am buying an apartment (probably one bedroom). Any comments on apartments vs houses and number of bedrooms etc.

This area is very established and lots of richer persons are coming and building massive houses as it is surrounded by all the mega rich suburbs and young yuppie suburbs. There are only a couple of apartments in my area.

THe other higher growth suburbs around the same distance (4-10km) mean I could get a 2 br house or apartments but they are in ****ty crime areas or apartment places (where the whole suburb is apartments).

I value my quality of life. I have lived alone for the last 8 years (with gfs for nearly all of it one live in for 4 years the others staying 90% of the time).

I could get a 2 br and rent the other one out but value my privacy. What do you all think?

Please share your advantages and disadvantages. Especially your experiences from doing the above eg. why living with someone as an owner is different to when you both rent.

thank you

I am from Perth. What suburb is this? Sounds like around the Wembley/Crawley area?

 

[Not Quite There]

well, from your description and preferences I think you need to decide exactly what your priorities are:

If you want a nice easy life, and everything to stay the same, then buy where you are.

If you want to make money, sounds like your area has seen its high growth period, persoanlly I would look for the next up and coming area.

Also, if OZ is anything like the UK, I would avoid highly priced apartments.

If you can get a 3 bedroom house for a similar price, I would go for the house. A lot of these apartments price is all built on hype, don't by off plan either liek this couple did:

http://www.thisismoney.co.uk/mortgages/article.html?in_article_id=408162

If your gonan buy one, buy a resale one, because it will be closer to the open market value.