Saturday Summary – the most interesting property investment articles I’ve read this week (2012/11/16)

Each Saturday morning I like to share some of the interesting property investment and economic articles I’ve read during the week.

I’ve put them here all in the one place for your easy reading.

Enjoy your weekend….and please forward to your friends by clicking a social link buttons on the left.

Property valuations a waste of time and money

Terry Ryder writes that until recently all the reports on his hotspotting.com.au website advised investors to get a valuation before buying real estate.

He has now removed that from his reports because he thinks valuations today are a waste of time and money.

He says: I’m sure there are plenty of competent valuers out there who care about accuracy and professionalism. It’s just been a long time since I encountered one who fits that description.

All my recent experiences with valuers have been frustrating, and the feedback I’m getting from consumers around Australia suggests many others are having the same disappointments.

The problem is that valuers are killing real estate deals. Whether it’s conservatism or incompetence, many valuers are under-valuing properties to a degree that’s plain ridiculous.

I tend to agree with Terry – valuers are currently very conservative, especially if you’re trying to access equity in properties you already own. However valuations are a fact of life and while they have little use before buying property, you can’t rally get around them after you’ve purchased your property investment – the banks always require one

Read the Terry Ryder’s full article here.

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Bubble – what bubble?

Another great Real Estate Talk show  produced by Kevin Turner. If you don’t already subscribe to this excellent weekly Internet based radio show.

If you are concerned about what is happening to the property market or is likely to happen because of the overseas markets, then we will have an update on that for you this week.

This week we speak to:

Michael Yardney of Metropole Property Strategists

Michael Matusik of Matusik Missive

Rob Balanda of MBA Lawyers

Michelle Hutchison of RateCity

and Michael Teys from Teys Lawyers

You should definitely subscribe to this weekly audio program. Click Here It’s free and you can listen on the go on your smartphone, iPad etc.

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ASIC raises alarm bells about spruikers exploiting SMSF rules to push dodgy property investments

Larry Schlesinger wrote in Property Observer that ASIC is currently undertaking “limited surveillance” of financial advisers and accountants over concerns that property spruikers are encouraging investors to set up self-managed super funds purely as vehicles for “dodgy” property investments.

“We don’t want SMSFs to be the preferred vehicle for dodgy property spruikers,” says ASIC commissioner Peter Kell.

Kell says being encouraged to set up a SMSF “solely to invest in direct property” should be a “warning sign” for consumers.

He says a big risk for SMSF investors is speculating on property in areas where they are less familiar.

This would suggest ASIC concerns about investing in areas such as remote mining towns, where new housing developments have been heavily promoted by marketeers.

According to Kell, in some cases investors are being flown to places like the Gold Coast, shown a property and then steered through all the steps necessary to set up the SMSF, including creating the holding trust required to act as custodian of the property and arranging the loan and purchase of the property.

Investing in property through a SMSF holds significant tax advantages with the maximum rate of tax paid on rental income being 15% and falling to 0% if the SMSF is in the pension phase.

This compares with personally held property where rental income is taxed at a marginal tax rate, which in some cases can be as high as 46.5%.

“ASIC has concerns that people are being encouraged to set up SMSFs in situations where they don’t have the resources, experience and understanding to ensure they actually generate the expected benefits,” says Kell.

But he says ASIC is emphatically not anti-SMSF, but is worried that as the sector grows in popularity it will be a target for fraudsters. ASIC hopes to release research into this aspect of SMSF investing in 2013.

Read the full article here.

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Can financial behaviours be changed instantly?

Pete Wargent, a regular contributor to Property Update wrote an insightful blog of the psychology of financial success.

He gives a brief explanation of the science of NLP (Neuro-Linguistic Programming) – a subject I’ve been studying for over 10 years.

One of the most highly recognized practitioners of NLP is Tony Robbins who argues that through using the powerful tools and techniques of NLP financial behaviours can be changed overnight.

Wargent suggests this is to some extent true, but only where someone believes that something must change, they believe that they can change it and that they themselves are responsible for actioning the change.

He then outlines the 5 steps that must be undertaken in order to change behaviour patterns.

It’s worth reading them in his blog here.

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The ins and outs of property indices

Why is it that each of the research houses reports different median prices and growth statistics?

Who is right and who is not?

In this article RP Data explain how their house price index is calculated, how it is more timely than the others (they have a daily index) and how it move virtually in synch with the ABS statistics but is avialble 3 months earlier.

Read the complete article here

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50 Things You Should Feel Great About

Morgan Housel wrote a great blog in Motley Fool reminding us to be optimistic and giving a list of 50 things we should feel great about.

Some of them were:

  • Biomedical gerontologist Aubrey de Grey thinks the first person to live to see their 150th birthday is already born. Medical technology is awesome.
  • A cancer-stricken man from Eritrea just received an artificially grown trachea derived from his own cells. More awesome medical technology at work.
  • The U.K.’s economic dominance fell sometime in the late nineteenth century, but for the most part, it’s been a nice place to live ever since.
  •  Many fear the U.S. economy will end up like Japan. Next time you hear that, remember that unemployment in Japan hasn’t been above 5.6% in the past 20 years.
  • If you’re reading this article, you’re part of the 30% of the world with Internet access. 70% of the planet would love to be in your shoes.
  • Nine percent of American households are millionaires. It’s not just the very top who are doing well.
  •  Overall cancer death rates in the U.S. fell more than 1.5% per year from 2001-2007. Falling cancer death rates have saved nearly 1 million Americans over the past two decades.
  •  Today’s personal savings rate is six times higher than it was in 2005.
  • Life expectancy for someone born today is eight years longer than someone born in 1960.
  • One of corporate America’s biggest challenges right now is what to do with record amounts of cash. Nice problem to have.
  • Ten years ago, cell phone technology consisted of a calculator and game called Snake. Today you can watch full-length movies, file your taxes, get driving directions, and watch live TV on a phone half the size and a fraction of the price.
  •  In the early 1970s, an influential study using a computer model called World3 predicted the world would exhaust all known supplies of oil and natural gas by 1992. Dire predictions are nothing new.
  • Traffic deaths per 100,000 people have fallen by half since the late 1960s.
  • If you’ve owned stocks since early 2009, you’ve enjoyed one of the biggest bull markets in history.

Read the full list here

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Blogs you may have missed

If you didn’t have a chance to read my daily blog, here’s a list of the blogs you missed this week:

Property Investment Market Update – RPData November 2012

How low will interest rates go?

The Time Value of Money & how to use it as a Property Investor

Money doesn’t lead to happiness 

 



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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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