It is often suggested that it’s a lot more difficult for people to buy their first property compared to many decades ago. It is true that property is a lot more expensive. However, I would like to suggest that in many respects, buying a property today is easier than it was many decades ago. I…
Borrowing capacity has reduced by around 30% over the past year due to the impact of higher interest rates and the increased 3% interest rate buffer that banks must use to calculate your borrowing capacity. This was eloquently depicted in this chart by CBA in February 2023. I wanted to explore the common strategies that people can use to…
If you sell a dud investment property, you may have to pay capital gain tax (CGT), selling costs and then stamp duty again when you reinvest… it can be a very expensive exercise! And if you have owned the property for a while, it is probably putting money in your pocket each month (i.e. more…
A common question I receive is ‘How much should I invest in property?’ That is, how do you know when you have enough, and should you start investing in other assets? It’s a good question because it invites people to consider their goals and develop a long-term strategy to achieve them. I set out some…
Most homeowners and investors are long-term borrowers. That is, they will have a mortgage for many decades. We must realise that over many decades, there will be periods where interest rates will be higher than the average and vice versa. The average standard variable rate since 1959 is 8.20% p.a. Noting that most borrowers enjoy…
Inflation reduced from 7.8% in the December quarter to 7.0% in the March quarter, which was good news, of course. Many economists believe that inflation (CPI) will continue to decline over the coming months. However, history tells us that when inflation has exceeded 8% (like in the US last year), it has taken over a…
All investment asset classes move in cycles. Investment returns are almost never linear. As such, investors must expect good and bad periods, which is why patience and discipline are big contributors to an investor’s success. I suspect that commercial property investors’ patience and discipline are about to be tested. This asset class is facing a…
I was listening to Morgan Housel’s new podcast recently (which I highly recommend by the way), and he said something along the lines of “Once you define your investment philosophy, you won’t be distracted by any noise that doesn’t align with it.” It really resonated with me. Success with investing is more about avoiding mistakes…
Over the past 20 years, the US share market has risen 5-fold, the Australian share market 5.4-fold, and Australian property 4.2-fold. That means if you invested half a million dollars 20 years ago, in either shares or property, it should be worth between $2 and $2.5 million today. You’d have even more money if you…
The price you pay for an investment property will only matter if you purchase the wrong asset. An investment-grade asset will, in the long run, mask any purchase price errors that you may have made. That is why focusing on the quality of the asset is easily the most important thing you must do when investing in property. Simple…
