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RE: ScaredyCatGuide to Real Estate - Three Reasons I Love Rental Properties!
All great reasons to buy rental properties. I just wish more Aussie investors had this mindset toward real estate. A few things strike me:
- unless the cash flow is positive, it's not a good deal (most Aussies are happy to lose money each month, banking on capital growth)
- you invest for income, with a long-term perspective to pay off the debt (most Aussie investors have interest only loans, banking on capital growth)
- the property going up in value is a bonus (it's the core strategy, if you can call it that, for Aussie investors)
- interest-rate risk is not an issue on a 30 year fixed rate mortgage (Aussie investors all have variable rate mortgages, so there's no guarantees on future cash flow levels
Gotta love the USA :)
Jason....I will keep saying it. You are literally describing the US market in 2008. Every single point you made in parenthesis to the T! I really gotta start shorting Aussie lending companies....the bubble will burst.
It has to. It's so crazy to be in it here because people literally think it will never happen. That's a key characteristic of a bubble though - most people have no idea what's about to happen.
I've invested pretty heavily in gold miners here. I think that will be a good contrarian play.
I just took a look at the miners ETF (GDX) vs SPY (S&P 500) for 2008 through 2011, sadly there wasn't much divergence. Miners went down hard to, bounce maybe a couple months sooner than the market but the rally was similar.
I really thought I'd see a divergence. I like miners as the contrarian/flight to safety play. Maybe physical gold in Aussie dollar could be a play too.
True, and I've considered that. The miners are definitely a bet on inflation and a weaker Aussie dollar, not deflation, which is what we saw in the 2008 USA housing crisis, at least until QE kicked in. I would expect the RBA and government here to respond right away with stimulus if the banks and housing market tank. I tend to think the housing market here will be fine until some shock from overseas. If I'm right, that would also lead to more economic stimulus and inflation worldwide, driving up the price of gold. Time will tell.