Hey - Would love to hear some feedback on my current investments

and why would a real estate agent recommend property? cough* commission * cough

No, the reason you'll find FP's don't recommend direct property is that their dealer group simply won't allow it. We are not property experts and should never pass ourselves off as one. Thats what real estate agents are for.

In fact I'd stear well clear of any advisor who does recommend property, they are generally the dodgy ones getting under the table payments from developers.

The other reason most FPs won't recommend "direct" property is that similar investment returns can be achieved through a diversified portfolio of managed funds and shares for lower risk and a lower cost, thats it. nothing sinister.

Most advisors are fee for service these days so they'll charge for what their times worth. If some of that cost can be met by commissions so be it, I know most clients would prefer their product pays for it rather than their pocket.

were heading for a 1 in 100 year property collapse I wouldn't be jumping onto a sinking ship now.

Thanks for the advice.

I understand where your coming from, of course everyting comes for a price, but i know with my 2 contract loans, the commissions come out at a % of my profit in the long run, which i was comfortable with.

As for the real estate, i figured a FA would have knowledge on all types of investments, lol.. I guess i never really thought about it, but of course it makes sense that advisers are specialists to a degree.

I was also wondering what was going on with property, 1 in 100 year collapse you think? That does sound nasty.. All i ever hear is 'its a buyers market now, you have to get in now' but then again, what a guy at a pub or someone at work says, is often different to the real case isnt it! haha.. Surely the property market cant go down much further, could it? I mean, some places falling over 20-30% within 12-18 months, could they go further.. to -50%?

I know i'd be pretty shattered if i bought an investment property for say $300,000 12months ago to only have it be worth $200,000 now.. ouch.

Curious as to why you think this, YG? I'd agree that we're definitely in the bottom section of the current cycle but where did you get the 1 in 100 year collapse from?

why do I think a one in 1 in 100 year collapse will occur? well consider this:

The sharemarket rise's and fall's pretty much in line with corporate profits. When the share market gets ahead of it's self, 1 of either 2 things happen, either a) it stays static and eventually corporate profits catch up or B) the market comes crashing back to earth. This happened in 1987 and it has happened in the last 12 months.

The property market historically has risen inline with a real increase in income. And has been that way for many years. However since the late 80's this linear growth has become disjointed and property price's have risen at a far greater rate than the growth in income. This is why there is a such an affordability crisis now. some will spout the old supply & demand BS but thats just incorrect, we don't have a shortage of land in Australia, infact we have plenty of land. Just not 1/4 arce blocks 5 minutes from the CBD....

so the same story goes with property as it is with shares, either 1 of 2 things can happen property prices stay static or there is a big collapse. I'm just betting on a big collapse. If Australian Property shares can fall on average 30 - 40% in the last 12 months why can't residential property?

why is Australia immune from the property collapse's that have occured in the US, Japan and the UK? how can anyone claim that growth of the last 20 years will continue? I've been to numerous meetings over the last 2 & 1/2 with fund managers saying that the growth in the australian share market, US property market and Australian property market couldn't contiune. They have been right with 2 out of 3 so far...

Young Gun

Since you've presented the chart perhaps we should refer to the other points raised in the AMP article.

Reasons not to get too gloomy
There are two favourable differences between Australia and
the US. First, while America has an oversupply of housing,
Australia has a huge shortage. Housing construction is currently
running around 30,000 dwellings per annum below annual
underlying demand, which is driven by immigration and natural
population growth. This is more than evident to anyone seeking
rental accommodation – capital city vacancy rates are very low
and rents are rising.

Concluding comments
A shortage of housing, a huge boost to national income from
commodity prices and higher lending standards suggest that
a US-style collapse in Australian house prices is unlikely. However,
rising mortgage rates (leading to record mortgage stress at a time
of massive over-valuation), poor housing affordability and very
high debt levels suggest that average Australian house prices
are more likely to fall than rise over the next year. On balance,
national house prices are likely to fall by 5% or so over the
next year but, as always, this will mask a huge variation
across locations.

By Dr Shane Oliver
Head of Investment Strategy and Chief Economist
AMP Capital Investors

More Here
http://www.amp.com.au/display/file/0...s_08052008.pdf

now why would a buyers agent be recommending property? lol

A financial planner can recommend you buy a house, and they can charge you for their advise in a different way.. trailing comissions from funds cover the cost of providing a service, just like you charge a fee to your client to find a house.. or prehaps you split the comission with the agent?

Hi Young Gun,

All this article is really saying is that no one really knows what it going to happen "Some are still talking about big gains on the back of the housing shortage, while others are suggesting up to 30% declines in house prices as overvaluation and excessive debt levels unwind and the economy deteriorates." That's a pretty big range to be talking about.

Olly only very briefly discussed the difference between the US and Australia, more than 80% of Aussies live on the east coast of Australia. In the US they are spread out much more nicely. When Americans come here and look a name of a place up on a map they think it's a town (because it would be in the US), when you tell them that it's just a name and no one lives there they think you are pulling their leg. The idea of massive desert that no one lives in has them beat as it's so different from their own country.

It sounds like Olly is taking an each way bet and covering himself to turn around in 12 months time and say "I told you so" for whichever scenario pans out. This is probably the best thing for an economist to say at the moment.

Trailing commissions are supposed to pay for ongoing service, whether this happens or not is another story, if a financial planner isn't giving you ongoing service feel free to go to an FPA registered financial planner who will give you ongoing service.

Cheers,

Dan

I want to drive it myself... they can both sit in the co-drivers seat!

Hey crc

Perhaps you're not familiar with my history- I've been an advocate of PI for some time now- many years well before I became a BA. You could say I have a slight passion for it
As for recommending it, I'd like to think that my comments on here are well balanced and you'll find many of my past posts both here on other forums that support this. What you won't find is much in the shares section as I admit to being somewhat Uninterested and Unknowledgeable here

As for splitting commissions, I'm an independent and exclusive BA- read my site for more details on fees. The only person who pays me is the buyer.
Hope this clears things up for you.

Thanks for clearing that up Jacque. I don't condone your passion for property, however I did think that suggesting that financial advisers someone recommend a product over another proudect because they get a kick back is unfair.

They expect to be paid for their service just like you do. They get it via trailing fees, whereas you get it as a fee charged seperatly. Either way both of you get the fee for service. I'm sure both of you will offer quality advise in your field, and both will expect to get paid for it.