Can Your Recently Bought IP Triple in a Decade? Why?

If you have bought an IP recently, I would love to hear your views as to why your property is unique and why you think it will outperform the market in general.

Some people claim that its the lowest-priced houses that rise the most, in percentage terms.

Do you agree?

After all bank costs are paid, do you expect your IP to double or triple in a decade?

Let's have your stories here.

one world said:

If you have bought an IP recently, I would love to hear your views as to why your property is unique and why you think it will outperform the market in general.

Some people claim that its the lowest-priced houses that rise the most, in percentage terms.

Do you agree?

After all bank costs are paid, do you expect your IP to double or triple in a decade?

Let's have your stories here.

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In the past yes, not sure about the current economic age.

95% probability of it not occurring.

We have gone through a 'super' cycle that offset the 'bad' cycle of 1989-1995 odd.

Inflation + a bit, is all I am looking for, on a 10yr basis.

If my hypothesis is correct, I will achieve a satisfactory but not great total return on my residential investments.

Of course there are micro markets, markets within markets blah blah blah

Intrinsic_Value said:

We have gone through a 'super' cycle that offset the 'bad' cycle of 1989-1995 odd.

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One could have easily doubled one's money in Perth during this bad period, as you call it. But, in fairness, I guess Perth came off a really low base relative to local wages at the time.

When houses are selling at 2 time the average annual salary, then prices can only go in one direction - up!

Intrinsic_Value said:

95% probability of it not occurring.

We have gone through a 'super' cycle that offset the 'bad' cycle of 1989-1995 odd.

Inflation + a bit, is all I am looking for, on a 10yr basis.

If my hypothesis is correct, I will achieve a satisfactory but not great total return on my residential investments.

Of course there are micro markets, markets within markets blah blah blah

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same here.

no booms, no busts, just a normal bluddy market for once.

the last 6 years have been far from great, in Perth at least. I think Brisbane has been equally disastrous. If you take a house that you bought 50% under its peak value you will double your investment just by it returning to its previous value. Some of the destroyed wealth does seem to be coming back into prices.

Intrinsic_Value said:

Inflation + a bit, is all I am looking for, on a 10yr basis.

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Agreed, I'm estimating 4% CG per year average across the next decade.

Erica said:

Agreed, I'm estimating 4% CG per year average across the next decade.

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That would put many properties at zero growth over 16 years - just doesn't sound realistic?

I don't buy properties to go up by 4%. 10% pa thanks.

I bought a few acres on the outskirts of a growing country town last year. I hope that within 10 years or so it will get rezoned. That will easily triple its value. There's no mortgage on it so if it doesn't get rezoned it's not a big deal, it will just be a recreation block for us. Nice spot for my daughter to learn to ride one day

luce.rocks said:

I bought a few acres on the outskirts of a growing country town last year. I hope that within 10 years or so it will get rezoned. That will easily triple its value. There's no mortgage on it so if it doesn't get rezoned it's not a big deal, it will just be a recreation block for us. Nice spot for my daughter to learn to ride one day

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Now THAT is good deal. Especially if CG free.

As for the question: now one knows. Could double, could triple, could halve.

Peter 14.7

Quite a few of our properties have doubled/tripled in value over the course of a decade.. Rents on those have doubled & some close to tripled also.

Over the coming decade Im looking for them to double yet again.

I believe we have attained that growth because early on in our investment journey we decided to target / purchase in areas that had recently been approved for or were in the planning stages for gentrification.

We looked for the following 4 flag sectors injecting money. -

Government, Commercial, Retail, Private

We discovered this ultimately uplifted & beautified the area resulting in people's attraction thus moving in and creating demand.

We have found this to work very well if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.

Typically these are some of the signs we looked for where sectors were injecting money -

A/ Local/State/Federal Government. ie Major arterial roads, Govt Depts locating to area, Street Scrapping, New Public Transport, Recreational facilities, Hospitals/Medical facilities, Suburb Redevelopment Authorities being formed. etc

B/ Big Multi National Retail & Commercial type companies. ie Major Shopping Centres, McDonalds Hungry Jacks, KFC, Bunnings, Harvey Normans, Good Guys, etc. These companies spend $Millions on market research before going into and setting up shop in an area. If there was no current or immediate future demand for their products and services they would not be moving in, so leverage off the back of their research.

Sources for information as part of your due diligence - You can check out all the federal/state/local government planning & development websites at this one convenient link (http://www.oultwood.com/localgov/cou.../australia.php).

Other sources I use to gather info are from all the various big multi-national company websites, local newspapers, community news, local businesses, and people in the area.....general networking etc.

C/ Private People/Investors. ie Owner occupiers and Investors bowling over old houses then rebuilding new modern homes and redeveloping town houses / villas.

Get out and about. Jump in your car and drive around the area. Better still is once you're in your prospective area hit the streets by foot. You will see so much more on foot than by driving.

These items listed above I believe contributed to our properties doubling & tripling.
__________________

It can double in 10 yrs

Ausprop said:

That would put many properties at zero growth over 16 years - just doesn't sound realistic?

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That's right Ausprop. It does not sound right, because it probably isn't right.

Can Your Recently Bought IP Triple in a Decade? Sure, if chosen well. On average, most double every 10 years. Some halve, some quadruple, some triple - average is mostly always double.

You'd probably have to choose something close to the beach for a tripling IMO.
or in a sustained high CG area.

Why? Because despite all the "it's all different this time" worry-warts and D&G'ers, it has mostly always has done so in the past. Yes, I know that past performance is no guarantee of future results. But what is the alternative? If something has done something for the last 100 years, what are the chances that all of a sudden, it will start to do something differently? (in my view, that is harder to believe).

I'm planning for a doubling of the portfolio from last year's value by 2025.

Then I retire.

I have just been looking at a couple of mine ...

Bought 1987 - $94,300 .... current value $550k ....26 years

Bought 1993 - $134k ..... current value $620k ....20 years

In 1987 no-one was buying, it was a real slump, we were the only people at the auction

In 1993 we were at a Wedding so had told the Agent, if it doesn't sell phone us...he did...we found out reserve and paid it. Interest rates were very high on that one.

Without a crystal ball no-one can tell. I have bought other properties and tripled my money in 3 years.

Chris

chrispy said:

I have bought other properties and tripled my money in 3 years. Chris

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I love stories like this. Do tell.......

Propertunity said:

Why? Because despite all the "it's all different this time" worry-warts and D&G'ers, it has mostly always has done so in the past. Yes, I know that past performance is no guarantee of future results. But what is the alternative? If something has done something for the last 100 years, what are the chances that all of a sudden, it will start to do something differently? (in my view, that is harder to believe).

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Just to play devil's advocate for a second, wouldn't that mean that in places like Rome, for example, that are thousands of years old, that the average house price would be in the multiples of millions (or likely more) by now? I can see how this trend may work over say 10 or 20 years but the numbers start to get ridiculous over much longer periods. I really hope I'm wrong but something about this doesn't seem right to me. It really only works when you start from a low base and look at it over a short period. Btw, this is nothing against property per se but just an argument regarding the numbers and maths of it.

Take this for example (random choice - mid-range apartment):http://www.rightmove.co.uk/overseas-property/property-26973378.html

That is 660k AUD. The rough numbers (in today's dollars, I presume?) for equivalent property over time are below:

2013: 660k
2003: 330k
1993: 165k
1983: 83k
1973: 42k
1963: 21k
1953: 11k
1943: 6k
1933: 3k
1922: 1k
1911: 500
1901: 250
1891: 125
1881: 60
1871: 30
1861: 15
1851: 7
1841: 3
1831: 1
1821: 50 cents
1811: 25 cents
1801: 10 cents

Another few decades and said apartment has no value. There were properties available for sale for centuries before then. You could go in the opposite direction and get a similar result. I hope I'm missing something.

Interesting stuff Cimbom. And pretty spot on about the importance of buying low and never overpaying for property - no matter the madness of the crowd.

People have been complaining about Sydney's overpriced houses for a long time. When Charles Darwin visited Sydney in the 1840s, he wrote more than a few words about it's high property prices. Here is an interesting link link for anyone who is interested:

http://ebooks.adelaide.edu.au/d/darwin/charles/beagle/chapter19.html

depends what the average Roman income in 1801 was, I would guess around 1 to 2 cents?

of course a median home back then probably had the vatican as a neighbour. these days it would be a flat in suburbia

Erica said:

Agreed, I'm estimating 4% CG per year average across the next decade.

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imo it isnt worth the effort, headache, risk or capital for that sort of return.

a basic subdivision can make you 5 or 6 years CG and take 6-12 months. arent we all in this game to make money? if it's only going to just about keep up with inflation then id suggest looking at other asset classes