Earlier in the year we ran a property investment seminar and made some bold forecasts.
Many of them as you know have come true and have been spot on.
One of those forecasts which we had to fight tooth and nail for with our legal department was the prediction that rents would increase by 30-50%.
We didn't indicate which areas, of course that's a little bit more tricky and you need a lot more research. However, the general theme and prediction was around rents rising.
I have to tell you, when my lawyer saw this he freaked out and said, “You can't publish that. There is no way that rents will increase by 50%.”
My lawyer is a smart guy, but he's not a property investor. In most of our advertising we dialled that back to 15-30%. Who wants to be misleading? Not us.
So why am I telling you all this?
I've just seen a report that came out a couple of days ago and I want to show you these numbers.
* Wendouree, Ballarat – Rents up 38.5%.
* West End, Brisbane – Rents up 39.4%.
* Bulimba, Brisbane – Rents up 44.4%.
* Griffith, ACT – Rents up 41%.
* Rose Bay, Sydney – Rents up 58.3%.
* Toorak, Melbourne – Rents up 43.8%.
I picked a handful of different examples from different parts of Australia just to keep everyone happy.
So what does that all mean?
Well, when rental yields go up, investors typically follow.
It makes sense doesn't it?
With interest rates still at historical lows, and rental yields pushing upwards, it means there's still more upside to go in property prices across Australia.
Now in another interesting report that you may or may not have seen, is the government enquiry into the financial planning industry.
The government came out with a report and recommended that all financial planners stop getting backdoor commissions from product suppliers in their industry.
The report was a reaction to the billions that were lost in the recent Storm Financial debacle.
The government wants financial planners to move from a commission remuneration system to a fee for service.
I have to tell you, this is a political hot potato and whilst I wish it did happen it isn't going to happen.
If the financial planning industry moved from commission to fee for service, you'll wipe out 60-70% of the industry overnight.
A better plan would be to educate the population on matters of investing and money. That would keep financial planners more accountable and on their toes.
But hey, that's not going to happen either.
So like all things with governments, a bit of noise at the moment and everything will just settle back into the way it used to be.
Let's see what happens in a couple of months.
Here's something else that is interesting…
Storm Financial's collapse cost around $2 billion. Most of that was ordinary everyday Australians given poor advice.
However, every year ordinary everyday Australians are losing $10.6 BILLION – and that's perfect legal – with many local and state governments making a killing… But you'll never hear of a senate enquiry that investigates this juicy income stream for the government.
What is it?
You may have already guessed…
Gambling.
In 2008, the latest figures that I could find, $10.6 BILLION was lost on poker machines in clubs and hotels… A further $1.3 BILLION was syphoned away in poker machines in casinos.
To put that into perspective, if you average it out, means that per capita, individuals lost $2,025 in NSW and $1,605 in Victoria.
This information should be on the front page of every newspaper in the country – but you'll never see it there. You may find it tucked away, deep in the paper where no one can really notice it.
There's another downside to this financial disease, gambling, and that is the trail of emotional carnage that happens to Australia families.
You can't put a price on that of course, but that's the real tragedy in what is going on.
So what can you do?
Well, it's all about awareness and knowing that it's happening, and not getting trapped into the downward spiral.
They're my thoughts…
Signed with Success,
Jon Giaan
Knowledge Source
P.S. A plan, a vision and education is the secret to how you deal with most of these problems. Educated decision making should be a subject at school.
Witold says
Hi Jon ,
Just like you and me , everyone can choose to gamble or not gamble .
Think of the extra taxes we would pay if people didn’t gamble .
Cheers
Axel says
I work part-time as a bar tender in a casino. Everyday i see the same people spending many hours putting lots of money into the pokies. These aren’t wealthy people spending for fun, they are locals who want an easy win.
I know it’s their life, their money, and their decision, but something or someone else in their lives has to be missing out when they spend so much time sitting in front of a machine dropping coins in the slot.
Andrew Charlton says
Hi Jon
I loved your comment on gambling. Such a shame that people get sucked into the pokie mentality. I myself have a regular ticket in Tattslotto which is not much better, but you know “you have to be in it to win it”.
As for the FP industry, being a small business owner, a marketer and qualified to act as a planner (but choosing not to), I would have thought that smart practices would be starting to move to a purely fee for service model and using it as their competitive advantage. But this doesn’t seem to be the case. When will businesses realise that if you deliver what your customers want, they will come in droves? Clearly all financial institutions, telcos etc. are all missing this point completely.
Thanks for your insights.
Regards
Andrew Charlton
J.Strange says
I enjoyed the read Jon. I certainly beleive the governments of today and yester year and for that matter in the future don’t have our best interest at heart. Greed is thick in our society. This is what has caused the current financial market and will do again after the next big boom which comes straight after a recession like this if you call it a recession. I beleive there has to be a level of good and bad that is committed by every government in the world to keep the peace so to speak. They only tell us the bull…. we need to hear.
Pretty soon whether you beleive it or not we are moving toward a one nation, one government, one currency plan. Along with that, goes our freedom and our say as a independant country. I think they call it your democratic right.
You think ID cards are bad news. For the past few years in the states, criminals now have a chip inserted into the soft, back part of their arm. This is going to be the intended for the masses and they will pass it off in some bull… way that it will sound like google shares and be the best thing for you. This is heading all toward the one nation scenario and this meeting coming up in Canada, this treaty!! Is a big chunk of it. Go on to Google and search for an interview that Allan Jones and a fellow called Lord Monckton who used to be an advisor to Margret Thatcher. This is about climate change etc
Regards,
jase
Matthew says
Unfortunately the same people who are getting suckered into the pokies, are your average Joe renter. As far as I know, a landlord is not allowed to increase the rent on a property by more than 10% per year. Wages are not going up that fast in the pokie victim crowd.
So how are these rents going up so fast? Simple, Landlords can exercise the right to kick a tenant out at the end of the lease, and then secretly “Auction” in a new tenant at a higher rate. If the old tenant cannot compete against the market, they go homeless, or scrounge for the precious few affordable rentals left out there.
I find it curious that John has put the rental market up against the pokies, since neither market has added much in the way of added value to their respective products over the years. Certainly the gambling industry is not giving back a bigger percentage than they ever did. And with the rental market going like it is, tenants are now being asked to pay first class prices, for third rate shitboxes.
Well done, this is what happens when investors put their money into pushing up the prices on properties which should be sold to those who wish to live in a home they own.
I count the seconds it takes for this post to be removed..
Bob Ramsey says
Matthew, It is supply and demand that pushes up rental rates and us investors will wait until the yeilds are suficient before we invest. To suggest that the investor has pushed up the rates (before he has invested) shows a lack of understanding of the property cycle. Of course once we have invested in a property we want the best return, but remember we have waited until the return is there, with some upside potential, before we have commited to a property. I understand that the average working man may be unable to meet the increased rents being showen, but if the rental for a particular area has already been established, we investors cannot be used as a scapecoat for increases.
JB says
Matthew
Not the right forum to express your views on what investors do to property prices.
We are discussing what the property market might or might not do in the near future with the views of buying to invest.
Think about it, investors did not create the system, they just participate in it. The government create the systems, if the government were to remove negative gearing there wouldn’t be that many investors in the property market. The government already removed negative gearing once and they quickly brought it back because it needs investors to pad the markets for its own shortcomings in providing enough housing.
the problem we are having now is an imbalance in the market where property assets are overpriced because capital became abundant. In the end the market will rebalance itself, the problem is no one knows when. But just like Xmas is coming…
discombobulated says
Since I don’t gamble, I’d be hapy for all taxes to come from gambling and that there be no other taxes. That’s right, ALL taxes.
Of course, I recognise that crime may increase so I’d want returned to me my rights to own fire-arms and ammunition, and to defend my family, neighbours, friends, relatives, and property.
Oooh, I cross the road. Damn, and I really believed I didn’t gamble. Is assessing risk before taking action gambling?
Is buying property without fore-knowledge of price direction a form of gambling? Yep, I thought so.
I guess gambling won’t ever stop then huh?
Maddy Magee says
Hi Jon
I am not so thrilled by the prediction of rent rises from a personal point of view. I have to rent at present as I went bankrupt 2 years ago and owning property is not an option for me. After losing my family home and business as a result of the bankrupty I was forced to seek rental accomadation. However, I wish I was in a position to be the investor and own the rental properties instead of struggling to pay the rent. I wonder if there will be enough people able to afford the high rents. If they can’t will we see an increase in homelessness and people living in terrible conditions because they cannot afford anything else. What I need in my situation is some miracles and a mentor to hold my hand and get me started in property investment. The reality is those who can afford to have a big property portfolio don’t see the need to share their knowledge, contacts or wealth unless they get paid for it. People in m current finacial crisis can’t pay for it. The truth is I am keen as mustard and passionate about turning my situation around. I work very hard to pay the high rent and even if I was not under bankrup[tcy contraints I simply never have enough to get started in property investment. I will be nearly 60′ when I come out of bankruptcy and investment properties will be out of reach to me for different reasons. I will still be paying high rent. So , Although its a boom for property investors returning high rent, there is a flip side for some of us who will continue to struggle to pay the high rent.
Don’t get me wrong I would really like to be in the property investors shoes, instead of mine. Good on you for making it. I am ever hopeful with the right mindset and a guardian angel I might be in those shoes one day.
Marie
johnadamson says
Hey the stuff you are talking about is spot on,yet no one is prepared to take a stand, if governments encouraged ordinary folk to attend seminars where they could learn about money,investing and how to make it all work what a difference it would make.ON THAT NOTE I ATTENEDED A SEMINAR RUN BY A YOUNG BLOKE JUST TURNED TWENTY WHO HAS ALREADY MADE IT, WORTH MILLION PLUS AND GOT TO SAY IT WAS ONE OF THE BEST SEMINARS/WORKSHOPS I HAVE ATTENDED IN TWENTY YEARS LOOK OUT FOR DAVID NORTON, HE IS AWESOME, I have followed some of his stratgeys and they have all worked in property investment, you can call him on 0448191007
Ian Gomes says
Oh btw, gambling is in all of us for the primadonas who think they don’t or you wouldn’t have got our of bed this morning. You gamble on your marriage, friends, all your family and everything you do. There are only two certainties in live…Death & Taxes and both have been tried to be cheated and individuals have paid dearly for it.
So, just don’t allow gambling like any anti-social behaviour take a hold of you and let it become an addiction.
With love always, IG
Joe says
Can we have the reference to the report used to cite the rents shown?
helena says
Hi Jon,
interesting reading and comments.
Education is crucial, do not believe what is fed to you by the media. Government have their own secret agenda’s, and prefer ignorant people, as they are easier to herd like sheep. Casino’s full of sheep and the Government are filling their pockets and carrying out their plans for our future.
A very informative and eye opening movie called “Zeitgeist” gives food for thought and awareness that we need to question and not take anything at face value.
Fear, arguing who is wrong and who is right, controversy, are all tools used to keep people from seeing the truth.
Education and acting on inspiration and a good gut feeling to grow everyday and move in the direction that is true for you, in whatever endeavor that might be, is all important.
Brett Coffey says
So… you dont gamble? good for you.
Think gambling doesn’t you? think again!
Whatever bussiness, shop, industry or income stream you have, own or work for are all treatened by gambling & limited by it.
The gamblers are walking past your shop /bussiness to do it. Many good tenents turn bad becase of it.
Take out gambling, people will buy electricals, furniture, cars, food (you get the pic).
IT EFFECTS YOU!
Think of it like a BIG obnoxious weed in the middle of your garden sucking out all the moisure.
Anyhow, if only someone would buy them a simple $300 – 1000 PC /console with a hand full of games, they would soon relise this is 1 BILLION times more entertaining than gambling and a lot cheaper. Thanks for listening to my rant.
Matthew says
For those who criticised my comments on choice of investments:
I have no problem with people investing in property to rent, as long as they are investing in appropriate types of properties. I would place in this category Flats, Units, townhouses, generally smaller properties. simpler dwellings which require little ongoing maintenance. I do get annoyed when investors are snapping up houses which could easily become family homes, properties built to house families, people who intend to spend more than 10 years in the one place, making such improvements as they can afford over time. Demand for these longer term properties is being inflated by opportunistic investment gurus directing new investors in this direction, very few are encouraging investment in the creation of new property suitable for rental.
Nobody expects investors not to take advantage of good opportunities, I guess I would just like them to consider the implications of certain types of purchases. Right now there are a hundred and one charismatic speakers out there, making big bucks teaching new investors buying plans which are putting housing prices out of the reach of other members of the population who have to work for a living.
In terms of supply and demand, it is builders who are making more properties available. They employ tradesmen who aid them in accomplishing this task. Materials for these endeavours are provided by various industries, who employ many more probably more or less skilled people. They in turn are supported by the food industry, from restauranteurs, back to grocers and butchers, right back to the farmers. The professions contribute by providing services which keep us safe, these being doctors, emergency services, law services etc. Government plays its part providing roads, basic education, large tertiary educational institutions, hospitals and other expensive infrastructure which are necessary, if not directly profitable (though our political wing moves itself further from these quiet but necessary activities with every passing year it seems). And a myriad of other retailers and service providers all provide products services which make life more comfortable for all of us.
All of these activities add to society. They all add something that was not there before they started the work of living. When clever people invest in small properties that are expected to be occupied for relatively short periods, that is, not places that will become homes, they make a positive contribution to the community also.
However when investors are encouraged to purchase properties built as family homes, and when there are more and more of these types of investors out there. The value of these properties goes up. And it goes up with no added value, these properties are going up because some clever person buys the property cheap, does up the garden puts on a coat of paint, and on-sells the property for ten times the work they put into it. Or they rent it out at prices only a limited market can afford, a market that more and more will not be able to afford there own home when they are ready to buy, if they are ever able to become ready.
Society works because a large variety of people depend on each other to perform different tasks, but they all have to produce something. When people make money off nothing, as some of the current investment courses are quite clearly advocating, it cannot be sustainable for society as a whole.
There is no value added in these schemes. None of these investment gurus talk about buying land and building on it, they pretty much all talk about buying established properties, many of them house on land (read owner occupier type property), and then flogging them off at a premium, after making negligible improvements.
While people are taught to take advantage of property in this way, they also take advantage of society as a whole, and this is worse than the Gambling industry, because nobody needs to gamble, but everybody needs a place to live.
Call me a sook, say this is not the correct forum for making these comments. Frankly I don’t care. But don’t bury your heads in the sand and pretend that “taking advantage of these fabulous opportunites” does not hurt people, because it is hurting lots of people right now.
I do thank Jon Giaan for allowing me to air my views, because I think it is important for investors to be aware of their impact on the society from which they make their income.
Siegfried Hirsch says
Yes, Helmut you are quite right. The way goverment is manipulating the rate issue is crimminal and in a sense quite hypocritical. One extreme aspect comes to mind — compare the rates charged for a 50 square metre unit within a complex of 26 with a four bedroom, two bathroom house on 800sq mtrs. — you guessed it! There is little or no difference — $900.00 every 6 months re both. This is not just nor ethical. There are many other issues as well that “Local Governments — Councils” need to be questioned about. In the meantime — IS THERE ANYONE OUT THERE besides you Helmut THAT HAS THE INTESTINAL FORTITUDE AND THE INTELLECTUAL CAPACITY TO DO SOMETHING ABOUT THESE INJUSTICES rather than just chinwag and expect others to wipe their backsides for them?
Those owners of one bedroom units(irrespective of status or location) who have had enough of being cheated by being charged inequitable rates by their respective councils(referring to 1 bedroom units in this case) now have the opportunity to not just voice their opinions — but actually DO something about it.
There are plans in place to act provided we get enough support from both 1 b/rm unit/apartment investors and owner occupiers.
There you are Helmut, you have prompted me to state our thoughts which we should be willing to put to action on behalf of others providing we obtain a substantial level of support.
All investors and owner-occupiers of 1b/room-studio apartments within a complex stand to benefit by participating. Tenants should also reap a percentage of the benefits when councils will have no alternative to re-adjust rates of studio apartments and 1b/room units due to massive petitioning and possible class action demanding a more equitable and proportionate rate determination based on clear and just mathematical logic and fact — not fictions instilled into the minds of the conforming and unwary via council legislature based on unsubstantiated facts that tend to bastardise plain logic.
As long as one believes and tries to live in the truth, one should have a clear vision and not be afraid. Unfortunatelly, this approach is rarely recognised nor practiced. Perhaps the alternative may be more appropriate to most — if one cannot identify what is true, one may identify what is not true. A significant amount of legislature is not based on truth but on the almighty ($) which implies conflict of interest and encourages confusion — “where there is confusion there is profit” which is becoming ever more obvious through the way our so called educational institutions teach language and how it is misused (Polysemy).
Councils are profiting a great deal through inequitable and unjustifyable revenue regimes. Let us begin by excercising our rights as Australian citizens and tax payers by contesting the exorbitant rates charged by councils for 1 b/room units,
and studio appartments.
Feel free to contact me — dolphin17702x@ yahoo.com .au
Siegfried.
helmut kaisr says
Thanks Siegfried, the sad part is that few people want to really learn the true fundamentals of investing in realeastate, instead they look at the quick buck and then complain endlessly,I have attented workshops and seminars and yes you guessed it know one wants to learn they want the hype the sizzle and that is what they get. So our government calls it CONFUSE AND AMUSE..interesting eh, that is confuse the public and amuse ourselves[government].
Following the principles will always make you money and lots of it, I have listened to that dymphna woman and i must say if she is making bucks talking that stuff well i got to congratulate jon giaan for his awesome marketing, because it really covers nothing,
Little wonder people get caught out well good luck to her the sizzle does work,and great marketing does get product sold so well done jon. Mate you should really contact this david norton fellow if you feel this lady is good well awesome would not be adequate for david or his team this fellow knows his onions and following his principles will get you amazing results, he is a truly dynamic speaker/presenter.
well lets look at what we know most people are like lemmings the incipient boom started in late 1999 and actually ended on the 13th of auguast 2002 these dates were predicted by Brian norton a true reals estate guru with input from the likes of Mark bouris the wizaed supremo,steven kokoulis, and friends, as brian put it the boom is like a glass of beer with a good head, it takes time for the head to dissipate once the beer has been poured, and so he says it is with investing 99% of people are getting in way to late unfortunately [but at least they are getting in,few ask any questions and just like lambs accept what ever is put in front of them and then expect to make money,yeah right,following principles and improving your financial IQ is what need to be learnt yet few would want to spend money or time attending a well structured forum instead follow other lemmings]a lot of these folks would not heed any advice if they were told where it was going to happen as they have been conditioned to beleive the old saying of it is too good to be true,
so the sizzle works and makes us bucks………
Well heres a prediction rents will rise by a good 40% over the next twelve months in nearly all regions of queensland and with on going exploration and new mines opening up there are some amazing opprtunities coming up for the savy property investor or mum and dad family, it certainly be interesting how many will take up this opportunity, i cannot wait for the next seminar/workshop run by david norton his mobile is 0448191007, the last one made me a bucket.
well jon thanks for posting this blog and i will be subscribing to some of your products but not BOHOLTS STUFF……
thanks
Helmut
[email protected]
johnadamson says
Hi Helmut, like siegfried i agree with all you have been saying good stuff
Laurie says
Hi Jon
Yes I agree gambling wreaks emotional damage on families. Something else I have noticed is the damage it does to local economies and business in areas where incomes are not high. Living in Queensland I saw the difference the introduction of poker machines made on some small communities. Businesses actually closed up shop because of the clubs and pubs sucking money out of the local economy. Now you might say that clubs give back to the community but I haven’t noticed that what was or has been since given back made up for what was lost.
I currently live in a community completely dependent on clubs to supply all entertainment, meals etc. Cheap maybe but completely lacking diversity. So what happens – people have to travel good distances to meet their needs. Business doesn’t open because they can’t compete with club prices and anyone wanting something else goes to the city. Stagnation. It’s almost criminal.