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Online Share Trading

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A: ....Real Estate

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barry_1
Super Contributor
Hope u read this Platsak!First to give every one a history of my dealings in this connection.When the first Property Unit Trust was launched ,namely Standard Bank PUT ,both my late father and i bought units,also when the first loan stock got underway we bought further units.To cut to the quick,they were not universially popular as shares gave better returns.The average income(taxable) ranged between 12% and 15% and the capital growth averaged aroung 12%.....i yearly....There was a time in 1994 when interest rates on deposits were also around 15%.We bought long term as LISTED REAL ESTATE IS A DIFFERENT ASSET CLASS.My late father5 always insisted that we should hold a third of our money in LISTED PROPERTY ,a third in fixed deposits and the other third in SHARES.That way he reasoned was the safest as one could sleep peacefully at night,he was a banker of the old school and very cautious by nature.
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17 REPLIES 17
barry_1
Super Contributor
It was only when we started to curb inflation and interest rates started to fall that property took off and in one period about three years ago property physical of all kinds and listed property went through the roof so to speak.Yes there was a boom and a bubble started to form.Listed property at one stage went up 150% in about two years.no young people could afford to purchase a house! Its good that we are getting this under control.It was quite amusing to read opinions from large property owners(such as RODE etc) that high prices that were to stay.It irritated me when some forumites asked the stupid questions such as my property trust that i bought on Monday ahas not increased in price in the last couple of days ,should i sell it?
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barry_1
Super Contributor
I sold out my entire property portfolio at the start of this year,which helped me to avoid a 40% loss that i would have suffered as it is a known fact as interest rates increase property value for obvious reasons decreases.Vic de Klerk suggests that now is the time to start building up your portfolio again.I for one will hold off till i can intrepet Titos comments and might wait a further couple of months. ...On page 34 of FINWEEK of 5 June( english edition) there is a very good article on OCTODEC and PREMIUM.Previously i held these two loanstock and there forte was converting surplus offices into upmarket flats.,for hiring or sale.
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barry_1
Super Contributor
When i start buying i shall strive to out-perform with my selection Standards Exchange Traded Fund(ETF) ,which by the way only lost 25% during this time.Perhaps the fund could be considered if u are not going to have a hands on approach.The ETF is PTXSPY.
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Brazen
Super Contributor
Thanks so much for this Barry. Please keep us posted on the subject as you go along.
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louisg
Super Contributor
It's usually a good sign when the insiders (directors) are buying the shares on the open market. Directors know their businesses better than anyone else. An added bonus with these property companies is that the Wapnicks are long term holders and therefore run their business with that view in mind.The Wapnicks have bought about R22,5 million of Premium stock and about R11,5 million of Octodec since the beginning of May. They also bought R11 million of Premium stock on 19 December 2007. They bought the December shares @ 1400c (40% loss)but still have the confidence to increase their position. Barry would you agree that it makes sense to buy more stock when the share becomes cheaper than your original purchase, as long as you are still confident in the shares future prospects and you a long term holder?
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barry_1
Super Contributor
definitely as far as property goes it's a good principle!
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barry_1
Super Contributor
thanks Brazen,i shall.
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louisg
Super Contributor
Barry, thanx for sharing your knowledge and experience. Much appreciated.
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HungryPunter
Regular Contributor
Barry thank you for this. This I can use.
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Not applicable
Hi Barry - I see you prefer listed property over buy to let. I rather went for the latter because of the wonders of gearing. To name one example. Bought a R30,000 flat in Sunnyside in 2002, today worth R280,000 getting a rental income of R2100 per month, bond repayment +-R350, levy +- R500. My cash outlay was not even R5000. The rental income has paid for the bond and my cash outlay ages ago. Today you probably won't get a deal like that, as you also won't make good returns if you buy listed property now. My point is doing buy to let as opposed to listed property at the right point of the cycle won't make you comfortable, it'll make you rich! Oh yes, and I didn't have to sell my flat at the beginnig of the year to protect myself against a downturn.
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Brazen
Super Contributor
Yip Victor, and the best part is the the 30K remains constant but your rent goes up every year. And in a downturn like this rentals are still going up. One big advantage to listed property is low entry costs (no transfer, no bond to service) and also minimum hassle. No evicting tenants, dealing with maintainance. . .
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john_1
Super Contributor
yip Brazen you are so right, one of the big problems with prop is the high entry and exit costs. Using the stockmarket with its 1% entry costs is a very smart way of owning property.
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platsak
Super Contributor
Barry. Thanks for the post. Very enlightning. I myself got out of commercial property a year ago after making a very good return. The amounts one can make is scary if one can overcome the barrier to entry (getting commercial finance)and the applicable zonings. Management of such a centre is however a nightmare and the risks is astronomcal. I am thus thinking of investing in a property fund once interest rates stabilizes. Whats the best value out there at the moment and which ones in your opinion can be put on a watchlist.
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platsak
Super Contributor
I am also very involved in the buy to let flat market as I own flats in the Sunnyside, Arcadia and Hatfield areas and is part owner of a rental agency that spesializes in buy to let market. If like Vic said ones gearing is right it's a very good return on investment. The flat market is highly liquid, demand is high and climbing and the income stream on these units are comparable to units in much better suburbs. As these units retails for under 500 000 k theres no transfer duty payable. Even if theres no capital growth for a year or two they dont cost anything or very little on a monthly basis.
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barry_1
Super Contributor
Thanks,...just of interest,in the past unit trusts and loanstock were always on the look out for private owners of good property prospects,they then usually buy and give the previous owners enough money and units in return for their property....later they went on to build their own large scale building ,so i dont know if some still follow this practice....another way of selling when has had enough of running your own business.....As far as a list goes i suggest that u go to Property Index Tracker.co.za....write down all the companies mentioned there .Then set up a WATCHLIST plus PTXSPY,then u wil be able to see ,if u are outperforming the EXCHANGE TRADED FUND....Also add ABT to the same watchlist....i have not decided which to take yet.
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barry_1
Super Contributor
there is so much happening on the property scene at the moment as :-amalgamations(APA,APB,HYP,RDF MADISON) I FANCY MADISON at the monent,but dont know how it will be affected by the merger....new reit legislation is also likely to have an effect on all classes of property next year....it is important to try to get over 20 billion funds going in South Africa as they will then appear on European indexes and then index funds overseas will be forced to buy them....and lastly dont forget lBT now registered as a rEIT overseas.Read previous posts on LBT,APA ,GROWTHPOINT,AMBIT,ACUCAP,OCTODEC which pretty wellcovers my interest formerly.Now every thing depende on which section takes off first,offices or industrials or shopping malls....by the way when building starts to slow ,that is the BEST TIME FOR PROPERTY ALREADY BUILT as then rentals can start to increase etc....HOPE THEIS MISH-MASH HELPS U....As i said i wont be making any decisions just yet.With property there is really no need to hurry.
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barry_1
Super Contributor
Ps thats LBT which is in holds property in a niche market.
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