How important is the need of valuation to the investors?
What I do is I revalue my properties landandairshow because I’ve got very much other high comparable sales and I lock in that higher valuation and I increase my line of credit when the market is down which is around here I focus all my energy on buying properties the best time to buy property is the moment.
You got passed in an auction that’s your number one time to make an offer you see that agent hates that property if you’re the vendor they hate you they hate your house they’ve been in your house for four weekends straight they’ve got no Commission, okay the BMW Audi payment is doing at the end of the month they want their money okay now.
This is where if you’re smart and you start negotiating after the option has been passed in the agent will start working for the Bayern of the vendor the second-best come is Monday morning when they’re all in the office all depressed getting slammed by the sales manager of whether.
You can sell their landandairshow property in the weekend I’m just kidding the market is very strong at the moment now these things actually happen but it’s true your based on supply properties when the property gets passed in the auction so imagine you’ve got an option clean rate of 50% or 60 which means full properties out of ten enough.
Selling that’s when I go in and make offers on those properties you know and that’s the best time to get discounts or terms of settlement just a delayed settlement or lower deposits so really what you want to do if you look at the market if you look at the counter cyclical nature of the market when the market is at its peak
Compared toother property valuations sydney asset classes alright let’s getstartedalright so right now .
There’s obviously alot of talk around you know property valuations sydney propertyprices being at all-time highs and beingso expensive and you know .
How a price isclear I’ll hire with you know theearnings multiple basically you know.
When compared to to income levels youknow being so high everything like thatand .
While there is potentially you knowsome truth in you know looking at that metric and you.
know believing thatprices are and did you know hi if you actually.
You know want to make anaccurate comparison you really need tolook at where valuations are incom parison to other asset classes and ifyou’re savvy investor you know generally being you.
Know where the value is canyou know over the long term you knowpotentially give you the best potentialrisk adjusted returns obviously .
Thereare bubbles so you know sometimes beingin the best of it how you play isn’t thebest in .
The short term but over the longterm you should get the bestrisk-adjusted returns because .
What you’re buying is you know a solid assetat a reasonable value now if we sort ofstart off.
By comparing to where the sortof stock markets are right now S&P is the US index that’s.
The top companies in the US they derive morethan fifty percent of their revenue fromoverseas now so it’s actually more of aglobal index if you will and andbasically .
The price to earnings ratio isaround right now that’s taken fromThe Wall Street Journal and basically.
That means in earnings yield of about four point one six percent now .
The dividend yield is only about two percentthe difference is that that other twopercent is being retained in thebusiness for you know growth or actually you know being used for share buybacksso effectively .
The best comparison forwhen you’re looking at you know equityis the verse property you need to lookat the earnings yield so at about fourpoint one six percent .
This is relativelycomparableor to wear Australian property you knowis sitting right now in terms of yieldsnow obviously if you’re looking athigh-end you know very luxurious kind of properties .