Porperty investments always outperform the money markets - please comment
Monday, October 3, 2016, 13:45 | No Comments »

1. Fund managers are not accountable to policy holders.

2. The system favours Stockbrokers selling shares from one portfolio to another; often.

3. Fund managers & stock brokers are over-paid.

4. Insurers have a conflict of interest. They often funder, develop and sell the fund to you - ofetn selling you under performing property, taking developers, property manager and agents fees. We believe this accounts for up to 60% of the annual profit potential of the investment. Why else have we produced seven times their profit?

5. Metropolitoan areas have benefitted by growing population requiring housing: that increased the demand for housing and that drove rents and prices upward - that's not likely to stop.

Over the next twenty years we believe many people approaching their golden years will suffer a drop in standard of living owing to the relentless effects of corruption and a shift in business opportunities to the next generation - a natural occurence, but for some the effected will be accentuated by the political shift.

However, property owners with assets in good areas will benefit from higher inflation. We foresee a drop in productivity in the building industry. That will drive costs of new build property and drag well-placed property with it. Owing to deterioration od security, property in wealthier suburbs will benefit as these areas pay for private security. Rents in those will benefit from property values driven upward by security and short supply.  

The graph below shows what happened in the last 25 years. Forbes reported Insurers peddling annuities averaged 6.45% pa. Power Stocks reported the JSE produced a 9.6% nominal appreciation against a 40% risk of loss; ABSA reported average 9.5% growth in residential property: we added 5.0% net rent to bring unmanaged rental properties to 14.5% pa. Our records of buy to let property we produced showed over 16.5% pa taking the selling prices as sold during 1990-1997, plus 7.8% net rent.

The figures that form this graph are a useful tool in showing net asset value. We have a model that tells what the net rent is after repaying the bond. It shows if rent are re-invested, the property is paid within nine years. For this that can afford a deposit of R 300,000 now, it's possible to generate and income of a PV of R 120,000 per year for life.

Europe and USA are still showing volatility & hugh risk. Many experts say their markets show potential for a slide. We believe this risk can be mitigated in managed estates where there is underlying intristic value in the property and a guarantee fo a steady income stream.

What do you think?


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