but instead of that I bought a bag of property trusts
gpt,sgp,wdc, sgp, gmg and slf
about as much as you would need to buy say a small apartment in sydney
most property trusts at the time carried about 50% debt or had gearing of about 50%
d/e might have been around 75%
The debt on most residential property is a lot more than 50%
I knew a woman who purchased a property with virtually no deposit
I think the average loan is about $250,000
a lot have such loans on a deposit of around $100,000
if they buy a place for $500,000 they might have gearing of around 50% ie $250,000 deposit and $250,000 loan
I reasoned at the time that debt was about the same and I was diversifying by buying prime properties in variety of forms of property
so I thought I would be fairly safe
well how wrong could I have been
I am now down over 25%
the interesting thing about this situation is that even though gearing in residential property is probably greater than 50% and not diversified or in prime real estate, property values in this sector have hardly fallen at all.
Can anyone explain why this has happened?
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i could have bought a resi property
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