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Statements last week by the International Monetary Fund (IMF) confirmed a two-speed global economy. A Greek debt crisis that could potentially trigger a European banking crisis would probably push Europe into recession… and the US would likely follow. Compare the economic challenges of the North Atlantic region with the sheer strength of the Chinese economy, where the IMF forecasts growth of 9.5% this year and 9% next year and you’ll understand that not only is there a two-speed economy here in Australia but we also have a two-speed global economy. So, “What’s Really Going On Globally And More Importantly In Australia?”

Phenomenal Growth In Australia

Australia, which has not been hitched to the North Atlantic zone for a very long time, has a huge pipeline of mining and energy development projects throughout WA & QLD. Our economy is firmly hitched to our massive export markets; China and India being the biggest. A report by Deloitte Access Economics Investment Monitor shows the value of investment projects in Australia has lifted to more than $830 billion. It found the value of current and future projects rose by almost 8.5 per cent in the June quarter, with resources and infrastructure projects leading the charge.

How Much Is $830 billion?

• $94.75 million every minute of every hour of every day for a year
• $10,000 a day for 227,397 years (or 83 million days)

Mining Australia reports that:

• India is one of Queensland’s biggest importers buying over 20 million tonnes of our coal each year
• The Indian government believes steel is vital for its economic growth, and is leading the push to buy up mining operations in Australia, and is strongly encouraging private companies to do the same

Back in April 2011 ‘The Australian’ newspaper reported that:

• A second Indian company is set to make a massive investment in Australia’s next coal frontier in Queensland’s Galilee Basin with GVK Power poised to buy Hancock Prospecting’s two mines in a deal worth $8 billion
• The first coal from the Galilee Basin is not scheduled to leave the country until 2014. The other big holding in the Galilee Basin is that of Clive Palmer, who claims to have a deal to export $60bn worth of coal to China over the next 20 years

Two-Speed Economies – Global and Australia

Two-speed means slow and fast (at the same time). Here at home retail, tourism and manufacturing are doing it tough while the mining sector (and those associated with it) continues to prosper at an incredible rate. Globally the same is true. The North Atlantic region continues to struggle while countries like China and India are literally booming. Because Australia is very much hitched to these emerging middle class economies we find ourselves in the fast lane of the two-speed global economy.

Even a recession in Europe and the USA will do little to quell the growth of a country like China. Remember the IMF has already factored this in and revised down the expected growth of China to 9.5% this year and 9% next (still massive). Even if a fall in demand for Chinese made products was more severe, that government (unlike many of their North Atlantic counterparts) could very easily undertake large infrastructure spending and/or cut interest rates to keep their economy stimulated.

On the flip side, those countries suffering in the current two-speed global economy have borrowed and spent and lowered interest rates as much as they can. Unlike China and India they have very little room left to move.

In response to statements made by the IMF last week Julia Gillard reaffirmed that the fundamentals of the Australian economy remain strong: Read more…

The ‘Resources Boom’ can be far reaching beyond the towns or regions they are closest to.  The stimulus from the resources boom means that mining states will tend to grow faster than the non-mining states while the mining industry is expanding.

Further, faster expansion of mining-related sectors and regions will attract labour and capital away from the rest of the economy according to the Australian Government’s Economic Roundup Issue 3.

As of 2009 Queensland was home to a quarter of all mining businesses in Australia, with over 600 of these businesses located in metropolitan Brisbane.

The presence of the mining and resources industry within Brisbane’s CBD is continuing to grow, with a number of these International and Australian firms searching for larger premises within the Brisbane CBD to accommodate their expanding business needs.  Of these firms, an increasing number are choosing to locate their global headquarters in Brisbane.

This flow on effect is beginning to be felt in Brisbane already!

Over 55,000 sq feet of office space in the CBD has been absorbed as the headquarters for many of the mining related contractors involved in the multi billion dollar investment happening throughout Queensland. Read more…

My opinion… the Reserve Bank (RBA) should have dropped official “Interest Rates“ last month by as much as 50 basis point – or ½%.

This would have:

• Boosted consumer confidence
• Stimulated spending and given retail a shot in the arm
• Created more jobs as money is freed up to flow through the economy
• Caused the Australian dollar to fall (sooner and further); which in turn is good for tourism, manufacturing, agriculture, mining (and other export markets)

The argument of whether the RBA should be focussed primarily on curbing inflation or stimulating the weaker parts of the economy will go on. Thus far they have been more concerned with the inflation side of the equation. I disagree with their judgement and still expect that they will move to drop rates soon – perhaps as soon as next Tuesday at their ‘October 2011 meeting’. I will be surprised and disappointed if one or two downward rate movements (totalling 50 basis points) don’t happen before Christmas… as will retailers and those in tourism. That said, the uniqueness of our two-speed economy means there are no guarantees, however.

Just as governments need to safely and responsibly navigate their way forward in challenging times, so do you. The current economic conditions have a huge upside for investors; there are pockets of unbelievable opportunity for the savvy and qualified. Some markets such as Darwin, Canberra and Melbourne have recently peaked while others have been flat lining on the bottom of the cycle for some time. We have worked hard to isolate some incredible buying opportunities where you can enjoy both strong capital growth and positive geared cash flow.

A better understanding of Australian property markets – in the context of current global economic conditions – will equip you to take advantage of some amazing opportunities out there. If you’re in Melbourne or Perth be sure to register for one of my events over the next few weeks. I promise to share factual insight and put you in the picture of what’s really going on. I’ll also show you how to secure, positive geared property, manage future risk and identify property hotspots. Find out all the details of these no cost events here >>>.

Do You Have A Question Or Request?

• How can we help you?
• Do you have a question for us?
• What’s on your mind?

Contact mrd >>>here

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The last couple of years have been crazy for investors – with the GFC, the stock market crash and the American property market plummeting.

Now some so-called ‘experts’ are getting on the bandwagon… saying a property bubble in Australia is about to burst – and comparing our real estate market to countries like Japan & the United States.

Nothing could be further from the truth!

I wasn’t going to run any FRΕE trainings this year. But I’m concerned about all the misinformation flying around and have decided the time has arrived to finally reveal the facts, and set things right for all my subscribers out there who are getting lost in all the media noise about the property market.

Watch this video now to get all the details:

http://investmentmentor.com.au/events/property-boom-strategies-to-prosper-in-todays-environment/

The news is blaring about how terrible the economy is, but has anyone shown you the facts…

• Have you seen what the ABS and BIS Shrapnel have to say about population growth?
• Do you know about our two-speed economy?
• Have any of the experts or newspaper editors backed up what they have to say with graphs & studies which can actually be proven?

Trying to sift the wheat from the chaff is tough. You can end up jumping from confusion to fear & back again – and those emotions can end up pulling you under.

But what if you had the undisputable facts that allowed you to COMPLETELY AVOID all the hearsay so you could get to the heart of what’s happening and make informed decisions about how to invest to secure a prosperous future.

Take control of your wealth building decisions today – these facts will change your game completely and stop you from making costly decisions you could later regret.

Get all the details here:

http://investmentmentor.com.au/events/property-boom-strategies-to-prosper-in-todays-environment/

Read more…

The NRL & AFL teams going into this week end’s preliminary finals have a specific game plan. Weather conditions, together with the players who are chosen to play for the opposing team, affect how a coach plans his team’s strategy. It should be the same way in ‘the game of life’; the strategy you are following right now should take into consideration the times and conditions in which we live. Times have changed and the Australian ‘climate’ is very different from that of ten years ago. With the right coach and the right strategy you can “Profit From Our Changed Economy”.

Times Have Changed

The very engine room of Australia has changed. Our economy was built off the back of our farming and manufacturing sectors but the mining industry will do the heavy lifting into the future. Structural change in an economy impacts the lives of its citizens and those who adapt prosper… while those who resist (or even stay the same) are the ones left behind.

Property investors in these unique times ought to be making some change but never lose sight of some basic fundamentals. Let me break down the complex to the very simply by saying it was supply and demand that determined the value of something yesterday and it will be supply and demand that determines the worth of that same thing tomorrow.

When I was a kid in the 1970s we went through the usual fads. Remember the chopper bikes (I never had one of those), Bahne ‘superflex’ skateboards and of course the yoyo would come in and out of vogue every few years?

Investing into property with strong demand is wise… but only where there is some certainty that demand will remain high.

Positive Geared Property

Finding positively geared property in areas of strong and continual capital growth is rare (that said, we have secured a number of them now). As with the yoyo or fibreglass skateboard… what’s in demand today may not be in demand tomorrow. When mines close some places become ‘ghost towns’.

Mining Towns vs. Muscle Towns

There are mining towns and there are muscle towns and understanding the difference is essential. My wife, Katrina, summed this up last week better than I could… so I will simply quote something of what she said… Read more…

A man asked an American Indian what was his wife’s name.

He replied, “She called Five Horses”.

The man said, “That’s an unusual name for your wife.

What does it mean?”

The Old Indian answered,

Read more…

The current resources boom is the “perfect storm” for property investors!  Huge infrastructure spending, large employment base, growing populations and high income residents create demand for housing and opportunity to “Exploit The Boom Towns”.

However it can be a risky and potentially perilous decision if you don’t follow some very simple but important fundamentals in your due diligence.

There are many mining towns that exist in a bubble which can burst if demand for their particular resource drops, or the local mine closes, or housing demand falls away after construction of the major project is completed.  There are many ‘ghost towns’ throughout Australia that once basked in the glory of being a “Boom Town”.  However some of these towns were dependant on just one miner such as BHP Billiton and did not have the diversity of industry to support its economic growth and keep it living after such an event. For example, in Revensthorpe WA & Hopetoun WA when BHP Billiton shut down its new nickel mine.

To take advantage of the Boom Towns it is important to look long-term.  What has this town or region got going for it other than the current project gaining all the attention?  We suggest that a town MUST have diverse economies and a life before and after the resources boom.  In other words the town’s sole economic prosperity is not based on that mining project.

A major regional town or centre with a solid, diverse economy is the key to a quality, less risky investment. Look at its current industry and employment base.  It is often the centre of a larger area drawing in population from surrounding regions and provide a wide range of retail, commercial, educational, medical and administrative services to large population catchments.

It is in locations like these you will find an economic life before and after the resources cycle.  It is a bonus for them to have the surge in activity created by increased mining or major one-off developments, however they are not the sole drivers.

Toowoomba Is One Of Those Regions

Speak with us about HIGH YIELDING Toowoomba House & Land >>>>here

As Queensland’s most significant inland city, Toowoomba enjoys a prosperity which is strong but stable.  Toowoomba has a substantial manufacturing and supply industry, a major education sector as well as a highly competitive retail industry.

Home to numerous small businesses, the city is also headquarters to a number of national and international companies.  Numerous local firms provide legal, accounting, financial, insurance, banking and real estate services to the region.

As a leading education centre, Toowoomba enjoys the benefits of the presence of the University of Southern Queensland with its large overseas student population and external studies unit.  The city is the nations leading location for secondary Boarding Schools with many Catholic, Independent and Christian Day and Boarding Schools.

Medical facilities include the extensive Toowoomba Base Hospital as well as two of Queensland’s larger Private Hospitals:  St Vincents and St Andrews.

Being at the junction of three national Highways – New England, Warrego and the extension of the Newell – and with existing and proposed new rail links, makes the city a major transportation hub.

Read more…

Unless you have been hiding under a rock this past week you would have heard (or heard of) the visiting American economist Harry Dent. Here to promote his book called “End of the World”; Harry is back to his old tricks telling people not to buy a house. He’s also telling people to sell what they have because houses are set to drop in value by 60%. Of course he cites what has happened in the US and Japanese markets for ‘evidence’ in exactly the same way as he did almost three years ago. NB: He was wrong then and he’s wrong now; but will no doubt sell enough books in between time so as to not really care.

A Walk Down Memory Lane

Let’s cast our memories back in time to March 2009 when Harry prophesied that “within 6 months our economy would be down the same dark hole that the US economy had plunged into”. Courier Mail March 02 2009

Dent was obviously wrong then and the Australian economy remains one of the strongest in the developed world.

In February 2009 a mutual fund known as the AIM Dent Demographic Trends Fund once had $2 billion in assets. It was merged into another, now extinct, mutual fund when only 20% of the assets were left. Dent claimed the poor performance was due to the fund not taking all of his advice.

In 2006 Harry Dent forecast the Dow hitting 40,000 by the end of the decade, the NASDAQ advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009. The great boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010.

Boy was that wrong! The Dow’s now around 11,000, not 40,000, the NASDAQ is under 2,500, not over 13,500.

No Real Estate Tsunami

A recent panel of Australians, Craig James senior economist from ComSec, Michael Pascoe and others did not agree with Harry’s “real estate tsunami” predictions for Australia.

Listen to Craig and Michael here

Comparing Australia With Japan

Read more…

Learn Where The Boom Markets Are And How To Take Advantage Of Them!

Boom Strategies That Put Money IN Your Pocket!

Watch out NEXT WEEK for details of these Live Information Sessions coming in October

Details released this coming week!

“How To Cashflow Property” was a popular question asked by many of the hundreds who completed my short 90-second survey this week.

THANK YOU to everyone who participated!

Current cost of living pressures have people torn between two realities:

1. The need to exercise extreme caution and defer new investment borrowings because of uncertain economic conditions.
2. The need to break the poverty cycle and get out of the financial ‘rat race’ once and for all… also because of uncertain economic conditions.

If like so many these days you want to take decisive action but have been put off by adding further pressure to your cash flow then the answer may be right under your nose.

“Great opportunities arise when excellent investment prospects are surrounded by unusual circumstances that cause a situation to be misappraised.”

There is no doubt that we are living in unusual times; but that has its UPside… opportunity, opportunity, opportunity!

One message I have heard through the survey results and from speaking with people generally is that the biggest obstacle to opportunity can be summed up in two words – Cash flow!

Now you can have your cake and eat it too! Read on for details of free-standing houses and duplexes with rental returns of up to 8.85% and great capital growth potential. That’s $299 a week cash flow positive using mrd‘s advanced financing strategies!

15% Property Returns About Normal

As a rule of thumb a property that grows on average by 10% p.a. should at the time of purchase have a rental return of about 5% (total 15%).

For a property to deliver positive cash flow the rental return needs to be about 8%… meaning such a property will grow on average by roughly 7% – or take ten years to double in value (a BIG difference from seven when you factor the power of compounding).

Finding property that doubles faster has always been my goal. Yes, in the same way as some events may trigger a one-off spike in property values the impact of the global financial crisis (GFC) had a negative short-term effect. But it’s medium to longer term averages that we should be investing for (unless you are a property trader or speculator; but that’s a completely different, higher-risk strategy that we do not promote).

You Will Never Get Rich On Rent

Read more…