if you want to pay off someone elses house and have all the other bullshit that goes with it like house inspections,possibility of eviction and having to move more frequently then rent if you want more security and to eventually own a house then buy
to be honest i totally guessed the average property value increase i knew its no more than ten, thought it was less than 5 but meh, 7 sounds good. also capitol gains tax on investments would be offset by property rates/taxes and maintenance/upkeep. the property i rent was valued at 450,000. we pay $1450PCM in rent, so $17,400PA so thats a 3.8%PA return... which is crap. if you add 7% on 'value increase' then subtract interest from your loan, taxes, rates and maintenance and you have a substantial loss over investing your money into a 'safe' portfolio. just sayin'
Yes I'm looking into that, and thats along the lines of what I was thinking. At the very least I think this is a better option of investing my money in the short-medium term maybe I'll buy a house with that money? We'll see. Somebody please explain this 'capital gains' tax that seems to push people over the fence on either side. Whats the deal with it, how does it affect a property? how does it affect a rental, shares, etc etc I keep hearing all the horror stories about how awful it is to rent, but in actual fact renting is fine. Sure there's a few things I wouldn't mind doing to the house like laying a slab in the backyard and a better gate so I can work on cars but hey I'm willing to live with that, maybe the next house I rent with my wife will have some of those things in it. I'll make one point here, that my marriage will be the single most important thing in my life, 2nd when they come will be my kids. Now having seen my parents, and my friends parents, most of them are late 40s early 50s - nobody owns there home, most aren't even close. I'd rather have the money / time to have living life - paticularly when I have kids than be stressing about meeting mortgage repayments, debt tears apart marriages - not saying that happens in every one but it's definitely something I'll think twice about. Quick question - When was the last time any of you were DEBT FREE ? Yeah, you'd end up walking out with a home loan! haha
As i said earlier, with negative gearing, running at a loss is not a problem while you have other people paying for your property. It also benefits your income. Stock market is a mugs game, to me it is like the pokies and I know very few people who have done well out of it. The only gamble I have taken is when I bought gold back in 2000. Paid off well. Again though, each to their own, I prefer to see my money going into something physical. Check ATO's website. It will explain t all best. Effectively it is a tax on making a profit. Considering the market when they could have bought I would say they have made bad calls on finances. Most I know in their 40's have paid off their homes, they were lucky enough to buy in the 80's and saw out the recession. Their mortgages are minute in comparison to todays market. Why can you not have both? I had a hard four years while studying and working full time. It has all paid off now to the point we are comfortable. Not once did we stress about repayments, instead we went without luxuries that we do not need. I do not know anyone where debt has torn apart a marriage. I do know a few where bad budgeting skills were the cause. Blaming debt is silly, as the debt is not the root of the problem, it is only a symptom. Never. As soon as I turned 18 i bought a property in Geelong while serving in the army. I do not see debt as an issue. I see it as a stepping stone to being debt free in 10 years and where I can provide everything for any children we have including top rate education. For me, I want to make my childrens life everything and work hard to setup their lives so they do not have to work as hard to setup their childrens. Worse case scenario is we sell off owned property that has zero debt and we are home free. Everyone has their own way of doing things, hard work now means easy life later.
Yeah you're not wrong about that, hence why I'm asking. So you paid off a house in 4 years? Right again, debt is a symptom of living beyond your means. I was talking more about homeloan repayments than general debt, all I'm saying is it is a big responsibility and can be a huge strain on any relationship. Yeah it's not necessarily and issue, but I was just curious I'll do some more research and possibly attend this Sir Richard Branson, Tim Ferriss, 21st Century Financial Education Summit I've got 5 months or so until I'll be seriously looking at exactly what to do. Will just be saving in the mean time, when I get 2-3k in the bank maybe I'll start investing then instead of saving and see where that gets me.
maybe you've heard the horror stories because it happens all the time. Maybe you've just had a good run, I know maybe one person who has, the rest have similar stories to mine. If the landlord manages the property themselves and you strike up good relations with them, they will probably tend to leave you alone. but most times you get stuck with a real estate, and they couldn't give a **** about the tenant. I did a lot of repairs myself rather than bother the real estate, kept all the places I rented in good order, including yard etc. Yet they'd drop the notice to enter notices every 3 months in my letterbox overnight and show up the next day when I was at work. I had no knowledge they were there until I found the notice of entry in my letter box the next day. I had a landlord decide to put one property I lived in for sale. Every couple of days I had strangers walking through my home, opening cupboard doors etc. This went on for a couple of months. I approached the real estate about it, and their response was that's the way it is..... I ended up moving out after a couple of months of that crap. Next place I moved into, I asked the real estate if the landlord had any plans of selling within the next few years, he indicated that they didn't have any such plans. Just after a 12 months of moving in, the place was sold and I was moved out. Another place I had a toilet that had come loose from the floor. Water was leaking out of the rear pipe. I had approached the real estate several times to fix it. They eventually sent some handyman guy out who simply put new screws in the base, which barely lasted a day before they pulled out (the inserts in the concrete needed replacing). I told the real estate and they never got back to me. So I eventually paid a plumber myself to fix it. I submitted the invoice to the real estate requesting re-inbursment, and never heard back..... Real Estates know that they have a long line of tenants waiting for properties, so their attitude is if you don't like it, move out. And this sort of scenario is not unheard of, in fact it's very common
I bought my first property when I was 18, worked my butt off and poured all of my money into paying it off. And from then I gradually bought more properties ( as my bank manager and adviser would let me ) and it sort of snow ball from there. As I said in a previous post that you'll never loose money on property, I was talking residential property not commercial portfolio's. I stick to buying properties in areas that I know are going to have high occupancy. Close to schools and universities are my favorite. But its ip to you wether your buying just for a place to live or to build personal wealth, justice sure you get plenty of advice before you commit to anything. And I don't mean forum advice either.
Information presented here is of general nature and you should consult a registered investment advisor before making any decisions. From a purely financial point of view, rental returns are generally lower than the interest paid out to a bank as part of a mortgage thus renting is the cheapest way of living in a particular house. To take full advantage of that, one should take the difference between the rental payment and what the mortgage payment would have been and further invest that money on a weekly/monthly basis. Of course most don't do that and thus any advantage is lost. "Ownership" is pretty much an inefficient forced savings plan. Banks charge for this service by means of interest in your mortgage. That said, many people seem to lack the discipline to save in any other way so its better than blowing all the money away. Your point "b" is the cheapest way out although there is the down side of renting being unable to make changes to the house/garden etc in most cases and of course the insecurity of being kicked out at the end of a lease period. Weather you invest in other property, shares, bonds, fixed interest or other asset classes is really a matter of personal preference. You can find any number of examples that show *any* of the classes are "best" for a given time. I personally like to put my money over a number of classes. Of late I have would back on some of the emerging equities markets and very recently cashed in some of the huge gains I have made in gold and moved into some of the listed property trusts and resource stocks that have been oversold (I hope) recently. Both of these sectors are quite undervalued (IMO) and have excellent prospects for outperforming the market in the next few years. Further to that I have some money in a few hedge funds (makes money weather equities go up or down - volatility is great for these types of funds) and other derivative type investments. Reaper
I'd suggest **never** going to a bank or any other "free" financial planner. I'd recommend an independent planner that will charge you a set fee for advice. That way you can be more sure you are getting true independent advice and not just the range of products that may suit the advisor. Reaper
I cant speak for all branches, but the CBank branch we deal with in Altona has an independent financial planner and she is actually quite good. We sat down with her when organising the latest home loan etc. She on sells both commonwealth products and others. I was rather surprised. You are right though, in most cases they will be pushing the banks products, which in a lot of cases are not that bad. My wage insurance is with C Bank and it is one of the best I come across.
Of course you can. Just be sure to put the disclaimer on the top of each post and don't give specific advice as to "you should invest in x". Reaper
Bingo Reap. Financial Advisor's at Bank's are pushed to sell the bank's products, even when they may know that your situation calls for a service they do not provide, or do not provide as well as a more specialised firm. A bank is a bank, they are not personal investment specialists. Needle in the haystack then minux Fair point Reap. I have suggested to you before Nath to go and see a financial adviser. I still highly recommend it. The services we (my company and others like it) aim to tailor your finances/investing to your life goals.
Yeah I still have the recommendation you gave me a few weeks ago, will likely go and see him in the next few months.
yeah this is the general feeling of most buyers ATM, but i feel its incorrect. i can ONLY base what i am saying on melbourne metro current market values. if you are lucky enough to land a house like darren did for 250k and still have good rental prices then its a perfect system. sadly rental prices in melbourne are such that the interest on your home loan would not be covered by renters "paying your house off" in the current market you would need to suppliment your rental payments with your own income to make your monthly payments. and by quite a lot too. using my house as an example the owner would need to suppliment our rent by around 10-13K a year (very very very roughly) i am by no means saying that buying a house isnt a good investment, and that paying rent is not a HUGE waste of money. what i am saying is there is too much demand in melbourne metro ATM, not enough supply and the going rental price is too low. but that will change: you see, everyone is so keen to capitalise on the market boom that they are building and ivesting in apartments all over richmond and the outer suburbs. each one of these can take 5 years to finish and what people dont see is most of them will get completed at the same time. all of a sudden BOOM, too many propertys become available, not enough people to fill them. demand gets outweighed by supply. market gets saturated by quality apartments and property values melbourne-wide decrease. anyone who bought their overpriced house in the last 5 years and has slogged to pay for it is in for a nasty shock.
My experience over a long time has been that first home ownership is only "available" to most people within restricted windows of compatiable price/income/interest rates. I let two windows go before I actually bought, and missed some very good returns. However, I believe that for the first home buyer there is another element, something like an insurance policy. Once in the market, you are in, If you are not in, you very well may not be able to get in when you want to or when a great opportunity is in the offering.
Unless you are in the top 2 brackets of marginal tax (very few are), these days negative gearing is not as effective as it used to be. The advantage comes when buying new or near new property where you can depreciate off the capital assets (ie buildings). This will greatly increase the amount of tax you can claim back. It should be noted that negative gearing is equally applicable against borrowings for many other asset classes such as shares and bonds for example. Being directly in the building industry I get the quarterly statistics etc from various industry bodies. Victoria has been in under supply of dwellings for 5+ years now and is only just starting to catch up. With the way of the world for the for seeable future still being somewhat depressed I don't see a building boom any time soon. There doesn't seem to be any shortage of buyers for the apartment blocks being constructed at the moment in Vic although other places (such as the gold coast for example) it's a very different story. At worst I would see values drift sideways for a few years but expect modest appreciation in most cases. Reaper
