Australian Federal Election - 2022

[sptrawler]

Have you seen the demand for rentals in some markets? I had 27 applications on one of my units I just renovated, I am not sure who you think is going to step up and provide the capital for building / renovating more rentals if new investment from investors was stopped, I know you will say you are happen for investors to be limited to new buildings, but buildings last for decades, we have to be able to sell them to other investors otherwise we won't want to invest the capital to begin with.

I can guarantee you I would not have invested all the money I did to renovate the units if I didn't think other investors would be there to buy it from me if I decide to sell, I would be forced to become a slum lord, holding the property and just taking out all the cash I could rather than putting more money in to improve it and stay in the business of offering quality living quarters.

I don't think negative gearing residential property should be stopped, but it should be limited, so that it focuses on the market where it is required, a friend of mine had $10m of rental properties negative geared. So paid zip tax.
Wait for the capital gain flip and upgrade your PPR, worked well for him, he now lives in the most exclusive suburb of Perth and still works for wages.

 

[Value Collector]

I don't think negative gearing residential property should be stopped, but it should be limited, so that it focuses on the market where it is required, a friend of mine had $10m of rental properties negative geared. So paid zip tax.
Wait for the capital gain flip and upgrade your PPR, worked well for him, he now lives in the most exclusive suburb of Perth and still works for wages.

Sounds like a bit of speculator, he would have had to pay capital gains tax, and in the mean time was providing housing for less than the cost of capital.

I wouldn't have a problem with a rule designed to limit negative gearing of speculators, but its hard to design a rule like that that wouldn't also trap genuine investors.

If interest rates hit 9% again, Even Mum and Dads that bought property on Low 50% LVR's and are positive cashflow today could find them selves negatively geared for a while, I don't want them to be faced with a rule that restricts their ability to deduct those high interest rates, its enough pain for them to be hit with the genuine loss of negative cashflow by itself, they should be allowed to offset other income and only pay tax on their real net earnings.

 

[SirRumpole]

3. most of the groups I mentioned above are not capable of deploying capital to meet their own demand, so their demand will not increase supply unless enough investors can step in and provide the capital in return for regular rental payments,

Well, given that investors are providing a social service for people not rich enough to raise their own capital, maybe rental properties should have rent caps on them so the lower earners aren't priced out of the market.

 

[Value Collector]

Well, given that investors are providing a social service for people not rich enough to raise their own capital, maybe rental properties should have rent caps on them so the lower earners aren't priced out of the market.

They could do that, but then that would either discourage investors investing at all, or severely limit the types of products investors can bring to the market.

For example imagine if there was a legal limit to the rental car companies could charge for car rentals, their range of vehicles would obviously become limited, their fleet would be age, and customers who honestly want better vehicles wouldn't be able to get what they want.

There are rent controlled apartments in New York City, and they are becoming the domain of the slum lords, because the cost of improvements has become prohibitive

I for one added solar panels to the units I just renovated in the hope that it would be a win win for me and the tenant, eg slightly higher rent for me and a big reduction their power bills, but if there was rent controls I wouldn't have done that, I also added more fencing to give each unit a private back yard, installed air con and installation etc, I did all these things to provide a better product to market and in the hope that I will be rewarded by a fair rental return in compensation, but rent caps would mean these additional investments would become higher risk, so I wouldn't have done it.

 

[SirRumpole]

They could do that, but then that would either discourage investors investing at all, or severely limit the types of products investors can bring to the market.

For example imagine if there was a legal limit to the rental car companies could charge for car rentals, their range of vehicles would obviously become limited, their fleet would be age, and customers who honestly want better vehicles wouldn't be able to get what they want.

There are rent controlled apartments in New York City, and they are becoming the domain of the slum lords, because the cost of improvements has become prohibitive

I for one added solar panels to the units I just renovated in the hope that it would be a win win for me and the tenant, eg slightly higher rent for me and a big reduction their power bills, but if there was rent controls I wouldn't have done that, I also added more fencing to give each unit a private back yard, installed air con and installation etc, I did all these things to provide a better product to market and in the hope that I will be rewarded by a fair rental return in compensation, but rent caps would mean these additional investments would become higher risk, so I wouldn't have done it.

Not all landlords would be as diligent as you.

I think a lot would just bump up the rents and not provide any of the improvements that you have, so renters lose both ways.

 

[sptrawler]

Not all landlords would be as diligent as you.

I think a lot would just bump up the rents and not provide any of the improvements that you have, so renters lose both ways.

Investors who rent to low income earners aren't there as a social service, they are there to make money, adding an improvement to the property is another item on the lease that the landlord has to repair.
There are good landlords, there are good tenants, usually the good landlords move up to a better standard of rental property and a good tenant usually leaves and purchases their own home.
That has been my experience, when I started out in investment properties it was with a two bedroom flat in a block of 50, then I bought a second. The tenants were terrible the wife and I cleaned them and painted them, they were spotless when rented, always a mess when the tenants left.
Flipped them and moved into houses on developable blocks, again a lot depended on the areas you purchased in, the better the area the better the tenant.
Gave up renting properties when I retired, way too much work, hassle and too time consuming, that's why the Government got out of social housing and would rather supply bond assistance and rent assistance, much easier than actually supplying social housing.

 

[Value Collector]

Not all landlords would be as diligent as you.

I think a lot would just bump up the rents and not provide any of the improvements that you have, so renters lose both ways.

It’s a market though, the crappy properties will earn crappy rent, and attract crappy tenants with no other options.

With out the improvements I made I would definitely not have been able to charge the same rent I am currently getting, and I wouldn’t have attracted as many applications so would have had to accept a lower quality tenant.

I was renting out the units before I renovated, the rent was lower, and the quality of the tenant was lower, so I made the business decision to allocate extra capital, bring a better product to market and hopefully earn a decent return on that additional capital over time, so far so good.

 

[Value Collector]

Investors who rent to low income earners aren't there as a social service, they are there to make money, adding an improvement to the property is another item on the lease that the landlord has to repair.
There are good landlords, there are good tenants, usually the good landlords move up to a better standard of rental property and a good tenant usually leaves and purchases their own home.
That has been my experience, when I started out in investment properties it was with a two bedroom flat in a block of 50, then I bought a second. The tenants were terrible the wife and I cleaned them and painted them, they were spotless when rented, always a mess when the tenants left.
Flipped them and moved into houses on developable blocks, again a lot depended on the areas you purchased in, the better the area the better the tenant.
Gave up renting properties when I retired, way too much work, hassle and too time consuming, that's why the Government got out of social housing and would rather supply bond assistance and rent assistance, much easier than actually supplying social housing.

Yep, it’s to much work for me to to bother scaling up my direct property portfolio, I am not buying anymore direct rental properties, so I am keeping the ones I have but definitely not adding any extra, it’s far easier to buy units in the listed or unlisted Charter Hall properties trust and just collect the distributions, the underlying commercial and industrial properties earn more rent and I don’t have to deal with them directly.

Anyone that says residential property land lords earn to much has probably never been one.

 

[SirRumpole]

Yep, it’s to much work for me to to bother scaling up my direct property portfolio, I am not buying anymore direct rental properties, so I am keeping the ones I have but definitely not adding any extra, it’s far easier to buy units in the listed or unlisted Charter Hall properties trust and just collect the distributions, the underlying commercial and industrial properties earn more rent and I don’t have to deal with them directly.

Anyone that says residential property land lords earn to much has probably never been one.

Have you been in the Air BnB market ?

Just interested in the benefits or otherwise compared to long term .leasing

 

[Macquack]

Yep, it’s to much work for me to to bother scaling up my direct property portfolio, I am not buying anymore direct rental properties, so I am keeping the ones I have but definitely not adding any extra, it’s far easier to buy units in the listed or unlisted Charter Hall properties trust and just collect the distributions, the underlying commercial and industrial properties earn more rent and I don’t have to deal with them directly.

Anyone that says residential property land lords earn to much has probably never been one.

So you do have a job, managing your investment properties.

 

[Value Collector]

So you do have a job, managing your investment properties.

Well yep, I would say my job is managing my investments in general, and the investment property side of things is something that I don’t want to scale up any further than what I already have.

 

[Value Collector]

Have you been in the Air BnB market ?

Just interested in the benefits or otherwise compared to long term .leasing

No, I think that would be even more labour intensive.

 

[wayneL]

Yep, it’s to much work for me to to bother scaling up my direct property portfolio, I am not buying anymore direct rental properties, so I am keeping the ones I have but definitely not adding any extra, it’s far easier to buy units in the listed or unlisted Charter Hall properties trust and just collect the distributions, the underlying commercial and industrial properties earn more rent and I don’t have to deal with them directly.

Anyone that says residential property land lords earn to much has probably never been one.

Indeed. People find out the difference between theoretical gross income, real gross income, and nett income, the hard way.

 

[Value Collector]

Indeed. People find out the difference between theoretical gross income, real gross income, and nett income, the hard way.

I recommend it as a side hustle if it’s hobby you think you might enjoy and if you have the right temperament for it, and some lazy capital you want to put some where, a rental property can teach you alot.

But, yeah there are easy ways to make money, that are scalable where increasing size doesn’t result in increasing headaches.

 

[sptrawler]

I recommend it as a side hustle if it’s hobby you think you might enjoy and if you have the right temperament for it, and some lazy capital you want to put some where, a rental property can teach you alot.

But, yeah there are easy ways to make money, that are scalable where increasing size doesn’t result in increasing headaches.

It is a big subject and an interesting one that many could add content to, maybe @Joe Blow could move these last few posts to a new thread 'rental properties', as I can add about 30 years of experience to it.
But under Federal election it would be lost.

 

[SirRumpole]

No, I think that would be even more labour intensive.

Yes, but you could always hire someone to do the routine stuff.

 

[Value Collector]

Well, given that investors are providing a social service for people not rich enough to raise their own capital, maybe rental properties should have rent caps on them so the lower earners aren't priced out of the market.

I found this short video that explains some of the pit falls that they have discovered in the US cities that brought in rent control.

 

[SirRumpole]

I found this short video that explains some of the pit falls that they have discovered in the US cities that brought in rent control.

If I was a landlord subjected to rent control I might be tempted to sell my apartment or whatever to an owner occupier instead of putting up with the hassle.

Which should be the objective of measures like rent control, more home ownership.

So why do landlords still stay in the business of being landlords ? There must be something in it for them.

 

[Value Collector]

1. If I was a landlord subjected to rent control I might be tempted to sell my apartment or whatever to an owner occupier instead of putting up with the hassle.

2. Which should be the objective of measures like rent control, more home ownership.

3. So why do landlords still stay in the business of being landlords ? There must be something in it for them.

1. Thats what ends up happening, working class neighbourhoods have all the rentals steadily disappear as they are sold to upper middle class, and the rental units are never replaced with new rental developments because no one wants to invest in them.

2. The objective should be affordable housing whether you are a renter or home owner, as I explained earlier there needs to be a large healthy supply of rentals, rental caps restricts that supply.

3. which land lords are you talking about? are you talking about the rent controlled areas of the USA? if a Land lord wants to get out of land lording they have to sell their property to another land lord, because they can't force tenants to move out. So they either wait for tenants to leave and the convert the unit into an owner occupier, or sell to a slum lord who is happy to collect the base rent and let the property crumble until the tenants leave or the building condemned.

Some land lords just end up setting the building on fire to claim insurance, and then sell the land to a developer.

 

[PZ99]

If I was a landlord subjected to rent control I might be tempted to sell my apartment or whatever to an owner occupier instead of putting up with the hassle.

Which should be the objective of measures like rent control, more home ownership.

So why do landlords still stay in the business of being landlords ? There must be something in it for them.

I know a few who are into defense housing. I think some of those rents are controlled and thus that income is ultra low but the cap gains made up for it.

Not sure how that would play out today though given the prices are coming down at the moment.