I have given up buying a house

[krisbarry]

ahhh but even in its worst years (say sept 11th 2001) almost all super funds had losses in that year, and also the following. Look at the returns on this fund 20+%

 

[bullmarket]

Hi Realist

There are pros and cons to renting just like there are pros and cons to owning your own home....as I said earlier - renting or being an owner/occupier boils down to lifetyle and objectives in life.

But from my point of view I would much rather be a landlord and then 'con' tennants like yourself into paying off my investment loan for me........for me, the landlord is doing the much smarter thing for the long term than the tennant

cheers

bullmarket

 

[Stan 101]

There are still great buys in realestate at the moment. just flipped two homes in 2 months less than 10 km from the CBD. Tidy returns on both. There will always be value if you search hard enough..

All the best for what you decide..


cheers,

 

[krisbarry]

The way I see it, is that we will all achieve the same thing at the end of our working life, and that is a nest egg, be it through housing, super, a business, saving etc.

There is no wrong or right answer to building wealth, it is what works for you at the time.

If you wanna work hard in your 20's save for a 5 bedroom house to pop out four babies, then that is what will be your nest egg.

others have different views....there are many paths to which lead to the same thing.

 

[Realist]

Tenants have no control over rising rents.

And home owners have no control over interest rates.

Tenants can just move to a different suburb or different apartment/house though. Home owners are stuck! If they move taxes, stamp duty, mortgage fees kill them.

Supply and demand means landlords can not charge too much.

 

[Realist]

But from my point of view I would much rather be a landlord and then 'con' tennants like yourself into paying off my investment loan for me........for me, the landlord is doing the much smarter thing for the long term than the tennant

Hi Bullmarket.

Over the longterm buying a house and investment properties is indeed the smart thing to do I agree.

But we are talking about now!! Today. I do not believe buying property is wise to do now.

As I said we rent a $650,000 place for less than $20,000 a year. The landlord pays $3500 in bodycorporate fees, probably $1000 in Agent fees, $400 in repairs etc. Some water, advertisments and downtime if I leave.'

His return is about $15,000 from $650,000 each year.

He gets a cool 2% return on his money annually. Slightly less than inflation.

He's losing money while I am paying cheap rent, saving and investing!

 

[nizar]

Realist

I agree with bullmarket

In 20 years time or more after paying so much in rent every year, ull have nothing (of course youll still have ur BHP shares lol, but not sumthing u can live in)

But the owner; who is using you to pay off his mortgage plus a bit himself; will have a house worth close to a million dollars

And who says that if you have a mortgage u cannot buy shares?

Why do u think people who are cashed up still get loans?

coz homeloan is 7% a year; if u could make more money investing it elsewhere then why not

 

[finnsk]

Question:

What is the profit on a house that you buy today for say $500.000 and sell in ten years time for $1.000.000, you live in it yourself and have a morgage of $400.000 at 7% for 10 years?

 

[Realist]

In 20 years time or more after paying so much in rent every year, ull have nothing (of course youll still have ur BHP shares lol, but not sumthing u can live in)

Nizar, you are missing the point.

I would not buy a house now!!

I will buy a house sooner or later when they are more fairly valued. I'll buy 2 if they become undervalued.


I treat houses the same as I treat shares - I wont pay too much for them. simple as that.


Any idiot knows buying a house is usually an excellent longterm investment.

The smarter ones amongst us know to wait and be patient and bargain hard and buy when they are fairly valued.

If you think buying a house NOW is a good investment you are dreaming. The only exception is if you get a really good deal, a nice house at a discount - then yes I'd buy.

ull have nothing (of course youll still have ur BHP shares lol,

If I invest in BHP and other shares for the next 20 years and they grow quicker than houses do in value - I wotn have a house, no. But I could afford a huge mansion instead!!

 

[cuttlefish]

but there's also that old cliche/proverb which goes:

"whens the best time to buy property?"

"now"

 

[karmatik]

Hi Bullmarket.

Over the longterm buying a house and investment properties is indeed the smart thing to do I agree.

But we are talking about now!! Today. I do not believe buying property is wise to do now.

As I said we rent a $650,000 place for less than $20,000 a year. The landlord pays $3500 in bodycorporate fees, probably $1000 in Agent fees, $400 in repairs etc. Some water, advertisments and downtime if I leave.'

His return is about $15,000 from $650,000 each year.

He gets a cool 2% return on his money annually. Slightly less than inflation.

He's losing money while I am paying cheap rent, saving and investing!

If that landlord paid say a 10% deposit on that $650,000 investment, would your logic not equate to a return of 23% on his $65,000 deposit, not to mention the increase in value of his premises plus tax relief on the interest he/she pays on the original loan. Sounds like a pretty decent investment to me?? You cant see the wood for the trees.

Property may be overvalued at the moment. You need to have look at the historical growth.

 

[krisbarry]

when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs. I reckon it is just as smart as buying a property when you are 20 or 30.

That way I have saved hundreds of thousands of dollars in bank interest.

My super will have grown substanially with continued investment from both myself, my employer, and the government. Then to add in the extra divdends from the companies that will be re-invested into buying more units, a great nest egg awaits me into retirement.

Its the same nest egg, just taken a very different path to the norm.

 

[Realist]

What is the profit on a house that you buy today for say $500.000 and sell in ten years time for $1.000.000, you live in it yourself and have a morgage of $400.000 at 7% for 10 years?

Excelent question.

Let's also assume rent is $300 a week. And you do not pay off the principle at all. Just to make it simple.

Mortgage interest is 7% so that is $28,000 a year.

Buying the house.

In ten years time you'll have paid $780,000 and your house will be worth $1M - so you'll have made $220K (less inflation)

Renting

After 10 years you'll have spent $156,000 on rent. But Investing the $100,000 you had at the start (the deposit) and the $13,000 you save on not having a mortgage each year.

You invest this in bluechips that pay franked dividends, you never sell shares just buy more with your savings for not having a mortgage. You get 10% return per annum (including dividends) You'll have $466,000.

Now rents will probably go up - but home owners have rates, repairs, body corporate fees, agebnt fees, stamp duties etc. So they do cancel each other out. so lets leave it simple.


So in this case renting and investing you make $466,000 (if your investments go up 10%)
Buying you make $220,000 (if your house doubles)

 

[Realist]

If that landlord paid say a 10% deposit on that $650,000 investment, would your logic not equate to a return of 23% on his $65,000 deposit, not to mention the increase in value of his premises plus tax relief on the interest he/she pays on the original loan. Sounds like a pretty decent investment to me?? You cant see the wood for the trees.

If the landlord owed $550,000 on the $650,000 place he'd be paying $38,500 a year in interest.

He'd be losing money hand over fist. Negative gearig would merely reduce his huge losses.

not to mention the increase in value of his premises

What increase? houses in Sydney have gone down for the last 3 years!!


P

 

[bullmarket]

Hi stop_the_clock

when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs. I reckon it is just as smart as buying a property when you are 20 or 30.

That way I have saved hundreds of thousands of dollars in bank interest.

My super will have grown substanially with continued investment from both myself, my employer, and the government. Then to add in the extra divdends from the companies that will be re-invested into buying more units, a great nest egg awaits me into retirement.

Its the same nest egg, just taken a very different path to the norm.

I disagree it's the same nest egg because in a way that implies that at age 65 everyone has exactly the same nett worth which of course they do not.

Yes obviously there are various paths to building wealth for retirement but some are more profitable and less risky than others...........the path each one eventually chooses to take imo boils down to, amongst other things, lifestyle and objectives.

cheers

bullmarket

 

[Realist]

"whens the best time to buy property?"

"now"

You sound like a prudent investor, expert financial advisor, and millionaire extraordinare all rolled into one.



Do you agree Sydney house prices have dropped since late 2003? or not?

 

[bullmarket]

Hi realist

In Melbourne it's only in the last 6 months or so that prices have generally begun to stabilise........and in Perth it's much the same and in some areas the prices are still going up from what I hear

cheers

bullmarket

 

[Realist]

Hi realist

In Melbourne it's only in the last 6 months or so that prices have generally begun to stabilise........and in Perth it's much the same and in some areas the prices are still going up from what I hear

Well Sdyney is 1 or 2 years ahead of the rest of the country with property prices, it boomed first now it has declined first.

I do not know about other Aussie prices nor do I care, all I know is Sydney house prices have dropped for the past 3 years and they are still overvalued. property has been a terrible investment for the past 3 years and will continue to be so for the short term.

Had you bought a $600,000 apartment 3 years ago I suspect you'd have lost up to $150,000 overall.

Had you invested your deposit in shares 3 years ago you'd have made about 80% profit.

It is a no-brainer.

Anyone who thinks houses are ALWAYS a good investment is wrong.

 

[krisbarry]

Hi stop_the_clock



I disagree it's the same nest egg because in a way that implies that at age 65 everyone has exactly the same nett worth which of course they do not.

Yes obviously there are various paths to building wealth for retirement but some are more profitable and less risky than others...........the path each one eventually chooses to take imo boils down to, amongst other things, lifestyle and objectives.

cheers

bullmarket

Off course we will all have different amounts in our nest eggs, total agree, but we will all have nest eggs, built in entirely different ways. This of course depends on lots of factors:

Social status
Family Wealth
Inheritance
Sexual preference
Children/non children
Size of home/unit
Managent of money
Lifestyle factors
etc

 

[cuttlefish]

You sound like a prudent investor, expert financial advisor, and millionaire extraordinare all rolled into one.

I wish ..

Do you agree Sydney house prices have dropped since late 2003? or not?

yeah I agree - was just repeating a proverb I've heard. I believe the message behind the proverb (or the way I read it anyway) is that, given how big an investment property is for most people, its always possible to find an excuse for not buying it just now and waiting for the optimum time - but hindsight often shows that it would have been better to bite the bullet and buy. A bit like 'time in the market' vs 'timing the market'.

But no I'm not saying now is a time to buy or not in Sydney or anywhere (i.e. I'm not trying to offer an opinion one way or another).