Shares or Property?

[lilly87]

I would say both if you have enough financial resources. Invest in at least one extra property (or two) and the rest leave for investing in biotech companis, genetic engineering companies, surely technical companies and all companies with a great potential for future growth. I am trying to this right now. I must admit that is difficult to do, but not entirely impossible. It just needs time and patience, and certainly good cash.

 

[MovingAverage]

Personally, I'm happy to be getting out of property right now. Have offloaded two IP's in Sydney over past two years.

 

[wayneL]

Personally, I'm happy to be getting out of property right now. Have offloaded two IP's in Sydney over past two years.

I'm in the market for a PPOR ATM, yeah pretty crap timing I know.

But anyway, taking to the RE agents, tonnes of investors are using the seller's market to GTFO, pursuant to COVID experience and pending law changes here in the Soviet Republic of McStalinstan.

FWIW.

 

[MovingAverage]

I'm in the market for a PPOR ATM, yeah pretty crap timing I know.

But anyway, taking to the RE agents, tonnes of investors are using the seller's market to GTFO, pursuant to COVID experience and pending law changes here in the Soviet Republic of McStalinstan.

FWIW.

I really do wish you all the best on your search for a PPOR--it's tough no doubt.
My last place (Sydney inner west) went to auction early Nov--hardly any stock on the market at the time and very strong buyer demand. Got a very sold price and happy. Fast forward 1 month to this weekend and every investor and his dog has put their IP on the market--AFR was reporting today that last weekend's clearance rates in Syd (and Melb) had dropped 20% as the FOMO factor cools, yields are dropping and more stock coming on the market. Glad I'm out of IPs (for the time being)

 

[wayneL]

I really do wish you all the best on your search for a PPOR--it's tough no doubt.
My last place (Sydney inner west) went to auction early Nov--hardly any stock on the market at the time and very strong buyer demand. Got a very sold price and happy. Fast forward 1 month to this weekend and every investor and his dog has put their IP on the market--AFR was reporting today that last weekend's clearance rates in Syd (and Melb) had dropped 20% as the FOMO factor cools, yields are dropping and more stock coming on the market. Glad I'm out of IPs (for the time being)

I've got till May until this lease runs out. I'm pretty sure we will be able to renew at at the absolutely ridiculous rent.... I basically lube up every Friday. (10 acres with in 35 minutes of the city... Huge house, way too big for us, but lucky to have been able to secure).

On the plus side, business is going swimmingly, so I can afford the lube.

Question is whether to wait a bit or jump in... There is a compelling case for each scenario.

 

[MovingAverage]

Question is whether to wait a bit or jump in...

Each to their own, but if its your PPOR I reckon you just buy when you can...forget trying to time market pullbacks. In the long run your PPOR will come out on top

 

[wayneL]

Each to their own, but if its your PPOR I reckon you just buy when you can...forget trying to time market pullbacks. In the long run your PPOR will come out on top

Well, yes I do tend to agree, but in our estimation, almost every property we are looking at is 2 to $300,000 over the odds.

At this stage in our lives once we buy, we will probably never sell ever again, so price probably not that relevant... But... I could use that 300 grand to derive a whole shitload worth of income, once I even become too decrepit to do my job, or come to my senses.

 

[MovingAverage]

But... I could use that 300 grand to derive a whole shitload worth of income

very good point

 

[Value Collector]

Well, yes I do tend to agree, but in our estimation, almost every property we are looking at is 2 to $300,000 over the odds.

At this stage in our lives once we buy, we will probably never sell ever again, so price probably not that relevant... But... I could use that 300 grand to derive a whole shitload worth of income, once I even become too decrepit to do my job, or come to my senses.

Out of interest, to preserve your capital for generating income, would you consider a 30 - 50 year triple net lease?

Eg, if a financier was willing to purchase your dream forever home, and lease it to you on a 30 or 50 year lease, with a property inspection only every 5 years, at a rent that was only 75% of the current market rent, but that increased each year with inflation.

But in return for the rent being only 75% of market rent you had to cover the costs such as rates, insurance and Maintenance for the term of the lease as if you owned the property.

Is that deal something that would appeal to people?

 

[MovingAverage]

Out of interest, to preserve your capital for generating income, would you consider a 30 - 50 year triple net lease?

Eg, if a financier was willing to purchase your dream forever home, and lease it to you on a 30 or 50 year lease, with a property inspection only every 5 years, at a rent that was only 75% of the current market rent, but that increased each year with inflation.

But in return for the rent being only 75% of market rent you had to cover the costs such as rates, insurance and Maintenance for the term of the lease as if you owned the property.

Is that deal something that would appeal to people?

Is that a similar model to some EP countries?

 

[Value Collector]

The reason for the above deal, is that I have been trying to think of ways in which a long term synthetic bond could be made that’s income increases with inflation and the capital is also protected from inflation (because it’s underwritten by the properties land value which should increase with inflation over the 30 years).

The tenant for his part, would get the stability as if she owned it, but didn’t actually have to sink a chunk of capital it at the start.

 

[Value Collector]

Is that a similar model to some EP countries?

I am not sure, it’s just something I have been thinking about, I like real estate as a place to store capital that I won’t need for maybe 30 years, because it’s a natural hedge against inflation.

But I don’t really enjoy land lording, eg dealing with constantly changing tenants and realestate agents etc.

So I have been thinking about whether it’s viable to either do buy and lease back deals (like the one I described above) with people in their 60’s who want to unlock their capital while also living in their home as they always have or even maybe new home buyers who are in their 40’s or 50’s willing to sign 30 to 50 year leases.

So I would secure my self a hassle free inflation hedged income for my life, and then when I am in my 70’s or earlier if the tenants pass away, I can start selling off some of these properties that are nearing the end of their term and have may Capital returned.

 

[wayneL]

The reason for the above deal, is that I have been trying to think of ways in which a long term synthetic bond could be made that’s income increases with inflation and the capital is also protected from inflation (because it’s underwritten by the properties land value which should increase with inflation over the 30 years).

The tenant for his part, would get the stability as if she owned it, but didn’t actually have to sink a chunk of capital it at the start.

I guess that pretty much mirrors the European model of tenancy, if I'm not wrong.

From my point of view it would entirely depend on my view of the capital gain of such properties in relation to inflation.

I think in a deflationary or a stable scenario it would be a great deal for the renter. I think bright 2 the baby boom it would have been a stunninglu good model for all parties concerned.

But it could be that in an inflationary environment but it might be a bad model...

It is my opinion that over the long term that the only way out of the current conundrum is inflation, perhaps hyperinflation, in spite of *possibly near-term depressionary pressures.

I do think that the holding of hard assets will be the go, going forward.

I am not sure, it’s just something I have been thinking about, I like real estate as a place to store capital that I won’t need for maybe 30 years, because it’s a natural hedge against inflation.

But I don’t really enjoy land lording, eg dealing with constantly changing tenants and realestate agents etc.

So I have been thinking about whether it’s viable to either do buy and lease back deals (like the one I described above) with people in their 60’s who want to unlock their capital while also living in their home as they always have or even maybe new home buyers who are in their 40’s or 50’s willing to sign 30 to 50 year leases.

So I would secure my self a hassle free inflation hedged income for my life, and then when I am in my 70’s or earlier if the tenants pass away, I can start selling off some of these properties that are nearing the end of their term and have may Capital returned.

I think the game of landlording is changing and about to change a whole lot more.

I in my most humble opinion, I think it is going to get a whole lot more **** for both tenant and landlord, at least and WA as these legislative changes come through.

For me at this stage in my life, I think owning stacks up as the better option, even without the prospect of capital gain.

I really think that I would prefer to gear myself up with financial instruments rather than property to be honest (assuming that I may have half an idea of what the hell I am doing)

For me the transaction costs of property and the lack of mark-to-market is a massive negative.

 

[qldfrog]

I guess that pretty much mirrors the European model of tenancy, if I'm not wrong.

From my point of view it would entirely depend on my view of the capital gain of such properties in relation to inflation.

I think in a deflationary or a stable scenario it would be a great deal for the renter. I think bright 2 the baby boom it would have been a stunninglu good model for all parties concerned.

But it could be that in an inflationary environment but it might be a bad model...

It is my opinion that over the long term that the only way out of the current conundrum is inflation, perhaps hyperinflation, in spite of *possibly near-term depressionary pressures.

I do think that the holding of hard assets will be the go, going forward.
I think the game of landlording is changing and about to change a whole lot more.

I in my most humble opinion, I think it is going to get a whole lot more **** for both tenant and landlord, at least and WA as these legislative changes come through.

For me at this stage in my life, I think owning stacks up as the better option, even without the prospect of capital gain.

I really think that I would prefer to gear myself up with financial instruments rather than property to be honest (assuming that I may have half an idea of what the hell I am doing)

For me the transaction costs of property and the lack of mark-to-market is a massive negative.

And do not forget annual fees on RE.depreciation weaf and tear, out of fashion,rates and soon land tax

 

[MovingAverage]

I am not sure, it’s just something I have been thinking about, I like real estate as a place to store capital that I won’t need for maybe 30 years, because it’s a natural hedge against inflation.

But I don’t really enjoy land lording, eg dealing with constantly changing tenants and realestate agents etc.

So I have been thinking about whether it’s viable to either do buy and lease back deals (like the one I described above) with people in their 60’s who want to unlock their capital while also living in their home as they always have or even maybe new home buyers who are in their 40’s or 50’s willing to sign 30 to 50 year leases.

So I would secure my self a hassle free inflation hedged income for my life, and then when I am in my 70’s or earlier if the tenants pass away, I can start selling off some of these properties that are nearing the end of their term and have may Capital returned.

Yes, what you’re suggesting is somewhat similar to what they do in a number of European countries. I know home ownership is engrained in the Australian dream—but reality is home ownership will never be an option for a lot of Australians and this will only get worse (not better) in the future. Realestate is a finite resource and with an ever increasing population that is obsessed with living near the three capital cities on the east coast something has got to give.

We have a private housing rental system that is relatively focused on short term leasing and occupancies. It is generally very difficult to get long term leases (many years) in most parts of Australia—12 month leases seem to be the de facto standard. I think this lack of security over long term rental accomodation is a contributing factor to driving folks into buying their own homes.

I often wonder whether we in Australia need a shift of focus to start thinking about serious long term rental arrangements along the lines of what you are suggesting. Similar systems have worked well across Europe for a very long time—in fact I have a friend in Germany who has been in a 50 year lease for many decades and that lease can be passed on to other family members if need be.

 

[qldfrog]

And the latest from Labour in Victoria

Windfall gains tax — frequently asked questions | State Revenue Office

Exemptions and exclusions Rezonings and valuations Selling a property Deferring a windfall gains tax liability Paying your windfall gains tax liability Grouping and aggregation Objections Deductions Prohibition on passing on windfall gains tax Exemptions and ex

www.sro.vic.gov.au

The love of Australians for RE might quickly fade....

 

[Value Collector]

And the latest from Labour in Victoria

Windfall gains tax — frequently asked questions | State Revenue Office

Exemptions and exclusions Rezonings and valuations Selling a property Deferring a windfall gains tax liability Paying your windfall gains tax liability Grouping and aggregation Objections Deductions Prohibition on passing on windfall gains tax Exemptions and ex

www.sro.vic.gov.au

The love of Australians for RE might quickly fade....

Looks like residential property is exempt, But the looks of it to me the biggest losers will be owners of rural property that have their land rezoned.

Traditionally it’s been a good investment to own some rural land on the fringe of a city, growing some pineapples or grazing some cattle for 30 years while you wait for the city to expand so you can sell for a big capital gain and retire.

Now it looks like in Victoria the government wants to tap into these land owners retirement fund, with the thinking that the capital gain is being generated by the governments rezoning, so they want 60% of any gain.

————————

There is a bad side effect here, the tax is calculated and payable when the rezoning happens, but can be deferred until the property is either sold or for 30 years.

So if the rezoning happens in 2025, there is going to be a strong incentive for the land holder to put off actually selling the land for as long as possible. Because as long as he continues to hold beyond that rezoning date he still has a large untaxed capital amount growing in his favour. So it could actually restrict future available land supply, and force property prices higher.

 

[adamjedgar]

I have read the first part of this topic and jumped over a few years to this page. I hope I'm not repeating a thought someone has already posted in between 2014 and now...

given that many are renting and wish to purchase, would i be right in suggesting that the rent being paid out is technically dead money? So for someone who is renting at say $600 per week, is purchasing an Investment Property even a good idea when that $30k rent could be directed into a home loan? do IP tax benefits really outweigh this?

It makes me think shares might suffer a similar problem for an individual who doesnt live in their own home? (the dead rent money)

I came across a couple of individuals (both tradies strangely enough) who lived in their cars (one a converted utility and the other a van) and rented out their IP's. Obviously singles could do that i suppose.

 

[wayneL]

I have read the first part of this topic and jumped over a few years to this page. I hope I'm not repeating a thought someone has already posted in between 2014 and now...

given that many are renting and wish to purchase, would i be right in suggesting that the rent being paid out is technically dead money? So for someone who is renting at say $600 per week, is purchasing an Investment Property even a good idea when that $30k rent could be directed into a home loan? do IP tax benefits really outweigh this?

It makes me think shares might suffer a similar problem for an individual who doesnt live in their own home? (the dead rent money)

A prescient post for me right at this very moment for different reasons

We've got six figures in cash that I am very uncomfortable with sitting in the bank.

Mrs wants to sink it into a suburb here in Perth which we both think has very good prospects going forward. But I am that doubtful about capital gains over the next 5 to 10 years (but bullish beyond that) yes we do want to gain a foothold into for our future living arrangements.

I am more bullish over the medium to long-term with the stock market, but cognizant of short-term risks.

Anything we do will be unleveraged, so a bit of a mule at a new gate at the moment.

Discussion is ongoing.

 

[qldfrog]

A prescient post for me right at this very moment for different reasons

We've got six figures in cash that I am very uncomfortable with sitting in the bank.

Mrs wants to sink it into a suburb here in Perth which we both think has very good prospects going forward. But I am that doubtful about capital gains over the next 5 to 10 years (but bullish beyond that) yes we do want to gain a foothold into for our future living arrangements.

I am more bullish over the medium to long-term with the stock market, but cognizant of short-term risks.

Anything we do will be unleveraged, so a bit of a mule at a new gate at the moment.

Discussion is ongoing.

Inflation is here and a monster recession coming if not already started.
Assuming that the powers in charge do not push to hot war as a pretext to clear the mess:
Where are you better off:
shares in recession or RE..
My view is RE especially land as an inflation edge, assuming we still have an increasing population.
In Japan, that might be different..
Do not forget gold silver...