The power of property...

tech/a · 19 September 2006

If you invest for 20 years in a house you are not going to end up with 1,400,000 because houses do not appreciate as much as shares do. If you think some crappy $200,000 postiviely geared (ie middle of nowhere) house will go up to over 7 times its value in 20 years you are dreaming.

Your a laugh!!!

Reynella 7 Jessamine Avenue.In Adelaide.

I bought this in 1983 for $32,000.
I noticed it sold for $265K in Feb.

No I didnt still own it but you get my point.

My deposit was $5000.
So $5k to $200K (conservative).

Push that lid off your shoe box!!

Bloveld · 19 September 2006

I asked Buffet, and he said you have a snowflakes chance in hell.
And he wants you to eat only dolphin safe tuna.

professor_frink · 19 September 2006

Realist said:
Oh dear, oh dear, no you do not come out ahead.

I have $100,000 and I buy shares hold them for one year then sell, I pay $1000 in brokerage, and after tax I make $7,000.

You buy a $200,000 property that is postively geared (good luck finding one) hold for a year then sell. You borrow $100,000 at 7% interest. So you pay $6,000 in stamp duty, $7,000 in interest, and you pay insurance, rates, water, repair/rennovations, advertising, empty time (no rent), agents fees, body corporate fees, then capital gains tax.

Sorry Realist, I should have made my example a little clearer. If I have a $100,000 and borrow $200,000, then that makes $300 000.

Realist said:
after 1 year you've spent alot of time and effort and you've made nothing

Do you not understand what positively geared means?

Realist said:
Now what happens if houses and shares drop 5%. YOU LOSE MORE.

So the one alternative left is we hold for 20 years.

Well, obviously we hold for an extended period. We aren't trading property

Realist said:
If I invest $100,000 for 20 years at 15% I end up with $1,400,000. If you do not believe it is possible please refer to W Buffett.

We've had this discussion before, Normally it's you doubting the returns of us traders. I believe that's a quite reasonable target- it's why I used it in my example.

Realist said:
If you invest for 20 years in a house you are not going to end up with 1,400,000 because houses do not appreciate as much as shares do. If you think some crappy $200,000 postiviely geared (ie middle of nowhere) house will go up to over 7 times its value in 20 years you are dreaming.

Now your sounding silly. What are you basing that comment on? Do you know what property has done in the last 20 years? Or do you think that we are going to have negative growth for the next 20?

Realist said:
There is no scenario where you are better off leveraging and buying a property, if so please list how it works on the proviso you include all fees, motrtgages and taxes and houses do not appreciate as much as shares (especially country town positively geared houses).

I'm sorry, but you expect me to provide you with a detailed analysis of why I think it could be done, yet you couldn't even understand the primary school example I gave you this morning?

clowboy · 19 September 2006

Realist,

Please accept my humble apoligy. I did check the relevant post to make sure that I had the right person but in my dazed state last night I still managed to balz it up.

And for the record there is nothing wrong with homebrand anything, especially as it does not exist. Homebrand is simply a label. Next time you are shopping compare the tin or bottle or whatever to the name brands, the one that matches is the same product.

Realist · 19 September 2006

professor_frink said:
Sorry Realist, I should have made my example a little clearer. If I have a $100,000 and borrow $200,000, then that makes $300 000.

Ok...

Do you not understand what positively geared means?

I do indeed, and I find it very hard to think you can find a place that is positively geared in any major city in Australia at the moment.

We've had this discussion before, Normally it's you doubting the returns of us traders. I believe that's a quite reasonable target- it's why I used it in my example.

Cool.

But how much will your $300K house be worth in 20 years?

Do not tell me a crappy place in Adelaide will be worth $2.1M in 20 years.

I suspect a $300K place in Adelaide will be worth $250K in 4 years time.

Now your sounding silly. What are you basing that comment on? Do you know what property has done in the last 20 years? Or do you think that we are going to have negative growth for the next 20?

Yeah, it has not gone up 15% per year on average that is for sure.

Realist · 19 September 2006

clowboy said:
Realist,

Please accept my humble apoligy. I did check the relevant post to make sure that I had the right person but in my dazed state last night I still managed to balz it up.

And for the record there is nothing wrong with homebrand anything, especially as it does not exist. Homebrand is simply a label. Next time you are shopping compare the tin or bottle or whatever to the name brands, the one that matches is the same product.

I do not do Homebrand.

Realist · 19 September 2006

tech/a said:
Your a laugh!!!

Reynella 7 Jessamine Avenue.In Adelaide.

I bought this in 1983 for $32,000.
I noticed it sold for $265K in Feb.

No I didnt still own it but you get my point.

My deposit was $5000.
So $5k to $200K (conservative).

Push that lid off your shoe box!!

What exactly is your point?

Had you instead bought $5000 worth of Microsoft shares you'd be a billionaire.

Just because a house went up 8 times its value in the past does not mean they or it will do so in the future. The same goes for MSFT shares, good luck making $1B out of $5,000 over the next 20 years with MSFT shares.

I expect that houses on average will triple over the next 20 years at best. Do you agree?

professor_frink · 19 September 2006

Realist said:
Ok...

I do indeed, and I find it very hard to think you can find a place that is positively geared in any major city in Australia at the moment.

Maybe you should have named the thread "The power of property..... in a capital city at the end of a housing boom".

Then I probably wouldn't have commented.

The world doesn't end when you leave Sydney. And neither do investment opportunities.

If you understand what positively geared means, why the previous comments?

Realist said:
Cool.

But how much will your $300K house be worth in 20 years?

Do not tell me a crappy place in Adelaide will be worth $2.1M in 20 years.

If you had of told people in my area 20 years ago that prices will go up near on 10 fold in the next 20 years they probably would have said the same thing. They did move up by that much however. Not saying that it's going to happen over the next 20, but you get the point.

Realist said:
I suspect a $300K place in Adelaide will be worth $250K in 4 years time.

Doesn't really make much of a difference when you talking about a long time frame. All that means is you could have timed your entry a little better.

Realist said:
Yeah, it has not gone up 15% per year on average that is for sure.

And it doesn't have to. Leverage takes care of the slight difference in returns.

Realist · 19 September 2006

We'll have to agree to disagree.

One of the problems I find with property is that negative gearing is basically your only option in the cities at the moment. And capital gains are gonna be unlikely over the short term.

Positive gearing is an option in a country town, but you may have periods where you can not find tenants, and your chances of capital gains even over the longterm in what is the worlds emptiest country are suspect in my opinion.

Oh well, we need property investors, infact I like property investors, they pay my interest rates, body corporate fees, repairs, and I pay them a small rent in return, and put my left over money into shares, it works well!

Realist · 19 September 2006

professor_frink said:
And it doesn't have to. Leverage takes care of the slight difference in returns.

Leverage works both ways Prof, there are now plenty of people in Sydney with neagtive equity.

petee · 19 September 2006

depends on the shares u buy..if dependable dividend payers then sure u will make money or plus capital gain and if strike rich on spec stock great but remember..property is needed for shelter and with a country like ours which will experience population growth beit not huge then property always in demand..also u have to take into account that most ppl who buy shares and dont own a house,they must rent a property and then they r subject to rises in rental..property will always rise whereas shares are subject to many condition..i remember 1987 for example where ppl jumping out office block buildings to their death..there was never such a downturn on the residentual property market

krisbarry · 19 September 2006

Oh my god... another property thread and the same old merry-go-round, with the same old people sprouting out the same old stuff

Ohhh ...I need a holiday

professor_frink · 19 September 2006

Realist said:
We'll have to agree to disagree.

C'mon Realist. I'm done trading for the day- Gotta give me something to do

Realist said:
One of the problems I find with property is that negative gearing is basically your only option in the cities at the moment. And capital gains are gonna be unlikely over the short term.

It's not a short term investment! If you have enough income to make up the difference for a couple of years then you're sorted. It won't be negatively geared forever. Granted you may have to wait longer if your buying an IP at the moment.

Realist said:
Positive gearing is an option in a country town, but you may have periods where you can not find tenants, and your chances of capital gains even over the longterm in what is the worlds emptiest country are suspect in my opinion.

When you go way out into hicksville, then I completely agree. There are places that people actually live in, that aren't capital cities. And they live there in fairly considerable numbers. Plenty of tenants.

Realist said:
Oh well, we need property investors, infact I like property investors, they pay my interest rates, body corporate fees, repairs, and I pay them a small rent in return, and put my left over money into shares, it works well!

I assume they like you too- your paying their mortgage.

Leverage works both ways Prof, there are now plenty of people in Sydney with neagtive equity.

Yes it does. Over the long term, it shouldn't be a problem. Unless your forced to sell at an bad time. Then again, that can still bite you on the backside if you aren't using leverage. And even with blue chip shares!

professor_frink · 19 September 2006

Stop_the_clock said:
Oh my god... another property thread and the same old merry-go-round, with the same old people sprouting out the same old stuff

Ohhh ...I need a holiday

Well go pack up some tuna, don't put any of your money in super this month and spend it on a holiday then.

Realist · 19 September 2006

professor_frink said:
C'mon Realist. I'm done trading for the day- Gotta give me something to do

Make any money?

I'm up a bit today..

It's not a short term investment! If you have enough income to make up the difference for a couple of years then you're sorted. It won't be negatively geared forever. Granted you may have to wait longer if your buying an IP at the moment.

timing is everything!

When you go way out into hicksville, then I completely agree. There are places that people actually live in, that aren't capital cities. And they live there in fairly considerable numbers. Plenty of tenants.

Where?

I assume they like you too- your paying their mortgage.

no, I'm paying only a part of their mortgage...

Realist · 19 September 2006

Originally Posted by Stop_the_clock
Oh my god... another property thread and the same old merry-go-round, with the same old people sprouting out the same old stuff

Ohhh ...I need a holiday

Go and eat some homebrad food, and leave us alone to discuss these important financial matters.

professor_frink · 19 September 2006

Realist said:
Make any money?

I'm up a bit today..

Yes sir I did

Realist said:
timing is everything!

Where?

South of Newcastle.

Realist said:
no, I'm paying only a part of their mortgage...

In a few years it will be all of it

I might go hit some golf balls. It's a lovely day outside

Realist · 19 September 2006

professor_frink said:
Yes sir I did

South of Newcastle.

suburb?

The Central Coast is overvalued.

Are you talking about the Hunter Valley?

In a few years it will be all of it

No, cause then I'll buy a house outright from all the money I've made off my shares!

I might go hit some golf balls. It's a lovely day outside

While I slave away here at work....

Not for long though, I am free in a few weeks myself.

michael_selway · 19 September 2006

Realist said:
suburb?

The Central Coast is overvalued.

Are you talking about the Hunter Valley?

No, cause then I'll buy a house outright from all the money I've made off my shares!

While I slave away here at work....

Not for long though, I am free in a few weeks myself.

What area of work do u do may I ask?

thx

MS

Realist · 19 September 2006

michael_selway said:
What area of work do u do may I ask?

I sell software for a US software company.

The power of property...

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