Forum Replies Created
Hmm, would I say this?
The most important advantage of real estate investing is LEVERAGE!
To be sure, leverage is a very useful tool – so long as we remember that leverage works in two directions (as well as leveraging our available dollars to purchase a more valuable property, it also magnifies any LOSSES should things turn bad). Leverage is useful, but it can be dangerous too.
To me, the most important advantage is the investor’s education, thus minimising risk while growing their investing options.
Benny
Hi Tom,
That’s a helluva good story to tell – well done you two, and congratulations !! :)I also recall you posting about aged accommodation, and you made some very interesting points there.
https://www.propertyinvesting.com/topic/5038708-over-55s-complex-deal-or-no-deal/page/2/#post-5053112In particular, I was gladdened by the good you did for others just by choosing that investing path, and the relief that older people felt when they knew their stay could be “many years” rather than “a year or so”. Great stuff!
Regards,
BennyHi Pradeep,
Did you see the post before your own post above? It sounds like you might have a point that Helen is unaware of – maybe reach out to her directly to see what she thinks.Benny
Hi Paul,
One further thought that struck me over this – and that is one could borrow the funds to complete the painting of the place – as with borrowing to purchase, you would be “borrowing for investment purposes” to cover what is actually a Capital Cost, so Interest could (should?) be deductible against your profits.Like, it keeps $3000 in your pocket that might be going toward saving a deposit on your next property. Of course you would need to weigh up the benefits of doing so, versus not doing so. It could cost mere cents per week in Interest, and the interest would be Tax Deductible too (it isn’t currently). Meanwhile you keep the $3000 as an Offset against the main mortgage…. Food for thought ;)
Of course, check this out !! You know me,
Benny
Hi PSM,
Welcome aboard !! There are others on here who are able to quote you chapter and verse on all of those things (i.e. accountants) but, in case you are “hanging out” for an answer this weekend, let me share what I “think” is correct (but I am NOT an accountant, so beware…)As I understand it, all you have said about not being able to claim it as a repair is correct. That leaves “how do you get to claim the cost?” And I think it would go as a Capital Cost (almost like it is part of the Purchase Price – you added value to the property, sort of like “buying it for a few thousand dollars more”). Like you, I don’t think it is any part of that 40 year “Capital Works deduction” either. Instead, it would become part of your Cost Base, so any Capital Gain on sale would be a few thousand $$ less to cover that cost.
Now, as I said, you CANNOT rely on my words there – but hopefully others will swing by to give you the “good oil” later on.
Benny
On a re-read, it was THIS final comment from that earliest linked article that holds the truth about negative gearing, and the likely result of its removal if implemented with little thought:-
Major changes to negative gearing will make housing investment less attractive. This will, in turn, impact housing supply – and we will return to the bad old days, when supply did not keep up with demand.
If we want to make housing more affordable in our country, we must tackle the blockages to supply and not impose new ones. Proposed changes to negative gearing and capital gains tax will make a bad situation even worse.
As always, supply vs demand holds the key to price. If something is scarce, its cost goes up. Force investors out of the market and even fewer homes will be built.
New couples or youngsters leaving home CAN’T always afford to buy a place – they must rent – so who provides the rentals? According to the article, tens of thousands of ordinary people – doctors, nurses, school-teachers, firemen, tow-truck drivers, sales staff, etc. Most landlords are NOT from the “big end of town” either.
By all means, look at the option of removing negative gearing if you must, but DO think it through first – don’t just implement it without a WHOLE LOT of discussion and consideration. Unintended consequences live in such hiding places, ready to pounce when due diligence ahead of a law change doesn’t take place !!
Benny
I thought this topic was worth a re-visit, as its subject matter was widely reported over the last few weeks (as the election loomed).
Here we are three years later – and (fortunately, imho) the changes discussed above won’t be taking place as Labor was roundly trounced at the 2019 election. Seems not many voters wanted:-
1. Labor to cut CG discounting in half (meaning we pay more Tax on any CG’s)
2. Not too many people were impressed by their intent to take away Franking Credit Imputation, effectively giving a “wage reduction” to many self-funded retirees (while touting that “the big end of town were to be hit”).
3. Negative gearing to be applicable ONLY to new properties in future (but any existing NG properties could remain that way until sold – but with a likely value drop at that time)
4. Labor to look to mandate usage of electric cars to be at 50% within a few years (say wha? – like, who charges them overnight – the solar panels? :p ). Never mind that existing vehicle’s values would plummet – and, how does one charge an electric car while on the Nullarbor for example?
5. Labor to legislate for 50% renewables by 2030 (South Australia can tell us what a GREAT idea that has been).
6. Greens threatening to stop ALL coal mining (I know – they aren’t in power, but their Senate seats would help Labor to govern, so a bit of arm twisting is likely, yeah?). What happens once a $60bn per annum income to Australia goes away? Not to mention the only reliable power sources apart from a few gas power plants also going away.
7. A threat to jobs with the stopping of coal mining (another Green initiative?) – sure, they will retrain everyone to work in renewable industries (but I wonder at the validity of that statement – it is right up there with “renewable power is cheaper than coal-fired power!”)
8. Labor refused to tell the country the COST of implementing some of these wild schemes ahead of the election. So guess what?The voters weren’t convinced, so now we have at least another 3 years to get a few more wrinkles ironed out before the next election. Whew, that could’ve been close.
Benny
Why not join us all on tomorrow night’s webinar (advertised on the front page, but link below)
http://www3.propertyinvesting.com/mu19
You’ll see from the advert that there will be a Market Update for all cities, a whole heap of other good stuff, as well as a Q&A session. Very good value for just $20. Check it out,
Benny
Hi Angal,
What are the Frankston 2019 house prices? It gradually continues as the previous year.
Surely, that will depend on other factors. Just because a suburb’s values have increased over 2 or 3 years is no guarantee that this will continue for the current year. It could be that the prices have hit a peak, and the values may flatten or drop in 2019, couldn’t it? Careful scrutiny of the market might provide some clues, but certainty of further price rises is far from assured.
I want to say that Frankston works only for Melbourne or any other cities.
Sorry, but I am still unsure what you are saying or asking there. To try to share my confusion, let me say that Frankston is a suburb of Melbourne, so it really can not “work for other cities” in any way. In fact, can it even “work for Melbourne”? What do you mean by “work”in that sentence?
I can only think that your question needs to be asked again but using different words, so I can understand just what it is you wish to know.
Benny
Hi Angal,
I want to know that Frankston works only in Melbourne or others?
I don’t understand the question there. Care to rephrase it?
Benny
Hi Carr,
Keep in mind that Steve’s book was written many years ago and, even when he was buying up, this was in a “forgotten area” of Ballarat. He bought there because the numbers worked for him there, at that time. Later, when the numbers didn’t work, he moved his focus to NZ, then later to the USA. It was all about tailoring his investing to the areas in which that style would work.In my welcome PM to you, did you happen upon the example (from a more recent timeframe) where a young bloke was using a similar pattern to build up his portfolio. In case you didn’t, check out his post here:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697977Now, that is from 5 years back or so – I suspect his way can still work in some areas today – but then, his way worked by having him doing renos – will THAT way work for you? See, there are many ways property investing can work, but they don’t all suit everybody. You might be better to start with the end in mind and work out what you want to achieve, and by when, then come back to ask how you might make that happen. For some, a slow steady path works – for others, they may be in more of a hurry (which introduces more risk).
I just checked Darryl’s story, and I note the original posted photos don’t display any more. Suffice to say, the numbers were impressive. In most cases, he bought low, renovated the place, then refinanced to get this depsoit back for the next property – and nearly ALL of the properties had a 10% return, so his share after mortgages and all other expenses still left him with a healthy chunk of change. If I recall correctly, his total Income from property was around $200k pa, and his expenses totalled about $140k. In a later post on here, he reported that he’d started working on paying down debt to get his leverage down to 50% to further consolidate his portfolio.
Further down in the linked topic you will see where some of us were able to buy back-issues of the magazine, so you can easily read the whole story. I highly recommend it to you,
Benny
Oh my – here we are, knee-deep in electioneering ahead of next week’s Federal Election, and half-truths and untruths are flying thick and fast. Do share some of yours too as you see/hear them.
I rather like someone’s suggestion “That parties found to be telling blatant lies during an election campaign should be brought to justice!” I can’t see how easily such an idea could work, but boy, I am hearing some whoppers out there right now.
1. This one, this morning, from Get Up who are actively targetting Right-wing sitting members – targetting Tony Abbott because “he refuses to debate Climate Change”. That’s funny – for years, I’ve been hearing “the Science is settled” whenever anyone wants to debate the issue – and THAT four-word slogan has been widely promoted by the Left side of politics. Is GetUp now saying “the Science is NOT settled after all?” Not really – they are simply slinging mud and hoping some will stick !!
2. Ads right now (from Greenpeace) show Tasmanian “survivors” posing in front of blackened land (after a bushfire supposedly) and blaming the Govt as if the burning of coal has created the bushfire….
Both Tasmanians and Victorians should be looking to the REAL cause of out-of-control bushfires, and that is the Greens themselves who, with the balance of power in both State Govts, vetoed the long-held practice of “burning off” yearly. So, when lightning eventually DID start a fire, there were many YEARS of build-up of fuel on the floor of the forests, such that it became a wildfire that was impossible to stop.
For those of you that think “Oh, we shouldn’t burn off, as it makes ground-dwelling animals homeless, and kills lots of them” I simply say “Think about it – a small fire started on a day where wind is low, specifically for the purpose of burning off the fuel load, WILL allow animals to escape as it creeps along the ground. It also greens up the forest, and promotes the seeding of fresh grass and new trees. But now, think how many animals CAN’T escape when a wildfire is roaring and jumping highways as it burns out of control. And think how many people lose their lives, including firemen who are attempting to control the uncontrollable?
Fortunately, the Greens don’t hold that power in Qld – yet – so we still burn-off to contain the build-up of fuel and keep future fires more manageable. It’s all about common sense – some parties have it, others are sadly lacking.
More thinking is required methinks :p
Let’s hear some of YOUR beefs too…. ;)
Benny
As the clanging bell of “Climate change” becomes more and more strident, the more I believe we all need to take a cold shower and re-look at some facts.
One fact I recall (about the time that we were fighting “chlorofluorocarbons in aerosols, and the hole in the ozone layer”) was that the icy poles on Mars were observed to be melting (or had completely melted). I can’t think ANY scientist on Earth was attempting to blame us for that. Of course not – the Sun was having a bit of a party, and that probably aligned with those times (mentioned above – from 1975 to 1998) when our Earth was getting hotter too. But for the last two decades, our temperature HAS NOT increased. The Sun has cooled – for now….
Isn’t that significant?
Doesn’t that throw some doubt on the whole carbon dioxide / climate change / end of the world drama that is clogging up our newspapers and our lives?
Seems not – the bells just keep on clanging, drowning any attempts to bring a wee bit of common sense into the argument. Schoolchildren are encouraged to play truant to bring even more emotion into play with “What about our futures” rallies. Demanding that Govts “do more” to make the bogeyman of Climate Change go away.
I struggle to know how Govts can stop volcanoes from erupting – and when the Iceland volcano threw off its lid in 2010, I read that it released as much pollution in one day as Sydney did in one year !! How do we (sensibly) do anything about that? That volcano went on for weeks – how many major cities should we close down for a year to counteract that pollution?
And, as we have earthquakes regularly, as tectonic plates shift, wouldn’t it make sense that there will be volcanoes erupting UNDER WATER too (unbeknown to us perhaps)? And what would that do to our oceans – maybe warm them somewhat? Well hello!! What can man do about these, seriously? How many more cities would we need to “shut down for a year” to offset the warming/pollution that arises from each of these events?
Now look, I certainly agree we need to do things to prevent pollution – like all those plastic bottles and bags that are currently choking marine life. That IS our problem, and we MUST fix that one. And we can do far better by keeping (and planting up) more trees – they give off oxygen, so that is goodness, even as they store carbon.
But the call to flee to sources of energy that are unreliable, costly, and are totally not viable if we are to keep a robust economy, instead of renewing our energy sources to use HELE coal, or Uranium, or even Thorium is beyond belief. Maybe in decades to come, the current “hot topics” (wind, solar, wave power) WILL be reliable and inexpensive – but that is not today. And I hear that even if Australia CLOSED RIGHT DOWN and the country generated NO emissions at all (turn out the lights and all leave!) the savings that were made from the cut in greenhouse gases would be totally negated within 6 months by China’s and India’s growth !!
So come on !! Let’s get real here. Our old people may yet die in huge numbers because of the current huge cost of electricity this coming Winter (thanks to the subsidies levied to cover the cost of solar, etc). Labor leaders talk of “renewables” (solar, wind, etc) being “the cheapest power around” – but if it is, tell that to South Australia! I’m sure they don’t believe it for a minute.
And even as Bill Shorten projects having 50% electric cars within 10 years, HOW will he provide all the extra Gigawatts needed? Surely not Solar or wind power – or we might be intermittently getting to work each day, depending on whether the day before was cloudy with no wind. Sheesh!
By demonising coal (as seems now to be happening), where will that leave Australia’s economy when its 2ND LARGEST EXPORT is axed? Don’t allow the Greens to gain seats in this election, please! How will all the school children who are today “demonstrating” about climate change end up when their parents suddenly don’t have a job, or when electricity costs grow even higher as ALL coal-fired power goes away. there might be enough solar power to let them charge their mobile phones, not much extra for anything else.
Think about it. Sure, we might need change – but let’s do it in a measured, orderly fashion, not in the heated rush that is “climate change alarmism” right now. Over time, let’s remove coal – sure. But replace it with something that is RELIABLE, just like coal is. Uranium, HELE coal, Thorium, or whatever is next.
Last words go to my newest mentor, Howard Thomas Brady:-
“It is hard to see a way forward in the climate debate due to the inextricable links that have been forged between so many disparate groups. It is rather like a thousand cats in the same room playing with a thousand balls of wool. It has got to the stage that a sharp global cooling, much like the Dalton Minimum between 1795 and 1820, may be needed to bring the foundations of modern climate science to its knees, and to disentangle those disparate groups caught up in the climate debate.
“To some extent we have been conned by our new awareness of the climate in polar and high altitude regions. In September 2015 President Obama had his photo taken near a retreating Alaskan glacier, and used this image to tell the world it is on the verge of catastrophic change. Obama did NOT tell the world that these polar regions have always been vulnerable to the slightest changes in climate, and always will be!
“In the past 40 years scientists thought that rising greenhouses gases provided a general guide through the climate maze. They were wrong. There are many competing forces behind climate. However, it is going to take some extraordinary events to change the present simplistic carbon dioxide global warming theories within the scientific community.
“The Fairy Tale called the Emperor’s New Clothes is very relevant. The defence of the role of greenhouse gases as the primary driver of the present global warming may become more strident but one day, someone or some event will make it clear that the emperor and all his rabid followers are stark naked, and the science community will suddenly nod in agreement and change sides so that climate edifice, built up over the last 40 years, will collapse. Then the charade will be over.”
Benny
Yeah, about 8 years too late !! Reviving old posts to spam us is not appreciated, Dean. This “local cleaning service” just happens to be your own. No surprise there I guess, but obviously disingenuous, so I doubt anyone will be calling you.
Give us a break mate !!
Hi ALJO,
That sounds pretty awful. One would hope someone could direct your steps if you talked to a Technical type within Telstra…..But wait, I hear wireless can be just as quick these days – maybe look at the capability of receiving Internet via a Mobile phone at that place and forget the ADSL altogether. Especially as (once NBN comes along) you will be forced to “give up” the ADSL anyway.
Wireless Mobile could be the answer to BOTH problems. But I am not a techy, so if others can add thoughts for Aljo, please do,
Benny
I appreciated his work so much that I immediately shelled out a few dollars to purchase his book, titled “Mirrors and Mazes”. I can’t wait for it to arrive.
Woohoo – it’s here !! And now that I am able, let me state a few more thoughts from this book that might turn a few hypothesese on their heads – like this one:-
“For those who talk about present temperatures being ‘unprecedented’, geological history shows that for 80% of our Earth’s history there have been NO ice sheets at the Poles. Indeed Mother Earth has normally been at least 3 to 5 degrees warmer, and plants and animals have happily lived and evolved in those hotter conditions.”
and this…
“The world has warmed over the last 300 years, yet not as much as various warm periods in the last 8000 years. More of our modern thermometer temperature readings may be broken, but such records only go back 150 years!”
One section of Chapter 1 – “The Climate Debate” is titled “Solutions before Answers” where he talks of over-spending on as yet untried solutions that cost billions :-
“In the fervent rush to reduce greenhouse gases, many countries have installed large-scale solar plants and wind farms that require large subsidies or tax credits to justify some return of capital. In Spain the economy was not robust enough to fund these subsidies that became a significant component of its ballooning National Debt.”
And just one more quote that shouted at me in a quick read through Chapter 1
“Carbon Dioxide levels rose about 11% between 1975 and 1998 while temperatures were also increasing. However, Carbon Dioxide levels rose another 9% between 1998 and 2017 while temperatures did NOT increase. So, how can rising carbon dioxide be the main driver?”
Dear reader, are these questions and comments of interest to you? I don’t wish to simply add to a store of website information if it is of no interest to others, so I’ll hold back now to see if there are any reader reactions before continuing. Meanwhile I will enjoy reading the whole book.
* All quotes from “Mirrors and Mazes” by Howard Thomas Brady – “A guide through the Climate Change debate”
Benny
Absolutely with you re “Caring for the environment” Jason. I’m sure we can be doing lots better in that regard too – i.e. don’t clear timbered areas to build homes. Leave the trees there and build homes where there are no (or few) trees. Don’t be in a rush to knock down old homes – the wood therein has captured a bunch of carbon, so fix it up if possible. And wood has very good insulating properties to keep the interior warm in Winter and cool in Summer.
I’m looking forward to the day when I drive my electric car with solar power absorbing paint. The future is bright – pardon the pun :)
I’m appreciating the imagery !! Why not, eh?
Hi SBH,
Back to my earlier comment of mine:-it sounds like I am asking more questions than I am answering, but that is purely to start you thinking around the whole subject, rather than just concentrating on “do I sell this or not”? There are many good reasons why you should and/or shouldn’t. Becoming more aware of ALL your available options is a good option at this time.
While responding to your most recent question, I thought more about one of your comments – this one:-
I think I was looking for a simple advise whether I should buy in where I want to live or not. rents probably cheaper like $500-600 for a standard house and owning a house costs a bit more for sure.
What came back to me today was a very early learning point for me – and that came out of a forum debate about “Do I hold my old PPOR as a rental, or do I sell it and buy a new one?”
Now, as I referred to earlier, there are a HOST of other questions/comments/learnings linked to that very simple question of yours. One MAJOR point was this one:-
Where one is thinking of retaining their old home as a rental, there is one point that should be fully explored before making a decision. It involves taxation deductions and the like. Goes something like this:-1. If you are buying a new home, any loans you take out are not deductible. Even if you take a loan against the old home (which might have a heap of equity in it) that you are making into a rental, it doesn’t matter as the REASON for the loan is to shelter YOU, not the tenant.
2. Carrying on from 1 then, any NEW loans against your old home are only Tax deductible if the loan is for investment purposes (e.g. borrow against old home to buy ANOTHER investment property).
3. One problem with turning your old home into a rental is that, in many cases, any mortgages have been paid down over some years, thus the remaining mortgage might be quite small (e.g. a house worth $600k today might have just a $120k mortgage against it – so $120k is a Tax deductible amount once the property is rented).
4. That is fine if you are wanting to have the property highly positive geared (nothing wrong in that at all) but then, you MIGHT be better off to sell your old home outright, claim the full CGT exemption and keep ALL of the equity to put against the new place, THEN borrow against the new place for other investments if you want.
SBH, there is so much more to this too (you KNEW there would be, right?) that I can only suggest you find a great adviser who can run through all of your options with you. You will find some right here, but then, you might have someone over there who can answer specific question s and can guide your steps.
Do come back here with any other questions too – we all learn by reading and learning from others like Steve and Jason, and a host of professional people who frequent these boards (see their signatures). Not me – I come up with a few thoughts from time to time, but have no qualifications that make me a professional, as such, do check all I say with your own advisers.
I hope the above thought helps somewhat. In closing, this topic might have some good thoughts around your question:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697967Benny
Check out the forum called “Heads Up” where we discuss things like meetings – here’s the link:-
https://www.propertyinvesting.com/forums/community/heads-up/To find it at any time, click on “Forum” (top centre-right of any page) and scroll down to the Community section where you will find “Heads Up” along with other community types of forums.
Looking through the list of topics, I note that Melbourne and Brisbane/Gold Coast meetings are pretty active, with only occasional entries for Perth and other places. Of course, YOU can start a topic in there, asking for others in the Perth area if they would like to meet up. It is a really good way to learn heaps quickly.
Benny
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This reply was modified 5 years, 1 month ago by
Benny.
Landlord Insurance perhaps? Of course, you might be thinking of some kind of Body Corp Insurance (i.e. to insure the common areas as well as the individual units).
I am quite unfamiliar as I’ve only ever owned private homes – perhaps someone else can come up with a better answer….
Benny
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This reply was modified 5 years, 1 month ago by
