Hi Calvin, thanks for your post. I take your point about child care costs taking a big bite out of the second income. In fact my wife stopped working after the birth of our second child for precisely that reason.
When I made that comment I was more thinking of families where all the kids were at least at school and therefore childcare costs wouldn’t be an issue.
It’s great to hear about your plan. I am in a similar situation to you familywise, although not quite as advanced down the track of the long term plan. Hang in there, and let us know how you go. It’s very inspiring to a fellow battler like myself!
eeshole
Originally posted by foundation:… and of course the power of leveraging works even more effectively in a falling market, which is why I have often suggested that continually ‘withdrawing equity’ in a rising market is a recipe for disaster. If you plan to ride out the inevitable fall, you’ll want to be at your lowest LVR level at the peak, not your highest!
Anyway, I think there’s some confusion here between inflation & gearing/ leveraging. Leveraging adds risk and potential return regardless of consumer price inflation. The reason CPI is good for PIs is that wages (and therefore rents) tend to rise roughly in parallel with CPI, eroding the relative cost of a mortgage and placing upward pressure on HPI.
Cheers, F.[cowboy2]
inevitable fall…… sounds like a good reason to sell the house and rent it back at a fraction of the cost. I can’t see many people doing that.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Originally posted by AUSPROP:inevitable fall…… sounds like a good reason to sell the house and rent it back at a fraction of the cost. I can’t see many people doing that.
Perhaps not many people, but it is happening! Although I would not personally feel comfortable doing this (I value the secure feeling of my home too much), I do know two people who have done just this very thing. One bought a 2 br unit for $80k in about 1992 and sold it for $260k in 2003. He is absolutely convinced he will be able to buy a 3 br house with a very small mortgage this decade.
I suppose time will tell…cheers, F.[cowboy2]
I think it is the true test of someones commitment to an argument. If you really think house prices are set to fall there is no reason to own the house you live in.
People have been bantering on for over 5 years now about house prices falling. If I had completely sold up I would be completley gutted. I have friends who tried this strategy and have now been caught with their pants down. The little equity they did have has been squandered on worthless gadgets and cars. One friend told me last year, that at age 34 and afer having owned a couple of houses etc, that he was worth a grand sum of nil. I couldn’t believe it. Interesting when I compare to other friends that studied the same degree etc that are now worth millions. Property is always the key that has set them apart.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
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