All Topics / Forum Frolic / other people ‘s money

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  • Profile photo of investecinvestec
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    @investec
    Join Date: 2013
    Post Count: 1

    i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people 's money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!!   INVESTEC

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    investec wrote:
    i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people 's money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!!   INVESTEC

    If the property doesn’t make any income and you sell it after 10 years for the same amount you had paid for it then you would have lost money – and opportunity to invest elsewhere.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Rick staRick sta
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    @rick-sta
    Join Date: 2011
    Post Count: 120

    I'm sensing a disgruntled tenant…

    And yes, 10 years down the track you would need to sell it for a lot more just to have the same amount of purchasing power that you had when you bought it, due to inflation of the currency supply (theft).

    I have come to realise that VERY few people in the world truly understand how the global monetary system works. I have asked other investors the basic question "what is inflation?" and always get the same response, "rising prices".

    Profile photo of Rick staRick sta
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    @rick-sta
    Join Date: 2011
    Post Count: 120

    "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

    -Henry Ford

    Profile photo of PCF InvestorPCF Investor
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    @pcf-investor
    Join Date: 2013
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    Interesting. Could you please sum it up in laymens terms. Because I honestly though the same but just never investigated as to why the prices rise.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    investec wrote:
    i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people 's money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!!   INVESTEC

    If the property is negatively geared during the time of ownership – and is sold for the price it was purchased for, the owner would have lost out on all the holding costs during the time the property was owned. There's also purchase costs such as stamp duty that need to be considered.

    If it was neutrally geared- but didn't move in value, then it's a pointless asset to own.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of VandoVando
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    @vand0
    Join Date: 2014
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    i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people ‘s money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!! INVESTEC

    Hi, I know accountants that get confused about negative gearing. The best, first and most definitive book on negative gearing was written by a Sydney (Eastwood) RE agent in the early 70s, Don Johnston ‘How to get real estate rich’ its out of print, I can’t even find it on Amazon. It was my golden goose. My apologies but I’m going to capitalize this … NEGATIVE GEARING WAS DESIGNED FOR BULL MARKETS! … So that you could strip out the profits tax free by increasing your loan annually. It worked well right through the 70s and up until the Japanese banking fiasco in early 90s then CRASH. It might still be useful for SOME high tax paying investors … sometimes. The reason it worked was because property didn’t just double or triple, some property rose 1000% in less than 10 years.

    Vando | Surf&Yoga
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    Experienced property developer offers passive investment... 9.64% net PA, no gearing.

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
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    @rick Sta, I agree…..most people don’t understand that inflation is GOVERNMENTAL THEFT. Its hilarious to me when people run around saying look how much my property went up in value…..no you idiot that’s how much the government has stoel from your wallet while you were watching tv……

    Profile photo of MilkTruckMilkTruck
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    @milktruck
    Join Date: 2010
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    Plus tax plus charges plus stamp duty plus rates plus etc … Where aren’t we stolen from by government?!? But inflation is a good way for governments to steal off us today and pay it back for less tomorrow. I wonder when that will become a driving strategy again like it was under Gough whitlam? MT

    Profile photo of CattleyaCattleya
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    @cattleya
    Join Date: 2008
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    @deancollins – Sorry, but would you please elaborate how the government steals money by way of inflation?

    Inflation is caused by all sorts of things / people increasing their incomes, fluctuation of AUD exchange rates, supply and demand impacting price of goods & services, etc, etc – all ups and downs are summed up and are usually causing overall price increase ie. inflation. And inflation is healthy and desirable, so long as it is within the targeted level of 2-3%.

    So it is actually all of us contributing to inflation, not the Government. Tax is also not stealing? It is our contribution to the well being of us all ie. building roads, paying for Army, police force, the dole, etc.

    Just wondering,
    Catts

    Cattleya

    Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
    Join Date: 2015
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    @cattleya,

    Governments are using a number of financial tools to actively accelerate inflation.

    If you believe inflation is healthy…..then you’re wrong but I wish you well.
    If you believe inflation is currently 2-3%……then please seek medical help :)

    Profile photo of Captain Risk0Captain Risk0
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    @worked
    Join Date: 2015
    Post Count: 14

    There are two sides to everything. Talk to someone who has lived in Africa where stealing and murder is synonymous. These people are so grateful for being in Australia and think higher taxes are a blessing and necessary for safety.

    Isn’t inflation the result of growth? And if systems are in place to ensure ‘a little more is taken from us’ to ensure that growth is supported – is this not a practical solution? Therefore if I am not reading out of context, how could you say that inflation is not healthy Dean?

    Profile photo of DeanCollinsDeanCollins
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    @deancollins
    Join Date: 2015
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    @captain, if inflation ‘was’ from growth (either population increases OR technological productivity increases) then I would say that yes inflation is healthy (eg we are making more therefor M1 goes up).

    However quantitative easing (and or artificially low interest rates) to induce inflation is not healthy.

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