By: landlordcity
27/10/2009
4:34 pm Yahoo! Profile:
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-Landlord - maybe you've missed the whole point - affordability: property in Pittsburg has fallen 40%.-
No, my comments are exactly to your point. Population, social and financial dynamics have changed the cost of the property my son bought. They have made the cost lower. I could not have afforded to buy his residence when I was his age. As transportation pressure brings people back into the city, as high tech industries move into space that is was vacated by companies involved in manufacture (which is exactly what is happening now) the cost of his property will probably escalate so that his son Joe Jr is not able to afford to buy it 25 years hence. |
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By: davidjtroy
27/10/2009
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"The wise investor knows the real value of an asset, NOT just its speculative one"
The only real value of a house is it's cost price. Anything more than that is an arbitrary figure included based on personal circumstances. So referring to real value is fairly redundant. |
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By: landlordcity
27/10/2009
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-The wise investor knows the real value of an asset, NOT just its speculative one.-
Are you telling us that YOU know the real value of an asset? If you don't mind me saying, that's a little presumtuous... I think perhaps you may be confusing something as nebulous as "value" with "cost". After all, what is the true value of anything? Diamonds, gold, shares in BHP, a vintage motorcar, a painting by Picasso, a fragment of the Dead Sea Scrolls, your house? You can only ever know the cost of anything and that, of course, is established by the marketplace. In other words, what someone is prepared to pay. |
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By: cxxxx@rocketmail.com
27/10/2009
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| Landlord - maybe you've missed the whole point - affordability: property in Pittsburg has fallen 40%. So my question is what for Australia? Not what's for Landlord in the past 10 years (we're all well versed on that by now). |
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By: ecchi.gaijin
27/10/2009
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irrelevant cxxxx. The system works around treading water while you use increasing equity from appreciation as deposits on further investments and so on again and again and again.
As I said, wonderful system while in a bull market. |
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By: cxxxx@rocketmail.com
27/10/2009
4:20 pm Yahoo! Profile:
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| wonderful system, except interest only costs substantially more than renting. |
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By: landlordcity
27/10/2009
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-So the place is worth $787k in 2019 and Joe's wage is $81k. Now, do you think Joe Jnr could buy the dwelling?-
It depends... On what? Social demographics, financial and population dynamics, etc, etc. My son lives in the middle of Pittsburgh in the States. He purchased the property early this year and has substantial equity in it. Dead centre in the city. I could not have afforded a house there 30 years ago. |
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By: ecchi.gaijin
27/10/2009
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You got me Al, in fact with the same principals I referred to previously. DOH!! lol
I more meant in principal, the $50 a week method is a interest only loan so you never pay off the principal unless you choose to later.
I wasn't arguing with your method, in fact it is a wonderful system while there is a bull market. |
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By: mentawaisurf
27/10/2009
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| The wise investor knows the real value of an asset, NOT just its speculative one. |
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By: landlordcity
27/10/2009
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-If Landlord believes 'property ownership' is paying a mortgage to the bank, he is mistaken.-
Funny, I can't remember implying anything of a sort. That fact is easily confirmed by reading back through my previous few posts. How could you have possibly have inferred or concluded that from what I posted earlier?? So that there is no mistake or misrepresentation of what I said, I repeat, I own several properties outright and have equity in several others. I hope that clears matters up sufficiently so that you do not misrepresent me again. I do not in the least regret having made the decisions to buy property during the last 30 years and have no regrets buying it today. Commercial or residential. Property investment has served me well into retirement and will continue to serve me and my entire family very well into the future. By the way, I was not lured ("via spruikers or government bribes and vested interests") or tricked or manipulated by evil capitalists or mesmerised by the dream of quick riches. My "delusion", as you call it, came completely of free will. |
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By: almurrie1@y7mail.com
27/10/2009
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Echii
I am betting that hyperinflation is more likely and real estate will be infinitely more desirable than cash in the bank. Echii, I really do own the property and also owe the bank. If it burns down I still own it and still owe the bank. I only don't own it if the bank reposesses it, through non payment. It is the renter who does not own. But even if you pay off the bank, the government can step in and say "you don't own it" here is some money, get out, we own it. So I guess no one ever really owns land.
I claim interest on the mortgage, but not on the VISA. Like I said money for nothing if it goes up and a possiblity of a very big increase in the future when wages and prices and inflation let go.
My gamble, my reward, and also possibly my loss, but with a 35% gain in 3 months on the markets now locked in I really don't care! |
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By: cxxxx@rocketmail.com
27/10/2009
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| ok landlord, sorry to have offended you. Now, what of the future? Let's say Joe Bloggs has a $400k dwelling that was $200k 10 years ago - thats 7% growth pa while his wages grew, say, 3% from $45k (22% of the dwelling) to $60k. Awesome. That's possible again for the next 10 years, right? So the place is worth $787k in 2019 and Joe's wage is $81k. Now, do you think Joe Jnr could buy the dwelling? |
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By: ecchi.gaijin
27/10/2009
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Yes menta, I think the ads did mention "and you keep the FHBG". But the point being that they are not as heavily burdened by a mortgage as was suggested. In fact the ads I recall were offering repayments equal to their current rent albeit for a limited time I think (shudders at the similarity to USA sub prime loans)
Banks really do need to go back to basics. This includes
better evaluations given on finance applications (current system is pathetic)
Minimum deposit or else penalties apply (somewhat negated by mortgage protection insurance)
Stricter lending criteria (including employment ratings based on job security by industry) |
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By: jennyxuanwu
27/10/2009
3:43 pm |
Message deleted. |
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By: mentawaisurf
27/10/2009
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| Yes Pete, and offered on 100% instant vendor finance (ie. no money down so that they're under water as soon as they move in). |
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By: ecchi.gaijin
27/10/2009
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"Unfortunately, too many FHBs fit that description. "
I am not sure of what the actual statistics are, but the biggest market I saw targetting FHBs under the grant were the Divine packages etc. Most of their house prices were well under the average prices. |
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By: ecchi.gaijin
27/10/2009
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Al
I was rely pointing out your misuse of the word "own".
"All it requires is the price going up, and if it doesn't, who cares, it has only cost $50 a week."
$50 a week is $2600 a year. If the property never goes up then that is all lost. Perhaps not a lot but as you said, you could have put that elsewhere for a better return.
"I put out about $5000 in tax and conveyancing, which was borrowed on a VISA at mortgage rates."
You might want to check before claiming interest costs on paying your taxes as they are generally non deductible. |
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By: mentawaisurf
27/10/2009
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If Landlord believes 'property ownership' is paying a mortgage to the bank, he is mistaken. If he believes speculation leveraged on the back of equity is property ownership then that is a dangerous definition. Leverage works beautifully on a rising market, but it will destroy you on a falling market.
Without going into my personal background, the mid-late 1990s was the ideal time to take on debt and buy property - when few were interested in doing so. When the investment mania, and paradoxically prices, peak then that is the time to get out.
My concern has always been for those who were lured (via property spruikers, vested interests and government bribes) to buy into an historic housing bubble with a heavy mortgage burden. Marginal borrowers are always the last buyers into a market before it peaks. Unfortunately, too many FHBs fit that description.
There will be an ideal time to buy property again. But that time lies years off. |
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By: almurrie1@y7mail.com
27/10/2009
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Echii
why would you want to own the property? That would be stupid, you would make much more even after tax by putting it all in the bank. Leveraging at a few hundred thousand percent is much more sense. I put out about $5000 in tax and conveyancing, which was borrowed on a VISA at mortgage rates. If the house goes up by anything more than the interest it will be money for nothing! ie. a 10% capital gain will give me about 4% which would triple my investment of $5000 (which I borrowed). All it requires is the price going up, and if it doesn't, who cares, it has only cost $50 a week. I know people who gamble 10 times that evey week!!!
Al |
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By: almurrie1@y7mail.com
27/10/2009
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That was with a $0 deposit using equity on a house that cost $260,000 5 years ago, now valued at $400,000. I can't imagine the banks would be happy making a 100% margin loan on shares worth the same value. And this frees me up for making some on the side in the market. You do tend to spend the excess when renting and this way you have to pay the mortgage which leaves you poor but asset rich. renters are asset poor and act wealthy!
Al |
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By: landlordcity
27/10/2009
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-landlord and jay, you guys are just braggers. "i own four houses"... "my property in queensland's gone up by soooo much".-
Bragging???? Why would we want to "brag" about being "delusional" enough to buy property and let someone else pay it off?? Indeed, why would you consider such an (according to you) invidious and "foolish" position such as property ownership to be something anyone would "brag" about? Better get your logic straight old son. |
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By: ecchi.gaijin
27/10/2009
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"Jay, the point being, we will come back to these basic rules again as market forces rebalance over coming years (as they always eventually do).
Then that will be the time to buy a house - when we'll all look back in hindsight and realise just how foolish and deluded we really were"
Menta, why would you buy a house when prices are at equalibrium? Unless long term you only wanted to get back what you paid? |
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By: ecchi.gaijin
27/10/2009
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Al
The $50 a week method means you never own the investment property, just the deposit and any increase in capital value. |
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By: cxxxx@rocketmail.com
27/10/2009
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| landlord and jay, you guys are just braggers. "i own four houses"... "my property in queensland's gone up by soooo much". Well, what about today? And one of you thinks there's "always been a high amount of renters in australia compared to many other countries"... need to get out more... happily hooked on property, the drug of the nation, it's a sensation. |
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By: landlordcity
27/10/2009
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-Then that will be the time to buy a house - when we'll all look back in hindsight and realise just how foolish and deluded we really were.-
Gee, I didn't realise what a huge mistake I'd made buying property until I read Mentawaisurf's advice. I'm so pleased he has set me straight. Oh dear, I don't know if I am going to be able to sleep tonight given the fact that I bought all the property I own in a "delusional" state. How "foolish" of me. How could I have been so stupid?
You didn't answer my question about renting one of my properties. You must consider yourself very lucky that you are able to take advantage of foolish people such as myself by paying off our properties for us. How stupid must we be to have allowed ourselves to get ourselves into this horrible position of property ownership!?!?!?! |
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