Originally Posted by Work Horse

Just an interesting anecdote, I have no interest (no pun intended!), in trying to predict the movement of house prices.

A mate that lived two doors down from me put his house on the market two years ago. It passed in at auction for $720 000. He wanted more so decided to hang on to it and rent it out.

Yesterday the house across the road went to auction; it’s a similar house on a block 50 meters bigger, deceased estate. The house across the road sold for $535 000.

Some of my neighbours where shocked and believed they personally had just lost a lot of money.

Originally Posted by Work Horse

Just an interesting anecdote, I have no interest (no pun intended!), in trying to predict the movement of house prices.

A mate that lived two doors down from me put his house on the market two years ago. It passed in at auction for $720 000. He wanted more so decided to hang on to it and rent it out.

Yesterday the house across the road went to auction; it’s a similar house on a block 50 meters bigger, deceased estate. The house across the road sold for $535 000.

Some of my neighbours were shocked and believed they personally had just lost a lot of money.

Originally Posted by flappist

And that is the stupidity of it all.

If I paid $500k for my house and it is now worth $2.50 the I have lost nothing unless I sell it and then of course I can buy another one for $2.50.

If I sold it for $1,000,000,000,000,000,000 the situation is the same.

The biggest whingers in these threads have almost always been renters who cannot afford to buy a house and so therefore are deriding those who have.

Bottom line:
If you are paying $500 a week rent waiting for the market to drop all of that money is gone and you have nothing.
If you pay $500 a week off a mortgage and the value drops you still have the house.

If the economy completely collapses (as the doomers keep rabbiting about) then money will be worth nothing so it does not matter how much you have AND there will be no rental properties as they will all be sold or repossessed so the clever renters will be the ones in the tents.......

Originally Posted by DANNO178

If you were paying 500 per week in rent then you can only lose 500 perweek. If shown in the example earlier where the value had dropped from the 700s to the 500s then you would lose more. If the property drops 50 k a year then you are down 1500 per week. And from the example earlier it was closer to a loss of 100k per year so with your repayment of 500 of week you would be out of pocket by closer to 2500 per week.

Originally Posted by flappist

No it isn't.

You are born, you work, you die.

If you spend $500 per week regardless of on what that money is gone.

In the case of renting after spending $500/wk for 20 years you have $ZERO

In the case of buying after spending $500/kw for 20 years you have a house that may have cost $300k and is now worth $2.50 which means you have $2.50 more than the renter.

If you own the house outright and sell it you have a bucket of money and nowhere to live. You could then rent and over a period of time you would use up your money and HAVE NOWHERE TO LIVE. J

If you are paying off the house you can't sell it without finalising the loan so unless you sell it at a loss, which would be stupid as you then have nowhere to live unless you rent or buy another house, you are getting nowhere.

I really shouldn't complain though. People who think like you are giving me money every week to pay the mortgages on my rentals which, regardless of how much less they may be worth in the future, they are costing me nothing.....

Originally Posted by DANNO178

People who think like you are going to make people like me so rich its not funny:notworthy

Originally Posted by flappist

What you mean you are not already so rich it is not funny?

Now just keep paying your rent......

Originally Posted by Big Damo

Sometimes I wonder if its even worth having a nice house and property, or even renting. you end up a slave to the bank and your employer.

When you've got big responsibility to a bank you cant just wake up one morning and decide to do something else for work, take a pay cut and start out new.

Then when you have your mortgage paid off, you're "too old" to get another job, no one wants to hire people in their 40s/50s it seems even though you have a good 15 years left in you maybe even more.

Part of me says living in a caravan in a park wouldn't be too bad, you own your caravan, your car, pay your money for a powered site and stack shelves 2 days a week and spend the next 5 doing what ever you want.

Sure you might not have the house with 50 bedrooms, the obligatory 5 60" TVs, 4 car garage but I bet you'd still be happy. Plus you can move around easier than if you wanted to sell your house/property and move.

Originally Posted by mr smith

One of the biggest lies of the last decade!

Just look at who sold this lie, TV and print media, the HIA and the banks.
Now...who got real rich off the housing boom?

Originally Posted by DANNO178

Rich , well I guess that depends on who you are and how you look at things. I have sold my house for close to 1 mil last year , debt free. I did have it all in the bank getting interest of 6% . Rates have now dropped and are dropping. So I have diversified my money. In july I purchased 60 oz gold at 1565, it was 1565 at the time but I paid 1580 per ounce from the perth mint with theirvadd on cost. I also purchased just over 8000 ounces silver n august at just under 30 dollars an ounce. Over the last two weeks I have purchased just on 150 k in gold stocks and the rest is in the bank. So you are quite welcome to follow what I have done and see how I go . I'll then let you decide weather I am rich or not.:notworthy

And don't worry , I will keep paying my rent in the meantime:yummy:[/QUOTE
Hmmmm.........

Originally Posted by GT0132

My 2c

While you have a commodity that's in demand it cannot be a dead set certainty that its value won't increase.

The demand for housing can only increase where there are net increases in migration and no commensurate increase in building activity. However in the mix this time is the fact that many who would otherwise be buying or upgrading are holding on to their cash, not borrowing (or not adding to their existing borrowings) and instead seeing what happens regarding our current econonic problems. As we all know, unless you're in an area positively impacted by the mining boom things are pretty bad right now economically. I suespect most if not all of the Eastern states are in recession.

Originally Posted by Outbackjack

Compound growth is over rated for the most part. Its all about inflation proofing your assets. I have looked at properties this way since I was about 23 or abouts. Bought me first house and paid as much off as fast as I could. Got rid of that mortgage in about five years. Bought number two and pumped as much as I could plus the rent and paid that off in about five years. Bought number three. Used the rent from number two plus as much as I could afford plus the rent from three into number three. That was paid of in about three years. The process goes on. I can now buy a reasonably priced house and pay it off without using any of my salary. Now have 12 houses. Ten of them are paying off the last two. I wouldn't recomend any more than that. It becomes a full time job to manage them. Its is virtually tax free income as well, as long as you have a professionally created depreciation schedule for each house. That costs about $500 to $600, but is tax deductable. Work the system and it will work for you.

Originally Posted by DANNO178

So from your comments you seem very aware that your property is now being double dipped. Not only is its value going down but the dollars tied up are losing value within itself and this is something that over 95% of people are completely unaware of. Not only is the house losing money but the value of your dollar is dissapearing very fast and shows with your comment about inflation chewing your assets. If you have that much property you may wish to diversy depending on your
age and postion .

Originally Posted by DANNO178

So from your comments you seem very aware that your property is now being double dipped. Not only is its value going down but the dollars tied up are losing value within itself and this is something that over 95% of people are completely unaware of. Not only is the house losing money but the value of your dollar is dissapearing very fast and shows with your comment about inflation chewing your assets. If you have that much property you may wish to diversy depending on your
age and postion .

Originally Posted by Outbackjack

Properties have only lost value if I were to sell them. None of my properties are worth less now than when purchased. Rents are always increasing. With the amount of people that are selling because of mortgage stress or default the demand for good quality rentals is increasing. Houses will always take back losses incurred by the market. Plus where else can I earn an income of around 4.5K a wwek and pay virtually no tax??

Originally Posted by DANNO178

You obviuosly are of retirement age and run your properties virtually tax free through your superfund. For others you need to start a company to reduce your tax . I have made more than 4.5 k from 150 k in gold shares in the last week and my silver went up by about three times this amount in one night last week. I dont know if you can put thoses in your super and run them tax free. But it sounds like you' ll be ok outback.

Originally Posted by Yellow_Festiva

Please explain with detail what you mean. I'm in a similar situation to outbackjack and I'm trying to see the logic behind this, if any.

Originally Posted by Outbackjack

Not ready to retire yet. I am 53. I use the depreciation schedule to offset any tax. Each house has an average of 8K per annum in depreciation. EG the average anual income from each property is about 18K that comes back to 10k when applied. When it is all added up and the Gumbyment tells me how much I owe them because of the risks I took and the hard work that I did it, is uasually close to being zero. In fact last year I got a return of 8K. I am thinking that industrial property might be a smart way to go. A mate has a couple that seven eleven lease from him. Each returns 11K per month. 8k after tax. thats pretty good but they can be expensive to get into.

Originally Posted by DANNO178

Its sounds like you still owe a bit of money on these properties. If so you need to be very careful. Feel free to pm if need be . As for commercial , can be brilliant ans sometimes not so brilliant . I have done very well with commercial property. You often have the same tennant for 5 or ten years with minimal to no outgoings which is usually paid for by the tennant. If its in a bad spot it can sit vacant for long periods of time .

Originally Posted by Big Damo

I help build ambulances to make my coin.....

That coin is silver and round.

Originally Posted by Outbackjack

Only owe about 200k spread over two properties. That will be gone in about 18 months. BTW all my hoses have been either built by me or less than 3 years old when purchased. In a funny twist of accounting the best performing property that I have is in Cooktown. It is about 3 acres backing onto the river. It has been leased by some hippy nudists for about 10 years!! :yelrotflm I just love doing the inspection trips for that one !!!

Originally Posted by DANNO178

Sounds allright then .

If ya need a hand on inspection day , just give me a yell , you can drive while I enjoy the scenary.:evill

Originally Posted by DANNO178

Wise move Damo , keep collecting those 66 round fifities. From your pay packet keep what you need for the week and buy the rest in silver. Anybody cant start investing this way. You will learn a lot during next week Damo . I was nearly going to buy a shedload of fifties like this and put them in my safety deposit box cause the mint charges me a bit to hold my silver . And then wanf to give me less than spot at sale time. They do sell it to me at spot price but thats only cause I have bought so much of the stuff.

Originally Posted by Outbackjack

Thanks. I rarely do personal inspections. The props are spread all over the country. But there are a couple that I do most years. One in Yea (Vic) and the other up north in Cooktown. I can drop in on a couple along the way. I leave everything pretty much to the property managers. And over the years I have learnt how to deal with those guys as well!!