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Gee, the post sounds rather hysterical to me.
First to mind is why do people shoot first do then ask questions?
One for spiderman's research analysys.
Did the accountant actually say don't do it, or just point out to the risks involved?
Seems you're not really aware of the risks involved investing in RE.
It is his job to point them out. If he had'nt you be complaining too.
I absolutely agree with this. I am convinced what I am doing is right and after speaking with a number of people about this issue, have been reassured. I know I have to have faith in the property cycle. It is good to be reminded of the risks, I guess. You go in with your eyes wide open then.Look, negative Nelly's can be good for you. It is a test of why you chose the plan of action that you did. If a little negative feed-back like this can throw your course into a wobbly, then perhaps you are not convinced you are doing the right thing yourselves.
I didn't come back with arguments because I didn't want to appear defensive or not able to listen. I just sat and listened to him. Chewed it over. Poured my heart out to my SS forum advisors... and the rest is historyYou should have been able to come back with good arguments for each point that the accountant raised, really it was simple (OK simple for me)
Sometimes too much coverage isnt good
My personal experience has taught me that there is two types of accountants - those that understand property and those that don't.
the only thing I can see that has changed is that you have spoken to someone (your accountant) who has a different investing style and/or risk profile than yours.
I have no idea whether it's right for you to buy this IP or not, but the fact that the accountant's opinion has provoked such a strong reaction in you is cause for alarm. You need to be more sure of your decisions in yourself, and not so swayed by the views of others.If a little negative feed-back like this can throw your course into a wobbly, then perhaps you are not convinced you are doing the right thing yourselves.
my question is: what happens when the property becomes positively geared? Do you change the name on the title/loan?
You know, if he'd crunched the numbers with me and said "don't do it" on that basis, it would hold more water for me. However, he did a little loose number crunching but basically his fears were the GFC and our 95% borrowing (which we were lead to believe was a good strategy, not a negative one).
I should clarify that he did not say "Don't buy this property" but did say "if your finance does not get approved, I would not be concerned at all". It's the same thing said in a different way, that's all. He pointed out all of the risks.
Panicking!
Enthusiastically purchased our first investment property two weeks ago
You asked your accountant for his advice and he gave it.
End of story.
As to the question of whether he has any IPs, if you discounted the advice of any professional who hadn't actually done what you propose to do, you may as well take all your advice from anonymous participants on websites.
I'm sure people could find flaws in the analogy, but I love this story, Jakk. Certainly it seems apt for newlywed1311's situation. Thanks for sharing it....and my house warming present to you is a little story
You asked your accountant for his advice and he gave it.
End of story.
Panicking!
Basically, he has a number of concerns. These are:
- We are borrowing 95% of the loan (though technically could increase our mortgage on our PPOR another $30,000 and then have a 'deposit' which would reduce our borrowing percentage)
- The market is flat and he believes it is likely to go into decline based on what is happening in Japan and USA.
- We will be negatively geared - I work it out to be around $65 a week. Quite affordable for us, but he claims we may be propping up a property that may still decline in value due to GFC.
He doesn't see that the capital value will necessarily increase at the rate of our negative gearing costs (holding costs) - even over 20 years.- We have equity of around $67,000 in our PPOR which is what we are utilising as our line of credit to purchase our IP. He said he'd like to see us reduce this loan even further before considering an investment property.
- He's concerned that we (AUS) may be heading for a recession/depression that we may not recover from - so property price could decrease while we are still out of pocket trying to hold onto it. We have a 20 year investment plan, ie, not to sell until retirement and only if necessary.
Can anyone reassure me or will you tell me to listen to him?
You know, if he'd crunched the numbers with me and said "don't do it" on that basis, it would hold more water for me. However, he did a little loose number crunching but basically his fears were the GFC and our 95% borrowing (which we were lead to believe was a good strategy, not a negative one).
I should clarify that he did not say "Don't buy this property" but did say "if your finance does not get approved, I would not be concerned at all". It's the same thing said in a different way, that's all. He pointed out all of the risks.
As to the question of whether he has any IPs, if you discounted the advice of any professional who hadn't actually done what you propose to do, you may as well take all your advice from anonymous participants on websites.