Bank Val on PPOR came in...

[pieman]

on my PPOR came at 7% above the price just before the GFC, what 3 years? So if I sold at the peak (ala my legs ache keen) and then put the coin in bank, after paying tax on the interest and renting a comparable house, I'd be in fact behind. Not to mention the SD cost of buying back in and the fact I got to live in a lovely 4 yr old house that required zilch maintenace.
I think the val was a bit light on but who knows. I guess its all about comparable sales.

 

[Peter_Tersteeg]

Your val is probably a bit light, but it is consistant with many vals at the moment.

 

[Bigtone]

on my PPOR came at 7% above the price just before the GFC, what 3 years? So if I sold at the peak (ala my legs ache keen) and then put the coin in bank, after paying tax on the interest and renting a comparable house, I'd be in fact behind. Not to mention the SD cost of buying back in and the fact I got to live in a lovely 4 yr old house that required zilch maintenace.
I think the val was a bit light on but who knows. I guess its all about comparable sales.

just be grateful of the fear he caused, it helped get your house cheaper

 

[Aaron_C]

The valuer must've liked the house and used the comparable sales he wanted to use

 

[tobe]

a val is only ever an estimate, loads of companies and people had great vals leading into the GFC, but it was only those with cash (ie, those who could or already had sold their assets) that were in a good position.

bank vals are only useful in borrowing from a bank. Theres no sense 'booking' your valuation against your net worth before you actually sell. Lots of companies got into trouble doing that, along with people. think babcock and brown, ABC learning etc. In the property space, all those students of henry Kaye 'booked' their increased net worth, prior to their OTP property handover!

 

[pieman]

Perhaps, but I've never heard of a property dropping 90% or 100% in value like those shares you mention
Property, can't beat it

 

[Token Funder]

Perhaps, but I've never heard of a property dropping 90% or 100% in value like those shares you mention
Property, can't beat it

Sure.

Equally, I can point to a myriad of examples where property owners have lost multiples of their initial investment.

A 20% drop on a 90% LVR purchase leads to a loss of twice what you put in.

Leverage works both ways and property investors leverage at a far higher level than do those in equities.

 

[pieman]

Sure.

Equally, I can point to a myriad of examples where property owners have lost multiples of their initial investment.

A 20% drop on a 90% LVR purchase leads to a loss of twice what you put in.

Leverage works both ways and property investors leverage at a far higher level than do those in equities.

Maybe, but I'd rather have 200k equity in a house in the sticks than Babcock and brown

 

[tobe]

Sure.

Equally, I can point to a myriad of examples where property owners have lost multiples of their initial investment.

A 20% drop on a 90% LVR purchase leads to a loss of twice what you put in.

Leverage works both ways and property investors leverage at a far higher level than do those in equities.

In practice property investor on average leverage more, however when you consider a lot of margin loan providers will let you borrow 80% of funds that are internally geared, gearing into shares can actually provide a much higher level of gearing. (not to mention cfds options etc as well)

 

[Token Funder]

In practice property investor on average leverage more, however when you consider a lot of margin loan providers will let you borrow 80% of funds that are internally geared, gearing into shares can actually provide a much higher level of gearing. (not to mention cfds options etc as well)

Indeed, though in my experience investors gearing into/with equities have a better appreciation of the downside risk than those gearing into property.

The latter group are more likely to under-appreciate the real impact of leveraging which can and does lead to tears. The of-used sale pitch thrown at the doe eyed newbie about "controlling' assets with limited amounts of their own cash tends not to highlight that a 10% fluctuation notionally wipes out said limited amount of own cash.

 

[tobe]

a 10% fluctuation 'at sale' would have that effect. Just having a bank valuation wont, (in practice, if not the letter of the mortgage). While the mortgage is paid set by the terms of the contract, the doe eyed newbie does indeed control the asset.

not so with shares, thats what margin calls are about.

Share investors who leverage must have a better understanding, there is more risk. With shares its margin call if you dont pay the instalments or the equity falls below the banks line.

With property its only (usually, in practice) if you dont pay the instalments.