Books

[WebBoard]

From: Mike .


Money Secrets of the Rich
From: Ric G
Date: 15 Jan 2001
Time: 08:26:12

Hi guys

I just read a copy of John Burley's new book. I have to say that the info contained in there is excellent, although I don't agree that you should "never ever ever negatively gear".

Actually that's my question for those who have read the book - John reckons you should never neg. gear, but then the case studies he cites in the "buy and hold" strategy are mostly negatively geared (eg. his first property is underwater by over $300 per month). Am I missing something here?

 

[WebBoard]

Marcus Black

Reply: 1
From: Mike .


Re: Money Secrets of the Rich
From: Marcus Black
Date: 15 Jan 2001
Time: 21:37:32

Ric,

The example he gives in the book is a property he was actually living in.

In other words, it made much more sense financially to pay $330 US/month for a property he was paying off rather than flushing the same amount (or more) in rent money down the drain.

Especially when taking into account his statement that fair market rent at the time would have been $525-$550 US/month. He was a young bloke living in a terrific house paying the same amount towards the loan that he would have spent on rent, the difference being that this way he ends up owning the place!

One good question often asked by Mr Burley is "Why negative gear when you can positive gear?". Hope this helps.

Kind regards, Marcus Black.

 

[WebBoard]

GB

Reply: 1.1
From: Mike .


Re: Money Secrets of the Rich
From: GB
Date: 15 Jan 2001
Time: 23:56:25

I have not read the book.

Two important factors in the US (as I understand it) that do not apply here are:

Husband and wife can average their income for taxation purposes. All the hassles we have about income splitting are built into their system. Hence trusts are used comparatively little.

Up to a certain value, interest paid on a loan used to fund a residence is tax deductible.

Other factors that affect discussion is that home ownership is relatively less common than in Australia (Aust about 80%); Loans are sold on the open market rather than being held by the financial institution - foreclosure is relatively more common; and utilities and tax authorities exercise their rights over defaulters.

In Australia utilities (apart from water) typically have no rights to attach the real estate and councils prefer to let back rates run at interest rather than foreclose and attract bad publicity. Only when all the value, or near to it, been used will a council take action.

US ideas are useful, but they must be put into the context of local conditions.

 

[WebBoard]

Jeremy

Reply: 1.1.1
From: Mike .


Re: Money Secrets of the Rich
From: Jeremy
Date: 16 Jan 2001
Time: 09:43:27

A very concise and well thought out expose of US/Aust property differences. Your comment about utilities/county liens on properties also goes part way to explain why the foreclosure market is so huge.