Break even point



From: Firefrog .

I spoke to a potential accountant/financial adviser today, he talked about there being a break even point for IP's and suggested that it currently is about 12 years. In other words you will only break even if you hold a property 12 years and make money if you hold it longer. What do you all think.
I personally find it hard to believe.
How would this person have come to this conclusion.


You gain strength, courage and confidence by every experience in which you really stop to look fear in the face. You must do the thing you think you cannot do.
- Eleanor Roosevelt
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Reply: 1
From: Jack Moro

My 2 cents worth is that this is totally wrong!!!!!!!

How many investment properties does the accountant have of his/her own ????
zero is my guess.

But I bet he/she could suggest a nice managed fund for you. One that pays a nice commission to the Accountant/Fin Planner.

Fairdinkum, as I have been studying Money one thing I Have learned is Fin Planners don't like property investment. Why I asked ? and I re searched ?MMMMMM and I realised there is no commission for it.

I once employed a Fin Planner who advised
me no better, than being a regular reader of Money mag has been though I enjoy the mag and it was a lot cheaper.

If you purchase a I.P at a fair price, and the property is well located to amenities,and you take due care with insurance, and you seek diligent advice on I.Ps and you educate yourself.

Your "FIRST" year capital gain and RENT will put you in front.

P.S Heres a good tip get a new accountant!

Hope this isn't to blunt

All the best
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Reply: 2
From: Michael G

If he has an opinion, then out of interest I would ask for a spread sheet to show so.

This probably weighs up;

- purchase costs (stamp duty etc)
- selling costs (agents commission and CGT)
- holding costs (interests, fees, maintenance)


- rental income
- capital gain after tax

Then you would have to factor in

- income tax bracket (what if you have a low income partner you have you property held in)
- inflation rate

Once you start putting in these figures then possibly you can begin an argument.

And then this doesnt not take into account

- buying below market from don't wanters
- the boost to value based on renovations and landscaping

Go back and get him to put his statement into a spreadsheet. If his giving advice get him to substantiate it

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