Greedy Investors

From the article:

Lower-income households are less likely to own housing, either their own home or an investment property, than higher-income ones.

Wow, amazing.

Offtopic: The "Greed is good" speech in the 1987 movie Wall Street is so famous that I thought surely I must have seen it, but it turns out I hadn't. I downloaded the movie a few days ago and watched it for the very first time. Still pretty good after 22 years.

p.s. Thanks Kim, I especially like reading the articles which have heaps of comments.
 
Interesting isn't it? I used to be like them, though, before I started this part of the journey and educating myself.

I can't remember which book it was it in but it said most ppl are stuck and unaware in the '***** matrix'. It's always someone else's fault, especially the government. :rolleyes:
 
So we are now back to the old story "Greedy Investors"....... brilliant, this subject is always recycled when we are approaching a booming RE market and people are actually making money. Things are looking up, its time to jump in. :)
 
This one caught my attention:

Comment 70 of 71
FHB Maybe of melbourne: 80K? Forget it! You will need at least 200K combined to even think about buying a decent place around the 350-450 mark comfortably. On 80K you could probably comfortably borrow about 200K.. maybe 250 max. I know, I checked it all out a couple of years ago, went to bank interviews, got pre-appoved loans, the lot, but never bought. That was before emergency interest rates, but also before inflation went nuts. There's just no way to borrow more without eating 2 minute noodles and catfood for 10 years unless wage inflation comes back before then.. O where art thou wage inflation? I've been on a bit over 80K for almost 2 years now! Before that, 10% increase per year without fail. What gives?

Posted by: renter of sydney 4:58pm today
Comment 69 of 71

It's a classic whinge by a renter.

They don't have to spend $400k on a first house.

But they want to.

You have to be realistic; BUY WHAT YOU CAN AFFORD.

If this means not living near the office, or the cafe strip, then stiff.

The only decent house that fell within my budget when looking for my first PPoR (which had no FHOG by the way) was 40 mins drive from my work, and nearly an hour by train to work for my then partner.

Get over yourselves you pathetic FHB whingers.

Life's not fair, and owes you zero.
 
Not to mention Bayveiw that 80k p/a could buy st least a couple of 400k houses, or at least it is for DH and I :D
 
This unfortunately..is all too common.....people nowadays don't like to take personal accountability for their life's directions!:mad:

I have heard all the excuses, some common ones being:

1. I don't have the time..

2. Propoerty in outer suburbs don't rise....

3. What if interest rates go up?

4. The newspapers say that prices will fall 40%! (classic!)

I have watched people spend 50K on a wedding or car.......have even suggested that they could still have a nice wedding for 23K or a wedding for 15K.....and use the rest as a deposit for property. They would not have a bar of it.

Instead people buy things which improves their status which they have to keep paying for ever.

We have heard of IQ (intelligence quotient) and EQ (emotional quotient). Most successful people (career wise) have both. But very few people seem ti have FQ (financial quotient) which frees them from the rat race.

Rant over.....:D;)
 
I get sick to death of people complaining about the price of property! Guess what, we all had to do it at some stage. And when I did it, I didn't have a huge income. 30 years ago, I was earning $10,000 per year! That's right, that's less than $1k per month. Most people today spend that on their car loan.

I did it the hard way by saving, and then buying something I could afford ($40k). I still live in this house today. What amazes me today is how much people are earning these days. I was only on $10k, when I bought my place. Now people are earning 50, 60 and 70 thousand dollars! How ridiculous! And they still complain about the price of property!

A classic example, a house up the street from me was recently passed in at $650,000 (which was definitely a good buy for this area). People out there are earning the big dollars, and can't afford something like this! It's pure financial ignorance! And what about the FHOG?! We didn't exactly have that when I bought a house. In fact when I bought my house, I had to pay the government. Stamp duty was over $300! And remember, that's with a wage of only $10,000.

Pure whingers if you ask me!
 
I get sick to death of people complaining about the price of property! Guess what, we all had to do it at some stage. And when I did it, I didn't have a huge income. 30 years ago, I was earning $10,000 per year! That's right, that's less than $1k per month. Most people today spend that on their car loan.

I did it the hard way by saving, and then buying something I could afford ($40k). I still live in this house today. What amazes me today is how much people are earning these days. I was only on $10k, when I bought my place. Now people are earning 50, 60 and 70 thousand dollars! How ridiculous! And they still complain about the price of property!

A classic example, a house up the street from me was recently passed in at $650,000 (which was definitely a good buy for this area). People out there are earning the big dollars, and can't afford something like this! It's pure financial ignorance! And what about the FHOG?! We didn't exactly have that when I bought a house. In fact when I bought my house, I had to pay the government. Stamp duty was over $300! And remember, that's with a wage of only $10,000.

Pure whingers if you ask me!

I agree with your sentiments, but I think most people now would love to buy their first home at just 4 times annual salary. They may say you had it pretty good!
 
Instead of moaning about these people you should thank the lord they pay thier rent!.
Even consider buying them a very expensive christmas present (a plasma tv for instance) for paying on time.
Not much chance of that happening around here is there?. :rolleyes:
 
I agree with your sentiments, but I think most people now would love to buy their first home at just 4 times annual salary. They may say you had it pretty good!

$80k x 4 is $320k. That 400k house is 5x income.

I was on $18k when I bought my first house for $40k, but then graduated and got a $35k job a few weeks later (yes, I bought my first house when I was still a student at uni - I'd saved a $13k deposit in a year on that $18k income, go figure).

Mind you at the time I was living in a sharehouse at $60pw expenses included ... fun times. Bit harder to do that now, I have a partner and two rugrats to feed.
 
$80k x 4 is $320k. That 400k house is 5x income.

I was on $18k when I bought my first house for $40k, but then graduated and got a $35k job a few weeks later (yes, I bought my first house when I was still a student at uni - I'd saved a $13k deposit in a year on that $18k income, go figure).

Mind you at the time I was living in a sharehouse at $60pw expenses included ... fun times. Bit harder to do that now, I have a partner and two rugrats to feed.

Most people don't earn 80k though. I think the avg. is still less than 60k.
 
I agree with your sentiments, but I think most people now would love to buy their first home at just 4 times annual salary. They may say you had it pretty good!

Assuming the average wage is at $52k per year, which I'd seriously doubt - I reckon it's more, then this would mean a first home would be in the vicinity of $208k.

You don't get much for that, but you can still do alright for $300k or less - if you are not too fussy and just a little bit realistic.
 
I personally believe we too easily label people. We castigate based on a couple of sentences, personal biases etc.... Greedy investor, bludger renter.....:rolleyes: :( Doesn't anyone get totally bored with this name calling? Gees how many times have threads on SS, from people who obviously have a few more smarts than the average bear, deteriorated into slanging matches on this and related subjects.

You aren't surely expecting some great thought provoking response on these matters when people are responding online to a media article limited to 300 characters. :eek:

If it validates your pre-conceived ideas about these individuals who are struggling (self imposed or otherwise) to acquire their own home or are looking from a rallying cry from your so-called landlord brothers (and sisters) about their ignornace, go for it. Read it and lap it up - its your prerogative.

I now switch off not only the articles that was referred to in Kim5's post but the ensuing noise that happens afterwards. There are emanantly more important things to worry about in the realm of property investment.
 
I personally believe we too easily label people. We castigate based on a couple of sentences, personal biases etc.... Greedy investor, bludger renter.....:rolleyes: :( Doesn't anyone get totally bored with this name calling? Gees how many times have threads on SS, from people who obviously have a few more smarts than the average bear, deteriorated into slanging matches on this and related subjects.

Kudos Buzz.
 
Instead of moaning about these people you should thank the lord they pay thier rent!.
Even consider buying them a very expensive christmas present (a plasma tv for instance) for paying on time.
Not much chance of that happening around here is there?. :rolleyes:

Riiiiight :confused:

We should thank the lord they're paying the amount they agreed to in a legally binding contract? In fact we should be so thankful they honour their side of this business agreement that we should in turn reimburse them with a gift to the value of 15-20% of their annual agreed payment. :eek:

Ummmm yeah ok. :rolleyes:
 
I have to admit I'm probably 'greedy' as we're entirely in this thing for the money. I get to embark on a quest for a tenant next week, which is not the way it should be, but its money. Money is useful stuff, and with the asking rent on the place being over twice the P&I mortgage, it should work out.
 
Assuming the average wage is at $52k per year, which I'd seriously doubt - I reckon it's more, then this would mean a first home would be in the vicinity of $208k.

You don't get much for that, but you can still do alright for $300k or less - if you are not too fussy and just a little bit realistic.

Quite agree.

Another aspect is interest rates. Assuming you're borrowing, a home worth 4 times salary when interest rates are 15% is heaps less affordable than one worth 6 times salary when interest rates are half.

But overall comparing house prices to multiples of annual salary isn't that good a measure, especially with mortgages, whose real value relative to salary falls over time.

For example, a house might be worth 6 times salary now (say $300k). But in 18 years, assuming your salary has risen by 3% pa, it will have doubled. So the price you paid for the house is only 3 times salary (now $100k pa).

Meanwhile the house might have risen 3% pa, ie also doubled in 18 years (I'm being far more conservative than the 7-10 year crowd). So in that time the house will be worth $600k.

So by that time you're controlling a $600k asset, rising in value by $20k pa. This is about equal to your interest repayments so you're effectively paying ZERO rent, becoming SUB-ZERO as time goes on. Your repayments fluctuate due to interest rates, but in the long term are falling since they're based on PAST VALUE which is almost always less than PRESENT VALUE.

Meanwhile rents will have risen by CPI, and assuming a 5% yield on PRESENT VALUE, indicate a loss of $30k pa, which in the long term rises with CPI and wages.

The longer term you go the more buying exceeds renting.

As for investors, if you get something close to cashflow neutral (at a worthwhile LVR like 60 - 80%), and assuming values rise by CPI then the debt will fall in real terms by that amount each year, it is difficult to see how one can lose over the longer term, despite modest capital gain only.
 
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