Is it wrong to think this way?

[Gordon Gekko]

Hi All,

Reading an article today in the Melbourne Hearld Sun about affordablity of buying into the property market.

They said (in rough figures) 18 months ago, people were spending 21% of their average wage on paying off their morgage.
Now it is around 26% of average wages going into the morgage. The said in 18 months time it will be over 30% and that is when the banks start knocking people back for loans.

So in 2 years time, there will be alot more people out there wanting to rent.

Is it wrong of me to "prey" on people who can't afford housing or is it just business sense??

GG

 

[Simon]

I can't see how providing rental housing for those who are unable to buy can be seen as preying on them.

I think you are filling a demand.

Cheers

 

[MF35]

Are renters preying on you when the rental market is low and you are getting low rents? I don't think so. I think the economic and social circumstances of the time determine the market value and you would be neglectful in a business sense not to charge reasonable market rent. If demand for rental properties goes up (and there is no corresponding increase in the supply of rental properties) then you would expect rents to rise and I can't see why you wouldn't charge rent in accordance with any rise in market value.

So in short, no you are not "preying" on people.

MF

 

[hwd007]

Gordon,

Are you trying to tell us you're a wolf in a lambs wool suit ?
Or are you a Chameleon that just appears like a Gecko ?
Or is the suit cotton and Gekko true to name, in which case you're ok !

ha ha just kidding.

Oh well its late ! and I'm tired. I tried at least.

Gordon, some may say, each must answer to their own conscience, all be it in light of the views of others.

I hope by now your question has been answered.

Best of luck in IP

 

[landlubber]

Gordon,
In fact when this happens, (prices have risen to the point so less can afford to buy) I'd say the opposite is true, and that in fact, you are very kind to provide accomodation at affordable rents.

Put another way ....less qualified buyers wll mean less buyer pressure will mean prices either don't go up , or rise less slowly.
Now if you really were a mean SOB you'd have already sold your IPs and be invested is some other asset class.

LL

 

[kissfan]

Hi Gordon. Some good points already raised here, and here is my 2 cents worth. I think that landlords are providing a service to the community and if those predictions you mentioned are correct and a lot of people can not afford to buy a house that there may indeed be a lot of them seeking somewhere to rent. If this was to cause an increase (over the board) in rents, it is my belief that you should still look after any long term tenants you may have in place. By long term, I mean anything over a year. By look after, I mean dont go raising the rent on them to a point where they may reconsider where they rent. I think this business (because that's what it is) is a 2 way street, if you look after your tenants, HOPEFULLY they in turn will look after you.


Cheers

Marty

 

[Kevmeister]

The market will dictate what they are prepared to pay for rental accomodation. Yields in metropolitan areas are as low as 4% because CG has soared. Supply and demand will influence the final rents you can charge. If you want to charge rent at a discount to help your conscience, go for it. Otherwise keep in mind that 10 gazillion other investors are simply going to be doing the same thing. Those who are truly needy often have government-subsidised rent anyway.

 

[Peter_Tersteeg]

There's an add circulating for a developer offering terms of no money down etc in which a woman states that when you're renting, you're paying off the landlords mortgage.

This irritates me, because this woman doesn't realize that if her landlord is negativly geared, she's not paying off the mortgage, but her landlord is actually subsidising her living in a home which is better than what she could own (for the same money).

I appreciate that the landlord will do well though capital growth in the long run, but it annoys me that people think that their landlord is simply taking advantage of them, when it actaully costs the landlord in cashflow, taking care of maintenace, rates, insurance, etc, etc, etc...

 

[TheBacon]

Well said, PTBear.

The attitude of a lot of people is that money, wealth and happiness are limited resources. Thus they believe that if someone else has more money, time, pleasure etc., they do so at the expense of those around them. Money, time, opportunity and joy are available to all.

1. When I had little money in my pocket I rented.
2. When I got a stable job I purchased my PPOR.
3. Now I am able to purchase investment properties.

All of these situations were win-win;
1. I got to live in a suburb I couldn’t buy in / landlord got rent
2. I got to buy a place of my own / vendor got cash
3. I have begun to secure my (and my families) financial future / others get a place to call home.

There are many parts of my life where there is an exchange of time, money or goods. In all of these cases the other party ‘wins’, but so do I. My boss makes more money than I do, but I get to go home, play with my daughter and forget about work, while still making ends meet, I don’t begrudge the gain that my bosses make, good luck to them.

If we are fair and honest in our dealings with others we can sleep well at night knowing we have not hurt anyone. In the case of property; if we charge a fair rent, keep the premises well maintained and are compassionate in our dealings with tenants, we can hold our heads high and take pride in the fact we are building our wealth AND providing a service at the same time.

We can, and should, all win in this game of life.

TheBacon

 

[hwd007]

Good Points !

Bring home the Bacon !

 

[Nimee]

There's an add circulating for a developer offering terms of no money down etc in which a woman states that when you're renting, you're paying off the landlords mortgage. It irritates me

And I thought it is just me!!!. It irritates me to the point I usualy talk back to the TV when the ad is on.

Gorden,

Think of it this way, when there are lot of people who cannot afford to buy, where are they going to live if there aren't landlords to supply them with accomadation? Only other way is government providing the housing. And I can't see this happening to the scale required.

 

[Peter_Tersteeg]

Originally posted by Nimee
Think of it this way, when there are lot of people who cannot afford to buy, where are they going to live if there aren't landlords to supply them with accomadation? Only other way is government providing the housing. And I can't see this happening to the scale required.

I think that if the government had to provide the majority of housing for renters, we'd either have a bankrupt government, or a lot of tenants screaming that they want better houses - like the rich who already own their own houses (regardless of what they had to do to get there).

 

[Jacque]

Gekko,

You are not preying. You are providing housing for people who need it, money for a govt who spends it and an asset base for yourself who will eventually utilize it to allow the govt to pay the pension to someone else, other than yourself....

Just my rambling...