It's not an excuse it's a reason.

[locko24]

Investor?

Someone is confused... I don't think it's me!
Anyone buying a house is an investor, whether they are first home buyers or not! So yes, investors are pushing prices up - but first home buyers need to to be counted as investors.
Anyone who does not think buying a home - or therefore 'investing' - is a priority, deserves no sympathy, in my opinion!!!

 

[wobbycarly]

Someone is confused... I don't think it's me!
Anyone buying a house is an investor, whether they are first home buyers or not! So yes, investors are pushing prices up - but first home buyers need to to be counted as investors.
Anyone who does not think buying a home - or therefore 'investing' - is a priority, deserves no sympathy, in my opinion!!!

Disagree with your logic.

Investors look at the numbers first, and won't purchase above a price where the numbers make sense.

FHB (or SHB, in fact most home buyer, IMO), look first at the amount they can afford. Then they find the most house they can get for that amount. If they find a house that they loooove, they will spend whatever it takes/the most they can afford, to buy that house. Even if the price is above what makes sense for an investor.

So while a FHB may, by default, become a property investor, the mindset that dictates the price they will pay is completely different.

 

[BayView]

Someone is confused... I don't think it's me!
Anyone buying a house is an investor, whether they are first home buyers or not! So yes, investors are pushing prices up - but first home buyers need to to be counted as investors.
Anyone who does not think buying a home - or therefore 'investing' - is a priority, deserves no sympathy, in my opinion!!!

Don't agree with this mindset. Most people simply want a home, and want a nice one based on their budget.

Most people don't have an investors' mentality when it comes to buying a home. You probably think they do, but keep in mind you are here on an investing forum, so your mindset is already that of an investor. Most people I know have never even heard of Jan Somers.

Here's a real life example of how the average person thinks;

A few years ago, a guy I used to work with, about 12 years younger than me, and had no property. At the time we had a few, so I did have a point of reference to discuss this with him.

So, he gets married, and the couple are looking to buy their first house. She was earning pretty good money herself.

They were looking at spending as much (or more) as they could afford on the McMansion with everything, and had no plans for kids in the near future.

Now, having been in the "house poor" situation myself, I suggested he go for something a lot more within his means, smash down the mortgage as hard as he can using the saved dollars he would have spent on a mortgage on the McMansion, and then buy an IP in 2 years. This way, their newly married life would be financially stress free, and they will accelerate their financial position much quicker.

Smaller steps at the start, but better result in the longer term, and less financial stress was my argument.

So, they actually listened, and went for the smaller house.

Up until this point, their mindset for their PPoR was only about buying a you-beaut house that they would love. I would say they were fairly indicative of the average couple.

 

[RumpledElf]

FHB (or SHB, in fact most home buyer, IMO), look first at the amount they can afford. Then they find the most house they can get for that amount. If they find a house that they loooove, they will spend whatever it takes/the most they can afford, to buy that house. Even if the price is above what makes sense for an investor.

The house we are building has a lot of bells and whistles (all of which cost money) that are largely aesthetic and we wouldn't bother putting in a rental property. The house isn't an investment, I'm 35, I want a NICE new house to live in, getting a bit sick of renovating. Building the same features in as a rental wouldn't pay off and would only reduce the yield, when you're looking for a house to rent the number of bedrooms are more important than the brand of carpet, whether the kitchen is vinyl wrap or melamine and the prettiness of the skirting boards and doors.

I like colonial style features and I'm damn well having them on a new house!

 

[locko24]

Bayview and Wobbycarly

Have to disagree with both of you here!

Why would someone buy a house if not as an investment? Surely paying rent is a much cheaper way to go than actually purchasing!
In essence, they are investing against future rent rises by purchasing!!
They may not plan to use the equity for anything - ever! Buying to save cash is still an investment.

Cheers

Locko

 

[RumpledElf]

Why would someone buy a house if not as an investment? Surely paying rent is a much cheaper way to go than actually purchasing!

Says you. Our house to rent would be $320pw. It cost us $140k. Much cheaper than renting.

 

[wobbycarly]

Bayview and Wobbycarly

Have to disagree with both of you here!

Why would someone buy a house if not as an investment? Surely paying rent is a much cheaper way to go than actually purchasing!
In essence, they are investing against future rent rises by purchasing!!
They may not plan to use the equity for anything - ever! Buying to save cash is still an investment.

Cheers

Locko

We may have to agree to disagree. I re-iterate... The purchase mindset is different.

So while a FHB may, by default, become a property investor, the mindset that dictates the price they will pay is completely different.

 

[Belbo]

I think what Wobbycarly is trying to say Locko24, is this.

When you put on your investor's cap, the only thing that matters is the numbers. Above all, will it yeild enough, and will it likely go up in value enough, to satisfy your strictly financial requirements?

When you put on your homebuyer's cap, the same numbers might well not make any sense. You might buy something as a PPOR that as an investment property would be insanely cash flow negative or have less than ideal capital growth prospects, or both, for example.

But you just don't care because your partner said "I love it!" or it's down the street from where your dear old grandma lives, and that's more important to you than money.

Of course, your PPOR is an investment too, but it's very often as much an emotional investment as a financial one.

A happy wife is a happy life, as they say, which is why I didn't consult my accountant on my wife's decision on which PPOR I was going to buy.

 

[locko24]

Says you. Our house to rent would be $320pw. It cost us $140k. Much cheaper than renting.

Sure - but you have limited choice as to where this is located!

 

[locko24]

I guess i can see all your points - people buy for the simple fact that they 'own' it.
I personally would still see it as an investment, whether the buyers do, or not!

Cheers

 

[InveSTAR]

my own excuse has been that "I'm too scared of debt" I live a comfortable life with a paid off house and cash flow through my work and think that it will reduce my lifestyle if I get into too much debt.

I have heard other excuses though

"you can't make money unless you rip someone off"
"Money corrupts people"

living with those beliefs could reduce your ability to create wealth.

 

[Bargain Hunter]

I guess i can see all your points - people buy for the simple fact that they 'own' it.
I personally would still see it as an investment, whether the buyers do, or not!

Cheers

I drive a car. It's a Daihatsu Sirion, it gets me from 'A' to 'B'. Why would anyone buy a Porsche when my little beasty will do the job? No-one would really believe this was an investment because it loses money but what if I changed the scenario to a classic MG, now this could be an investment because there is an opportunity for a capital gain. But just wait, there's a whole lot of reasons I might buy a classic car all of which have nothing to do with investing, but I can use this excuse to sway my wife for the purchase...

People buying a PPOR want the great Australian dream. They hear that rent money is dead money and only lining the pocket of the landlord. The expectation of their peers says that when you get married you get a mortgage, some may even think that it's an asset for their future, the list goes on but in general the reasons for the purchase have more to do with what they can afford and what the property will say about them (as opposed to being a renter) than the likely performance of the individual property as an investment.

I would argue that just because someone buys an item that is likely to increase in value it does not make them an investor anymore than the millions of Australians that have superannuation.

Being an investro you go into the deal with your eyes open, investing is a verb it involves activity not a passive position.

Regards

Andrew

 

[Bargain Hunter]

My family and friends thought is was great when we purchased our first investment property, slap on the back, well done, investing in your future... by the fifth property some had turned almost hostile, how many properties can you live in at once, greedy capitalist pigdogs (said in jest but...).

So there appears to be an acceptable level of investment among family groups and peers which if you exceed will get you into trouble, so my advice is don't tell your friends or family too much about your investing unless they are on the same wavelength.

These jibes have not stopped us investing but they can distract you at the time. Don't let other's opinions stop you from building a portfolio if that is your aim.

Regards

Andrew

 

[skater]

I guess i can see all your points - people buy for the simple fact that they 'own' it.
I personally would still see it as an investment, whether the buyers do, or not!

Cheers

The first property I bought, I bought the only thing I could afford in the area I wanted to live. I didn't care that it was a heap of crap (it was) because it was mine and one day, I would own it outright. I certainly did not see it as an investment.

Fast forward and the other two PPORs are a completely different kettle of fish. Having started investing, the next PPOR was bought because it was undervalued. It was slightly more $$ than other homes in the area, but it was a sub-dividable dual occ with a second three bed home on the same block.

The PPOR we currently have was also undervalued.

 

[skater]

But just wait, there's a whole lot of reasons I might buy a classic car all of which have nothing to do with investing, but I can use this excuse to sway my wife for the purchase...

Really.....................?

 

[RumpledElf]

Sure - but you have limited choice as to where this is located!

On our block of land that we created and decided to live on instead of selling off because we love the area

The choice of colours on the other hand, geez, that was not limited enough. No wonder they give you a solid day to choose all your colours ...