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Seems like a good article. I like Noel as well and his book 'Getting it Together' was my introduction to the concept of investing and not spending everything I earnt, shame I only got that in my 20's and not from my parents or at school.Sorry about that, try this...
He does recommend it sometimes thoughThe thing that has always annoyed me about him, is that he made his early living (and I suspect built his initial wealth) running a real estate office, but used to rarely recommend buying of real estate once he went into financial planning.
SMH said:Q: A friend told me negative gearing to buy investment properties is the best way to accumulate wealth. But if you invest in managed funds or the sharemarket, you would be unlikely to borrow such a large sum for investment. The return will then be less because of the smaller principal. Is this true? I am 55 and contribute a third of my before-tax income to super.
A: It is true that you can usually borrow more against property than you can against shares but it's also true that over the long term shares tend to give better returns. Remember, too, that borrowing magnifies the outcome, so if you lose money because of badly chosen investments, the losses will be greater if you borrow heavily. Your best course of action may be to buy a property to start with and focus your energies on reducing the debt to a level where it is no more than 50 per cent of the value. You could then borrow against the equity in that property for shares and increase your borrowings as your equity in both asset classes grows.
The agent was kind enough to tell me they had no offers, had already comitted to buy elsewhere and were getting desperate. Tried to talk me into offering $580K as the owners would take it he said.
I don't blame the agent completely, I blame the vendor to some degree too. They should never have told their REA that they had committed to buy elsewhere and were getting desperate. As a vendor, its all about your posturing in managing your REA. We all know they're just interested in making the sale at any price, so you need to posture strongly to get the best price.I assume you would NEVER sell through that agent. Talk about loose lips.
Simon,
If the best unit sold for $510K then make the same offer. Tell the agent you will sign contracts immediately on acceptance of offer, no cooling off period and subject to pest and building. This puts the heat on the vendor. Offer is open for one week. Mention that the nice unit you liked went for $510K. The agent has to submit the offer to the vendor in NSW. Who knows these are interesting times. Make the bid. And don't go anywhere near $580K. Lots more coming onto the market anyway and the main stream media just keep printing more and more negative news.