Property Investors ahead of the Pack

[see_change]

Amongst all the doom and Gloom stories being pushed by the media it's nice to see that all the effort people have gone to has paid off

http://www.theaustralian.news.com.au/common/story_page/0,5744,9617781%5E25658,00.html

Property investors ahead of the pack
By David Uren, Economics correspondent
May 21, 2004
PROPERTY has been a highly successful investment strategy for more than one in 10 households in Australia, according to research conducted by the Reserve Bank.

The average property investor has a net wealth of $662,000, more than three times the $218,000 average wealth of the population at large.

Their higher wealth reflects their property ownership, the Reserve Bank says, and the longer they have held their property, the richer they become.

Property investors aged over 65 have an average net wealth of $1 million, with most of their properties fully paid off.

The average age of people who have their own home and an investment property is 49 years. Property investors in the 45-to-64 age bracket have an average net wealth of $860,000.

The Reserve Bank said that, surprisingly, almost one in six property investors rent the home where they live.

The renters with property investments are younger, with an average age of 39 years, and 85 per cent of them have borrowed to buy their investment property.

Negative gearing, where investors pay more on their debt and property costs than they receive in rent for a tax advantage, is most popular among younger property investors.

The study found that half the investors in the 25-to-44 year age group have either no income or tax losses from their property.

Investors who have borrowed to buy their property have an average mortgage of $120,000, while the average value of their investment property is $250,000.

The principal dwelling of owner-occupier investors has an average value of $310,000.

Although there are people in all income groups with investment property, the market is mostly composed of higher-income earners, the study said, with the top 40 per cent of income earners owning 71 per cent of the investment properties.

Property investors have an average household income of $83,200, compared with the population average of $47,500

See Change

 

[Aceyducey]

Yup,

That goes back to the recent report on the topic.

Overall you're better off being an investor than not.

I wouldn't mind seeing a similar report on share holders.

Cheers,

Aceyducey

 

[whitt]

I have seen similar stats here in NZ.

 

[Sunfish]

I wouldn't mind seeing a similar report on share holders.

Cheers,

Aceyducey

You know perfectly well that anyone who had the guts to punt on the tech boom early, and the wisdom to pull out before the excreta hit the ventilator did VERY well.

In a couple of years those with both the guts and wisdom WRT real estate will have done better ...... BUT

The "but" is because it is easier to leverage RE than shares. The flip side is that leverage magnifies both profits and losses. (no empahsis needed)

Today, neg gearing property sounds about as dangerous as neg gearing BANKS! I'd rather buy bait and fuel and go fishin.

North Qld........ Perfect at this time of year! ....... Thommo

 

[Aceyducey]

You know perfectly well that anyone who had the guts to punt on the tech boom early, and the wisdom to pull out before the excreta hit the ventilator did VERY well.

Considering the amount shares are up in the last year, anyone seriously doing shares should be doing very well

Cheers,

Aceyducey

 

[Kristine..]

The study found that half the investors in the 25-to-44 year age group have either no income or tax losses from their property.

Although there are people in all income groups with investment property, the market is mostly composed of higher-income earners, the study said, with the top 40 per cent of income earners owning 71 per cent of the investment properties.

Property investors have an average household income of $83,200, compared with the population average of $47,500

No. 1 Son bought his first investment property when he was earning less than $10,000 per annum.

Now, with property #2, his gross rental income is almost $20,000 pa although the properties cost more than their income to hold.

The first property has now doubled in value according to the bank valuer.

Daughter applied for a loan when she was earning $6,500 per annum, but had to increase her earnings to $13,500 to qualify (which she did by working extra shifts).

Her property has improved by about 30% ($40,000) in the year she has owned it and produces about $8,500 in rent.

For the Reserve Bank figures to show the average household income of investors to be $83,200 I would suggest that this includes the net income from rent as well as other earnings.

In my opinion, the main benefit with property is that it holds, grows and restores your money to you. My children can't withdraw the money from the property, the property has improved by at least their own gross annual wages each year (and they didn't even have to get out of bed for that growth), plus the property produces income to help pay out the loans borrowed to buy it in the first place.

Even at this stage, they have every dollar they have ever earnt.

It is no surprise that property investors have a higher net worth than the non-investing public. Just ask my children!!

Cheers

Kristine

 

[thefirstbruce]

acey, personally I have developed cold feet about buying any ip's within the next few months, and decided to throw it at the share market short term. Beats being bull-hitted by REAs all week.

I wonder what the Somers, Brenda, and Steve McKnight are doing with their cash this year?

Anyone else out increased their share market exposure this year? And I respect this is a forum about property investment.

 

[Aceyducey]

Anyone else out increased their share market exposure this year? And I respect this is a forum about property investment.

Yes. As I've discussed elsewhere

McKnight had a big buying binge in NZ late last year & now is getting into commercial properties.

Cheers,

Aceyducey

 

[keithj]

Shares or property or both.

Anyone else out increased their share market exposure this year?

Absolutely. I see few benefits in holding poorly performing assets. Why keep assets that are yielding 2-3% on current valuations with low probability of good growth in the medium term, when you can invest in Listed Property Trusts that return 8-9% with an equally low probability of good growth. They are liquid, so if/when the residential property bargains appear over the next few next years, LPTs are easily convertible to cash. Since this is a prop forum, I mention LPTs - other shares have different yield/growth/volatility/liquidity/gearing characteristics.

 

[NigelW]

Amongst all the doom and Gloom stories being pushed by the media it's nice to see that all the effort people have gone to has paid off

http://www.theaustralian.news.com.au/common/story_page/0,5744,9617781%5E25658,00.html

Property investors ahead of the pack
By David Uren, Economics correspondent
May 21, 2004
PROPERTY has been a highly successful investment strategy for more than one in 10 households in Australia, according to research conducted by the Reserve Bank.

The average property investor has a net wealth of $662,000, more than three times the $218,000 average wealth of the population at large.

Their higher wealth reflects their property ownership, the Reserve Bank says, and the longer they have held their property, the richer they become.

Property investors aged over 65 have an average net wealth of $1 million, with most of their properties fully paid off.

The average age of people who have their own home and an investment property is 49 years. Property investors in the 45-to-64 age bracket have an average net wealth of $860,000.

The Reserve Bank said that, surprisingly, almost one in six property investors rent the home where they live.

The renters with property investments are younger, with an average age of 39 years, and 85 per cent of them have borrowed to buy their investment property.

Negative gearing, where investors pay more on their debt and property costs than they receive in rent for a tax advantage, is most popular among younger property investors.

The study found that half the investors in the 25-to-44 year age group have either no income or tax losses from their property.

Investors who have borrowed to buy their property have an average mortgage of $120,000, while the average value of their investment property is $250,000.

The principal dwelling of owner-occupier investors has an average value of $310,000.

Although there are people in all income groups with investment property, the market is mostly composed of higher-income earners, the study said, with the top 40 per cent of income earners owning 71 per cent of the investment properties.

Property investors have an average household income of $83,200, compared with the population average of $47,500

See Change

Good to see that the stats back up the contention that you're better off in the long run by investing.

but

Property investors in the 45-to-64 age bracket have an average net wealth of $860,000

Crikey! I reckon that's a pretty low target to aim for over that timeframe...you don't want to be average, even if it's "average of an exceptional group"

 

[Rickardo]

Kristine,

A little off topic, but where were your childrens IP's purchased? With an income like that they had to be relatively cheap IP's, unless you gave them some help with the deposits?

 

[Kristine..]

Hi Rick

No. 1 Son: Bundoora, student accommodation (off the plan 1997 when he was 16) $70,000 including furniture, 7.5% pa return, indexed, now returning approx $6,200 pa recently valued at $145,000

No. 1 Son: Croydon, 4 year old Townhouse, $237,000, (Son now 22 years old) $12,220 pa

Daughter: Kilsyth, 30 year old Townhouse, $136,000 (Daughter was then 18 years old) $8,580 pa

No, we don't help with deposits. We do help with encouragement. We don't charge them board but expect nay! demand that they invest in property.

They have saved their own deposits from working at Bi-Lo.

It's easy, but it certainly helps if your parents are committed to property investment. Daughter swore she would not follow in my footsteps. 'Hot Damn It!' she said when we emerged from Barry Plant 'Now I'm Just Like You! Is there no escape!! Remember, I've done this only to humour you - just don't expect me to ever do it again!'

She then proceeded to renovate alongside me, is highly territorial, and is just about ready for Property #2.

By the way - I am always happy to adopt another protege Rick, encouraging people is my mission in life!

cheers

Kristine

PS No. 1 Son's Christmas Card to me read 'We don't do too badly for a dysfunctional family'! but I think he should get out more!!

 

[Gee Cee]

Keep on Rolling Along

Hi Kristine.

It is always inspirational to read your posts.

I purchased my firts house when I was about 19 in 1978 for $23000.(A deceased estate do upper) I knew nothing about property but was always a bit entrepeneurial.

With a bit of painting, mowing and budget reno it was soon rented. 1979 - 1980 was the first boom I experienced. I was earning about $200 per week as a apprenntice and was amazed at how much I had made. I held back from the temptation of selling and pocketting around $30000 and buying a new Sandman Van. And still having pockets of money left over.

Instead I re-financed and bought another similar property.
(From then on I was addicted)


As you would know there was no internet or vast selections of books available regarding investing in property. It was virtually learn as you go, make mistakes & pick yourself up and move forward again.

My boys are now 4 years old. They have been going to building sites, solicitors, bankers etc since they were in capsules. Even though they are only 4 they are already showing a keen interest in wanting to know about why and how come and when and who and any other question relating to building, and investing.

This is the 3rd boom I have traded and invested through. Yes you learn something every time. But the more booms you experience, the more similar they seem to be.

I am hoping that my guys keep up their interest in property. And that by the time they are partly through High school they can experience their first boom.
Which will allow them although young, to get the picture of what happens.

Gee Cee
(Mr Mum)

 

[paul_s]

"The average property investor has a net wealth of $662,000, more than three times the $218,000 average wealth of the population at large."

"Property investors have an average household income of $83,200, compared with the population average of $47,500"

The results are somewhat loaded when the group of people being looked at have almost double the average income.

Here is a more extreme example, I bet if I sampled exotic car collectors their net worth would be above average, does that suggest collecting such cars is a good investment?

Not that I am suggesting propery is not a good investment, just that the stats don't really mean much.

 

[DOC]

Hi Everyone,


Just wanted to say Kristine, well done! Were thinking about starting a family soon and are often perplexed by the task of educating our kids about financial wisdom. Especially when we see so many of our friends and family who have the knowledge but seem to going round and round in the 'Circle of Debt'. Looks like the key to your success is leading by example and instilling into your kids the mentality that they can do it.
In my journey through a lot of the other posts, it is obvious that there is a lot of uncertainty at the moment and specifically relating to Property. However, I think the most important message that can be gathered from the Reserve's reports and the experiences that Kristine and her family, is not whether you can afford to invest, but that you can't afford not invest. Whether that be in Property, Shares or other vehicles.


Cheers,
DOC.