Property is a Poor Investment?
- Thread starter WASP
- Start date
Had a Valuation come back on one of our Rocky Properties a couple of days ago.
cost's to date.
Land 1600m2 $35k
House, move, re-roof, plumbing , power etc $70k
Total spend $105k
Had it rented 3 week's after start for $180, now $220 soon to be $240 per week
Almost 12 mth's old and now valued at $300k
190% increase in 12 mths, sound's like making money to me.
BB
cost's to date.
Land 1600m2 $35k
House, move, re-roof, plumbing , power etc $70k
Total spend $105k
Had it rented 3 week's after start for $180, now $220 soon to be $240 per week
Almost 12 mth's old and now valued at $300k
190% increase in 12 mths, sound's like making money to me.
BB
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Boatboy, that is a very impressive increase.
I am just trying to learn about property value:
We have 2 components with an IP:
A building:
Let say (I might be completely wrong here) after 70K improvement the building worth 100K. It had 0 value when you purchased (land value).
A land:
purchased for 35K, taking 100K from the assumed building value, it has increased to 200K. That's 572% in 12 months?
I am just trying to learn about property value:
We have 2 components with an IP:
A building:
Let say (I might be completely wrong here) after 70K improvement the building worth 100K. It had 0 value when you purchased (land value).
A land:
purchased for 35K, taking 100K from the assumed building value, it has increased to 200K. That's 572% in 12 months?
Karina's story is amazing isn't it.
All the mega legends on somersoft are women.
See ya's.
Hi all
Great thread enjoyed reading through it. Well when it comes to shares and you have no experience you can get caught.
I went into shares about a year ago and until recently was nearly 50% down on capital has come back a bit now BUT? you still got to pick the right ones.
This was with a portfolio of 5 companies.
Sue
When you say no money out of your pocket you are talking Cross Collat i gather.
Trying to work this out here what i think Cendrillon is saying is
if IP Val is say $300000 loan $200000 refinance at 95%
So new loan $285000 have $85000 for another purchase or just cross collat the property.
Next property also at 95%
Wouldn't this attract substantial Mortgage Insurance costs?
Cheers
BC
Great thread enjoyed reading through it. Well when it comes to shares and you have no experience you can get caught.
I went into shares about a year ago and until recently was nearly 50% down on capital has come back a bit now BUT? you still got to pick the right ones.
This was with a portfolio of 5 companies.
Sue
When you say no money out of your pocket you are talking Cross Collat i gather.
Trying to work this out here what i think Cendrillon is saying is
if IP Val is say $300000 loan $200000 refinance at 95%
So new loan $285000 have $85000 for another purchase or just cross collat the property.
Next property also at 95%
Wouldn't this attract substantial Mortgage Insurance costs?
Cheers
BC
Enjoyable read:
Comfort factor is, however, one of the most important financial considerations. What's the point of investing if it adversely impacts on your day to day existance?
Many people don't simply because equities can be bought:
a. in smaller parcels
b. have greater liquidity, so buying is simple
c. have an emotional attachment to the shares which makes it difficult to sell if you don't set an automatic stoploss.
The gearing question is to most interesting. As an investor, you can easily gear 100% into shares, often with capital protection guarantees (ie any loss is covered by the lender). These often attract much higher interest rates than your standard mortgage rate.
Gearing into property is more expensive (once you pay stamp duties, establishment fees, agent fees, deposit etc) however the interest rates are far cheaper. It does, however, have the advantage of a lack of liquidity (no motivation to trade frequently, a major source of capital losses) and a lack of transparacy (imagine if everyone had a giant neon sign on top of their home with the daily price on it. One day up $5k, the next down $6k. Most people would feel as uncomfortable as they do with stocks.)
Property also has the advantage of the ability to "add value", somethign which you cannot do with equities (and no, covered calls don't count, as there are far more effective & lower risk derivative strategies that can be implemented with less capital outlay).
Of course, very few wealthy people I know are totally committed to one vs the other, so the argument in itself may be simply a matter of proportionality rather than the exclusion of one or the other.
Fair enough point, but comfort factor does not change the raw numbers.
Comfort factor is, however, one of the most important financial considerations. What's the point of investing if it adversely impacts on your day to day existance?
Question - did you do the same level of DD as you do when buying a property?
Many people don't simply because equities can be bought:
a. in smaller parcels
b. have greater liquidity, so buying is simple
c. have an emotional attachment to the shares which makes it difficult to sell if you don't set an automatic stoploss.
The gearing question is to most interesting. As an investor, you can easily gear 100% into shares, often with capital protection guarantees (ie any loss is covered by the lender). These often attract much higher interest rates than your standard mortgage rate.
Gearing into property is more expensive (once you pay stamp duties, establishment fees, agent fees, deposit etc) however the interest rates are far cheaper. It does, however, have the advantage of a lack of liquidity (no motivation to trade frequently, a major source of capital losses) and a lack of transparacy (imagine if everyone had a giant neon sign on top of their home with the daily price on it. One day up $5k, the next down $6k. Most people would feel as uncomfortable as they do with stocks.)
Property also has the advantage of the ability to "add value", somethign which you cannot do with equities (and no, covered calls don't count, as there are far more effective & lower risk derivative strategies that can be implemented with less capital outlay).
Of course, very few wealthy people I know are totally committed to one vs the other, so the argument in itself may be simply a matter of proportionality rather than the exclusion of one or the other.
Nice job BB
and a great example of how you can add value to increase your overall profit. Definitely a sweat equity job that you should be proud of!This has been one hell of an interesting discussion (thanks Alex and Cendrillon) though it's taken WAY too much time reading and digesting for a Sunday.
As for me and my partner, we've always invested both ways and will continue to do so. I love property. He loves shares. The perfect partnership when it comes to investing
I think everyone is missing the mark here there are so many people who don't invest there money at all at the end of the day most investments that return something are a good thing. As for property as someone said it is an affordable and fairly safe way for the "normal person" to invest. Next time you're talking to friends who don't have any shares or IP'S ask them out of anything in there life what would be the best thing the invested in, I think you will find it is buying there PPOR that they live in and how it has doubled even tripled in value since they have owned it. just simple fact's that people who are doing everything don't think about.
For people who don't get the idea of what I was saying, it's that property is a safe comfortable investment. If you purchase carefully in almost any area you're going to make money in the long term and to me that sound a hell of a lot better than not investing in anything and making nothing. cheers sam
For people who don't get the idea of what I was saying, it's that property is a safe comfortable investment. If you purchase carefully in almost any area you're going to make money in the long term and to me that sound a hell of a lot better than not investing in anything and making nothing. cheers sam
Nice job BB
This has been one hell of an interesting discussion (thanks Alex and Cendrillon) though it's taken WAY too much time reading and digesting for a Sunday.
Hi Jacque,
I can't believe this thread has been raised again!!!! I read this a few months ago, and it took me ages then!
Where is Cendrillon anyway, haven't heard from him for a little while now.....Oh yes, thats right the share market is booming..... Did anyone happen to tell him that so is the property market in Qld and Melbourne??? If I remember rightly he had $30,000 that he was going to do something interesting with in the share market. Wonder whats happened with that????
Where are you Cendrillon, we are missing your discussions... or then again, maybe we aren't!!!
Couldn't agree more Kingchevy,
There is a danger of over analyzing too. I think the key is to begin investing. Whether it be IP or shares or a combination of both, at least these investments are going a long way towards making your future more financially secure.
Regards Jason.
Where do people find these things?!
Click Username --> View Profile --> Find threads started by WASP
Takes about 5 seconds.
Surely you know how to use the internet?
Never knew that!
