maybe the smart people are buying at above average return, what do you think?
Yes. Everyone here is above average
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maybe the smart people are buying at above average return, what do you think?
Negative that was including all outgoings (5.5% gross minus 1.5% outgoings)
really a lower return then a TD?
Hypothetical.
- TD Paying 6% Interest
- $60k Cash
- 30% tax bracket
TD = $60,000 * 6% = $3600
After tax return = $2,520
- House with 4% Net yield
- 60k Cash deposit
- 15k in acquisition expenses
- 7.2% I/R on debt
- 30% Tax bracket
- $2,000 Depreciation allownace (2000*0.3)
Neg Geared Approx after tax + Depreciation = $3,852
300k increasing by 2.5% gives $7,500 minus 3,852 = $3,648
After tax Total return on Term Deposit = 4.2%
After tax profit on IP = 6.08%
So the above statement you made on a term deposit beating Resi IP over the year is false when you do the numbers. Their is pro's and cons with each investment vehicle
Regards,
RH
I'm not sure whether you can use a margin loan to buy Gold equivalents on the ASX, but of course there is the CFD option if you are looking for leverage, not that I would recommend buying that way.Hobo i'm completely clueless with gold (i'm being serious lol). Can you burrow against it? If so what LVR/Rates (I'm making an assumption you can only really burrow against gold stocks). And how do you determine fair value?
That's not what I said. I suggested a TD had performed around the equivalent of an average Sydney house over 2010.Interesting how people keep stating that a TD is as good as an IP investment.
Yes. Everyone here is above average
TDs are a useful comparison as they are a risk-free return. Given the risk involved in holding a property asset, in a rational environment return from holding property would be materially higher than a risk-free deposit.
Token Funder rolled eyes to the suggestion that everyone here is above average, you are saying that some members could achieve greater than average results... your views don't necessarily contradict so not sure how you came to the conclusion TF's view is naive.If their focus is just on residential property, then it would appear logical to me that some of those members would be able to achieve 'greater than average results'.
Somersoft will have some above average housing investors, some average housing investors, some below average housing investors. The question is whether Somersoft's average investor beats that of a random sample of non-Somersoft property investors... I have seen it inferred that there is a higher standard of housing investor on this site than elsewhere, but I doubt there is any way to quantify such a claim.
Actually Token Funder, i think this is a pretty silly and naive statement by you.
Personally i am negative on residential property, but that opinon is partly based on the fact that i am no expert when it comes to buying property.
Instead of being an expert in one asset class, i prefer to become a 'reasonably competent' investor in several asset classes. To overcome my lack of specific 'expert' knowledge in a particular asset class i demand a greater margin of safety to compensate me.
But this is a property forum, with some members who have been around along time. If their focus is just on residential property, then it would appear logical to me that some of those members would be able to achieve 'greater than average results'.
That's not what I said. I suggested a TD had performed around the equivalent of an average Sydney house over 2010.
It is under-represented by what in my experience is the most successful class of landlord - old persons of Mediterranean descent (more fans of concreting than the Internet, I suspect).
Given that Gold doesn't have a return you wouldn't value Gold like you would other income producing assets. Different people will give you different answers, but I would suggest you should think of Gold like a currency, it will swing from overvalued to undervalued and back again (in a cyclical nature) against stocks, oil, property and other assets. The ideal situation would be to buy when undervalued against these other assets and sell when overvalued.
It is over-represented by punters with little experience prior to the mid-nineties and much experience in the seminar caper. It is under-represented by what in my experience is the most successful class of landlord - old persons of Mediterranean descent (more fans of concreting than the Internet, I suspect).
Sounds like 90% of Dromana.
They all have a holiday house which is made of bits and bobs, nothing spent on them for 20 years, full of fruit trees, all drive around in spotless 1986 Commodores, only use cash, don't have a mobile phone or a phone at the H/H and are super-tight.
They would be great value here most likely...if only they owned and knew how to use a computer.
Hell yeah. People like this have a wealth of knowledge. I'm fortunate in that several members of my wife's extended family fit this bill, and are happy to talk to me about investing.
What's interesting is that although they have done very well, they can be VERY set in their investing ways. Trying to talk about 'cashflow positive investments' was like heresy! Still, I got a lot out of talking to them. The main theme they talked about was picking properties that seemed 'unnaturally cheap', and holding onto them for a long time. Buying good location was also a very strong theme. These people weren't interested in 1 year rates of return, but 10 year rates of return, and some of them had held the same properties for literally decades.