The true effects of the rate rises....

Reply: 1
From: Robert Forward


Hmmm, interesting last few paragraphs of the report...

QUOTE
A negatively geared investment is one where you have to keep pouring in more money, month after month, until you sell it. It's a business deliberately structured to run at a loss. Why would you do such a thing? Because you hope the (concessionally taxed) capital gain when you sell will be so huge as to make it all worthwhile.

Now, put yourself in the shoes of one of these smarties (tax dodgers get no sympathy from me). Your out-of-pocket costs have increased and you know they've got further to go. You can't put up the rent and, indeed, you're having trouble just keeping the place tenanted.

You're just hanging on for the capital gain. But then it occurs to you that, with rates rising the way they are, there probably isn't going to be much more capital gain.

What would you do? I reckon a lot of investors will decide they've had enough and sell up.

If so, their expectation of no more capital gain could prove self-fulfilling. And prices may even fall a bit.

Oh the hurt! The pain!
UNQUOTE

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au
 
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Reply: 2
From: Glenn Mott


I note with interest the above posts because while reading a 3 day old newspaper last night, a column from a journo called Toohey suggested that because of market reforms, the RBA could no longer lean on the banks to make it harder borrow money for residential property. Thus, the RBA had no choice but to raise interest rates, which in turn affects all industries that borrow money, not just those involved in property investment. Some of these industries are not booming like property has in the last couple of years and will have their interest bills rise by 30% in the next 12 months.

Even though residential property values have increased world wide in the last couple of years, a significant amount of our gain can be attributed to the government policy of providing first home buyers with grants upto $14000. When this grant has completely evaporated, the boom will be well and truly over, building companies will be going broke all over the country, fly-by-night real estate agents & finance brokers lacking in customer service skills will be going back to jobs they held before entering the industry because of the "gold rush" and businesses such as "The Investors Club" will close the doors.

Successive governments seem to have tinkered with things that affect the residential property market in an attempt to keep themselves in a job, only to cause great shifts in wealth each time.

I feel that as a nation, we would be best served if our government got rid of the FHOS and negative gearing and STOPPED mucking around with short sighted, self serving policies so that the property market could find its own natural balance, ie as the number of renters increased, yields go up making property investment look more attractive as it is then possible to see lots of cash flow positive properties.

The current system is overly encouraging people who wish to reduce their tax, not allowing them to realise that their taxes don't make them rich, their assets increasing in value does!

Glenn
 
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Reply: 2.1
From: Jas


> From: "Glenn Mott" <glenn_mott@hotmail.com>

Hey Glenn

> Successive governments seem to have tinkered with things that affect the
> residential property market in an attempt to keep themselves in a job,
> only to cause great shifts in wealth each time.
>

> I feel that as a nation, we would be best served if our government got rid
> of the FHOS and negative gearing and STOPPED mucking around with short
> sighted, self serving policies

To put it bluntly, its not in the politicians interest to be forward thinking. They are better served, political career-wise, to rush in at the last moment and save the day. They don't care that the latest 'save the day' policy has bad economic repercussions in a couple of year's time.

Either the other side will be in, and it'll be their problem, or the same politicians get to 'save the day' again! Where's the problem for them?

Jas


----------------------------------
When facing a difficult task, act as though it's impossible to fail. If you're going after moby dick, take the tartar sauce
 
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Reply: 2.1.1
From: Igs Kanny


"...I feel that as a nation, we would be best served if our government got rid of the FHOS and negative gearing and... ...the number of renters increased, yields go up making property investment look more attractive as it is then possible to see lots of cash flow positive properties..."

One question: how would the property be positively cash flowed without the negative gearing?

I can only suggest that Ross Gittins pull his thumb out of his bottom and did some research on the NG and its history (one way would be going to a local library if he knows what that is). Then he can try and see how the abolition of the NG would effect us all, him included.

I can see clearly now how much thinking and research goes into writing articles for SMH.

Igs
 
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Reply: 2.1.1.1
From: Igs Kanny


some more of Ross Gittins

...You'll pick up a bit of extra bread from the snobbish dummies willing to pay through the nose for the alleged gold version, .... which you've hyped up as "professional")...

...Now, put yourself in the shoes of one of these smarties (property investors, IK), tax dodgers get no sympathy from me...

He doesn't think much of other people, does he?
Guess who he is...
He is is the Herald's "Economics Editor".
I say good for Herald.
Cheers
 
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Reply: 2.1.1.2
From: Jerry Maguire


hi to all investors out there
like i always say you need to have a plan before you get into investing in property/ies. that includes the interest rate...
if you can't afford the rate to rise between 5% to 10% or if this is not in your plan ( i used the MAUS professional business plan )before you start to invest please don't start for F sake cos we doesn't want to see someone go down the drain just on their first ip without a plan and cos of the rate rise.
they will have negative thoughts about investing in ip next time thats where the ppl who bad mouth the industry cos they are once bitten twice shy...
the FHOG i think is about 10K stops at the end of this mth and i can't wait for another 6 to 18 mths and the rate rise to pick up some bargains...

IF YOU GOT NO PLAN DON'T START

if you want to be a rich and retire wealthy have a plan so you won't worry much about the rate rise.

Jerry
 
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