Not a bad caution Amadio, but in my case do as I say and not as I do.
I would rather pay tax on income properties than negatively gear.
My attitude has always been 'work out how to afford the asset today - then pay tax'. So what if you have to pay tax in tomorrow's dollars? Naive - possibly, and always remember if paying tax upsets so much that you cant bear it - just give it ALL away - and you are no worse off than you were before!
I had a brief chat with Emma about this last night. I had a 'feeling' her Vegas thing may be more popular than she thought (she is often a pessimist) and it seems I may have been correct.
I think this has good legs well beyond sub-prime. So what if a 20-30% return collapses to net 10%? If nothing else you have had fun, made money from day one AND your investment has increased in capital growth. AND you have made that near impossible in Australia (whisper in case someone hears you
...profit...
Redfern in Sydney is a red hot property market. A next door neighbour at a property I own there just paid $1,050,000 for an unrenovated terrace. Rental on this 'investment' is $550pw. Net return wont be more than (say) $23,000. At 7.5% thats an interest bill of $82,500pa. In other words a whopping loss (pre tax) of $1100 per WEEK.
I seriously scratch my head sometimes. This guy was an 'investor'.
For those that jump into the US now, there will be an instant 'sugar high' of CG. I cannot see any real downside. Yes you will have management issues and little drama's but thats with any property. Principally IMHO the simple act of talking to Americans is my biggest issue. Few of whom understand anything other than some dialect they picked up in preschool. However, with careful use of sign language and pictures it is possible to get some of them to understand you (of course there are some VERY bright ones who still speak 'English' and got man to the moon and developed the internet which allows all this - but I digress.) Yes you will have little drama's.
But the money really speaks for itself. And if it makes money it is always less of a job than anything that doesn't. And as I said previously if return collapses it is STILL 100 times better than anything local. I will spell it out for the dummies. P O S I T I V E
After originally thinking of the foreclosure thing as short term only, I seriously think this has long term legs. It is certainly worth considering as a very solid arm to anyone's investment portfolio.
We are, after all, investing to make money, not to simply support our tenants lifestyle as our govt and the Fairfax press would have us believe.
BTW Emma is doing a lot of work for you guys making sure you all get looked after. In Boholt's world I believe she has just handed out probably at LEAST 250k worth of information - (an expensive person to throw out Dymphna??)
I have one major request of you all. Out of courtesy to one of the most informative and inspiring blogs I have read about this topic (not hard BTW, but I still think this was very good, even if the competition was high) I would ask that you treat Emma's contacts with great respect. The last thing anyone wants is for 'Australians' to get a bad name over there - that could easily ruin it for everyone. A bad reputation is easily earned and VERY hard to overcome. Do what you say you will do and be honest - even if you might _think_ someone is having a go at you.
A good reputation in business is something all Australians should strive for. It may even help us all get proper finance...