What is your Gross Worth?

[jingo]

In your example, you could have bought a $1MM IP... but you didn't/haven't!

Not everyone can either, ie. you stil need to somehow service 900k debt.

If you wait 3 months, that same IP may be worth $1.1MM and you may not be able to afford it anymore.

Good point Jit,

Servicability determines how many gross assets one can acquire. Investor888 mentioned earlier that 'anyone' can increase their gross assets. This really isn't true. There are many people around who do not qualify for loans and therefore cannot purchase income producing assets. Their networth in years to come is likely to be (but not necessarily) less than a person who is eligible to borrow for the purpose of purchasing quality assets.

Interesting debate from all.

Regards Jason.

 

[steveadl]

steveadl I think 888 made a valid point.
If you have an IP you bought for $1,000,000 with $100,000 deposit you would likely consider your gross value is $1,00value.

Sorry I don't see what he said or you in this post as valid to the subject at all. Sure it's been over analysed to death now for what should have been a very simple poll, but the simple fact is we're discussing what gross assets you have control over - simple as that. Nor what assets you COULD have, not going into the usual debate how the properties aren't really worth what the investor believes (I'd say few are deluding themselves), and certainly not what we're worth if we take into account our earning potential as an individual and put a value on that etc! We're not talking potential gross value if you invested the extra $100k a certain way, it's simply what you have now.

Does my bank value my gross assets based on what I actually own, or do they also mutiply the $10k I have in my account as if it were used as a deposit for a $200k property and therefore say my assets are actually $200k more than I hold? Please!

As JIT said, what a load of crap.

 

[vbplease]

I believe you are both dangerously wrong.

why is that?

Because the storm folk were leveraged up the wazoo on the stockmarket and lost it all.. leveraging shouldn't be done.. end of story.

Oh, and the fact that this is a property forum isn't the point either

 

[buzzlightyear]

leveraging shouldn't be done.. end of story

On shares or property?

Leveraging is a bit like drinking alcohol. Everything in moderation.

 

[vbplease]

sorry buzz, just stirring a bit.

bit sick of seeing sunfish's "anti-leveraging property" posts, when he's views are based on the stockmarket..

edit: I'm all for leveraging in property

 

[kum yin lau]

Hi, vbplease, it's very easy to generalise and form a conclusion that may not stand up to closer scrutiny.

There is a very strong reason to leverage. Find me a fulcrum and I will move the world.

I mortgaged an IP @9.5% flat rate for a year in March 2009. Only $170000. To buy shares. Someone on this forum said it needed big cajones. I'm a woman. Wonder where that fits in.

I bought shares @ 40 cents whose NTA is 98 cents on a PE ratio of around 3x and the earnings to 30 June 09 was 8.1 cents, last dividend 1 cent.

Theoretically, the share could half and half and half again until it's worth less than 1 cent but the probability?

Assuming it doesn't go up in price, and I take the 2cents p.a. dividend, note that that is a 5% yield. It costs me 5% to make this investment.

I treat that as a business risk.

Storm or no Storm, I go for leverage when I think the risk is worth taking.

KY

 

[jaycee]

steveadl I think 888 made a valid point.
If you have an IP you bought for $1,000,000 with $100,000 deposit you would likely consider your gross value is $1,000,000.
If i have $100,000 cash and apply the same ratio, then my gross wealth is also $1,000,000 as I too could by that a 1Mil IP any time I want.You dont undertand the question. How much $ is the property you 'own' worth - not could own,'do own'.

In practice you'd pay fees, stamp duty and will incur fees when you sell, and of course holding costs.
So I could argue that my cash "gross wealth" position is better than yours at that given time.

As for values, go back 5-6 years and look at SSers (and dubious "experts") growth estimates, they obviously had no idea for avg houses were supposed to have almost doubled since. And dollar cost averaging share trading would've brought never ending returns just as selling covered calls & puts.
So I think many people here cant really ascertain value.
And yeah, "gross worth" is also fudgy malleable term.

Could've, would've, should've isn't the focus

 

[Witzl]

This thread sure got amusing.
Some people are just so quick to jump on the semantics of the anti-leveraging/anti-property bandwagon..... even when the topic is hardly valid.

Sash asked a pretty simple question, "what is your gross worth of properties?", and even said "dont worry about debt for now".......

.... keyboard warriors much?

 

[ianvestor]

Gross wealth is very easy to aquire (just get a lot more debt).

Hey if it's so easy to get more debt, perhaps you would be kind enough to find an extra $1.4m for me? Because from where I sit getting more debt isn't easy at all

 

[Dazz]

from where I sit getting more debt isn't easy at all

Amen to that....the credit squirrels rule the show at the moment.

 

[sash]

Yep....so true...the banks are tightening the thumb screws on everything at the moment.

Squeezing deals is becoming harder......just talked to the lady at the CBA I deal with and she mentioned the rate of loans being turned down is now more prevalent.

Acquiring quality property is easier than getting the financing. I have had to let a couple of very good unit block go as a result because of the level of equity that banks want to mitigate risk.

Hey if it's so easy to get more debt, perhaps you would be kind enough to find an extra $1.4m for me? Because from where I sit getting more debt isn't easy at all

 

[Harris]

steveadl I think 888 made a valid point.

No he didnt. He made a juvenile remark and found support from equally juvenile poster in you

I too could by that a 1Mil IP any time I want.

"Wanting" isnt sufficient. "Doing" is..

In practice you paid fees, stamp duty and will incure fees when you sell, and of course holding costs.

That is what not the poll was about. Get your reading glasses and read the poll again

So I could argue that my cash "gross wealth" position is better than yours at that given time.

and thats about all you guys been doing. Majority of us have less to argue about and more to act on.

Your ilk has been arguing for eternity and failing your dreams and prophecies to see property values drop down by 50%, have resorted to immature ridcicule .

As for values, go back 5-6 years and look at SSers (and dubious "experts") growth estimates, they obviously had no idea for avg houses were supposed to have almost doubled since.

Not doubled.. close to tripled for me in 3 regions of Australia over the last 6 years and many more between 70% - 90% appreciation (on bank values) on buy price in the last 5 years.

So I think many people here cant really ascertain value.

We live 'value' and know how to ascertain it well. You are an armchair do-nothing-poke-fun-at-everyone-specialist

And yeah, "gross worth" is also fudgy malleable term.

Not debating on 'term'.. no one was until you popped your mug in and started your drivel.



Harris

 

[Piston Broke]

We live 'value' and know how to ascertain it well. You are an armchair do-nothing-poke-fun-at-everyone-specialist

lol, How many IP's you willing to bet on that? Or just the beamer?
c'mon, make it worth me while!

Some people obviously have such a simplistic mind and can only handle a single point of aspect of investing at any given time. Gross Worth alone means nothing, so the topic need a little spicing up. Maybe you just got you nickers in a twist after the last interest bill....oh well, make sure to get up early every morning and keep slaving away a little longer.

 

[sash]

Piston Broke

Can you please elaborate on your achievements to date.....

I am presuming that you have retired very young...

lol, How many IP's you willing to bet on that? Or just the beamer?
c'mon, make it worth me while!

Some people obviously have such a simplistic mind and can only handle a single point of aspect of investing at any given time. Gross Worth alone means nothing, so the topic need a little spicing up. Maybe you just got you nickers in a twist after the last interest bill....oh well, make sure to get up early every morning and keep slaving away a little longer.

 

[Somerville]

Give up Piston Broke. The thread was asking about gross worth as a matter of interest, nothing more. It is an easy thing to calculate and you are now embarrassing yourself by demonstrating that you find a simple question to be a very complex issue.

 

[The Fence]

Yep, give it up mate....you're gone...

 

[Piston Broke]

sash the plan was to retire at 40 (from age ~18), by the time I got to 33 I realised it would be very boring as I was used to working >12 hrs a day doing various things I liked so much that It was more lifestyle than work. And unlike most peers I never spent much on booze & drugs. I held few paye jobs, and not for long.
Now I sit here in my pyjamas with a coffee typing.
Maybe that's why I'm bored with just a convo on "gross worth".
Or maybe it's because I seen many people come and go (broke!) in the world of investing & business. I know many people who's gross worth is in the tens of mils most of whom I would never swap places with.
I'm happy with my little golden pigeon that lays cute small little "nett" eggs, not "gross" goose eggs.
Most people that know me just thing I work and lead a simple life, even though the last 7 yrs most have'nt seen me work much at all and wonder what it is I do and how can I afford things. As most round here know, most people out there have no money by Monday.

Achievement? Ok here's a recent one:
A few mths ago a good friend bought a house with a loan approved.
After he signed the contract, the bank told him he had to put up an extra $20k for the deposit otherwise they would'nt do the deal (it was X-col with his ppor).
He reluctantly told me this 4 wks before settlement when I asked why I had'nt seen him for while. He was busy trying to get another loan and was about to take a 20k loan with 4% interest per month (ouch!).
So I told him to come back and see me the next, i may have some contacts that could help him.
The next day I asked the details of the deal ( he cashflow was good) and gave him 2 envelopes each containing $10K, and just said if you can pay me back in 3 mths it would be great, if not it should'nt be a drama. And no I dont want interest, it's a favour not a business transaction.
I was very proud of that, and remembered way back when I lost weeks of sleep over a sum of <$5K.
I've had a few of these "achievements" over the last decade, one of which was a check for $120K (within hours). Gross don't interest me (boring without some spice ), how much do I have and or can spend does.
Quality beats quantity.

ps And I do hope I have the pleasure of meeting you sash, one of these days.

 

[sash]

Wow!!!!

You don't sound anything like the bloke who sends some of the post under the "Piston Broke" handle....

You seem like a decent bloke.....I too gave $5k to friends of mine in Melbourne so they could complete a reno. I had not contracts...just an informal agreement that they would pay me within 12 months.

I agree that quality beats quantity....I also agree that Net Worth is the end game we should aspire to. But gross worth...so long as you can hold the property is also a predictor of potential net worth.

I attend some Sydney meetings....perhaps I paths will cross then....

sash the plan was to retire at 40 (from age ~18), by the time I got to 33 I realised it would be very boring as I was used to working >12 hrs a day doing various things I liked so much that It was more lifestyle than work. And unlike most peers I never spent much on booze & drugs. I held few paye jobs, and not for long.
Now I sit here in my pyjamas with a coffee typing.
Maybe that's why I'm bored with just a convo on "gross worth".
Or maybe it's because I seen many people come and go (broke!) in the world of investing & business. I know many people who's gross worth is in the tens of mils most of whom I would never swap places with.
I'm happy with my little golden pigeon that lays cute small little "nett" eggs, not "gross" goose eggs.
Most people that know me just thing I work and lead a simple life, even though the last 7 yrs most have'nt seen me work much at all and wonder what it is I do and how can I afford things. As most round here know, most people out there have no money by Monday.

Achievement? Ok here's a recent one:
A few mths ago a good friend bought a house with a loan approved.
After he signed the contract, the bank told him he had to put up an extra $20k for the deposit otherwise they would'nt do the deal (it was X-col with his ppor).
He reluctantly told me this 4 wks before settlement when I asked why I had'nt seen him for while. He was busy trying to get another loan and was about to take a 20k loan with 4% interest per month (ouch!).
So I told him to come back and see me the next, i may have some contacts that could help him.
The next day I asked the details of the deal ( he cashflow was good) and gave him 2 envelopes each containing $10K, and just said if you can pay me back in 3 mths it would be great, if not it should'nt be a drama. And no I dont want interest, it's a favour not a business transaction.
I was very proud of that, and remembered way back when I lost weeks of sleep over a sum of <$5K.
I've had a few of these "achievements" over the last decade, one of which was a check for $120K (within hours). Gross don't interest me (boring without some spice ), how much do I have and or can spend does.
Quality beats quantity.

ps And I do hope I have the pleasure of meeting you sash, one of these days.

 

[Witzl]

i dont think anyone disagrees that Net Worth is the end goal..... i know it is what I am aiming for. However, net worth takes time to achieve, and gross worth in resi property does play a part in giving a vaigue future indicator of future net worth.

I too hope to one day be the sort of person who can help his friends and family out of financial binds.... afterall, what good is money if you dont have someone to share it with to spread the love

 

[Piston Broke]

I admit i like "stirring the pot"... gotta bring out the passion!
It's kinda strange I've known that friend for ~15yrs and he's a real friend as he's done me many favours, he's the type of person I could call at 3am and tell him I'm stranded 200kms out and he'd say without hesitation "What road you on? I'm on my way with food & drinks, need anything else?". I dont know many ppl like that.
I did ask him why did'nt he ask me before and he replied "I never knew you were into real estate, and I really did'nt think I could ask you for a loan".
And of course I told him in a husky voice "Some day... and that day may never come, I'll call upon you to do a service for me. But.... until that day, accept this as a favour." He's the only person I know that has'nt seen "The Godfather" the look on his was priceless.

sash I've seen many of'em come & go, I seen'em make it and lose it.
I've lost many "so called" friends over piddly amounts of money, booze drugs etc etc it breaks my heart just thinking about it. Some I thought were decent ppl would even try to rub my nose in their "gross worth" once they bought one or two IPs or a flash car, and decide that I was'nt worthy of their presence or that my simpleness cramped their style.
Maybe I'm psycologically scared by those "gross worth" figures lol where do I get compo?
Ozzy Osbourne said in his video (Don't blame me), "Be carful who you step on on they up, as they will kick you on the way down".

You don't sound anything like the bloke who sends some of the post under the "Piston Broke" handle....

Now you know why I try to keep busy, otherwise I cause problems & expenses...


Witzl I always said that at the early stages of an investing plan you need to gear up, and that the risk is much less, a few hundred K loan is not much, and anyone with a full time job can afford to pay P&I on it.
Most of my close relatives don't even know about many of my assets, I don't go out saying "I'm here if you need a loan", but I do pay attention and if someone close seems in trouble, but has a good plan is a hard worker and does'nt pi$$ it it up the wall, then I'll try and help.
I don't have much simpathy for the boozers, gamblers, dopes etc. They can rot in their own carcass.
And it does get passed on, when I did'nt sleep for weeks over <$5k, a relative said "You look like sheet! What the hell you been doing?" I told him I'm short ~$3,500 and was in a bind as suppliers would'nt supply and i could'nt order more stock. He pulled out his cheque book, wrote a check out for $5K and said, "I ain't expecting it back anytime soon, lemme know if you need more".
And to that same person I returned the favour years later with a cheque for 120K to avoid a bridging loan for a few mths. I was walking 2ft off the ground for quite a while.