What NOT to do with residential property

From: Land Holdings


In today's Sydney Morning Herald, in the Money manager section there's an article 'House work: How to profit from your prized possession'.

Some of the suggestions for 'making money' out of your property are:

1. Reduce your home loan so that once it is paid off you can 'divert the money you were using for mortgage repayments to other investments'.

2. Sell your home and rent a while. 'They can look at taking these profits and doing something else with the money. Instead of being asset rich cash poor.'

3. Borrow against your home to invest shares, managed funds and investment properties. (This last one's alright!)

4. Borrow against your home to start a business.

5. Rent your spare space.

6. Subdivide. Sell the bit you don't need to someone else.

7. Use your home as a set for commercials.

8. Take a holiday and rent out your home only if you live in the 'right' area.

9. Downgrade so that you can improve your lifestyle or improve your ability to invest.

10. Trade down to contribute the extra into Super.

My point score: 2/10. What do other investors think?

LH.
 
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Reply: 1
From: Michael Croft


Written by someone who wears a large hat!

Michael Croft
"The best parachute folders are those who jump themselves."
 
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Reply: 1.1
From: Sergey Golovin


Oh Michael!

They put so much effort into publishing that piece of information...

I do like that bit about commercials - you can make up to $1500 day if they using your place for movie shots. Have to cope with dozen tracks and 60 personal though.


Serge.
 
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Reply: 2
From: The Wife


1. Reduce your home loan so that once it is paid off you can 'divert the money you were using for mortgage repayments to other investments'.
** Yeah ok, its a plan, not for everyone, but a plan***

2. Sell your home and rent a while. 'They can look at taking these profits and doing something else with the money. Instead of being asset rich cash poor.'
*** Only for the masters of self control***


3. Borrow against your home to invest shares, managed funds and investment properties. (This last one's alright!)
** Again, its a plan I guess**

4. Borrow against your home to start a business.
*** Or get the right loan and the right business and leave your house out of it***

5. Rent your spare space.
** Ooooh, doesnt that sound like fun**

6. Subdivide. Sell the bit you don't need to someone else.
** Subdivide yes maybe, but seriously, how many times have you looked out your backyard and said, "I dont need that bit"?***


7. Use your home as a set for commercials.
***may as well sign your pets up as well hey?**


8. Take a holiday and rent out your home only if you live in the 'right' area.
*** Huh? who wrote this? this is a joke right?**


9. Downgrade so that you can improve your lifestyle or improve your ability to invest.
** its a plan, but not many like to do it***


10. Trade down to contribute the extra into Super.
**cough**


2/10 from me to.


TW
 
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Reply: 2.1
From: Kevin Forster



The only thing is that most newspaper articles is they're written for the everyday person or 95%ers.

So you get what you can out of them but don't expect any new or exciting revelations.

Kevin
 
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Reply: 3
From: Yuch .


If I am to follow these advice.....I will probably never retire...

Point #3. Borrow against your home to invest in shares, managed funds?????? If you are an experienced stock trader, you will be alright. If not, you probably will lose your home. Investing in managed funds - your home will be eaten away by the fees fund managers charge.

Point #4. Borrow against your home to start a business??? 99% of the new small businesses fails in the first year!!!

Point #8. The dumbest idea I've ever heard!!

I am not going to mention the other points, but to piont out that 3,4 and 8 may send you broke!!

Regards
yuchun
~ The secret to success is to start from scratch and keep on scratching. ~
 
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Reply: 3.1
From: PT Bear


It's advice like this that creates the 80-20 rule (and the 80-20 rule within the first 20).

PT_Bear
 
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Reply: 3.1.1
From: Jay Hunter


what's wrong with borrowing against some of the equity in your home to invest in a good portfolio of shares?? I thought his would be the same as borrowing against your some to invest in an IP except its a different class of investment... if nothing else I thought in the current climate with property still on a high and shares a bit more realistic not it would be a good option? (rather than having all your money tied up in property...

am I missing something ??


jay
 
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Reply: 2.2
From: Lisa Southgate


Reminds me of a story - I think it was in the SM Herald - a woman who had a mansion in Centennial Park rented it out to the Lucas family while George was in town last year shooting the upcoming Star Wars saga - Attack of The Clones. Anyway, she ended up mad as hell and suing him because his family made a mess of the gardens and about five humungous pre-bred over-the-top expensive Japanese carp in the pool died. They were something like $300 or $500 a fish. She estimated she lost about two or three thousands of dollars worth of fish...why on earth would you rent out your home and leave the over-priced fish there? (Why would you buy the things in the first place??) - Lisa.
 
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Reply: 3.1.1.1
From: Gee Cee Clay


Don't you people realise that journalists that write financial matters are all multi millionaires and only write these articles to help us all out.

Not that they need the wage each week.
 
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Reply: 3.1.1.1.1
From: Sergey Golovin


I have seen statistics somewhere recently and they say that in 1998 52% of Australian wealth was tied up in properties - asset rich cash poor. Obviously you can imagine all that rambling - how nice it would be to access all that equity...

Serge.
 
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Reply: 3.1.1.2
From: Yuch .


Hi Jay,

Personally, I've lost a lot of money in shares in the past. I would rather use my home equity to purchase more IPs....

Whatever you do, as long as you are comfortable with it and it works for you, then it's right.

Regards
yuchun
~ The secret to success is to start from scratch and keep on scratching. ~
 
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Reply: 3.1.1.2.1
From: Robert Longmore


90-10 as long as the rest of the home owning public is doing what they read in the papers, then we will all do well.

(90-10 rule. 90% of the worlds wealth is held by 10% of the population, because 90% of the population are stupid sheep)
 
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Reply: 3.1.1.2.1.1
From: Cathy Baxter


Who do I contact about the movie set?

I've always thought my caravan park would make a great soapie!!!!

They'd hate our house though - boring 60s blonde brick - yuk.

Didn't someone on this forum say about a year ago they would be the next big trend hehehe

Cathy
 
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Reply: 3.1.1.3
From: Terry Avery


Hi Jay,

I don't you think you are missing anything. Balancing out your property
portfolio with shares when the property market is peaking and the share
market is in the doldrums is a valid strategy. Also shares give you
liquidity should you need it.

Cheers

Terry
 
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90-10 wealth ratio

Reply: 3.1.1.2.1.2
From: Brett Burt


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I read an expert's assessment of wealth distribution and why it occurs, =and why the financial chasm is so radical in society. Using =demographics, history, statistical information, patterns of wealth =creation etc....he thought that even if we redistributed the wealth =equally (western world) amongst everyone, it would take less than 10 =years for the 90% of wealth to return to the former 10% who held the =wealth originally. My opinion: most people are financially still at pre =school level.

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I read an expert'sassessment of wealth =distribution and
why itoccurs, and why the financial chasm isso radical in =society.
Using demographics, history, statistical information, patterns of wealth =
creation etc....he thought that even if we redistributed the wealth =equally
(western world) amongst everyone, it would take less than 10 years for =the 90%
of wealth to return to the former 10% who held the wealth originally. My =
opinion: most people are financially stillat pre school
level.

------=_NextPart_000_00DD_01C17A71.F34282C0--
 
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Reply: 3.1.1.3.1
From: James Spry


It doesn't matter what the 90% do. Because it isn't about what you do, it's about how you think.
Unfortunately articles like this only make matters worse.
The only thing the 90% should be doing at this stage is getting a financial education! (just like every other successful investor.) Oh yeah, and they should probably cut up their credit cards as well.

Jim Jim the monkey boy

"If you find yourself in a hole, stop digging"
from Rich Dad, Poor Dad (need I give the authors name?)
 
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