Why did you choose to invest in property?

C

Chloe

My partner and I have been talking recently abiout IP's. I have bought a PPOR and settle in March but have plans to look into buying an IP too at the right time.

My partner was saying that there are a few negatives with IP's such as CGT, tax paid if positively geared etc.
Did these things turn you off and were they ever enough of an issue that made you think twice?

My partner is now thinking that shares may be a better option. I'm still in the property mindset.

Any opinions/thoughts?
 
Chloe said:
My partner was saying that there are a few negatives with IP's such as CGT, tax paid if positively geared etc.

My partner is now thinking that shares may be a better option. I'm still in the property mindset.
Click to expand...

Uh, you're aware that you also have to pay CGT on shares if you make gains, and dividends are taxed? In any case, you're concerned that you have to pay tax if you make money? Yet you still go to work?
 
i love that argument. i dont want to invest because i will have to pay tax, but yet i go to work every day.

i investi n property because inflation erodes the debt and raises the rent.

eventually it costs you nothing to own and is something you can pass down to your kids.

then they dont have to work like you did at their age - they can study, travel and enjoy their life while someone else pays their bills.

the best bit is, they dont know they're getting it until after they graduate uni.
 
My wife and I like property because we feel we understand it better than other asset classes. We feel we can take our time researching and separate our emotions from it which is harder with shares because it is so easy to look at the exact price whenever you want and the tv harps on about it every hour or so. It does seem to be less volatile than shares and more forgiving of mistakes which is a boon to us since we will no doubt make a few. :)

As for tax, I'd rather earn a bucket load of money and pay a fair share of tax than not and you are going to pay tax on any profits anyway.
 
Chloe said:
My partner is now thinking that shares may be a better option. I'm still in the property mindset.

Any opinions/thoughts?
Click to expand...

Been there done both.

Horses for courses, but for us:
- Made money in property
- Lost money in shares

Having said that, why not do both? (I'll have all the anti-diversification people screaming now)

...or are you doing shares already?

Where is your super money (yes it is YOUR money)?
Is it in shares?
Do you know which shares?
If you want to do shares, maybe that's a starting point?

The Y-man
 
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Shares is not an area I feel comfortable with, that's not to say that maybe one day I might not give it a go.
Property is an area i feel I could manage. 41 days to go and I'll have one (PPOR), then I can start seriously researching IP.

My partner started to go off the idea of property after speaking to a family member who is into shares and gets an income from dividends. He was just saying that there's "too much" tax one has to pay if you make money on property.

We don't live together so it's not my money that wil be affected!

I would absolutely prefer to earn decent money and pay tax for it than just work and pay tax anyway!
 
LEVERAGE. You simply cant have the same leverage in any other investment.

thats why I got into it to start with, looking back, and why I am still in property (with a small share portfolio as well) is still primarily leverage, as well as tax advantages (negative gearing, borrowing equity rather than selling and paying CGT, depreciation PAYG variation etc) and the truly passive nature of the investment.

I literally can choose to do nothing at all most days. A typical month might involve one call from an estate agent, maybe. thats it. no margin calls, no checking thru company accounts, analyists recomendations on buy and sell, no writing covered calls, checking market indices etc etc. the last 2 properties I bought literally involved a couple of calls to an estate agent after setting a report from real estate.com, signing the paperwork, organising a loan and organising the deposit bank check. All up Id estimate about 8 hours work.

That property puts maybe $20 pm cashflow into my pocket, and the capital growth has enabled me to borrow again for the next one. Calculating the ROI on that is dificult, but its certainly better than any other investment I can think of off the top of my head.
 
One reason people often forget or don't realise is that as a property investor you are operating in an asset class in which the majority are NOT investors but owner occupiers (70% OO to 30% Investors). This when knowing what to look for and understanding the human emotion aspect most definitely gives you an advantage in sourcing, securing and on selling.

Compare this to shares or managed funds and you will realise you are competing 100% with other investors, and your opportunity to buy below market value or manufacture CG are very limited if at all.

I still believe in diversifying to a degree and certainly hold shares and managed funds too but I know which has performed better for me over the years.
 
Chloe said:
Shares is not an area I feel comfortable with, that's not to say that maybe one day I might not give it a go.
Property is an area i feel I could manage. 41 days to go and I'll have one (PPOR), then I can start seriously researching IP.

My partner started to go off the idea of property after speaking to a family member who is into shares and gets an income from dividends. He was just saying that there's "too much" tax one has to pay if you make money on property.

We don't live together so it's not my money that wil be affected!

I would absolutely prefer to earn decent money and pay tax for it than just work and pay tax anyway!
Click to expand...

this family member, obviously a multi millionaire and proffessional investor?

No?

Most of the investment books say to be wary speaking to family members about finances.
An internet forum might not be the best place either, but at least most of the strangers here have nothing personal they need to prove. The only hidden agenda is an obvious and stated bias toward a particular asset class (property). At least some of them arent lying about being self funded retirees after their property purchases. I refuse to believe a whole bunch of people are on here posting posing as 'real' property investors. Some maybe, but it cant be all of them.
 
Tobe, no of course his family member is not a millionaire and professional investor....but he works for a bank!!

I have my own views anyway. For me at this stage of my life I will be looking into property.
 
being a Bank manager usually involves the following attributes;

They are good at managing employees
they understand bank processes
they look trustable (usually involves glasses and a portly demeanor)
they meet targets set by the bank
they are good at engaging with the local community and bringing in business for the bank
they are especally good at apearing knowledgeable, and their advice is rarely questioned due to the status the community places them (see trust above)



They certainly could be good sailors, football players, share or property investors, in their own time, and Im sure many of them are. Or they could be average. Being an average property or share investor has no more relevance to being a bank manager than does being a good sailor. It wont come up at their next performance review.

They are specifically precluded from giving specific investment advice unless they are also a financial planner, and only then when they give out a statement of advice specific to an individual.
 
NB, being a mortgage broker, real estate agent, financial planner, accountant etc also dont require being a successful investor either.

there are individuals who specialise in specific areas such as property or share investment, but they too sadly dont necessarily have to have been successful at their own investing.
 
Chloe said:
My partner and I have been talking recently abiout IP's. I have bought a PPOR and settle in March but have plans to look into buying an IP too at the right time.

My partner was saying that there are a few negatives with IP's such as CGT, tax paid if positively geared etc.
Did these things turn you off and were they ever enough of an issue that made you think twice?

My partner is now thinking that shares may be a better option. I'm still in the property mindset.

Any opinions/thoughts?
Click to expand...

If you pay tax this means you have made money.

If your partner doesn't want to pay tax, tell him to quit work.

No income, no tax. Problem solved.

I look at paying tax, being a good thing. The more I pay the more I made.

Either way, Mr Taxman will get his money.
 
tobe said:
fair enough, the most leverage, without having to stay up all night staring at screens or do charting research, the highest leverage that isnt commonly margin called due to LVR solely.
Click to expand...

Yes, of course but i was challenging the accuracy of that single statement. :)
As you said its not only leverage but also the risk appetite that draws people to property.

I feel more comfortable with shares than property for the simple reason there are less moving parts with the whole transaction. With shares i do my research, make the trade and go home.

With property there is a whole lot more due diligence involved & a lot of things can go wrong. Such as a failed settlement or a property inspection or valuations coming under. Also, if you are going to auction then you are at the mercy of human emotion.

In saying that i am of the view that for me the vehicle to be financially secure is a hybrid of Shares, Property, managed fund, cash & super.
 
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