Why Do Most Investors Stop Purchasing After Two Properties??

[nhg]

I didn't even know about this

No threshold under TRUSTs in NSW either. Unless I'm reading it all wrong

Though in queensland you have an extra threshold with each trust and then it kicks into 0.4% or so for a while longer.

and in Canberra you can only own your property for 100years? So i hear.

 

[devank]

Generally trusts lasts for 80 years as well.. so I here

 

[nhg]

Generally trusts lasts for 80 years as well.. so I here

Not in South Australia

 

[MIW]

Not in South Australia

Agree. That's what I heard that if it's set up there no time limit......
Also, you are right about no land tax exemption for trust in NSW, but QLD is very generous for individuals and trusts.
The only mistake I did in QLD was to buy 2 IPs under one trust thus now paying land tax. Instead should have set up separate trust for each IP, but we live and learn...

 

[Deltaberry]

well done, what keeps driving you?

How long until you purchases start making money for you? or are you putting in a pretty good deposit immediately?

Most of them start making money, partly because the capital we put in is higher and in some cases we don't borrow.

Nothing in particular is the driver. The main driver is just sometimes we see an opportunity or what we think is a good deal, and we just buy it for the sake of buying. Is there a particular end game? Not really. Some of the sites we buy can be used to build Hiltons in the middle of the city, some are just small shops. Some are just multiple addresses in one acquisition - sometimes the case in CBDs. We haven't built up any of the sites because we don't like to bank our fortunes on having to undertake one particular outcome.

 

[Deltaberry]

Resi or CIP? If Resi I assume land tax would chew up a lot of your profits.

What kind of returns do you seek for each property mind me asking.

We have resi, CIP, mixed use, farm land etc, although CIP would take up the bulk of the value at the moment.

No particular return. Some properties return as low as below 4%. We can be yield players but often we're not. Some sites can't be measured by yields as some of them only come up once every 100 years - these things just don't get sold.

 

[Francesco]

I have only read the OP and a few others. I think one other reason people can stop at 2 IPs apart from the reasons already mentioned is that at the back of their minds they do not really want to be self-reliant.

The reason is that they want to qualify for part government Age pension and the Concessions Card. In fact many financial advisors advertise that they will help their clients to achieve that level of dependence on government welfare. Intuitively, people may feel that achieving this outcome is smart and optimal result with their time and efforts. Some have remarked that they feel entitled to the welfare as they have been paying tax throughout their working lives.

With 2 IPs, an investor is unlikely to be self-reliant at retirement if that is their major assets other than their house and superannuation. A Treasury source has indicated that in NPV terms, a retired person costs $400k in government Age pension and another $400k in other care, excluding housing. In fact, the average Australia is going to rely on the government as for man the average super amount accummulated is about $100k with less for women. Hence, excluding house, to qualify for part Aged pension a single must not have more than about $0.7 million and for couple about $1 m. Two IPs are not likely to disqualify them on the assets test for the Aged pension.

Unfortunately, this is a common mindset of many people.

 

[D.T.]

I have only read the OP and a few others. I think one other reason people can stop at 2 IPs apart from the reasons already mentioned is that at the back of their minds they do not really want to be self-reliant.

The reason is that they want to qualify for part government Age pension and the Concessions Card. In fact many financial advisors advertise that they will help their clients to achieve that level of dependence on government welfare. Intuitively, people may feel that achieving this outcome is smart and optimal result with their time and efforts. Some have remarked that they feel entitled to the welfare as they have been paying tax throughout their working lives.

With 2 IPs, an investor is unlikely to be self-reliant at retirement if that is their major assets other than their house and superannuation. A Treasury source has indicated that in NPV terms, a retired person costs $400k in government Age pension and another $400k in other care, excluding housing. In fact, the average Australia is going to rely on the government as for man the average super amount accummulated is about $100k with less for women. Hence, excluding house, to qualify for part Aged pension a single must not have more than about $0.7 million and for couple about $1 m. Two IPs are not likely to disqualify them on the assets test for the Aged pension.

Unfortunately, this is a common mindset of many people.

Yep, I've heard people I know say things like "But if i receive rental income I'll have to pay more tax", and things like "But if i get more assets I won't qualify for the pension".

 

[devank]

The reason is that they want to qualify for part government Age pension and the Concessions Card. In fact many financial advisors advertise that they will help their clients to achieve that level of dependence on government welfare. Intuitively, people may feel that achieving this outcome is smart and optimal result with their time and efforts. Some have remarked that they feel entitled to the welfare as they have been paying tax throughout their working lives.

If that is the case then why can't they simply sell everything at the end and buy a supa dupa home?

 

[china]

If that is the case then why can't they simply sell everything at the end and buy a supa dupa home?

Yes, it is certainly possible.

There are many pensioners who live on the north shore and eastern suburbs of Sydney whose homes are worth 2mil plus. They are asset rich and cash poor. However, these pensioners have usually been in their homes for many years.

When you get to pension age, you don't really want to sell all to buy a multi-million palazzo as you can't be bothered doing maintenance and all your kids have left you. You really want good cashflow to enjoy the end of your days.

 

[Rolf Latham]

and all your kids have left you. You really want good cashflow to enjoy the end of your days.

Im hopeful that I will have my children, theirs and god bless me maybe even my GGC with me in my home on many many occasions.

A much older friend of mine recently finalised "grandpas" world, a few hundred acres of bliss where the family can spend time in their own ways, lots of animals, toys and lots of acceptance by the dam full.


ta
rolf

 

[china]

Im hopeful that I will have my children, theirs and god bless me maybe even my GGC with me in my home on many many occasions.

A much older friend of mine recently finalised "grandpas" world, a few hundred acres of bliss where the family can spend time in their own ways, lots of animals, toys and lots of acceptance by the dam full.


ta
rolf

God bless you with the fortune of having kin and brethren around you to the end of your days.

Sadly, many pensioners live alone, long abandoned by all save for the occasional phone call if they are lucky. Until death is imminent and then those with a claim to the estate may flock back to contest the will.

 

[Rolf Latham]

Sadly, many pensioners live alone, long abandoned by all save for the occasional phone call if they are lucky. Until death is imminent and then those with a claim to the estate may flock back to contest the will.

And that is a sad truth.................. as I see it to

ta
rolf

 

[china]

And I am not sure whether it is sadder to sit alone as a lonely old man in a 3 mil mansion or a housing commission bedsit.

 

[Rolf Latham]

And I am not sure whether it is sadder to sit alone as a lonely old man in a 3 mil mansion or a housing commission bedsit.

and again sadly, at least in the majority of cases, all those permutations have a component of choice..........

ta
rolf

 

[DaveM]

And I am not sure whether it is sadder to sit alone as a lonely old man in a 3 mil mansion or a housing commission bedsit.

I would be happy as an old man to sit alone in a bedsit having lived a full and interesting life, than in a mansion having spent my life fixated on attaining wealth at the expense of actually having lived life.

 

[china]

I would be happy as an old man to sit alone in a bedsit having lived a full and interesting life, than in a mansion having spent my life fixated on attaining wealth at the expense of actually having lived life.

How do you define full and interesting life? Often a life spent obtaining great wealth is full and interesting. It would be quite improbable for someone to have created great wealth sitting in front of a tv and joining the centrelink queue. Wealth is often a by-product of interesting activities.

 

[Francesco]

If that is the case then why can't they simply sell everything at the end and buy a supa dupa home?

They do this but many also cash in and have a tour overseas or distribute funds among children and grandchildren to lower their assets and maybe get higher Aged pension rate.

 

[Aaron_C]

How do you define full and interesting life? Often a life spent obtaining great wealth is full and interesting. It would be quite improbable for someone to have created great wealth sitting in front of a tv and joining the centrelink queue. Wealth is often a by-product of interesting activities.

No but scraping and saving every last penny and eating home brand food would constitute a dull and uninteresting life, in my view.

 

[china]

No but scraping and saving every last penny and eating home brand food would constitute a dull and uninteresting life, in my view.

Sure, but as you are aware, you cannot become seriously wealthy purely by saving. Therefore, if you are saving religiously so that you can use your savings for investment, business, etc, you must still be engaging in interesting activities to achieve amazing wealth. Hence, my point is that if you achieve great wealth, it is improbable that life is uninteresting.