The Y-man said:....except the freedom to move around from city to city....
Cheers,
The Y-man
You can rent it out while youre away ...
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Your home is not an Investment
- Thread starter JimmyJames
- Start date
You can rent it out while youre away ...
See Change
Disagree,
Definately an investment! I've read how its a "liability": takes money out of your pocket rather than an "asset": puts money in your pocket, but whichever way you look at it, it IS an investment.
My PPOR has risen in value by a measley $130K over the last few years. Nothing nearly as flash as Seech's experience with his subdivisions. But, that's still growth! Any growth I experience I classify as investment growth. If its a depreciating asset then its not an investment, its a money sink.
You don't need to sell your PPOR to realise this profit in retirement. Just use an LOC and pull it out to invest in some income generating vehicle such as shares or some such. I can't see how anyone could classify their PPOR as anything other than a very significant part of their asset base, their net worth and their investment portfolio! You could choose not to buy a PPOR and just keep renting, but then you'd miss out on all the CG that this particular investment would give you.
Cheers,
Michael.
Definately an investment! I've read how its a "liability": takes money out of your pocket rather than an "asset": puts money in your pocket, but whichever way you look at it, it IS an investment.
My PPOR has risen in value by a measley $130K over the last few years. Nothing nearly as flash as Seech's experience with his subdivisions. But, that's still growth! Any growth I experience I classify as investment growth. If its a depreciating asset then its not an investment, its a money sink.
You don't need to sell your PPOR to realise this profit in retirement. Just use an LOC and pull it out to invest in some income generating vehicle such as shares or some such. I can't see how anyone could classify their PPOR as anything other than a very significant part of their asset base, their net worth and their investment portfolio! You could choose not to buy a PPOR and just keep renting, but then you'd miss out on all the CG that this particular investment would give you.
Cheers,
Michael.
Wow, Thanks for all your eager responses everybody. Great to hear so many spins on the topic.
Pitt St said:
Gee Piitt St, take it easy man, I did not say that I invented the wheel
I haven’t written a book, so it must be from RK's book.
I'll give you another one
"An investment operation is one which, upon thorough analysis, promises safety of principal and satisfactory return" - Ben Graham
Now PPOR does promise safety of principal, but does not have any return until sold.
Thx
V
Mate,Panic said:
Disagree again. I think someone already posted that any CG can be realised readily with an LOC any time you want it. I've already done this with the growth in my PPOR and am investing it very nicely in the stock exchange right now. It is in fact a "return" and Jan Somers even has the math for calculating the Internal Rate of Return (IRR) on any property investment allowing for the growth component in her books.
I think you might be missing the point just a wee bit by thinking you need to sell your PPOR to realise a return, that's not the case.
Cheers,
Michael.
I think that for anyone to decide that a PPOR is an asset or a liability is pointless.
Mine makes me money and I am happy. More importantly my wife is happy - and that is an investment in itself.
If someone has a label they wish to apply to it then that is fine. We seem to be arguing semantics more than anything.
I say potato you say potato, I say tomato you say tomato..... kinda loses a bit when typed out I think.....
Cheers,
Mine makes me money and I am happy. More importantly my wife is happy - and that is an investment in itself.
If someone has a label they wish to apply to it then that is fine. We seem to be arguing semantics more than anything.
I say potato you say potato, I say tomato you say tomato..... kinda loses a bit when typed out I think.....
Cheers,
The Y-man said:
In a strange sort of way I'd count that as value-adding; the lower wattage globes reduce you domestic power bill (paid for by after-tax dollars?) and you have the higher wattage globes spare.
One of the books I have (Peter Spann?) suggested using maximum wattage bulbs in any IP you were looking to sell or rent; this makes the place look brighter and more spacious.
Peter
Define investment.
Define investment.
I don't agree with Oxford dictionary or several other posters here & definitely not RK.
Is reading this web site an investment ?
Is you wife/husband/partner an investment ?
Is buying a Jan Somers book an investment ?
Is having kids an investment ?
A broader definition of investment is anything that helps you enrich your life .
My PPOR has increased in value by $100Ks over the last 10 years. That's $$ I wouldn't have got if I was renting. And it sure hasn't cost me that much in maintenance or rent. So it's the best investment I've every made (wife & kids excepted).
KJ
Jimmy,JimmyJames said:
Define investment.
I don't agree with Oxford dictionary or several other posters here & definitely not RK.
Is reading this web site an investment ?
Is you wife/husband/partner an investment ?
Is buying a Jan Somers book an investment ?
Is having kids an investment ?
A broader definition of investment is anything that helps you enrich your life .
My PPOR has increased in value by $100Ks over the last 10 years. That's $$ I wouldn't have got if I was renting. And it sure hasn't cost me that much in maintenance or rent. So it's the best investment I've every made (wife & kids excepted).
KJ
keithj said:
KJ, I'm merely attempting to draw a line and promote a less dangerous mindset. As you said, investment can be any multitude of things. But i'm talking property investment!!!! I'm talking portfolios.
I often recommend that people use their equity to get into their first IP to get their portfolio started. I just believe people should focus on building their portfolio and milking the maximum cash and capital gain from it, and not rely on their home to retire upon. Personally I would like to think I'd leave my home to my children. How does that help me as an investment? I want a portfolio that i can liquidate over time, at retirement, and live on the CG and not even think about my personal home. It's where I live. Not an investment property.
Jimmy
how can you say your PPOR doesn't provide a return? it's a paper shuffle to say it doesn't. If it makes you feel better pay the equivalent amount of rent that you have saved into a bank account each week. the return of a PPOR is simply its rental value (and tax free cap gains that can be realised later by selling or refinancing).
if you argue that you will never want to sell up, well (a) at least you have a place to sell vs renting all your life and (b) the obvious answer is to buy a PPOR that is beyond your retirment requirements or (c) as previosuly posted, reverse mortgage.
if you argue that you will never want to sell up, well (a) at least you have a place to sell vs renting all your life and (b) the obvious answer is to buy a PPOR that is beyond your retirment requirements or (c) as previosuly posted, reverse mortgage.
MichaelWhyte said:
Michael I see your point and we are all aware of LOC's. My point was that even through LOC the PPOR is not an investment but a vehicle to invest. You owe interest on the LOC anyway, so the LOC itself becomes a liability. If you can get better return on the money invested from the LOC then the interest then it is an investment, if you cant then it is still a liability.
In any case even with the LOC you are not spending your own money. You are borrowing from the bank - that is why you are paying interest.
Thx
V
Panic said:
Gee
talk about semantics....
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Panic,Panic said:
That's true of IPs too though. You want to access any CG then you have two choices: 1. Sell it, or 2. LOC. The only difference is that your PPOR CG yielded from option 1. is CGT free so makes it the better investment vehicle for CG over IPs.
All semantics, I still reckon the PPOR is one of the most powerful investments in any investors armoury.
Cheers mate,
Michael.
Who has the best investment portfolio
1) Person A who rents, and fully owns a $300k IP
2) Person B who fully owns a $5mill PPOR and has no investment properties
If a PPOR really is a liability then Person A is the best placed and person B has one huge "liability".
Personally, I would far prefer to have the assets/liabilities of person B than person A, even if RK wouldn't approve.
1) Person A who rents, and fully owns a $300k IP
2) Person B who fully owns a $5mill PPOR and has no investment properties
If a PPOR really is a liability then Person A is the best placed and person B has one huge "liability".
Personally, I would far prefer to have the assets/liabilities of person B than person A, even if RK wouldn't approve.
mdk92 said:Who has the best investment portfolio
1) Person A who rents, and fully owns a $300k IP
2) Person B who fully owns a $5mill PPOR and has no investment properties
If a PPOR really is a liability then Person A is the best placed and person B has one huge "liability".
Personally, I would far prefer to have the assets/liabilities of person B than person A, even if RK wouldn't approve.
Using less extreme numbers:
Person A: rents and owns $300k in IPs
Person B: full owns $500k PPOR and has no IPS
I would argue that Person A has the better portfolio. Even ignoring cashflow, person A has more diversification, more flexibility, and most importantly Person A shows potential to significantly grow his/her portfolio in the future. Person B just bought their own place and paid it off. Great, but that means their growth is limited to their PPOR. Person A would be more open to new ideas which will make him/her a lot more money in the future.
Alex
Personally, I don't think of a PPOR (I don't have one, BTW) as an investment. The reason I think it's bad to think of your PPOR as an investment is that you tend to think 'My PPOR is an investment, therefore I don't have to invest in other things'. Most people tend to take the path of least resistence, so in the same way as they think 'My super will be there for me' or 'I'll just get the govt pension' they will think their PPOR will fund their retirement.
My issue with that is you end up with a PPOR which might be worth a lot of money, but you don't have the financial skills and experience to use it. My parents, for example, are sitting on an expensive house with no debt. But the place is getting old, and my parents wouldn't dream of renovating or selling. So all that value just sits there when it could be funding their retirement.
It's almost a mental trick you play on yourself to say your PPOR is not an investment (even though of course it increases in value and it saves you rent). You use it because most people take the lazy way out and you want to pre-empt that.
Alex
My issue with that is you end up with a PPOR which might be worth a lot of money, but you don't have the financial skills and experience to use it. My parents, for example, are sitting on an expensive house with no debt. But the place is getting old, and my parents wouldn't dream of renovating or selling. So all that value just sits there when it could be funding their retirement.
It's almost a mental trick you play on yourself to say your PPOR is not an investment (even though of course it increases in value and it saves you rent). You use it because most people take the lazy way out and you want to pre-empt that.
Alex
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