Inflation

Hi,

The purpose of the article was to show how inflation needs to be considered when it comes to evaluating your property returns.

It’s not so much of an issue at the moment when inflation is at historical lows, but there is an potential issue with the handling of the taxing of the capital gain.

For example, no longer can you index your cost base, instead you just get a 50% discount. This might mean that in the long-term you pay tax on your inflation adjusted price rather than the real gain.

Your point about borrowing money to increase the return is well made. The example was not to show that profit cannot be made… just that profit is eroded by inflation.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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My thoughts are that it harder to go broke making a profit.

We should all be aware that there are many avenues of Property Investing. Some ways come and go but ones that will never come and go and has been around almost forever is the buy/hold strategy.

For this strategy to work best you have to pick areas that will give you the best growth.

What makes a property grow in a particular area – we could discuss that for years.

My thought on a simple plane though is – Supply and Demand. This is a simple analogy but one that seems to explain a lot of things. If someone wants something and their is not many of them will pay a lot of money to own it. If there are a lot of them they will pay less.

If no-one wants it it is worth nothing – if everyone wants it, it is worth a lot.

Simple – I know – True – I think yes.

We should never crticise other investment avenues for the betterment or justification of our own strategies. Personally I don’t like wrapping, but I appreciate that you can make a lot of money out of it. Is it sustainable long term (10-20 years), only time will tell in Australia.

Be educated – appreciate all the stratagies and use the one or a combination of many that suit you.

My thoughts.

Petters