Mini,

Usually I qualify my statements these days to add, “in Australia in 2004” to discuss positively geared properties, because I know there are different markets performing other than the Aussie market. Frankly, the positive residential properties left in Australia, as you’d know, are now pretty much relegated to mining towns, wheatbelt towns, and rural and isolated towns.

I only have a couple of properties, Mini, as do you, and my properties outside of sydney have had decent CG, but if I was buying *today*, and thinking forward for 7 years, I would be thinking about growth- as you also do.

As for funding properties with other income, well yeah, that’s something I’ve always known I would do. I fund them by working and adding money into them. It works for me.

kay henry

If your husband is still in bankruptcy, would it be legal for him to acquire a loan?

kay henry

Tough Deal,

I look more at rental yields in sydney than price. Fact is, if you are looking at inner-city/inner-ring suburbs, rents can be significant in dollar terms. The cheaper the property… the higher the yield. Why I am looking at yields is because I think CG will be slow at best for the next couple of years…and possibly negative in competitive markets (over-supplied areas). Hence, yield becomes important, when CG is questionable in the near future.

If you are seeking, say, 6%, can you get it for a 400k apartment? That’s around $470 a week. I mean, it’s possible, I suppose… but it’s risky to aim for those rents in this slower market.

I’d go for cheaper, although if you are going for a 400k apartment, go for a Renzo Piano- that will keep value in all market conditions, in my opinion.

kay henry

Here’s an email on the topic that I got sent last week- it’s doing the rounds. I think some of you may enjoy it- it’s cute )

kay henry

____________

The bottom of the class war

September 16, 2004

MY dear Mr Latham,

I understand you’ve eschewed crudity since defeating that lovely Kim Beazley chap, but absit invidia, you are a beastly, beastly man.

Advanced Dressage classes were hopelessly disrupted this morning as word spread of Labor’s communistic plot to target needy students in decent schools.

Nobody could calm the horses and my friend Quentin might have been seriously injured had Wasim, his valet, not broken the fall.

Uneducated people who exercise their democratic right not to send their children to schools like ours imagine everyone around here is spectacularly well-heeled.

Ignoratio elenchi.

I have a pal (to avoid embarrassment, he shall remain anonymous) who is driven to school in an Australian car. Most mornings he tells the chauffeur to drop him around the corner to avoid the shame.

Another friend’s family, Mr Latham, is actually eligible for your fair-dinkum-ease-the-squeeze tax relief. Admittedly, his daddy is a sugar farmer who owns 5 per cent of Queensland, but they employ a smashing accountant who insists all the government subsidies – sorry, incentives – don’t need to be declared.

And that lovely Brendan Nelson man is right. Many families make enormous sacrifices to send their darlings here. Pa has at least five jobs – he’s on the board of Qantas, Westpac, Coles Myer, News Limited and Rio Tinto – and Mummy cut the St Moritz ski-trip to one week this year. Admittedly, we spent the rest of the break at Euro Disney.

Everyone here is furious about your callousness, and intent on taking up arms in your pathetic – and, to be frank, psychopathic – class war.

A school rally is being organised, it’s just a matter of finding a spare evening. We have sailing on Mondays, bridge on Tuesdays, Latin on Wednesdays and real tennis on Thursdays. Friday’s difficult for the next few weeks. It’s impossible to reschedule the school ball – Tom Jones and John Farnham have been booked for more than a year. And representatives from Christie’s and Sothebys, as well as the Saatchi brothers, are flying in from overseas for the charity art auction.

We’re taught to believe the best of people, Mr Latham, so I’ve enclosed an invitation from Headmaster to visit our school and see for yourself the damage Labor’s policy could do. There’s a map as well – if you park near tennis court 12, walk across the eight cricket fields and past the 10 rugby grounds, you’ll see a massive six-storey building. Don’t stop there, that’s the gymnasium.

Head for the boatshed, veer through the six soccer pitches and you’ll be at the rifle range. For you’re own safety, don’t linger long there, Mr Latham (that’s a joke!!), but head for the information desk on the fourth floor of the library/theatre/hospital complex. They’ll direct you to the school monorail, and it’s a 15-minute ride to the principal’s office.

Quaere Verum, Mr Latham,
Yours not very respectfully,
Name and address withheld.

Regan,

Deciding what to do depends on your circumstances. If you’re working, you can make all kinds of decisions. If you’re happy to live at home with your folks, then it sounds like a PPOR isn’t a priority for you right now.

It’s great you want to invest early… but I don’t have the “live lean” philosophy. I have always had a car- since I had a licence, and to me, that was an essential part of life. I saw “non-earning years” as a part of development, too- University, a car, going out… you can’t bring back the early years, and you’ll be working for much of your life soon anyway- well, many people do- me, for example

Wealth or fun as a teenager? I’d go for fun any day Or, if you’re going to buy an IP, I’d do what most of us probably did for our first IP- buy a cheapish one, so your first mortgage doesn’t seem overwhelming and takes over your life.

kay henry

redwing, I haven’t been able to find any link between Neil Jenman and Brian Tracy. My knowledge of Jenman is that he doesn’t give a toss about any guru.

LifeX, if you go to http://www.briantracy.com you can read about the myriad of books Tracy has written. He’s a self-development guy, lifecoach etc etc…

I like this though:

Brian Tracy Online eCoach
Get Brian Tracy for a year for a
fraction of his $20,000 daily fee.
http://www.EmpowerMeOnline.com

hehe… yes, he has a 20k fee usually, but because yer a special person, he’ll reduce that fee to help you ) These gurus are fuuuuuuuunny!

kay henry

geo,

Interesting that you say we “need” shares. Why do we need them? I know multiple streams of income is a term used by some gurus… but why isn’t it enough for people to have an income, say, from a salary or property? Why do we need to also have vending machines, or a home internet marketing business? Not sure I understand the logic.

kay henry

Hey Mr_D (cute avatar, by the way),

I don’t think people necessarily need to worry about increased IR’s. I think you’re right in that a slight rise in IR’s (they’re thought to only rise by .25% some time this year) might change the status of CF+… but does it really matter whether your property *makes* $20 or loses $20? It’s such a small amount, I can’t see that it would matter.

I’m not really into CoCR- I think it’s a furphy of RE. Anyone can put in a large deposit to get a better return on a buck… I go on the purchase price and rental return- it seems like a better way to calculate real returns.

Anyone who is buying RE without capital gains in mind- in the 2004 flatter market- might end up losing a lot of money.

As for me, I would rather *invest* megabucks (I don’t consider it “losing” money- I consider it making an investment into my future)… so I would rather my IP’s cost me a hundred bucks a week with potential for CG, than go for the $30 a week on a property that’s CG potential is dubious…

On that note, if we’re waiting for the next cycle to realise gains… what is a run-down property (pretty much the only CF+ ones left in the Aussie market) going to look like after 7 years of tenant wear and tear? Will it have gains? Or will it just require more and more repairs so it doesn’t fall down?

kay henry

Well, Marc, given that to become a doctor, lawyer or vet, it requires a TER of around 99.4… then I don’t agree that you can throw money at students and have them get these kind of marks. They either have it or they don’t.

kay henry

sis,

I think you’re right about the perception of schoolkids- some thinking they are better than others. Even in my mother’s innocent days… she said children used to say to other kids, “Catholics, Catholics, ring the bell… publics, publics, go to hell.” hehe. It’s silly, but is indicative of how kids can distinguish between each other.

I think another point is that… it doesn’t matter how much money you pay for your kid’s education- a child who isn’t very academically skilled, can’t be made so by throwing money into their education. Educational outcomes will often be determined by the child themselves.

Another factor is the parent’s own attitude to education- if a parent sees it as important, then so might the child. I see “values” as more taught within the home, than as the responsibility of the school- kids will learn more from what is modelled at home, than in any classroom or playground.

At my school, kids got segregated in around Year 10… those who would be going on to Years 11 and 12.. and those that would be presumed to be leaving. So they had more “vocational” preparatory classes for those in the latter group, and more academic emphasis on those in the former group. I didn’t understand it at the time, but that was certainly establishing a class division even then into the “hidden curriculum”.

kay henry