- Our strategy is simple,” 4 green houses, one red hotel”. The key to winning in the game of Monoply is to have as many of these red hotels as possible, which increases your chances of receiving income (rent) everytime someone lands on your square.
Very true…..and a perfect tactic for the game of Monopoly, however real life is not quite like that.
1. You don’t usually have “competitors” become your instant tenants.
2. The objective in real life isn’t to bankrupt your short term tenants.
3. In real life the growth is by controlling the “title deed”, not putting a hotel on it.
4. Regent street title deed costs $ 300, yet to put a hotel on it costs $ 1000. In real life, that ratio for the good properties are often reversed…..that is….the dirt in Australia is expensive. This stumps most activities stone dead.
5. Unlike in Monopoly, you cannot buy 3 run down houses like Old Kent Road with one pay packet.
6. Taxes in real life come thick and fast….not at the turn up of a card, where one person cops it and the rest get off scot-free.
7. The cost to visit a railway station isn’t quite the same.
8. Industrial properties like the water works and the electric company cost about 1000 or 2000 times as much as a house, not half as much. Also, renting these costs about 1000 as much as staying in a swanky upmarket hotel.Yes my friends……if you apply the same principles of winning at Monopoly to real life you shall surely have absolutely no money at all.
Here’s a what if , all comments appreciated .
What if – as in my situation , your home property all up could rent out at around 700 PW. , because of other rentals all within the same property and mortgage as well as the house itself. Where as our mortgae is only 300 PW .
We like living on our own place and this one in paticular and are sick of renting as we did for yrs in travels . But really we could rent this whole property out for around 700 pw maybe more now with as l said only a 300 pw mortgage .
So should we be renting it all out then and renting something else ourselves , is there something much smarter we could be doing with it and build up ? We only have the one property .
Cheers.
MaxHi guys, Theres not much enlightening there. My friend simply took advantage of the PPOR CGT exemption 3x over. You need to be careful you don’t do it too often as the ATO could easily deem you to be in the business of developing then not only do you not get the PPOR CGT exemption, you don’t get the 50% discount either plus you will have to pay GST on any sales. He was lucky – Syd Nthn Beaches went through an almighty boom from 1997 to 2004. He then replicated the same strategy at a seachange location and have since put the new PPOR back on the market. Such a strategy obviously works during a boom. I’m sure there are plenty of examples of it NOT working simply because the transaction and holding costs are so high. Historically, the risk of overcapitalising is high with Oz properties. Its just that the recent housing boom has masked the true value of many renos.
To Maximum, whether you rent out your current PPOR will depend on a few things. Once you rent it out, you can’t claim another PPOR otherwise you will lose the CGT exemption. Will you be able to obtain a $300 a week rental for your new abode which you’ll be happy to live in? (as this is how much your mortgage repayments are so its dead money anyway). You can then set up a separate LOC for deposits with any new purchases. You can probably afford a couple of -‘ve CF IPs seeing you’ll be receiving income from your current PPOR and rather than pay tax on it, offset it against high growth IPs. Keep reading and good luck!
I agree with Dazzling, there are many things to consider.
My suggestion is to make up a spreadsheet with each of the options and look at the financial information before considering decisions around lifestyle, etc.
Probably best to project out 5-7 years or so – PPOR scenario in one column, and IPs scenario in the other.
I would be sure to factor in effects of CGT, tax issues including your marginal tax rate, expenses for maintaining a PPOR versus multiple IPs, other deductions, etc.
Best of luck with whatever you choose to do.
(P.S. – when I did the above exercise, I ended up going down the PPOR road, then LOC to buy shares & another IP).
There’s lots of Rent Vs Buy calculators available on the web to assist your decision..
We’ve moved out of our last PPoR’s after a couple of years living in each and doing them up then turned them into IP’s..then onto the next.
The way our system works the best strategy in theory would be where you and a friend buy similar houses in similar areas and rent to each other (Fully Furnished of course)
Redwing
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThanks very much for the ideas guys.
We think we could probably get a very nice rental we’d like for 2-250 PW [ bargain hunting that is ] . Our place would also rent higher because it’s on a few ac’s but youknow to me a 4 or 5 grand a yr saving wouldn’t make it worthwhile uprooting ourselves for . As far as any other savings go l definitely have to learn more about it all before l can do some sums l guess.
One idea we’ve had is that we could be paying of a 2nd property as well from this one with some manovering . Mind you we blow any change at the moment and it helps me not have to work too much which l like , so just where all that would stand if we did something else l can’t tell yet .
CheersIs it only a $4-5k a year saving?
Have you done the sums on all deductions and savings ??
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorNa the 4 or 5 could just be the savings from renting instead . [ l think ] .
The rest , l just don’t know enough about yet to work out so at this stage l wouldn’t have a clue to be honest .
cheersOriginally posted by redwing:Is it only a $4-5k a year saving?
Have you done the sums on all deductions and savings ??
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
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