i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people 's money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!! INVESTEC
investec wrote:i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people 's money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!! INVESTECIf the property doesn’t make any income and you sell it after 10 years for the same amount you had paid for it then you would have lost money – and opportunity to invest elsewhere.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I'm sensing a disgruntled tenant…
And yes, 10 years down the track you would need to sell it for a lot more just to have the same amount of purchasing power that you had when you bought it, due to inflation of the currency supply (theft).
I have come to realise that VERY few people in the world truly understand how the global monetary system works. I have asked other investors the basic question "what is inflation?" and always get the same response, "rising prices".
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
-Henry Ford
Interesting. Could you please sum it up in laymens terms. Because I honestly though the same but just never investigated as to why the prices rise.
investec wrote:i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people 's money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!! INVESTECIf the property is negatively geared during the time of ownership – and is sold for the price it was purchased for, the owner would have lost out on all the holding costs during the time the property was owned. There's also purchase costs such as stamp duty that need to be considered.
If it was neutrally geared- but didn't move in value, then it's a pointless asset to own.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people ‘s money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!! INVESTEC
Hi, I know accountants that get confused about negative gearing. The best, first and most definitive book on negative gearing was written by a Sydney (Eastwood) RE agent in the early 70s, Don Johnston ‘How to get real estate rich’ its out of print, I can’t even find it on Amazon. It was my golden goose. My apologies but I’m going to capitalize this … NEGATIVE GEARING WAS DESIGNED FOR BULL MARKETS! … So that you could strip out the profits tax free by increasing your loan annually. It worked well right through the 70s and up until the Japanese banking fiasco in early 90s then CRASH. It might still be useful for SOME high tax paying investors … sometimes. The reason it worked was because property didn’t just double or triple, some property rose 1000% in less than 10 years.
Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
@rick Sta, I agree…..most people don’t understand that inflation is GOVERNMENTAL THEFT. Its hilarious to me when people run around saying look how much my property went up in value…..no you idiot that’s how much the government has stoel from your wallet while you were watching tv……
Plus tax plus charges plus stamp duty plus rates plus etc … Where aren’t we stolen from by government?!? But inflation is a good way for governments to steal off us today and pay it back for less tomorrow. I wonder when that will become a driving strategy again like it was under Gough whitlam? MT
@deancollins – Sorry, but would you please elaborate how the government steals money by way of inflation?
Inflation is caused by all sorts of things / people increasing their incomes, fluctuation of AUD exchange rates, supply and demand impacting price of goods & services, etc, etc – all ups and downs are summed up and are usually causing overall price increase ie. inflation. And inflation is healthy and desirable, so long as it is within the targeted level of 2-3%.
So it is actually all of us contributing to inflation, not the Government. Tax is also not stealing? It is our contribution to the well being of us all ie. building roads, paying for Army, police force, the dole, etc.
Just wondering,
CattsCattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
Governments are using a number of financial tools to actively accelerate inflation.
If you believe inflation is healthy…..then you’re wrong but I wish you well.
If you believe inflation is currently 2-3%……then please seek medical help :)There are two sides to everything. Talk to someone who has lived in Africa where stealing and murder is synonymous. These people are so grateful for being in Australia and think higher taxes are a blessing and necessary for safety.
Isn’t inflation the result of growth? And if systems are in place to ensure ‘a little more is taken from us’ to ensure that growth is supported – is this not a practical solution? Therefore if I am not reading out of context, how could you say that inflation is not healthy Dean?
@captain, if inflation ‘was’ from growth (either population increases OR technological productivity increases) then I would say that yes inflation is healthy (eg we are making more therefor M1 goes up).
However quantitative easing (and or artificially low interest rates) to induce inflation is not healthy.
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