Complain or Conquer, is housing affordability really the issue?

But that's not reality, homeownership is roughly around 70% give or take a few percent.

Home owners in a multimillion dollar property who receive the pension are still a burden if they have no savings.

Someone who retires with 9 ips outside of super will be self funded and most likely will continue to pay tax.

Ideally everyone would own their own home but that is not viable or realistic.

 

Who knows. I can easily nominate 10 home owners, all on the government Aged Pension. A huge welfare burden ($300,000pa) but I am OK with that.

I can also nominate one home owner (me) who owns 8 (near enough to 9) IPs who rents to one couple because they are building their dream home, a mother and single mum (both working), a group of 3 young lads (all working), multiple young couples (all working) and a number of students (assuming using HECS), etc. So no welfare burden (assuming the HECS debt is paid back).

I believe I am providing a great service (i.e. good quality and affordable shelter) to the people of Australia and, on top of that, none of us are draining the public purse. Australia needs more people like me. Lets choose a government that encourages and support people like me.

 

How does one person living/renting in one IP spread welfare around?

I know; you think all the NG is being funded by the rest of the Country....

What about my taxes? Aren't I funding other investors who are neg geared, then. It's ridiculous... they are getting back some of their own tax that they have already paid.

Guess what happens to most of that tax? They re-spend it...more GST, more jobs, more tax from the jobs.

On your first point; there are plenty of IP's which are not suitable for more than one or two people living in them - such as a small studio for eg. Yes; more could live in them than one person of course.

But irrespective of that; there is no law that says any house should have more than one person living in it due to it's size....

Our current (future) PPoR property is tenanted by a 30 year old single lady with a dog...she also runs a small aromatherapy etc business out of the house; she enjoys her privacy and the space to run her business.

There is no welfare burden there; she works, pays tax, pays rent, and we provide her with a roof and a place to generate income and taxes.

 

This started me thinking and I thought I should undertake a little more ‘formal’ analysis. I decided to look at my family members (sisters, brothers, SILs, BILs) and close friends, some I met at high schools (47 years ago), some at Uni (42 years ago) and some during my working life. Most are around 60 (like me), some are over 60 but all are above 50. I selected this group because I know their life journey, I know the risks/decisions they have made and have a fairly good idea of where they are now at.

A snapshot of this group follows:

1. A couple own their PPOR, do not own any IPs, are retired, live a modest lifestyle on their Super which is invested in cash (drawing 4%, soon to go to 5%, so their balance is going backwards – don’t get me started!!!). In time, they will need the Aged Pension to supplement their Super.
   
2. A single, paying off their PPOR, owns one IP which is debt-free (don’t get me started!!!), works part-time and is using transitioning to retirement to supplement their income, has a Super balance that would fund a comfortable lifestyle if they owned their PPOR, will probably withdraw moneys from Super to pay off their PPOR, they will probably need the Aged Pension to supplement their Super.
   
3. A couple, owns a block of land, aiming to build PPOR using funds from the sale of an IP, owns one other IP which is costing them (in a mining town), one does not work due to health issues and has no Super (withdraw balance under hardship provisions), the other works but only started late in life (has limited funds in Super), will be retiring on the Aged Pension with a small supplement from Super.
   
4. Two couple, lost everything when business went belly-up (so no PPORs and no IPs), now renting, weren’t great believers of Super (even when they had the business - don’t get me started!!!), three out of four still working, likely to be renting the rest of their lives, will used the Super to supplement the Aged Pension in retirement.
   
5. A single, inherited multiple properties years ago, stopped work immediately (used to work for me and go out with SIL), living off the equity, already had to sell one property as the bank was going to take it back (I lent him money to in order to give them time to sell. I can see more forced sales to come), as they haven't worked for years they have limited funds in Super, will be relying on the Aged Pension with a small supplement from their Super.
   
6. A couple, has health issues with a child 30 years ago, never owned PPOR, never owned any IPs, always rented (were our first tenants in our first IP), always worked, enjoyed the ‘good’ life (cars, clothes, etc), still renting and will do so for the rest of their lives, will rely on the Aged Pension supplemented by their Super in retirement.
   
7. And so on. Most of the other couples are paying off their PPORs, none own any IPs, some are working, some are still funding their younger kids (school, Uni, etc), some realise they are running out of time and contributing more into Super (probably too late), some are retired, all will use their Super to supplement the Aged Pension or the Aged Pension to supplement their Super (depending on how large their Super balance).

Out of this group, only one couple (beside my wife and I) own their PPOR, have bought multiple IPs, started their own business (in accountancy as one is an accountant and the other in IT), put heaps of funds in Super. For years, I have suggested they should wind back/sell their business and enjoy the ‘fruits of their labour’ but to no avail. They can easily afford to do so and be self-funded. Then two months ago, one suffered pains in their chest at 4am (heart attack), went to hospital and was on the table by 6am. They are now reviewing their life plans.

I believe we are all born wearing heavily tinted sunglasses (figuratively speaking) which we cannot remove.

For me, mine were cheap, I paid cash, they were of low quality, the tint started to fade the day I was born and were fairly transparent by the time I was 30, I could see where I was and where I wanted/needed to go, I am well on my way, the tint still continues to fade just at a slower rate.

For others, theirs were premium glasses, they were very, very expensive, they paid for them on their life’s credit card, they were of super high quality, the tint has never started to fade, they can’t see where they are or where they need to go, they get the glasses serviced on a regular basis (paid on the same credit card) so that the tint doesn’t start to fade nor allow it to.

For some in this premium glasses group, they accidently (or may be on purpose), scratch the tint and it lets some light in. Some see where they are and where they need to go (maybe in a hazy way), some will take some small steps in that direction while other will pay to have the tint repaired/replaced because they are comfortable in that ‘pre-scratch’ world.

From what I outlined about my family and friends above, I trust you can work out what sort of sunglasses they were born with.

Sorry about such a long and heavy post, especially on a Sunday. Time to go and make some lunch.

 

The government would need to provide housing for those that couldn't afford to buy, so option 3.

 

I think some people just have their heads in the sand. Just don't have the drive or the mindset to do anything about their situation. Some don't even realise they have a situation to begin with.

I also don't understand all the criticism that investors get. It's a significant driver for the economy.

For the one IP I currently have:
- buyers agent that helped me research and negotiate on a property
- solicitor that negotiated my side of the contract
- vendors' solicitor that negotiated their side of the contract
- real estate agent that got the commission from the sale
- pm team that now manage my property
- b & p inspector
- electrician that fixed up some safety issues and issued certificates
- plumber that did some repairs and issued certificates
- smoke alarm compliance inspector
- carpet cleaner
- handyman / his wife and one employee that did some basic Reno tasks for me + suppliers of all the materials
- staff in call centre that setup insurance
- my accountant and their team
- my broker and their team ( including staff based
in Nepal )
- a humble forum administrator that provides a platform for research, networking and learning

So far, easily over 30 people that in some way have got some form of economic benefit out of my investment in 1 property.

 

I'm pretty sure it comes up whenever the market peaks in Sydney.
But that is the centre of the universe.

 

It's genuinely scary how pathetic we are at managing money in this country.

I'm fairly confident your examples aren't overly rare either.

 

@Gockie, don't frown. My post was meant to inspire people, not depress them.

Hopefully, you and other PC members were born with the cheap sunglasses and are well on their way with their life journey. If they have the premium ones, all I can suggest that they scratch them like there is no tomorrow and allow as much light as possible in .

I don't want people to end up financially where the majority of my family and friends are after 50 to 60 years on this planet.

I know us baby boomers have lived through the best period in history, we have had the unfair advantage on NG, the unfair advantage of CGT exemptions, the use of Super, the luxury of property increasing over the decades, etc, etc (written with a significant sprinkle of sarcasm ) but look where my family and friends have ended up. It is the GenXs, GenYs, etc (including my kids and grandkids) who are going to have to fund these folks for the next 20 to 30 years.

I worry a lot about governments making it harder for people to get ahead. They should be educating the young people of today on how to become financially independent; there was virtually no such education for people of my generation on how to do it and, as a result, most haven't achieved it. Surprise!! Surprise!!!

 

Maybe because they have a 'poor person' mindset, it took them decades to end up in their current predicament.
They are essentially still poor people with a lot of inherited money and given enough time will revert to mean.

 

And if you borrowed money, then there is the bank staff, their lawyers, ... plus the seller's bank staff and their lawyers also received some economic benefit.

Stop buying IPs, otherwise you will solve all of our country's economic problems and the pollies will have nothing to BS us about .

 

I got my expensive sunglasses from the pawn shop.
And when the lenses got all scratched up, I got cheap replacement lenses off the internet

 

Have they started to fade yet?

 

My expensive sunglasses were tax deductible.

 

Probably.
But I'm still undecided if that's a good thing or not?

 

Only if you are using them for investment purposes. Wearing them as you sit on the beach won't cut it.

 

Can you depreciate the glasses?

Heard Gen Z have some new ones coming out soon.

 

Great post.

I thought of another person; you forgot to mention the tenant that you are providing accommodation for who cannot afford their own house yet.