Join Australia's most dynamic and respected property investment community

Does Property Build Wealth?

Discussion in 'General Property Chat' started by MTR, 2nd May, 2016.

  1. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,468
    Location:
    Perth, Melbourne, USA
    If property does build wealth then why aren't most investors wealthy enough to buy more than 1 property.

    This should tell you that the way most property investors invest is fundamentally broken.

    (Here are the stats from Simon Buckingham)

    I think its broken because in the main property investors are not getting the formula right, they are not strategic in the way they invest.

    What do you think??

    The majority of investors only have one property.
    And only around 15,728 (or 0.068% of the population!) have a portfolio of 6+ properties.
    That’s just 680 people in a million.

    Fewer than 2,920 out of 339,311 investors in the whole of Sydney.
    Fewer than 2,780 out of 323,043 investors in Melbourne.
    Fewer than 1,427 out of 165,821 investors in Brisbane
    Fewer than 1,247 out of 144,905 investors in Perth
    Fewer than 850 out of 98,722 investors in Adelaide
     
    kierank and Xenia like this.
  2. EN710

    EN710 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,145
    Location:
    NSW
    Can't tell ... but if it is easy then everyone should have succeeded. I think it's a combination of a lot of things, e.g. not everyone wants to have multiple properties (stress!!)
     
  3. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    Most so called investors aren't really investors, they're just mug punters.
     
    Finrod, Perthguy and Foxdan like this.
  4. Barny

    Barny Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    1,181
    Location:
    Melbourne
    I'm a mug punter
     
    mrdobalina and Ace in the Hole like this.
  5. Allgood

    Allgood Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    217
    Location:
    NSW
    We were just talking about this on the weekend. A family member of mine bought a fancy apartment Canberra a few years ago. At the time we thought it was an odd choice but recently he was whinging that there's no money in real estate because it hasn't increased in value (probably because there's a huge over supply and the Canberra market has been flat recently - he's playing the short term game.) But I'm sure the brochure looked good with a lovely view over Lake BG.

    Similarly a family member bought an IP in Mt Druitt in about 2010, had loads of tenant issues and sold it in about 2012 with a $40,000 loss after all costs. I know because I hear about it every time I see her. She says she always knew realestate was a bad investment and this just proves it - I say to her it was an expensive way to prove a point! I often wonder what that house would be worth now... if only she held it for a few years.
     
    Cactus likes this.
  6. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    I used to be a mug punter but have since progressed to simply being just a punter.
    So far so good.
    Hope to be a true investor one day.
     
    Iamnumber5 and Barny like this.
  7. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
    Posts:
    2,347
    Location:
    4/136 The Parade Norwood, South Australia
    Not everyone can build wealth in every investment vehicle.
     
    kierank and MTR like this.
  8. LibGS

    LibGS Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    616
    Location:
    Melbourne, Australia
    I'll buy my 6th next month and I still consider myself a newbie.
     
  9. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,123
    Location:
    FNQ
    A fair chunk of the investors would be 'accidental investors', they have upgraded their ppor and kept the original property possibly for emotional reasons.
    Some have holiday houses which are rented out until retirement.

    Many want immediate gratification and give up way too soon.

    Then there would be many thousands who have inherited a property or two

    None of these are really investors with prior planning, forethought or a desire to hold large amounts of real estate.
     
    kierank, Hanison and MTR like this.
  10. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    Just maybe, the average person is happy to add only 1 investment property to their nest egg, along with some shares and other random investments.
    Not everybody who has a property should be considered a property investor.
     
    MTR, wylie, Joynz and 1 other person like this.
  11. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

    Joined:
    14th Jun, 2015
    Posts:
    2,106
    Location:
    Sydney & Adelaide
    Lots of people buy 1 rental as an invesment based off accountant/finplan advice
    Others buy because they have a general awareness that they need to invest in something and shares are too complex
    Some buy because they are gullible and fall for spruikers and sales people patter
    And others buy as part of a defined wealth creation strategy... and we are by far the minority

    But importantly, not everyone is wealthy enough to buy more than 1 property because they represent the average/median wage earner. Not all of us can be on high incomes and buy 5, 10, 20 properties due to our servicing. For Joe Average on 40-50k and a wife working part time on 20k, buying a unit as a rental is as far as they will ever go due to lender policy.
     
    orangestreet, Finrod, albanga and 7 others like this.
  12. Logan

    Logan Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    146
    Location:
    Sydney
    I have always wondered if these figures relate to individuals or households ? I think if you looked at a couples combine portfolio it would be higher or people with 6 or more. I also wonder how trusts etc fit into these figures?
     
    Cactus and wylie like this.
  13. 2FAST4U

    2FAST4U Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    925
    Location:
    Adelaide
    Peter Martin: $80,000 is anything but average Scott Morrison

    I read in another article yesterday that in SA only 21% of taxpayers earn more than 80k. Nationally it's around a quarter. Most people don't earn enough to build property portfolios considering the price of houses in Australia's capital cities.
     
    MTR likes this.
  14. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,468
    Location:
    Perth, Melbourne, USA
    I think there is far more to this.

    I know many people who want to achieve financial freedom through property investing and
    An element of luck with property investing for sure, but there still needs to be some skill ie understanding how to source finance, who to use, what to buy, when to buy etc etc.

    Many people get stuck because of serviceability but some investors will tweak the system understand there are perhaps other avenues to get it over the line, some investors will be far more persistant, hungry to make money.
     
    HUGH72 and EN710 like this.
  15. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,575
    Location:
    Sydney or NSW or Australia
    TheGreenLeaf, ellejay, Ardi and 5 others like this.
  16. luckystar

    luckystar Well-Known Member

    Joined:
    8th Nov, 2015
    Posts:
    56
    Location:
    nsw
    At one point I bought 3 properties on 57k a year and still had the capacity to borrow another 300k so not sure about the facts being displayed here
     
    wylie and MTR like this.
  17. bobbyj

    bobbyj Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    195
    Location:
    Sydney
    At the end of the day, I think the majority of people don't think about property investing (yes, they may discuss and mention it over latte's at work, but really, they don't think about equity/LVR/yields/positive vs negative gearing/forward planning/house vs unit/location/infrastructure/tenants/insurance/property managers/conveyencers/solicitors/tax agents/brokers/interest rates/savings/offset accounts/P+I vs IO/do I need to keep going on?).

    There's more to life than money and property and most people don't think about building wealth. The classic thinking of 'what you earn from your job is your wealth'.
     
    orangestreet, Cards, MTR and 3 others like this.
  18. datto

    datto Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    1,394
    Location:
    Mt Druuiitt
    [​IMG]

    What the heck? I can't see the famous smile anymore.
     
  19. Sonamic

    Sonamic Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    953
    Location:
    Sunny QLD
    It's not what you earn but how you spend it.
    Take 1000 people earning an "average" take home pay of say $1,000 a week. What percentage of those 1000 people blow the whole lot before next payday? Half? So of the remaining 50% saving at least something, how many of those do you think would invest in property? How many would be able to get a multi property portfolio together? And the big one, how many would get to 6 or more IP's "Club"?
    It would make an interesting experiment.
     
    Koshy likes this.
  20. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    What exactly are you seeing Datto? ;)
     
    datto and MTR like this.