For negative gearing Die Hards??

Discussion in 'Investment Strategy' started by MTR, 29th Sep, 2020.

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  1. BunnyXiao

    BunnyXiao Well-Known Member

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    Yes I know. First the 'melt up' then the melt down. Happening in Equities/commodites markets too the melt up. Meet Kevin has a lot of good info on USA housing market and it mirrors what you are seeing

    I know for many with large property holdings, multi-millionaires realise that whilst they are great RE investors they are poor portfolio managers (Kevin O'Leary Shark Tank's words). So then need to balance out into stocks, bonds, property, commodities, businesses, venture investments etc. Though I do realise and wonder as if you are a good property investor is this good. But its more of a total wealth management folio approach that those with a lot do need to consider.
     
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  2. MTR

    MTR Well-Known Member

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    Agree with you

    I will check him out.... thx
     
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  3. Lacrim

    Lacrim Well-Known Member

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    As a result of this, don't vacancy rates increase and ultimately force down rents??
     
  4. MTR

    MTR Well-Known Member

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    opposite, rents are increasing Because the proportion of renters in US is still higher than people buying

    Its not unusual to get multiple rental applicants.
     
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  5. ChrisP73

    ChrisP73 Well-Known Member

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    @kierank curious, are any of the properties held in trust security to bank loans? Or is all of your bank borrowings secured against the two properties held personally? Have you lent money to any of the trusts?

     
  6. kierank

    kierank Well-Known Member

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    We have six loans.

    Three secured against properties in our own names (our PPOR, our future PPOR and a buy/reno/sell IP)

    Two secured against properties owned by trusts.

    One secured against an IP that is 60% owned by us and 40% by a trust (long story, thanks to Paul Keating).

    Never lent any of our personal funds to our trusts; always used OPM.
     
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  7. ChrisP73

    ChrisP73 Well-Known Member

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    Interesting, thanks for sharing. Same or different lenders?
     
  8. kierank

    kierank Well-Known Member

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    In accumulation phase, we used multiple lenders.

    As we are now self-funded pensioners, we want to simplify our lives and slowly consolidating to one bank.

    Then we will probably look at reducing our loan portfolio. How much will depends on our cash reserves (in Offsets) and how much we need to (legally) manipulate our tax situation.
     
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  9. ChrisP73

    ChrisP73 Well-Known Member

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    Makes total sense. Thanks!
     
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  10. mickyyyy

    mickyyyy Well-Known Member

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    I've seen one change so lets see if more to come and it should as its counter productive not to when all other levers have been pulled...
     
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  11. mickyyyy

    mickyyyy Well-Known Member

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    No chance! Pure cashflow play right now
     
  12. MTR

    MTR Well-Known Member

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    Bring it on....... I want to see low docs and no docs come back. Wont happen unfortunately

    lets see how it all pans out next year???
     
  13. MTR

    MTR Well-Known Member

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    Ok, what I thought...... damn those banks
     
  14. MTR

    MTR Well-Known Member

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    Heads up..... you can accumulate property whenever you like
     
    Last edited: 17th Oct, 2020
  15. MWI

    MWI Well-Known Member

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    Actually I did that with some, sold Perth and VIC, but more for a different reason to use cashflow else where and for further investment....:)
     
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  16. MWI

    MWI Well-Known Member

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    Likewise... so far only 20 years into IPs journey.
    And by the way never ever had P&I loan on IPs, why P would not be tax deductible, was able to save that P and reinvest if required.
    Just refinanced few now and pulled out another title, pulled out extra equity, without paying one dollar off.
    Had also PPOR revalued at Best Valuation so far, e.g. in 4 years 33% more.
    What most novices I think forget to do is also evaluate their cash positions. There are times and years where rules or economy, hence valuations and borrowing rules, are more favourable so in such times I always try to pull out more. For buffers for reinvestment for peace of mind...
    No need to do anything against higher PPOR but why not use it in favourable times (lazy money), if we don't use the loans we don't pay much (only say the yearly profession package - very low cost against $M to access).
    But agree with you even in times of crisis found out that property is a get-rich-slow-scheme with one of the lowest risks in comparison to other asset classes risk.
    Many novices make decisions on short term timeframes forgetting it is get-rich-slow-scheme so should think 10, 20, 30 years, long term.
    We plan never to sell approach when starting out....that served us well so far!
     
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  17. MTR

    MTR Well-Known Member

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    I think whatever works.

    It takes time to build a portfolio and the trick is to ensure you are also creating income streams.

    This is what we have done and just mix it with a couple of developments.
     
  18. MWI

    MWI Well-Known Member

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    Agree, one should do what works or has worked, as no one has a crystal ball into their future. The key is DOING as that is EXPERIENCE and LEARNING what works what doesn't as opposed to THEORY what one reads or heard or someone else's opinion not experience.
    We are all different and many may not wish to develop just be passive investors at first but first we need to overcome our BIASES. Many will advise based on their journey, whereas I think each journey is UNIQUE, but why not learn from those that our GOAL/DREAM is similar too, why reinvent the wheel.
    Our mind and us is the key in investing or decision making hence some reading into this maybe insightful. I have found out one such inspiration from a story I just read by Maria Konnikova, who did two things:
    1. Decided to SET ODACIOUS GOAL, to win a poker tournament
    2. Decided to find a MENTOR on how to achieve it
    amongst all her setbacks and negative challenges she was facing at that time.
    What I find interesting about her is that this could be applied to anything, even investing into RE, the mindset to set a goal and then to find a mentor that did what you wish to achieve.....
    It is inspiring to learn that human mind is so complex yet it is the key!

    I think @Sackie is one such person that gets it. He will be open to information, not afraid to check it out but he uses mentors who have 'walked the talk' rather than just 'talk' to learn from.
    Is it easy, NO, is it possible, YES!

    A brief overview if you enjoy such real life stories:
    THE BIGGEST BLUFF
    Maria Konnikova
    How a New York Times bestselling author and New Yorker contributor parlayed a strong grasp of the science of human decision-making and a woeful ignorance of cards into a life-changing run as a professional poker player, under the wing of a legend of the game
    Maria Konnikova had never actually played poker before and didn't even know the rules when she approached Erik Seidel – Poker Hall of Fame inductee, winner of tens of millions of dollars in earnings – and asked him to be her mentor. She had faced a stretch of personal bad luck, and her reflections on the role of chance in her life had pointed her to poker as the ultimate master class in learning to distinguish what can be controlled and what can't. Seidel was in, and soon Konnikova was down the rabbit hole with him, a journey that would lead her to the following year's World Series of Poker.
    Then something extraordinary happened. Under Seidel's guidance, Konnikova began to have many epiphanies about life that derived from her new pursuit, including how to better read not just her opponents but far more importantly herself. She found her way to making better decisions and to a place where she could accept luck for what it is, and what it isn't. But she also began to win. She even learned to like Las Vegas.
    In the end, Konnikova is a student of human behaviour, and ultimately the point of her incredible adventure was to render it into a container for its invaluable lessons. The biggest bluff of all, she learned is that skill is enough. This is a book that will focus your mind and strengthen your hand.
    9780008270865The Biggest Bluff
     
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  19. MTR

    MTR Well-Known Member

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    thx
    Just read this, fascinating..... had not heardof her before

    The game of life: Maria Konnikova on what she’s learned from poker
     
  20. MWI

    MWI Well-Known Member

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    Agree, just brilliant, so many insights into our mind, into our behaviour, even how to deal with it.

    Some great learning we can take away to help our lives in just about any situation:

    - I didn’t just learn the rules of the game. I learned about the intricacies of my own psyche. I learned about the pitfalls of my decision making. About the way I let people bully me because I was afraid of seeming anything other than nice. But what I learned above all is how to rise above the noise: how to embrace uncertainty rather than fear it, reframing the very thing that once petrified me – my utter lack of control over certain key elements of my life – into something that I could instead use as a source of power.
    How we frame something affects not just our thinking but our emotional state. It may seem a small deal, but the words we select – the ones we filter out and the ones we eventually choose to put forward – are a mirror to our thinking.

    - The language we use becomes our mental habits – and our mental habits determine how we learn, how we grow, what we become. It’s not just a question of semantics: telling bad beat stories matters. Our thinking about luck has real consequences in terms of our emotional wellbeing, our decisions, and the way we implicitly view the world and our role in it. There is no such thing as objective reality. Every time we experience something, we interpret it for ourselves. How we phrase sentences can determine whether we have an internal or external locus of control, whether we are masters of our fates or peons of forces beyond us. Do we see ourselves as victims or victors? A victim: the cards went against me. Things are being done to me, things are happening around me, and I am neither to blame nor in control. A victor: I made the correct decision. Sure, the outcome didn’t go my way, but I thought correctly under pressure. And that’s the skill I can control.

    Just amazing....how do we see ourselves currently in the pandemic situation, how do we see ourselves in our RE investment journey, how do we see ourselves as parents/humans, how do we see negative gearing...etc....are we a victim or victors in our minds (so choose now), do we choose to listen to all that noise, how do we deal and react to it?

    This is similar to what JR said many years ago in his book The Seasons of Life:
    Life is a delicate maneuver of selection, rejection, review and change. Each person entering our world brings either a contribution or destruction. Trying to be “always nice” is to invite certain disaster. Those with poisonous attitudes, strange opinions, and caustic conversations love to look for someone nice who will listen to them. They love to dump their verbal garbage into the mental factory of anyone willing to listen. A major challenge in life is for each person to learn the art of standing guard at the doorway of their mind. Carefully examine the credentials and authority of those seeking to enter within that place where your attitudes are formed.
    The words, opinions, and comments of others are constantly taking their toll on each of us. Subtly, the conversations of gloom, despair, complaining, condemning, and criticizing are forming our temporary moods and our permanent personality and character. As a wise man once said, “A sour face does not come as an accident. It is the result of sour thoughts.”

    Ok so back to topic...Investing and strategy, some will blame the negative gearing and how it is detrimental of what it supposed to do, but it will depend really on YOU, you are the X-factor the most important ingredient, as what you think and feed your brain and who you listen to will have impact in some way..... how you will interpret it is vital too are you the victim or victor about something which for now is out of your control? Too many times people try to change the circumstance out of their control instead of concentrating on them, what can I do to soldier on, to find a solution to change instead.
    If only we were told to adopt such mentality our world would seem so much nicer and easier, don't you think?;)
     
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