Is your owner-occupied property your pure financial asset?

Is your owner-occupied property your pure financial asset?
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Most Sydneysiders know the reasons why they are getting up early to work and finish late every day.
Isn’t it just to buy their owner-occupied property for a stable life?
Therefore, when calculating the assets and liabilities, Sydneysiders are giving priority to owner occupied properties as their first assets.
Really?
Let us define 3 features’ of pure financial asset:
First, against inflation;
Second, the value is increasing as the time goes;
Third, get the passive income.
These three features are must at the same time, not either one or two of them.
Unfortunately, in Sydney, your owner-occupied home is just for you or your family living there, spending your income to support your mortgage bank instead! You just do not pay the rent to the landlord, but you still have to pay interest to the bank for mortgage you owing. But you can't generate any single dollar of passive income. Further, You are wasting many days, many years, which are non-renewable, non-returnable, and the most precious leverage tool to generate pure assets --- TIME!

 

Who uses the term pure financial asset other than you or your financial planning one stop shop as you copy and paste from your newsletter?

By that definition berkshire hatheway shares, bonds and gold would fail your test. That just says your definition is meaningless.

 

PPOR straddles that area between investment but also an essential requirement (shelter) with value to the owner. We all need a roof over our heads, and are going to have to pay for it one way or another. I could have more investments if I sold my PPOR and downsized to a campervan but I like my property, I get enjoyment from it at a level that at least matches how much money it owes me.

I think your general point is valid that for most people the bulk of their wealth will be their primary residence, which may not be enough to retire early or at a desired income level.

Most people will have at least some investments outside PPOR via Super. Perhaps a better poll question would be what is the ratio of the value of your investment portfolio relative to your primary residence?

 

By this guys post, warren buffett has no pure financial assets. Okay.....

 

The next installment is "we can help you leverage your home by using the the equity blah blah blah"

 

What happens when you sell it tax free and move into your best investment property?

 

I really don't understand the question, or the post explaining it. A grammar check would really help.

 

We paid off our PPOR around 30 years ago.

Our fixed expenses are annual rates and building insurance. Plus occasional maintenance or replacement issues. Improvements are optional.

We may not earn passive income from it (unless we want to rent out a room or two - pre cgt so no worries there), but it sure saves us heaps, no rent or repayments.
Marg

 

So....you're a renter then? While you may be paying for someone else's pure financial asset, by paying maybe just a bit more you could be paying off what's maybe not a 'pure' financial asset but an asset none the less.

Horses for courses...

Personally I LOVE being able to hang a picture, paint a wall, rip out a kitchen....and I also love not having a 19 year old property manager tell me my window tracks need cleaning. My sanity is my best financial asset.

 

You are asking is hot water cold ! or Do you still beat your wife and you can only answer yes or no.

 

I think you will find the personal residence is only a small fraction of the investment properties with most investors.

 

Is hot water cold? That would be a clear 'no' wouldn't it?

 

Home is where the heart is. We bought our PPOR to have the feeling of having your own place. That's not financial.

On the other hand, PPORs are free of capital gains, save rent and generally speaking increase in value faster than inflation. That part is financial but I won't realize that value unless I liquidate the asset. Most likely we won't and my kids will be the financial beneficiaries.

So, I'd say no, but not sure about your definition.

 

Depends of the perspective. I assume one definition of an asset is an item which could provide a future benefit, generate cash flow and reduce expenses.

Pity then on that basis the things have so many outflows such as rates, insurance, repairs and maintenance but zero in the way of actual income usually.

 

Didn't Thornhill state your home is a liability, i.e. costs you money to maintain?
If I remember, he has a preference to rent so that you have more money to invest.
There was an example where even banks have a preference to lease a property rather than purchase buildings so they can use the funding for more profitable uses.

 

He could have said something along those lines. All I know is I keep on getting bills to pay and I don't see any gold coins falling into my bank account from it. Oh well, at least it serves the purpose of keeping the rain off my bed - when it does rain.

 

Well, he is flogging his share seminars so he is hardly going to recommend real estate!
Marg

 

Although there is a belief that Peter does his seminars out of the goodness of his heart to help others.

 

Whether you think renting or owning is optimal, one important consideration is equity in the PPOR allows additional leverage into investments that you otherwise couldn’t get. That is a big asset IMO