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Property Investing phrases you dislike

Discussion in 'Investor Psychology' started by Greyghost, 9th Jan, 2016.

  1. Greyghost

    Greyghost Well-Known Member

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    I thought I would post this as in my day job I hear some catch phrases from clients who are not educated in invested that are totally misconceptions.
    The worst part is that many believe these and take them on face value.

    For example:

    Just buy a property and pay it off

    Property doubled every 7 years (note- any monkey could have made money during certain boom times, so I guess you only hear the "good" stories).

    One of my favourites:
    " I bought a property to pay less tax". Such as what the OTP developers sell you on..
    - facepalm...
    I'm paying too much tax, should I sell a property?

    I regularly hear some of my larger business clients complain about thier tax bills when they are a 1 family business clearing over $1m a year plus wages..

    Or some mindset type ones I hear;
    I don't know anything about houses or investing, my parents didn't teach me that stuff.

    Perpesctive is such a powerful thing..

    Id like to hear other phrases you've heard during your journeys!
     
  2. Fullysickbro

    Fullysickbro Well-Known Member

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    In not the smartest person at all. But what's the issue with buying a property and paying it off? In these tuff economic times it seems fit to pay it off.
     
  3. datto

    datto Well-Known Member

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    I think we humans are definitely creatures of habit and seem to take things for granted very easily.

    Even a million bucks. pa is not enough. Still complains. I think it's time to stop and smell the roses.
     
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  4. Biz

    Biz Well-Known Member

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    Astute investor

    Savvy investor

    Seasoned investor (presumably with salt and a pinch of turmeric?)
     
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  5. rhinsor

    rhinsor Well-Known Member

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    I just read all these three in the past hour on a couple different property listings
     
  6. Fullysickbro

    Fullysickbro Well-Known Member

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    Michael Yardney? Lol
     
  7. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    I'll treat the question as serious. The benefit property investment gives you is the power to leverage. $1 of equity allows you to borrow another $4 to say $9, depending on how much debt you are comfortable taking on. So $100k allows you to buy properties worth $500k up to say $1mill.
    If property prices go up, you get the benefit of every extra dollar of growth. So for your $100k lets say you buy a $500k investment property. If the $500k property increases in value to $600k you have basically doubled your equity, $100k is now $200k.
    If you had split your $100k into 2x$50k deposits and with that money bought 2x $500k properties then you would have had a better return... if the above happened and again both IPs went from $500k to 600k then you basically made $200k from your $100k initial deposit. (Also see Sash's recent thread).

    Alternatively, if property prices go down, you can be in negative equity. E.g. that's the trouble some people are in when investing in mining areas. Little to no rent income, lots of expenses and no foreseeable CG.

    If you buy soundly in an area with CG, property investment is pretty solid way for average Australians to build wealth with a bit of discipline. It can take patience when the markets are not booming. Its ok to have 1 fully paid off IP but then you lose interest i.e. tax deductions (and also extra depreciation), any dollar you make will be taxed.... plus you only have 1 property. If you had multiple properties all growing in value.... its been a nice feeling seeing all my properties going up $1,000 per week in Sydney for the past 2 years and me not doing anything to those properties except for owning them.... (this won't continue forever and I believe it's the end of this boom but it was a very nice ride)!
    If I just had 1 IP I would have just made a passive $1,000 a week. Which is ok. But with multiple...:D:p:D:p

    It would be extremely rare for a well selected property investment to not show some sort of return. There's always the possibility to sell - it is expensive though buying and selling (Stamp duties, agents fees, marketing, solicitors etc) so the costs of transacting should be considered.
     
    Last edited: 9th Jan, 2016
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  8. Bayview

    Bayview Well-Known Member

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    Real estate ads for a property for sale - targeted at investors, saying;
    "Secure your future"
     
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  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    "other people's money"
     
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  10. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Just wondering... why do you dislike it Terry?
     
  11. Iamnumber5

    Iamnumber5 Well-Known Member

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    @Gockie what about the risk? It's always nice to discuss profit, but the more leverage you have, the more risk that you are exposed to.
    Let me just exaggerate a little, say lets go to casino, think at the potential of winning quick money but you are at the expose of losing your money very quickly too. What @Fullysickbro saying, with current economic time, perhaps paying off the mortgage is a better option.

    High risk - high gain rule always apply.
    Our investment might have high gain, while we are still comfortable with the risk during the process, or perhaps we are not aware of the potential risk?

    Having said that, I am still on the market for another IP
     
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  12. Sonamic

    Sonamic Well-Known Member

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    Entrepreneur.
     
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  13. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Mindset
     
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  14. Fullysickbro

    Fullysickbro Well-Known Member

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    I'm all for leverage and understand the process which I agree. I'm all for risk adverse, especially for times that are bad and paying off your homes allows you to reduce uncertainties.
    I veiw property investing world wide, and see many of Australia's housing markets going no where but flat or down. Some will go up, but I'm not sure where that is. And I'm not up for gambling to hope it does.
    Also paying off your ip or part of it helps the return, I only know of 2 people that are truly positive cash flow. The rest all run at a loss and think negative gearing helps them make money.
     
  15. Fullysickbro

    Fullysickbro Well-Known Member

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    Property prices always go up. Hate this line.
     
  16. bob shovel

    bob shovel Well-Known Member

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    "but what's your strategy?"
     
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  17. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Oh and "The tax man pays for it"
     
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  18. EN710

    EN710 Well-Known Member

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    "We provide tailored financial planning and source the right property for you directly from the developer so they're better in price"

    Me on the phone: eye roll
     
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  19. skater

    skater Capitalist Premium Member

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    Real Estate Advertisements - "Owner says sell!"...........So THAT'S why it's listed?
     
  20. WattleIdo

    WattleIdo renovating Premium Member

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    Most people
     
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