Wealth paradox

Woman we know, does this.
She uses the equity in properties to reinvest. She has worked very hard. Now has 15 houses carefully selected around Qld, to maximise her return on investment.
After the morgages are paid she has an income of $6500 per month.
This increases as each morgage is paid out.
My young Bro is a Financial advisor and finds investment properties for clients and makes a nice living.
He and his wife also invest in housing properties and have a very healthy portfolio.
He is retireing in Dec, this year at age 58. He will
continue to dabble in this field but doesn't need too.
He was the financial advisor to the woman above.
I retired at age 57.
Anyone who doesn't use the equitty in this way is
losing out. You have to own your own home tho,
so as you are not putting yourself at risk during a
recession. Careful selection and location of investment
property is the key to success.
Some people might think they are greedy, thats crap,
it's being smart and using a good business sense to
make hard work pay off !
Cheers.

Must have hit a button or something.
I lost me Capitals, didn't I !

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weird up front looks as if he is rolling in it but really just making ends meet...god help him if interest rates go up...

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There is an excellent book called "Living next door to a millionaire", the premise being you probably wouldnt know due to the way they appear, the car they drive or in a lot of cases the humble home they live in. Now I am not applying this to this example of people, as it sounds like they are on the right path. However, there are examples where somebody may be in a flash house/ car etc but a hiccup and the cards come tumbling down. Generally because they are financed to the hilt, no equity and have actual funds that may last them a month or so.

Most people make plans whilst life is passing them by, today is the time to make things happen. In respect to them or anyone out their working to increase their financial security being greedy is just another example of the good old "tall poppy" syndrome. Its funny, its always seem to be ok to go " ****** in his flash car or house" but never much chop if you go " look at the povo driving around in a heap of junk" :angel:

Regards

Stevo

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must have hit a button or something.
i lost me capitals, didn't i !

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Hmm so did I????

Regards

Stevo

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Originally Posted by olbod

Must have hit a button or something.
I lost me Capitals, didn't I !

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Seems to be happening across the site. If you hit 'quote' or 'edit' the capitals are there. Just not on the main reading pages.

Nothing wrong with that.

That's what is called negative gearing, you put all your cash into an asset and borrow the rest and hope you can rent it out or sell it for more in the future. If not it comes off your taxable income.

Same with those poor cash starved business people. As long as their income remains viable they are OK. Until a recession comes again.

An Aunt of mine had 9 houses on the go. When she was short on cash in her retirement she just sold one off. Saves relying on the pension system.

My Sister is doing the same. One house in Hervey Bay, one in Hobart and a unit at Nerang. All negative geared.

She lives in a caravan and when she wants a trip up or down the East Coast of Australia all expenditure is a tax deduction as long as she conducts business to do with one of the houses.

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Originally Posted by barryj

Nothing wrong with that.

That's what is called negative gearing, you put all your cash into an asset and borrow the rest and hope you can rent it out or sell it for more in the future. If not it comes off your taxable income.

An Aunt of mine had 9 houses on the go. When she was short on cash in her retirement she just sold one off. Saves relying on the pension system.

She lives in a caravan and when she wants a trip up or down the East Coast of Australia all expenditure is a tax deduction as long as she conducts business to do with one of the houses.

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1: The only thing wrong is selling assets to purchase liabilities. I don't think that is good business sense.

2: Plenty of it about, but I don't think it is a good way to invest. By the same token, I don't go to the casino and gamble.

3: Good on her. I too don't intend to rely on a government funding of my retirement years.

4: That can become a grey area. Travel can only be claimed if the primary purpose is business (in this case the investment houses) related. You can't take a three week holiday and "pop in" to an investment house and claim the lot (well you can, but look out if you are audited!).

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Originally Posted by BigJon

1: The only thing wrong is selling assets to purchase liabilities. I don't think that is good business sense.

2: Plenty of it about, but I don't think it is a good way to invest. By the same token, I don't go to the casino and gamble.

3: Good on her. I too don't intend to rely on a government funding of my retirement years.

4: That can become a grey area. Travel can only be claimed if the primary purpose is business (in this case the investment houses) related. You can't take a three week holiday and "pop in" to an investment house and claim the lot (well you can, but look out if you are audited!).

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She always does work on the properties while she is there, e.g. curtains etc.

She also organises the real estate agent to do an inspection with her and she gets to know the tenants during this time. She has only had one problem with a tenant and this was due to the agent not doing their job. Took the agent to court and won damages plus costs.

My Sister is a Financial Adviser so she makes sure all is in order.

Too much of a risk for me but it works for her.

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Originally Posted by barryj

She always does work on the properties while she is there, e.g. curtains etc.

She also organises the real estate agent to do an inspection with her and she gets to know the tenants during this time. She has only had one problem with a tenant and this was due to the agent not doing their job. Took the agent to court and won damages plus costs.

My Sister is a Financial Adviser so she makes sure all is in order.

Too much of a risk for me but it works for her.

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Yep, like I said, a grey area. I think the phrase "primary purpose" is open to interpretation.

Since no-one else seems to be prepared to stir up this discussion by presenting an opposing view, it looks as if I will have to do it.

Here goes!

People like those you have all been admiring for their financial genius are probably the most important single reason why so many first home buyers can't even go close to affording a home.
The activities of those people investing in property drives the price up.
It is only because property is a good investment that they put their money into houses. They invest knowing that the price will go up and they know they can sell at a profit because someone else knows that they can fairly safely pay a ridiculous amount for the property because demand will force the price up even further.
Since property is such a good investment, no-one is interested in building or financing affordable housing. The bigger the house, the bigger the return, so two income, one child families build a Mcmansion to maximise their return.
As is so often the case when someone makes a profit it is at someone else's cost.
If housing was not such a good investment, we would not have a housing affordability crisis as severe as the one we have now.
As I am part of the generation who could afford to buy a home (even if I did have to pay 17% interest for a time), I am not making this point because I missed out. It is current crop of young parents who are suffering.
Those people who are securing their own financial security are choosing to do it in a way that almost ensures that a lot of other people will struggle financially all their lives.
Before anyone points out that everyone could do the same, let me suggest that usually when it comes to having to make a choice between paying the family grocery bill or the electricity bill, or investing in a property on the Gold Coast, parents tend to choose to feed the kids.
Greed may be good for the greedy, but it forces others to pay for the luxuries the greedy enjoy.