Author Topic: Property investment as a mindset  (Read 1818 times)

Bloop Bloop

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Property investment as a mindset
« on: February 16, 2020, 09:23:33 PM »
Hello

I come from a place (Australia) where property investment is rife. About 9% of our adult population owns at least one investment property. 1/3 of our residential homes are owned by investors.

It seems to me that there's not nearly as much of a property mindset in the U.S. Why is this?

Australia has a few things spurring on investment -
1. Low interest rates
2. Negative gearing and capital gains tax exemptions
3. Much higher income tax (47-48.5% on income over $180,000, which previously was 49-50.5% until last year)

But then in the States, I see low interest rates and quite high yields, far higher than ours.

Here in Australia the general trend seems to be that investors want to buy up as many houses as possible so that they can control the rental market. I see it heading towards a 50/50 split of owners and renters.

Is it just that in the U.S., there is so much more liveable land, and a more decentralised populace, that buying up property isn't seen as a big thing? Is it cultural? Perhaps the U.S. just values innovation and business investment more so than investment in land?

Interested to hear your thoughts about the cultural gap.

Monerexia

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Re: Property investment as a mindset
« Reply #1 on: February 16, 2020, 10:17:59 PM »
Anecdotally I see many people in the working class buying things that take less mental effort and less capital--consumer goods, automobiles and so forth. They are pursuing other interests and can't fathom the idea of working enough and saving enough to put the money down.

ctuser1

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Re: Property investment as a mindset
« Reply #2 on: February 17, 2020, 08:31:15 AM »
I can't speak for the entire US.

However, I don't even think about buying investment properties because I am kinda scared of the work that comes with it. I have my hands full with all the effort that goes into fixing up my semi-fixer-upper primary residence. I simply don't have the bandwidth to also mind more houses.

Assuming I had the time, I would probably still not be too tempted based on the investment returns alone. There are two additional things on top of the nominal investment returns that are cited by property investors:
1. Cheap leverage.
2. Tax benefits.

#1 adds risk, and I am not sure the returns from (leveraged) property is commensurately superior for the risk leverage adds. #2 can be valuable in some narrow situations (e.g. show low income/assets for college applications) for individuals, and *very* valuable for ultra-wealthy because they can launder profits from other businesses and avoid taxes.

All in all, I see property investment as something that *can* be done if you have some specific needs where the tax/leverage will tilt the scales in your favor. However, it definitely is not a slam-dunk for everybody like you are suggesting it is in Australia. Indeed, I suspect that a majority of small property investors in the US would be financially better off if they simply stuck with some vanguard index funds *even* after the crazy price runs in hot markets like San Fran etc.

There was no such crazy property price appreciation where I live. NYC has always been crazy expensive - no change there. Exurbs in NJ and CT are also always semi-crazy expensive. Not much change there either. So I fail to see how a small time investor would be better off here in property over index funds.



dandarc

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Re: Property investment as a mindset
« Reply #3 on: February 17, 2020, 08:48:46 AM »
Quote
1 in 8 American adults consider themselves to be residential real estate investors or own residential investment property today. That 28.1 million people is broken up as follows: 3 percent or 7 million people, consider themselves to be real estate investors and an additional 9 percent of all American adults own investment properties today according to our study.

https://www.biggerpockets.com/blog/2012-09-20-biggerpockets-memphisinvest-survey-investors-revealed

A lot of folks in the US wind up being accidental landlords. You bought a house to live in, move for whatever reason and rent that house out. So I sort of disagree with the premise that Australia is necessarily having more investment real estate than the US. My wife and I did this semi-intentionally for 17 months spanning 2018-19, and then we moved back into the house. We did not enjoy being landlords, particularly long-distance landlords, even though it actually went about as well as you could expect, so we're not diving full-on into investment real estate, but for that ~1.5 year period, we were real estate investors.

US is also in a long run of low interest rates, which I think contributes more than anything to wide-spread home ownership, whether primary residences or investment properties.


Wrenchturner

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Re: Property investment as a mindset
« Reply #4 on: February 17, 2020, 10:05:03 AM »
The US has very good GDP growth and stocks are doing well; maybe investors are choosing stocks instead?

Many investors were burned in the financial crisis, some aversion to housing might be related to that either at the buyer level or at the lender level.

Just guessing.

Bloop Bloop

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Re: Property investment as a mindset
« Reply #5 on: February 17, 2020, 01:24:49 PM »
Thanks for your responses, folks. The things that you've mentioned (benefits of leverage, but annoyances like maintenance and need to manage tenants) all apply here, too. I guess my question is why in the U.S. do people primarily see investment as being via shares whereas in Australia there is a lot more focus on property as an investment. A few of you have touched on that - including the stronger performance of US shares being a factor. It may also be that here in Australia our two main cities are running out of land to expand to and we have few viable satellite cities, whereas the U.S. is full of suburban sprawl.

bacchi

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Re: Property investment as a mindset
« Reply #6 on: February 17, 2020, 01:38:00 PM »
I think Wrenchturner is on to something. How badly did Australia get hit by the GFC? Many US cities had dramatic declines (that's how ARS made so much money in Vegas). That decline influenced a lot of people, particularly young millenials. Owning property is dangerous, the thought goes.

Hedge funds are buying up rental property in the states now.

Wrenchturner

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Re: Property investment as a mindset
« Reply #7 on: February 17, 2020, 02:18:59 PM »
I think Wrenchturner is on to something. How badly did Australia get hit by the GFC? Many US cities had dramatic declines (that's how ARS made so much money in Vegas). That decline influenced a lot of people, particularly young millenials. Owning property is dangerous, the thought goes.

Hedge funds are buying up rental property in the states now.

The irony for me is that I would feel more comfortable buying a US property than a Canadian one right now.  The Canadian cap rates on rentals are horrendous, which makes me concerned about housing more generally.

Canadian real estate is a bad meme.

srad

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Re: Property investment as a mindset
« Reply #8 on: February 19, 2020, 12:27:11 PM »
I see all sorts of comments as to why investment properties are good/bad.  Many of the bad seem to come from those who don't have any.  So take it for what it is.  Many of the common gripes are they take too much work.  So is that true? really depends on the type of property you buy.  If you buy a fixer, then yes, those first few months are going to hurt.  But once its all fixed and rented out, the number of times you'll hear from your properly screened tenant is maybe 2 or 3 times a year .  I currently have 8 rentals, i haven't heard from a tenant in over 4 months (i just screwed myself here i'm sure).  We self manage and both my wife and i work full time jobs.  There's still have plenty of time to go out and play.  Have i had to cancel a trip or two due to a vacancy coming up? yep.  But in the grand scheme of things, a little sacrifice is going to pay off.  So, do they take more work than an index fund?  yes,  Cant refute that in the least.

Do they require you have a reasonable pile of cash? yes.  Down payments aside,  A few years ago i noticed the roof over one of my front porches was sagging.  Both the supporting posts had rotted out, this cost 7k to fix, The next month another properties furnace had an issue costing me 1500.  So things do come up and you need to have some cash available. We drove 10+ year old cars for years.  Now that my portfolio is aging (read rent is a lot more than the mortgage now) we've been able to buy much nicer cars (with cash).

Can they make you more money than the market?  The ones I purchased prior 2006 have killed it. One of my homes i paid 200k for, its worth 600k now. The more recent ones I've purchased obviously haven't been able to put up the 18% returns the market has and frankly probably never will.  Many investors out there with bigger pockets than me are in search of yield and have been buying rentals, so there's be a bit of  yield compression in that market.  But each year the rents rise and my principal is paid down the numbers get better and better.

I"m sitting about half my NW in rentals the other half in the market.  I look at my rental portfolio as my pension.  I know what i'll be getting each year from my rent, i cant know what i'll be getting from my investments.  During the GFC you know how much my rent went down?  None, i even raised the rent during that time.

I will add one of my biggest concerns is the liability issue.  Owning index funds comes with zero personal risk.  The though of someone getting harmed on a property of mine and being able to sue me for all i'm worth scares the hell out of me.  I have a 3 mil umbrella policy and the properties are in LLC's, but will that stand up to a lawsuit if i really do F up??  I hope to never find out. 

A few other things rentals have vs index funds.  You get to be a counselor. I've had tenants not get along with other tenants (in my duplex's) those are always fun conversations one group hated each other so much one was throwing rocks on the roof at night to bug the other one.  I told em to knock that sh!t off or they are out of there...   I also had a neighbor call me to complain the kids at my rental house are playing basketball in the shared driveway and the ball keeps hitting his house and waking him up during his naps.  I was like are you kidding me??  I literally told him to move to the country if you don't want to hear your neighbors.  Side note, we see that neighbor all the time since i don't live far from that rental, we are courteous to each other and have even had a beer or three together.

You do get to be really good at fixing things.  15 years ago i couldn't paint a wall.  Now i can fix almost anything, and if i don't want to fix it, i can hire someone to do it.

Every time you see a tenants name come up on your phone you blood pressure jumps a little bit.  Every time..

Depending on where you live you also are vilified.  I live in Portland OR, and wow do the cities politicians and a subset of the population hate us.  Never have I been hated on for owning my Apple stock.

So i get why people don't have them.  There are times i'm like ugh why am i doing this.  But those are pretty few and far between.  I just don't trust the market enough to go all in.  I like control and that's what owning rentals gives me, a little bit of control over my investments.  If any of that changes, i can always sell.




bigchrisb

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Re: Property investment as a mindset
« Reply #9 on: February 19, 2020, 02:01:50 PM »
Not may Australian's remember substantial capital losses on residential housing.  The recent (30 year) history has been that if you leverage, buy and hold you will end up with a large capital gain.  We also haven't had a recession since 1991.  If we say that working age stars around 20, then you have to be over 50 to remember being in the job market when there were large scale job losses. 

Combine that with an attractive tax arrangement and you end up with a country with a strong preference to speculate on property capital gains.  Thus far, it has been a self fulfilling prophecy. 

I'm an Aussie that got to FI before 40 without resi property.  It will be uncomfortable for a lot of people when it unwinds, but thus far I've been wrong on predicting when it will unwind for my whole adult life.

Bloop Bloop

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Re: Property investment as a mindset
« Reply #10 on: February 19, 2020, 03:45:09 PM »

Every time you see a tenants name come up on your phone you blood pressure jumps a little bit.  Every time..

Depending on where you live you also are vilified.  I live in Portland OR, and wow do the cities politicians and a subset of the population hate us.  Never have I been hated on for owning my Apple stock.


Yes, this is a huge problem in Australia, where there is a lack of affordable housing. The fact that some of us want to retire on tenants' rent is seen as a bad thing. As you say, no one ever gets vilified for having wealth in shares but because you were able to beat out someone with less money at an auction, suddenly you're the bad guy.

I'm cooling off on property in general because there's a massive amount of anti-investor sentiment right now and I don't want to be screwed over by punitive taxes that might be in the works. I'll probably keep using property as a money sink as long as negative gearing is useful to me, but as I wind down into retirement there will be little use out of it and I might sell up, get my capital gains tax discounts and then go into shares.

SwordGuy

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Re: Property investment as a mindset
« Reply #11 on: February 19, 2020, 09:40:29 PM »
About 7.1% of US households own rental property.   Many of those are accidental landlords, i.e., they could not sell a house they moved out of and so rent it instead.  I suspect your idea that Americans have a higher rate of rental ownership is due to Americans dominating much of the internet world with their content.

https://www.huduser.gov/portal/pdredge/pdr-edge-frm-asst-sec-061118.html


srad

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Re: Property investment as a mindset
« Reply #12 on: February 20, 2020, 08:40:58 AM »
Interesting article.  This is what i was hoping it had when i read it

"A particularly fascinating aspect of the IRS data was the dramatic increase in number of folks reporting rental income on their 1040 Schedule E between 2009 and 2011, from about 8.6 million to 10.6 million. My conclusion is that during that timeframe, many folks took advantage of the glut of foreclosed single-family properties being sold at low values. The number of small investor landlords has remained relatively flat from 2011 through at least 2015."

Would love to know what percentage of the 2 million new landlord's were investors realizing what good deals are out there vs those that couldn't sell.

dreadmoose

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Re: Property investment as a mindset
« Reply #13 on: February 20, 2020, 10:32:32 AM »
Can they make you more money than the market?  The ones I purchased prior 2006 have killed it. One of my homes i paid 200k for, its worth 600k now. The more recent ones I've purchased obviously haven't been able to put up the 18% returns the market has and frankly probably never will. 

This is where I personally get stuck when I look at property values or investing in real estate. Can someone correct what I'm looking at or explain what I'm missing that makes real estate win out here?

Using the example you have of killing it doesn't match up to returns in my calcs. If you bought for 200K in 2006 (ignoring that you bought prior to that) and if the house is worth 600K now that means you got about a 9% return (8.82%). If you'd bought only S&P500 in Jan 2006 you would have gained just over 9% (9.15%) annualized return with dividend reinvestment ( according to this site https://dqydj.com/sp-500-return-calculator/).

I haven't found the magic in borrowing the whole amount at rental property mortgage rates making up the difference. If that is assumed as killing it in the real estate market what should drive me towards buying property vs real estate?

I usually end up commenting the easy sound bite that if buying houses was the way to untold riches why don't the banks / hedge funds own every house in the world by now? It seems they make more lending other people the money to assume the risk.

I'm honestly looking for the math I'm missing, the rent vs own calculator works a bit of it out when you're talking primary residence (using the price differences to invest over time rather than assuming lump sums at the same period of time) but keeping / buying rental property never seems to work out to me. I always end up assuming I would have to put more weight into owning something tangible when I'd personally rather diversify.

ctuser1

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Re: Property investment as a mindset
« Reply #14 on: February 20, 2020, 11:34:18 AM »
This is where I personally get stuck when I look at property values or investing in real estate. Can someone correct what I'm looking at or explain what I'm missing that makes real estate win out here?

Using the example you have of killing it doesn't match up to returns in my calcs. If you bought for 200K in 2006 (ignoring that you bought prior to that) and if the house is worth 600K now that means you got about a 9% return (8.82%). If you'd bought only S&P500 in Jan 2006 you would have gained just over 9% (9.15%) annualized return with dividend reinvestment ( according to this site https://dqydj.com/sp-500-return-calculator/).

Very very simplified back of the envelope math below...

Let's assume real estate returns 8.82% after all costs, while stock market returns 11% (assuming ~2% extra when dividends are reinvested).

Average Leverage:
1. 3X in case of real estate (very realistic as an average from 2000 till now in case you had a 30 year loan)
2. 1X for stocks (I doubt you *can* easily or cheaply leverage up for stocks if you are not a bank).

So the real estate return will be multiplied something close to 3X => ~25%.

There are loads and loads of complicating factors in the above super-simplification, but the idea is same in any complicated return models you can construct.

The other source of extra return for real estate is creative use of tax code beyond it's intent to avoid paying taxes.

In order to get this extra return:
1. You need to put in additional work.
2. You need to take additional risk due to leverage.
3. You need to take additional operational risk due to government policy changes (almost all of the extra return potential is wedded to government policies).

Some people decide it is worth the trade off. Especially as a diversification strategy where you have a percentage of your net-worth in RE, it's not a bad idea at all.

The reason I don't venture anywhere near RE *now*:
1. Extra work. I have enough on my hand and simply can't handle the work required.
2. Extra risk.
3. <speculative reason> SP500 has had a hum-ho average run since 2000 if you consider longer term historical trends. RE has had an absolute gangbuster run over and above it's trendline that just keeps up with inflation. Any return to average won't bode well for RE. But this is speculative. For all I know, the divergence from trend can go on for my lifetime.
« Last Edit: February 20, 2020, 11:37:04 AM by ctuser1 »

MKinVA

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Re: Property investment as a mindset
« Reply #15 on: February 20, 2020, 11:56:17 AM »
Interesting question. Property investment as a mindset. Americans have been told for years that homeownership is "the American dream" at least according to the National Association of Realtors. I think Americans do have a property investment mindset, but maybe played out a little differently. I have found that both before and after the crash, many people still look at their primary residences as investments from which they will make money (come out ahead of their investment). It is relatively easy to buy and sell a house here and most can find a bit of a bargain if they are willing to move outside the most popular areas of their towns. They might fix it up a bit, live there longer than they intended, pay property taxes, and when they sell for more than they paid, in their mind, they have made money. Very few probably take into account how much they have put into the property. But we are talking about mindset, right?

Also, depending on your socioeconomic group, you will find many people with summer or weekend homes that they rent out under the table, or over the table, but rarely making enough to fully pay for the property. I think those people also justify this as an investment in their minds over valuing the time they spent in the home themselves.

I guess what I am saying is Americans would say they do have a property investment mindset because they think they are making money on their primary home or at least not "wasting" money on rent thereby coming out ahead of the game.

Telecaster

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Re: Property investment as a mindset
« Reply #16 on: February 20, 2020, 12:03:08 PM »
Thanks for your responses, folks. The things that you've mentioned (benefits of leverage, but annoyances like maintenance and need to manage tenants) all apply here, too. I guess my question is why in the U.S. do people primarily see investment as being via shares whereas in Australia there is a lot more focus on property as an investment. A few of you have touched on that - including the stronger performance of US shares being a factor. It may also be that here in Australia our two main cities are running out of land to expand to and we have few viable satellite cities, whereas the U.S. is full of suburban sprawl.

Generation X here.  Not really sure the answer to your question.   However, growing up, home ownership itself was seen as a very desirable thing.  Just sort of something you were expected to do as an adult.  At least where I grew up.  I don't think it is as much of "thing" as it used to be. 

Perhaps with the creation of the 401(k)  in the 1980s many people became familiar with owning mutual funds and so people felt comfortable with that.  Just speculating. 

bacchi

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Re: Property investment as a mindset
« Reply #17 on: February 20, 2020, 01:13:18 PM »
I"m sitting about half my NW in rentals the other half in the market.  I look at my rental portfolio as my pension.  I know what i'll be getting each year from my rent, i cant know what i'll be getting from my investments.  During the GFC you know how much my rent went down?  None, i even raised the rent during that time.

In the US during the dot bomb, rents decreased in many of the tech (and even semi-tech) cities due to layoffs. I think my rents decreased 20%.

Quote
So things do come up and you need to have some cash available.

Yep, living paycheck to paycheck, or rent payment to rent payment, will always have some risk.
« Last Edit: February 20, 2020, 01:56:58 PM by bacchi »

marty998

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Re: Property investment as a mindset
« Reply #18 on: February 20, 2020, 01:38:03 PM »
Bloop - move to NSW. A previous government nearly got thrown out after they introduced a vendor duty on sale of properties. No state government is going to try that one again here.

I don't mind if the feds remove some tax concessions we currently enjoy. If prices moderate or go down it'll simply mean I have the capacity to buy more. In the long run it's all a wash, because future governments might have a different idea. Introducing a new tax on investments, and I'll vote against it, whatever the flavour. There's a big difference, one which Scotty From Marketing is happy to muddy in order to win an election.

Indeed, I just bought a beautiful apartment nearby last week. You seem to get so hung up on future tax changes all the time with your posts, that I fear you are missing out on actually growing your portfolio.

Bloop Bloop

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Re: Property investment as a mindset
« Reply #19 on: February 20, 2020, 03:15:33 PM »
Marty, I am afraid that they are going to institute an investment property tax. We already have a progressive land tax here in Victoria, which is a nuisance, but not greatly painful. But I fear the government might cave and introduce measures to actively punish the very act of property investment, which is why I am likely now to take a more share-heavy approach with future investing (also because as interest rates go down, the benefit of NG diminishes - plus, while everyone talks about the effect of low interest rates on property, they also encourage business investment).

Australia has always had a tall-poppy streak and it has often had punitive measures in place for those who seek to be financially successful. E.g., less than 20 years ago the top tax rate of 48.5% applied to all income above $62,000 [at that time, US $35,000!] Nowhere else in the world would you have found that sort of taxation.

srad

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Re: Property investment as a mindset
« Reply #20 on: February 20, 2020, 04:02:34 PM »
Can they make you more money than the market?  The ones I purchased prior 2006 have killed it. One of my homes i paid 200k for, its worth 600k now. The more recent ones I've purchased obviously haven't been able to put up the 18% returns the market has and frankly probably never will. 

This is where I personally get stuck when I look at property values or investing in real estate. Can someone correct what I'm looking at or explain what I'm missing that makes real estate win out here?

Using the example you have of killing it doesn't match up to returns in my calcs. If you bought for 200K in 2006 (ignoring that you bought prior to that) and if the house is worth 600K now that means you got about a 9% return (8.82%). If you'd bought only S&P500 in Jan 2006 you would have gained just over 9% (9.15%) annualized return with dividend reinvestment ( according to this site https://dqydj.com/sp-500-return-calculator/).


Leverage + rental income + appreciation = did well.   

I know i was fortunate enough to buy a property in a city that has taken off and I take no credit for predicting that, its just the city i live in and i wanted to buy rentals so i started here.. 

I put 10% down on this property and subsequently dropped about 40k to fix it up.  Over the course of it being rented i've had to put in about 25k of repairs, (roof, porch repair and many many appliances)  But really that 25k came from the tenants.  So i'm only out of pocket 60k. And that 60k, if i sell gets me 400k (less a whole bunch of taxes, fees, and depreciation recapture).  Now you throw in what i've collected over the years on rent and the principal pay down the tenants are doing for me, the numbers start looking even better. 

On the flip side,  just under 3 years ago I bought a duplex for 250k in a smaller town nearby.  Down payment was around 70k, I then put 30k in to fix it up, and I may be able to get 300k for it right now.  But its producing 1k a month over the mortgage.   Would I have done better in the market than this one over the last 3 years, yes.  But i'm getting a steady 1k a month, principal paydown from the tenant, tax advantages and (hopefully) some appreciation.  Which is what i'm looking for, a reasonably steady income stream.  And i know i need to take out maintenance and vacancies, that's probably around 150 a month so its $850 to me.  You'll need to ask me in 10 more years how i fared vs the market on this one.

bigchrisb

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Re: Property investment as a mindset
« Reply #21 on: February 21, 2020, 01:57:04 PM »
Marty, I am afraid that they are going to institute an investment property tax. We already have a progressive land tax here in Victoria, which is a nuisance, but not greatly painful. But I fear the government might cave and introduce measures to actively punish the very act of property investment, which is why I am likely now to take a more share-heavy approach with future investing (also because as interest rates go down, the benefit of NG diminishes - plus, while everyone talks about the effect of low interest rates on property, they also encourage business investment).

Australia has always had a tall-poppy streak and it has often had punitive measures in place for those who seek to be financially successful. E.g., less than 20 years ago the top tax rate of 48.5% applied to all income above $62,000 [at that time, US $35,000!] Nowhere else in the world would you have found that sort of taxation.

At the moment in the Netherlands the top tax rate of 51.75% kicks in at 68.508/year.  Taxes happen.  Australia is high taxing, but also a high service country.  Some countries are higher taxing again.  I'd rather live in Australia (or the Netherlands) than many lower taxing countries.

Figure out what investments make sense for you, then work out the best way to manage the tax around it.  Doing it the other way around is letting the tail wag the dog.

Model96

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Re: Property investment as a mindset
« Reply #22 on: February 21, 2020, 05:41:51 PM »
Investment property is seen as secure in the long term, especially in a country like Australia which in the last 20 years has embarked on its biggest immigration population increase. More people = need more homes.
Paying off a property loan is often a more successful 'saving' strategy, than actually trying to save to invest elsewhere. And knowing that investment properties in your area have been increasing in value by over a $1000 a week + rent is also a great incentive.
Owning investment properties appeals to the Mustachian in me too, because DIY property maintenance saves a lot of money in Sydney and gives you a job even when you are FIRE!
« Last Edit: February 21, 2020, 05:43:32 PM by Model96 »

marty998

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Re: Property investment as a mindset
« Reply #23 on: February 21, 2020, 06:41:22 PM »
Marty, I am afraid that they are going to institute an investment property tax. We already have a progressive land tax here in Victoria, which is a nuisance, but not greatly painful. But I fear the government might cave and introduce measures to actively punish the very act of property investment, which is why I am likely now to take a more share-heavy approach with future investing (also because as interest rates go down, the benefit of NG diminishes - plus, while everyone talks about the effect of low interest rates on property, they also encourage business investment).

Australia has always had a tall-poppy streak and it has often had punitive measures in place for those who seek to be financially successful. E.g., less than 20 years ago the top tax rate of 48.5% applied to all income above $62,000 [at that time, US $35,000!] Nowhere else in the world would you have found that sort of taxation.

20 years ago wages were not as high as they are now. And that was 20 years ago. it's not what applies today. Stop having this victim mentality that you are being "punished". If you, being the top 1% earner that you are, are not going to pay tax, who would you rather the government tax? Poor people with no money? How will that work out for you when there's no police to stop your neighbourhood from turning to shit, no teachers to educate your future children, and no nurses to tend to your old age.

Look, tax is my biggest expense, I pay much more income tax in a year than my total expenses for the year, and in addition I'm about to write a $37,000 cheque for stamp duty next month. Would I like to pay less? Hell yes! But it's a cost of doing business that applies to everyone. It pays for the society that allows us to freely accumulate wealth.

Regarding low interest rates.... I'm loving the reduced "benefit" of negative gearing, it means I'm no longer losing money and I'm actually getting positive cashflow. So what if I pay a bit more tax, I'm making more profit! And regarding corporate Australia and investment.... I'd actually prefer if higher rates were in place. It might stop executives from investing in shit marginal projects. If you have a choice of 10 things to invest in and enough capital for all 10 because of low rates, then you're going to invest in a lot of shit things. If you've only got capital for the top 3, then you're going to make damn well sure those 3 will succeed.


Bloop Bloop

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Re: Property investment as a mindset
« Reply #24 on: February 22, 2020, 06:58:07 AM »
I'm not top 1% - I'm top 2%. You're off by a factor of 2!

Who should the government tax? (Or not spend on?) - How about pensioners sitting on their PPOR, for one. Or families on $100k+ that still get FTA and FTB. Meaningless middle class welfare.

I can stomach the current tax rates - but future impositions on property investment will be a different thing altogether.

Quote
I'm loving the reduced "benefit" of negative gearing, it means I'm no longer losing money and I'm actually getting positive cashflow.

Although that's correct in isolation, all that actually happens is that lower rates pump up house prices, making it harder to buy in for your next house. And also reducing the relative benefit of being an investor over a property owner.

We are agreed on one thing - I'd love rates to skyrocket, because then NG would give us a bigger cushion, house prices would come down and we could afford to buy up more.