Хочу купить дом, а не могу

[Mikhaila]

or you could just get a personal loan and spend it all

The result is more or less the same (in case your imaginary property does not appreciate a lot.)

"equity release" is just like a lower-rate credit card that you have to pay back at the end. A huge increase in the asset's value would do that for you, but these days this sounds like a serious bet.

The result is not even near the same and it has nothing to do with the personal loan but never mind…

[Witt]

or you could just get a personal loan and spend it all

The result is more or less the same (in case your imaginary property does not appreciate a lot.)

"equity release" is just like a lower-rate credit card that you have to pay back at the end. A huge increase in the asset's value would do that for you, but these days this sounds like a serious bet.

The result is not even near the same and it has nothing to do with the personal loan but never mind…

of course you cannot tell us how eating through the "equity" is different from living on a low rate credit card in the case mentioned above

[Mikhaila]

or you could just get a personal loan and spend it all

The result is more or less the same (in case your imaginary property does not appreciate a lot.)

"equity release" is just like a lower-rate credit card that you have to pay back at the end. A huge increase in the asset's value would do that for you, but these days this sounds like a serious bet.

The result is not even near the same and it has nothing to do with the personal loan but never mind…

of course you cannot tell us how eating through the "equity" is different from living on a low rate credit card in the case mentioned above

What’s a lot? Is 4-5% a lot?

Doesn’t appreciate forever or how?

And one more time for those who read selectively.

P.S. Yes, if property market crashes and nobody wants to rent anymore and the person loses his/her job/health/mind and the % goes to 17% and inflation stays @ 4% then the person B clearly buggered and person A will look like a smart investor. Will it happen? I don’t know. Everybody makes their own assumptions and decisions and harvest the results accordingly.

[Witt]

What’s a lot? Is 4-5% a lot?

Doesn’t appreciate forever or how?

say, stays flat for 5 yrs+ or slowly drops 10-15% in a few years as is alreayd happening in quite a few places.

[Aeros Group]

я что-то не понимаю как рефинансирование без последующей продажи за большие деньги makes money. It only gets you deeper in debt and you'll end up paying even more back to the bank. Все Ваши рекомендации приведут только к глубокому залезанию в долг (если дом не подорожает настолько, чтобы покрыть расходы)

Example 1:

30 years ago, Qld, Logan. Medium house price is $14K. Plus legals, etc, make it $15K.
You managed to borrow $150K with 7% interest only for 30 years and buy 10 houses.

Today you would have 10 houses with medium price around $250K (minimum) with total value $2500K.
You are still owe to banks original $150K. Plus you paid in $315K in interest. Plus you would need to pay interest on interest (compound interest) if you’ll manage refinance it and pay it from banks money. Consider rent received, it shouldn’t be more than another $100K (just guess).


Example 2:

Your goal is retirement on equivalent of $100K. You will need to have outright around 10 IP with rent $200 p/week.

Traditional way: pay your house, borrow against it and buy 1 IP, then pay it, buy next, etc. It will take about 50 to 150 years, give or take.

Russian way: borrow as much as you can, buy at 80% LVR as many IP and as soon as you can, put together ‘no money deals’, buy 60 houses. One would be surprised, but it is possible to do in 5 years.

Once you got 60, you can sell 50 and keep your 10 paid off (your goal). But most likely you will keep going (see example 1).
People are greedy after all. And it is not necessarily bad

example 1: current days... medium house price is $500k. you managed to borrow $5 mil and bought 10 IP. I wonder how many people can borrow 5 mil even interest only

example 2, russian way: borrow as much as you can (1 mil?), at 80lvr as many IP (all 3 of them )...

hmm, doesnt work either your example's problem is that 30 years ago borrowing 150k was not much easier than borrowing 5 million now.

Looks like you don’t believe in banks!

“I treat all banks fair and equally – I hate them all”
Unknown

Well, if you don’t believe it could be done, you wouldn’t even try, would you?
Or, if you don’t know how to do it, you just need to learn.
If you walk in to the bank and ask for $5 mln loan, they would laugh. If you walk into the same bank and ask if they want to refinance $5 mln loan, you would laugh.

Example 1:

Average couple without own house with rather low income (just not on doll) and no deposit 4 years ago manage to buy 12 IP in 18 months. They were forced to sell 2 of them (with over 100% CG) in course. They are semi retired for last 2 years (didn’t get paid for work) and still buying. At present they control 11 properties. Last was bought 2 months ago and they are still looking for more. And, yes, they stated from one IP, then another two, etc...

Example 2:

Single person with own house (almost paid out) on decent income from government job started investing 3 years ago. He managed to buy 7 IP in first year and he keeping them for now. He is still working.

Example 3:

Couple running own business (average income) and with own house (almost paid out) started investing 3 years ago. 4 IP at present, still working.


Few facts out of these examples:

During in 2003 bubble for 9 month average figures for IP (3br houses) in QLD were:
Rental income per day: $25
Mortgage repayment per day: $22
CG per day per property: $370 (variation was between $150 to $930)

Say, how many properties you wish to hold before next bubble?

[Tatsiy]

Народ, вернитесь в реальность. Разговор не идет о перераспределении уже существующих сбережений. Какие миллионы? Какие, к черту, десятки домов?

[Witt]

Народ, вернитесь в реальность. Разговор не идет о перераспределении уже существующих сбережений. Какие миллионы? Какие, к черту, десятки домов?

I think her name is Mrs Robert Kiyosaki

also, I can spot things like hindsight bias and survivor bias etc in her advertisements.

http://en.wikipedia.org/wiki/Survivor_bias

http://en.wikipedia.org/wiki/Hindsight_bias

[Mikhaila]

What’s a lot? Is 4-5% a lot?

Doesn’t appreciate forever or how?

say, stays flat for 5 yrs+ or slowly drops 10-15% in a few years as is alreayd happening in quite a few places.

Ok , what is your strategy on this subject if you have one of course?

A. Sell the asset
B. Refinance and keep the asset
C. Take personal loan, credit card etc (not sure if you have any assets in this case)
D. Do something else not sure what...

Your short and straight to the point answer will be appreciated.

[Aeros Group]

(and do not forget CGT!)

В некоторых случаях при продаже его можно не платить...

В каких? Хотя бы в общих чертах. Если гейн есть, то куда его денешь?

Опишите ситуацию, хотя бы в общих чертах.

Example from ATO website:

“Generally, if you are an individual – not a company or trust – you can ignore a capital gain or capital loss from a capital gains tax (CGT) event that happens to a dwelling that is your main residence (also referred to as 'your home')…”

[Lenusik]

(and do not forget CGT!)

В некоторых случаях при продаже его можно не платить...

В каких? Хотя бы в общих чертах. Если гейн есть, то куда его денешь?

Опишите ситуацию, хотя бы в общих чертах.

Example from ATO website:

“Generally, if you are an individual – not a company or trust – you can ignore a capital gain or capital loss from a capital gains tax (CGT) event that happens to a dwelling that is your main residence (also referred to as 'your home')…”

how main residence exception can be applied to investment property- context CGT was fist metioned in?
what are 'some cases' when ones does not have to pay it?

[Witt]

What’s a lot? Is 4-5% a lot?

Doesn’t appreciate forever or how?

say, stays flat for 5 yrs+ or slowly drops 10-15% in a few years as is alreayd happening in quite a few places.

Ok , what is your strategy on this subject if you have one of course?

A. Sell the asset
B. Refinance and keep the asset
C. Take personal loan, credit card etc (not sure if you have any assets in this case)
D. Do something else not sure what...

Your short and straight to the point answer will be appreciated.

If I am sure that it's going to decrease in value in the next 5+years, I'd sell it now (depending on tax situation, but most likely sell). This assumes it's appreciated in price since I've bought it.

[Aeros Group]

how main residence exception can be applied to investment property- context CGT was fist metioned in?
what are 'some cases' when ones does not have to pay it?

Again from ATO website:

Your net capital gain is:
your total capital gains for the year
minus
your total capital losses (including any net capital losses from previous years)
minus
any CGT discount and CGT small business concessions to which you are entitled.

If a dwelling was not your main residence for the whole time you owned it, some special rules may entitle you to a full exemption or extend the part exemption you would otherwise get. These rules can apply to land or a dwelling if:
• you choose to treat the dwelling as your main residence, even though you no longer live in it (see Treating a dwelling as your main residence after you move out)
• you moved into the dwelling as soon as practicable after its purchase (see Moving into a dwelling)
• you are changing main residences (see Moving into a dwelling)
• you are yet to live in the dwelling but will do so as soon as practicable after it is constructed, repaired or renovated and you will continue to live in it for at least three months (see Treating land as your main residence), or
• You sell vacant land after your main residence is accidentally destroyed (see Treating land as your main residence).
There are some other cases, which I don’t think could suit your needs.
- If the properties are owned by a non-resident (overseas) company…. No CGT (however, there are some other taxes in this case, which can be expensive).

After 12 month of holding IP, you will pay only 50% of CGT.
If your IP bought on joint name, CGT will be split and each partner will add his/her part of CGT to their income.

[Mikhaila]

If I am sure that it's going to decrease in value in the next 5+years, I'd sell it now (depending on tax situation, but most likely sell).

Wow! This is really BIG BET – to be sure about price movement direction of any asset for 5+ years. This is of course excluding exceptional circumstances like major road build next to a house or petrol station opened or something of this magnitude.

This assumes it's appreciated in price since I've bought it.

This is another WOW! According to this logic if you bought a dud you’ll keep it regardless of the market direction, but if you bought something what appreciated you going to sell it.

Well, happy investing Witt.

[Witt]

If I am sure that it's going to decrease in value in the next 5+years, I'd sell it now (depending on tax situation, but most likely sell).

Wow! This is really BIG BET – to be sure about price movement direction of any asset for 5+ years.

this bet is no bigger than yours. And you asked me what i'd do in this situation, I gave you an answer

This assumes it's appreciated in price since I've bought it.

This is another WOW! According to this logic if you bought a dud you’ll keep it regardless of the market direction, but if you bought something what appreciated you going to sell it.

Well, happy investing Witt.

thanks, I am happy with my investments, which aren't in property by the way

[Lenusik]

....

I see there is no miracle cure here. Anyway, thanks for digging the ATO database
once a dwelling starts earning income and expenses, eg depreciation, are claimed against this income-, you can choose to call it or treat it whatever you want, it will be subject to CGT in a CGT event (event is not limited to sale only) If it was your main residnece for part of the year, it still will be subject to CGT pro rata.