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The Gold Bubble... Just how badly have the silly goldbugs failed?
Topic Started: 21 Jun 2014, 11:46 AM (27,189 Views)
Shadow
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Rastus2
9 Dec 2015, 07:28 PM
Right, so let me get this straight, you are now claiming that all of the IP's that have their current yield, but who had work done to improve them from their original purchased condition to their condition today, would have had today's yield regardless
In general, yes. If I have a $500K property returning $20K pa rent, that's a 4% yield.

If I build a $100K extension, the rent might increase to $24K pa, but the property value is now $600K, so the yield is still 4%.

Don't forget that the yield is the current market rent divided by the current market value.

If I improve the property, both the numerator and the denominator increase, so the yield will generally stay the same.
Edited by Shadow, 9 Dec 2015, 07:46 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Rastus2
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Shadow
9 Dec 2015, 07:41 PM
In general, yes. If I have a $500K property returning $20K pa rent, that's a 4% yield.

If I build a $100K extension, the rent might increase to $24K pa, but the property value is now $600K, so the yield is still 4%.

Don't forget that the yield is the current market rent divided by the current market value.

If I improve the property, both the numerator and the denominator increase, so the yield will generally stay the same.

yup, but it still cost you an extra 100k to get that extra 4k... the 4k did not magically appear.

Having made the decision to spend that money for the extra rent, the costs of that asset have risen. If they did not have the property, that cost would not happened.

You are saying people don't need to renovate, extend, etc etc to have today's yield... well perhaps, but they do it regardless... so it's a cost of the property which increases the rental income as well as it's value.

Look at it this way..

How many 100 year old houses are still being rented out in the same state they were back then ? how many 50 year old houses ? how many 30 year old houses ? Why were they altered ? often it's to ensure the rent can either improve, or at least, not dimminish.

It's only slum lords that don't spend anything on their IP's over the decades, reno's let alone good maintenance...

If you did nothing to the property over 20 years other than minor repairs, would it still get the same yield ? (assuming the 2% per year of value still happens)... of course not. Or are you trying to say that the 2% increase only happens to houses that have major renovations/extensions to them ?


When houses get to a certain age, in general, they need to have some decent work done to compete with those in the same area that are either newer, or have had that work done. Kitchens/bathrooms/laundries built 30, 50, or 100 years ago are not always suitable for today's occupants.




Edited by Rastus2, 9 Dec 2015, 08:01 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Shadow
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Evil Mouzealot Specufestor

Rastus2
9 Dec 2015, 07:59 PM
When houses get to a certain age, in general, they need to have some decent work done to compete with those in the same area that are either newer, or have had that work done
It's optional. The owner can choose to have an outdated property. And many do. There are plenty of slumlords renting out old substandard homes.

Yield won't be affected, since both the property value and rental income are equally impacted by the reduced dwelling quality.
Edited by Shadow, 9 Dec 2015, 08:03 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Rastus2
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Shadow
9 Dec 2015, 08:02 PM
It's optional. The owner can choose to have an outdated property. And many do. There are plenty of slumlords renting out old substandard homes.

Yield won't be affected, since both the property value and rental income are equally impacted by the reduced dwelling quality.


Well for thkse many owners who choose to spend money on their propery over the years, their costs are part of holding that property...

It does not matter if it's optional or not... if they slend the money, it was a cost.

Insurance is optional for owners who do not have a bank loan... are you going to claim that sjnce it is optional, its not a cost lf owning the property ? :re:
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Shadow
Member Avatar
Evil Mouzealot Specufestor

Rastus2
9 Dec 2015, 08:09 PM
Well for thkse many owners who choose to spend money on their propery over the years, their costs are part of holding that property...

It does not matter if it's optional or not... if they slend the money, it was a cost.
And? So?

Many people use their gold to make jewellery, or buy it in the form of jewellery and trinkets, which is an extra cost. But it's optional, so it's best to exclude it as a holding cost for gold.

Quote:
 
Insurance is optional for owners who do not have a bank loan... are you going to claim that sjnce it is optional, its not a cost lf owning the property ?
If we're including insurance for gold, then we should include it for property. Either include it or exclude it for both, for a proper like-for-like comparison.
Edited by Shadow, 9 Dec 2015, 08:18 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Rastus2
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Shadow
9 Dec 2015, 08:13 PM
And? So?

Many people use their gold to make jewellery, or buy it in the form of jewellery and trinkets, which is an extra cost. But it's optional, so it's best to exclude it as a holding cost for gold.


If we're including insurance for gold, then we should include it for property. Either include it or exclude it for both, for a proper like-for-like comparison.

Lol, how many peolle who invest in gold have it melted to make jewlery ? How many people who buy houses do some improvement ? Clutching at straws here.


We already did include insurance when we included the cost of storage for gold :re:

In truth, is someone is happy to have pooled gold backed by physical gold, the storage and insurance can be free...



https://www.abcbullion.com.au/storage-services/storage


Try that with property :D
Edited by Rastus2, 9 Dec 2015, 08:26 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Shadow
Member Avatar
Evil Mouzealot Specufestor

Rastus2
9 Dec 2015, 08:26 PM
Quote:
 
Many people use their gold to make jewellery, or buy it in the form of jewellery and trinkets
Lol, how many peolle who invest in gold have it melted to make jewlery ? How many people who buy houses do some improvement ?
The vast majority of people who own gold, own it in the form of jewellery, watches, trinkets etc.

The number of people who own that form of gold would be substantially greater than the number of people who have renovated or extended a dwelling.

Quote:
 
We already did include insurance when we included the cost of storage for gold
Then we should include it for property, in order to do a proper like-for-like comparison, even though it's 'optional' for both.
Edited by Shadow, 9 Dec 2015, 08:39 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Rastus2
Member Avatar


Shadow
9 Dec 2015, 08:32 PM
The vast majority of people who own gold, own it in the form of jewellery, watches, trinkets etc.

The number of people who own that form of gold would be substantially greater than the number of people who have renovated or extended a dwelling.


Then we should include it for property, in order to do a proper like-for-like comparison, even though it's 'optional' for both.

Yes, they bought the gold in that form... they did not 'renovate it' :re:



Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Matthew
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Rastus2
9 Dec 2015, 07:59 PM

yup, but it still cost you an extra 100k to get that extra 4k... the 4k did not magically appear.

Having made the decision to spend that money for the extra rent, the costs of that asset have risen. If they did not have the property, that cost would not happened.

You are saying people don't need to renovate, extend, etc etc to have today's yield... well perhaps, but they do it regardless... so it's a cost of the property which increases the rental income as well as it's value.

Look at it this way..

How many 100 year old houses are still being rented out in the same state they were back then ? how many 50 year old houses ? how many 30 year old houses ? Why were they altered ? often it's to ensure the rent can either improve, or at least, not dimminish.

It's only slum lords that don't spend anything on their IP's over the decades, reno's let alone good maintenance...

If you did nothing to the property over 20 years other than minor repairs, would it still get the same yield ? (assuming the 2% per year of value still happens)... of course not. Or are you trying to say that the 2% increase only happens to houses that have major renovations/extensions to them ?


When houses get to a certain age, in general, they need to have some decent work done to compete with those in the same area that are either newer, or have had that work done. Kitchens/bathrooms/laundries built 30, 50, or 100 years ago are not always suitable for today's occupants.



do you think your gold provides you with an income?
My only hope for my three boys is that they turn out nothing at all like Chris.
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Rastus2
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Matthew
9 Dec 2015, 10:08 PM
do you think your gold provides you with an income?
Not at all.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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