Welcome Guest [Log In] [Register]


Reply
Property investors are suckers!
Topic Started: 1 Oct 2015, 05:00 PM (5,148 Views)
Veritas
Default APF Avatar


Shadow
1 Oct 2015, 09:29 PM
First calculate how much it will cost to pay off a home over 25 years.

Then calculate how much it will cost to rent the same house for the rest of your life (maybe 70 years).

You'll soon figure out where you're going wrong...
What home and where?

Lets take this example.

Three bed in Maylands, about 7ks from Perth CBD. Asking price, $795,000

Initial outlay (deposit alone @ 20%) = 159k

Total mortgage costs over 25 years at 4.09% = $1016700

Here is a comparable property in the same area

http://www.realestate.com.au/property-house-wa-maylands-416784421

Rent equals 600 pw.

Total rent costs over 25 years equal $780,000 (less the deposit not paid) = 621k
Total rent costs over 30 years equal $ 936,000 (less the deposit not paid) =777k

So you'd be approaching 35 years in the rental property before you have spent as much as you would have if you had bought it.

Ten years more. And that's with rock bottom interest rates.

And yes, I know rents rise. But like IRs they fall too.

and if the conversation was so redundant, why did the RBA bother publishing this: http://www.rba.gov.au/publications/rdp/2014/pdf/rdp2014-06.pdf

which said this:

Quote:
 
Real house prices have increased at an average annual rate of slightly less than
2½ per cent since 1955. If this rate of appreciation is expected to continue then our
estimates suggest that houses are fairly valued (see Table 1 or Figure 3). As we
discuss in Section 7.1, forecasting house price growth is subject to considerable
uncertainty. That said, many observers have suggested that future house price
growth is likely to be somewhat less than this historic average. In that case, at
current prices, rents, interest rates and so on, the average household is probably
financially better off renting than buying
.


The situation would be far worse in Sydney in terms of the rent cost v mortgage costs ratio and thats one of the main reasons its totally overvalued.







Sydneyite
1 Oct 2015, 08:25 PM
So you pay $1750/month in rent? $400/week?

Regardless, you make the classic bear mistake of basing your decision comparing only the first year mortgage costs compared to your current rent. Keep renting - it probably suits you better! :re: You might want to research the concept of net present value of cash-flows analysis to learn how to do a proper rent vs buy comparison.
Bullshit argument.

You borrow a set amount. How much you pay back is governed by interest rates.

Big rise in interest rates= big rise in your housing costs.

Its not just rents that go up.
Edited by Veritas, 1 Oct 2015, 11:13 PM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Profile "REPLY WITH QUOTE" Go to top
 
Waters
Unregistered

Veritas
1 Oct 2015, 11:10 PM
Rent equals 600 pw.

Total rent costs over 25 years equal $780,000 (less the deposit not paid) = 621k
Total rent costs over 30 years equal $ 936,000 (less the deposit not paid) =777k
No rent rise for 30 years , lets be realistic now and up the rent by 2 pc pa (less than inflation to be conservative)

And then calculate the next 30 years after that

Not lookin so crash hot for renter-boy now huh
"REPLY WITH QUOTE" Go to top
 
Foxy
Member Avatar
Zero is coming...

lonewolf
1 Oct 2015, 10:11 PM
Not sure what you mean there! Does the mortgage cost gets lower on 2nd year?
If you are paying P&I the interest component of the payments reduces with each payment.
As long as interest rates do not go up.
Peter
If I was super rich I would not own a house.
Peter
Edited by Foxy, 2 Oct 2015, 12:57 AM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
Profile "REPLY WITH QUOTE" Go to top
 
Ex BP Golly
Member Avatar


foxbat
2 Oct 2015, 12:56 AM
If you are paying P&I the interest component of the payments reduces with each payment.
As long as interest rates do not go up.
Peter
If I was super rich I would not own a house.
Peter
Some of us own, and rent. Weird heh!

:lol
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
Profile "REPLY WITH QUOTE" Go to top
 
Sydneyite
Member Avatar


Veritas
1 Oct 2015, 11:10 PM
What home and where?

Lets take this example.

Three bed in Maylands, about 7ks from Perth CBD. Asking price, $795,000

Initial outlay (deposit alone @ 20%) = 159k

Total mortgage costs over 25 years at 4.09% = $1016700

Here is a comparable property in the same area

http://www.realestate.com.au/property-house-wa-maylands-416784421

Rent equals 600 pw.

Total rent costs over 25 years equal $780,000 (less the deposit not paid) = 621k
Total rent costs over 30 years equal $ 936,000 (less the deposit not paid) =777k

So you'd be approaching 35 years in the rental property before you have spent as much as you would have if you had bought it.

Ten years more. And that's with rock bottom interest rates.
Jeez you are getting more and more hopeless Veritas! Two MAJOR problems with your analysis:

1) You forget the owner ends up with an asset worth $??? after the 25 or 30 years! Duh!
2) Rents rise in the long term always due to baked in inflation - you cannot ignore that

I would have thought after years on this forum you could at least to a better rent/buy analysis than that pathetically flawed attempt there.

You are beyond hope - please just keep renting. But when you are old and poor don't come crying like the big socialist you are asking the government to take more money from people like me to give people like you more than a subsistence lifestyle. :re:
Edited by Sydneyite, 2 Oct 2015, 08:25 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
Profile "REPLY WITH QUOTE" Go to top
 
peter fraser
Member Avatar


Sydneyite
2 Oct 2015, 08:21 AM
Jeez you are getting more and more hopeless Veritas! Two MAJOR problems with your analysis:

1) You forget the owner ends up with an asset worth $??? after the 25 or 30 years! Duh!
2) Rents rise in the long term always due to baked in inflation - you cannot ignore that

I would have thought after years on this forum you could at least to a better rent/buy analysis than that pathetically flawed attempt there.

You are beyond hope - please just keep renting. But when you are old and poor don't come crying like the big socialist you are asking the government to take more money from people like me to give people like you more than a subsistence lifestyle. :re:
+1 - the denial of the obvious is just amazing.
Any expressed market opinion is my own and is not to be taken as financial advice
Profile "REPLY WITH QUOTE" Go to top
 
Frank Castle
Member Avatar
Business As Usual

Veritas
1 Oct 2015, 11:10 PM

Lets take this example.
Three bed in Maylands, about 7ks from Perth CBD. Asking price, $795,000
Well thats one cherry picked example - Heres another (1 minute search) so do your numbers on this

Lets take this example
3 bedroom in Koongal about 4klms from Rocky CBD. Asking price $244,000
http://www.realestate.com.au/property-house-qld-koongal-120738485

Rent = $290/week

Posted Image

I can probably do similar numbers in Brisbane Suburbs if you like. $450k buy renting for $450+/week
Edited by Frank Castle, 2 Oct 2015, 09:00 AM.
Ignore posts by The Whole Truth · View Post · End Ignoring
The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
Profile "REPLY WITH QUOTE" Go to top
 
Sydneyite
Member Avatar


peter fraser
2 Oct 2015, 08:42 AM
+1 - the denial of the obvious is just amazing.
Yea. We have had so many threads like this. All the decent spreadsheets / calculations etc generally show (with reasonable assumptions) that buyers are better off as long as long term house price appreciation is > 1% or so. That's for OOs of course.
For Aussie property bears, "denial", is not just a long river in North Africa.....
Profile "REPLY WITH QUOTE" Go to top
 
deluded
Default APF Avatar


Sydneyite
2 Oct 2015, 09:12 AM
Yea. We have had so many threads like this. All the decent spreadsheets / calculations etc generally show (with reasonable assumptions) that buyers are better off as long as long term house price appreciation is > 1% or so. That's for OOs of course.
Three people have brought up rising interest rates and you've totally ignored that point. Care to engage with it?
Real Trump News -- Real Climate Science News -- Real Democrat Party News
Profile "REPLY WITH QUOTE" Go to top
 
stinkbug
Member Avatar


Ex BP Golly
2 Oct 2015, 02:40 AM
Some of us own, and rent. Weird heh!

:lol
It's actually a pretty good strategy, if you you want to reside somewhere in very high demand.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Enjoy forums? Start your own community for free.
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy