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If you don't own a home by your 40s, you never will. And you'll end up poorer than those who do.; Silly bears who think they can rent their way to wealth are only fooling themselves...
Topic Started: 10 Oct 2016, 07:29 AM (8,617 Views)
Foxy
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Zero is coming...

Khaderbhai
10 Oct 2016, 06:51 PM
Renters are taxed on their income from wages and other investments (e.g. share dividends), plus any other (non-housing) assets they decide to sell for profit.

But obviously renters overall are taxed less than homeowners, because they're much less wealthy than homeowners...

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This lack of wealth is mainly because renters end up paying more for their lifetime accommodation costs, which leaves less disposable income to invest in other income-producing assets. And obviously renters don't own their own home, which is one of the greatest stores of wealth for most Australians.
Is it the house that makes them rich???

Or are they rich and have a house.

People with shoes are wealthier than people without shoes??

Was it the shoes??

I dont think so..
So one of the richest people in the world has a house worth the average of a Sydney house :D

But you keep intimating that buying a house at these prices will make you wealthy???

Why does Warren Buffet not start buying Sydney realestate, after all it is such a good money making venture No??


http://time.com/money/3843188/this-is-how-much-it-costs-to-live-next-to-warren-buffett/
Edited by Foxy, 10 Oct 2016, 08:24 PM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Khaderbhai
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Wealthy Suburbanite

Simon_S
10 Oct 2016, 08:14 PM
Meanwhile the Renter has started 25 to 30 years earlier
No, it only takes 5-10 years of rent inflation vs paying off the mortgage before interest repayments become lower than the cost to rent an equivalent dwelling. So the renter might get the first 5-10 years in which they can save/invest more than the homeowner, but then the homeowner gets the next 60-65 years in which they can save/invest more than the renter.


Jon Snow
10 Oct 2016, 08:14 PM
Yes, but how much would a $500K home sell for if you had 40 years of 2% deflation?
It would sell for much less than the cost of renting it for 70 years.
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I think the ability of central banks to create consumer inflation has gone
Yet inflation is still positive in the majority of countries under central bank control.
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I am betting on what I have observed occurring in every industrialised economy over the past 30 years. Will it continue? I believe so.
Inflation?
Edited by Khaderbhai, 10 Oct 2016, 08:35 PM.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
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Chris
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Rufus
10 Oct 2016, 07:42 PM
Actually you can't unless you borrow against your own funds, which has it's limitations.

For a budding entrepreneur having equity in a home makes getting finance so much easier.

It's not a narrow view, it's the reality of life.
You are turning the ridiculous into the absurd.

If my funds are greater than your equity, barring any pitiful variable, I will be able to borrow more.

Or are you stating that borrowers can get more credit for a start up based on future values?? You are saying it would be normal for borrowers to gear 110-20% over the property value?

Your 'houses always win' argument is getting a bit inflated m'es thinks.
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Khaderbhai
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foxbat
10 Oct 2016, 08:19 PM
Is it the house that makes them rich???
It's two things. Firstly, it's the fact that lifetime accommodation costs are significantly lower for homeowners than renters. Secondly, it's the fact that homeowners end up holding a valuable asset that tends to rise in value over time, compared to renters who don't own a home. Taken together, these two factors result in greater wealth accumulation for homeowners than renters.

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But you keep intimating that buying a house at these prices will make you wealthy???
I didn't say "wealthy" (since that term is quite subjective) but certainly "wealthier" than someone who chooses to rent an equivalent home for their lifetime, instead of buying it.

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Why does Warren Buffet not start buying Sydney realestate
He probably doesn't know or understand the Sydney market, or have any interest in it. He invests in what he knows, and seems to do pretty well out of it. But most people aren't Warren Buffet. For most Australians, the choice is between buying a home or renting a home. In which case, buying will generally end up being a better generator of wealth.

It's not a choice between buying a home or 'being Warren Buffet'. By choosing to rent, Australians don't suddenly gain Warren Buffet's investment prowess. They just end up squandering their money on rent payments. I highly doubt Warren Buffet pays rent to a landlord.
Chris
10 Oct 2016, 08:38 PM
If my funds are greater than your equity, barring any pitiful variable, I will be able to borrow more.
How does that work? A bank isn't going to lend you money secured by your savings. It will want a real asset as security.
Edited by Khaderbhai, 10 Oct 2016, 08:49 PM.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
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Rufus
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Chris
10 Oct 2016, 08:38 PM
You are turning the ridiculous into the absurd.

If my funds are greater than your equity, barring any pitiful variable, I will be able to borrow more.

Or are you stating that borrowers can get more credit for a start up based on future values?? You are saying it would be normal for borrowers to gear 110-20% over the property value?

Your 'houses always win' argument is getting a bit inflated m'es thinks.
If you are borrowing against your own money, what are you really borrowing?
Khaderbhai
10 Oct 2016, 08:42 PM
How does that work? A bank isn't going to lend you money secured by your savings. It will want a real asset as security.
Yep they will. They put the money into a term deposit and the owner can't touch it. The bank pays an interest rate on the term deposit and they put a margin on the loan.

They would do that all day every day if they could find enough people called Chris.

it's really borrowing your own money and paying for that privilege, or in our terms "money for old rope"

Edited by Rufus, 10 Oct 2016, 08:54 PM.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Terry
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Khaderbhai
10 Oct 2016, 08:42 PM
It's two things. Firstly, it's the fact that lifetime accommodation costs are significantly lower for homeowners than renters. Secondly, it's the fact that homeowners end up holding a valuable asset that tends to rise in value over time, compared to renters who don't own a home. Taken together, these two factors result in greater wealth accumulation for homeowners than renters.


Same as saying someone who holds a stock index is better off over the long run than someone who doesn't that stock index. Kind of stupid argument mother cat.
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Chris
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Khaderbhai
10 Oct 2016, 08:42 PM
A bank isn't going to lend you money secured by your savings. It will want a real asset as security.
Here we are, interesting territory.

A transaction with the bank is always quite simple, it's risk vs reward. Can you explain to me why a bank would borrow more money to someone with less equity than I have savings?

You are now all stating that a bank will borrow over the properties value I.e. 120% with a view that future values will rise and cover the negative equity regardless of whether you're business succeeds or not.

Very very interesting. Is it the same with margin lending?

This is not where I thought this would go but titilating none the less 😁
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Khaderbhai
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Chris
10 Oct 2016, 08:59 PM
Can you explain to me why a bank would borrow more money to someone with less equity than I have savings?
As Rufus has explained - you're just borrowing your own money. It makes no sense. If you have $100K of savings then why would you borrow that same $100K from the bank and pay interest on it, instead of just spending the $100K?
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You are now all stating that a bank will borrow over the properties value I.e. 120% with a view that future values will rise and cover the negative equity regardless of whether you're business succeeds or not.
No, we're saying if you buy a home, for say $400K, and it goes up in value to $600K, then the bank will lend you $160K (assuming 80% LVR) against that increased equity to start your new business.




Terry
10 Oct 2016, 08:54 PM
Same as saying someone who holds a stock index is better off over the long run than someone who doesn't that stock index.
No Roddy, it's not like that at all, because a stock index isn't a necessity for most people.

Nobody is forced to choose between buying vs renting a stock index.

On the other hand, accommodation is a necessity, so people must choose whether to rent that accommodation, or buy it.

Over a lifetime, it's much cheaper to buy it.
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Kind of stupid argument mother cat.
Yes Roddy, all your arguments are.
Edited by Khaderbhai, 10 Oct 2016, 09:14 PM.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
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Terry
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Khaderbhai
10 Oct 2016, 09:09 PM


No Roddy, it's not like that at all, because a stock index isn't a necessity for most people.

Nobody is forced to choose between buying vs renting a stock index.

On the other hand, accommodation is a necessity, so people must choose whether to rent that accommodation, or buy it.

Over a lifetime, it's much cheaper to buy it.

Yes Roddy, all your arguments are.
That depends mother cat. You're talking about suburbia and you're basing the future based on assumptions that have no rigor. That's why this kind of nonsense is published: Nudge theory that has no application or value except emotional impact.
Edited by Terry, 11 Oct 2016, 12:01 AM.
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Jon Snow
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I know you are just being a dick, but I will play along today.
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It would sell for much less than the cost of renting it for 70 years.

Your starting position is that both the buyer and the renter have $500,000 in cash?
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Yet inflation is still positive in the majority of countries under central bank control.
And yet it continues to decline, despite record low interest rates and even negative rates in countries under central bank control. Despite all mandates and efforts to increase inflation, it continues to decline.
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Inflation?
No.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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