Isn't It Kind of Crappy Towards Society to Buy a Lot (if Any) Investment Properties?

So, I'm by no means an expert in this, so I thought I'd come to this forum to get some opinions from people who hopefully know what they're talking about, people defending their own behaviour to make peace with their god, and people who don't know what they're talking about, but want to talk about it anyway.

So here goes: Isn't it kind of crappy to buy a bunch of investment properties? I get the feeling landlords feel like they're doing lower income households a solid by providing them with a roof over their head - but I've never understood that. If so many people didn't go out of their way to own so many more properties than they needed, housing would be a lot more affordable right? The supply would be so much higher, and the demand would be lower. The threshold for buying a house would be a lot lower, and people could enter into the market earlier.

It's just a rich get richer thing right? Buy investment properties, and it inadvertently pushes up the price of your own home. You make it harder for people to buy a home, and in doing so, can raise the rent you charge.

I currently don't own any home, but my savings are getting to a point (finally) where I can start to think about the longer-term future. And having been a renter my whole life, as were my parents, the thought of buying extra homes to line my own pockets at the expense of another just seems like a real jerk move.

Knowledgeable experts, unknowledgeable experts, and moral justifiers, please share your thoughts.

Poll Options

  • 592
    Buy as many investment properties as you'd like
  • 213
    Just buy a house to live in - invest in other things
  • 74
    One investment property is fine


            • @cheapaschips:

              I love it. If only you all spent the time and effort you do complaining into working for something

              I do, I own a house and I'm going back to University to continue my studies. I'm not whinging for myself because to be honest, I'm set and if you read my previous comments, my parents keep trying to urge me to buy an investment property which I refuse. I just feel bloody terrible for the upcoming generations with people like you thinking houses now will be considered cheap in the future. Most mortgages are already 30 years, how many more years of people's lives do you want people to give up before they can own a home? How do you expect normal people who are currently renting to save up enough for a home when they rise faster than their wages?

              Haha yes every year let the government just give everyone a free house who is an Australian citizen or turned 18.

              I've never heard of that being a solution but sure, for your sake, let's assume our best solution is for people to give up netflix to afford a home. I'd hate to use the word but you're clearly a boomer and add nothing to your argument. It's just how you feel.

              • +1

                @bkhm: I am not a boomer. I am young. Realistic. Not born Rich. Just a hard worker who set a goal achievable for all and succeeded(after many years, nobody said it was easy)

                • @cheapaschips: Mate you're talking about the 90's and have kids with houses already.

                  Just a hard worker who set a goal achievable for all and succeeded.

                  No, you were born in the right time where, like my parents, your work could afford you a house or even multiple. You're not in the least bit realistic.

                  • @bkhm: Its ok , Continue being lazy and make excuses while the rest of us work hard and achieve a realistic goal. You clearly are learning nothing from the multitude of people who all have purchased a home saying they worked hard and made it possible

                    Back to your Netflix :)

            • @cheapaschips: And you only get 1 year in a city, then you get moved to the sticks and someone else has a turn in the city.
              There are only so many homes after all.

              I can't understand why left unregulated, competition makes the most sought after properties more valuable.
              But some here can see that there is a conspiracy behind it to keep them from getting a place on Sydney's waterfront.

  • +8

    It's just a rich get richer thing right?

    I came to this country 5 years ago as a married man with 7000$ in my pocket and no job. Today I own a house and can pay deposit for another property on mortgage. I am still on average salary and so is my partner. It is hard work and making the right choices and priorities.

    • +7

      It is the same people who I saw when I was saving for my first house.

      I would see people on less income and even Centrelink, especially Centrelink eating out more times a week then me and buying more luxury items.

      Yet for years I scraped togethor enough for a deposit and it's the exact same people who didn't sacrifice complaining in this thread


      Everything is achievable, either you get stuck into it or keep complaining. Pick a choice.

      • That's it

      • -2

        “Everything is achievable”

        So we can all become professional athletes or billionaires. Sorry but it’s not how the world works. You’re just basing your success stories from survivorship bias.

        I also highly doubt people paying rent and other necessities will have money for luxury items while being on Centrelink, unless they have worked in the past.

        • Have you tried ? Don't give up before you even start.

          If you want to use that example. There are thousands of professional athletes. It is not that exclusive a club. Ask them how they got there and they all the same thing …"years of hard work and sacrifice to achieve the goal"

          Same applies to buying a house or any other goals set out.

          • @cheapaschips: Working hard alone doesn’t make one successful. It’s a combination of smarts, talent, determination, investing in at the right time and decent amount of luck. It also applies for professional athletes.

            • @Griffindinho: Can’t believe you were downvoted for this. It’s so realistic that the person who downvoted you must be on another planet.

              • @Ghost47: I downvoted him because he's trying to say that since not everyone can be a professional athlete, it's not worth putting any effort into trying to afford a house, and it's better to just complain that those that have put in the effort have disadvantaged those that haven't.

        • +2

          "You’re just basing your success stories from survivorship bias."

          This is not a success story. It's hardship, tough decisions, setting right priorities and learning the art of savings. All I am saying I bought a property with pretty much no financial backup. I cut down on holidays, didn't buy a car until my deposit was saved, no extravagancy and I settled in an affordable suburb with what I could afford and not a dream home. In general, it is doable if one wants to, sooner or later.

        • +1

          A billionaire or professional athlete is an extreme outlier, when the guy says "Everything is achievable" obviously it isn't true literally.

          But if we take it back to the OP comment, then its not an uncommon situation. I know many, many immigrant families (including mine) who moved to Australia or other countries with less than $7000 or whatever, no centrelink benefits, and are doing extremely well now with multiple properties, investments etc etc etc.

          Luxury items & necessities also differ wildly depending on people's perceptions. A luxury item for me growing up was a $10 pokemon toy but given my economic circumstances now it might be some of the clothes I've purchased recently.

          Even if we want to say that these were different times 20 years ago or whatever, I still know plenty of people from either my high school or university who have made the right decisions and are now factors more successful than I. I'm doing OK, but I know that if I had made better decisions at certain points of my life I would be doing far better.

          So while I agree not EVERYTHING is achievable, Australia at least is not such that people are limited to their circumstances with no ability to influence their future.

          • @Dotaguy:

            . I know many, many immigrant families (including mine) who moved to Australia or other countries with less than $7000 or whatever, no centrelink benefits, and are doing extremely well now with multiple properties, investments etc etc etc.

            They immigrated to Australia at the right time when there was ample of opportunities to grow. Housing was affordable and wages wasn’t stagnant. Many recent arrived migrants won’t have that level of success.

            • +3

              @Griffindinho: I beg to differ. This is said every few years and you or someone else like you will say it again in 2025 when all these families have purchased a home.

              Families(or individual )… immigrant or not.. that want to succeed, will succeed through hard work and purchase the house now or in future, and you will continue making excuses not to put in the effort.

              • -1

                @cheapaschips: It’s not excuses it’s the reality of the world we live in. You can only do so much, without factoring in other things which are more crucial to success than just working hard.

                • +2

                  @Griffindinho: good luck in life with that attitude…

                • -1

                  @Griffindinho: Fortunately (or unfortunately I guess depending on your attitude), this just isn't true. I've pointed out examples of people in both situations who have either made it or not depending on the decisions that they've made (it's not just about working hard).

                • @Griffindinho: Exactly, how do you account for unplanned life events like GFCs and turndowns in the market, unexpected job losses, unexpected medical situations (yours or family that you have to take care of), accidents, divorce, stagnant wages and immigration allowing businesses to pay people less money as they're willing to do the same job even if its not done as well? (less but within award but no recognition or reward for higher performance).
                  We're all being sold out and then being blamed for "excuses".

      • This is so stupid. There ARE people who are making sacrifices.

        Why are there so many people making ignorant comments that the people who are complaining mustn’t be making sacrifices? It’s stupid and ignorant.

        • Some people are deluded from reality because it shows how privileged they are. It may have worked 20-30 years ago, heck even 10 years ago coming off the mining boom. Australia could’ve been in a much stronger position financially if the government decided to invest into a sovereign wealth fund from our natural resources. Now Australia is in a much different position with a trade war with China, which will impact us in the years to come.

          • @Griffindinho: Yep, only based on their own circle of friends/people they know.

            Australia pissed away the mining boom.

          • @Griffindinho: I think its a really toxic thing to think that people are "deluded from reality", and that somehow it's "privilege" to think that people can't have success today because somehow the times are different.

            This thought isn't new. A poor person in the 2000s, or even in the 1980s would have thought the same thing. If you had this sort of mindset at any point in history your chances of success would be much lower. Maybe you could have fell into wealth like some people have, but these are the exceptions and not the rule. For as many people I know who managed to make the most of the "easier" economic conditions from the baby boomer times I also work with people from that era who are now in their 60s and can't retire because they somehow still managed to have a mortgage over their heads that late in life. A specific person I'm thinking of is in this situation also happened to take our financing to purchase a new car last year.

            Achieving success and wealth is always going to be a mix of luck (or privilege to you) and making the right decisions (not just hard work). I can list off tons of examples of people I know who have achieved a huge level of success because of the decisions they've made, I also have friends from incredibly wealthy families who are now in their 30s with nothing because all they did was rave and do drugs in their 20s. One of these guys is now in prison - his privilege wasn't any help when he got busted trying to import drugs.

            • -1

              @Dotaguy: Look at the housing market. With wages stagnating and property prices soaring, more aussies will be priced out of home ownership unless they have inheritance or have been lucky in their occupation and have reaped the rewards. Your anecdotal evidence means not much in the grand scheme of things. I could also say my friend who came from a privileged background managed to become CEO of a large corporation because of their family connections. The landscape to success changes from each generations. With the rise of neoliberal governments in the 21st century. it’s going to be very difficult for the working class to ever achieve prosperity. The wealth inequality will keep growing and growing.

              • +4

                @Griffindinho: Wealth inequality isn't a bad thing by itself, consider that most people in the lower percentile of wealth in Australia are still much better off than people in a higher percentile in say, China.

                As far as the issue with anecdotal evidence goes, no one is disputing that for every example of success there could be just as many examples of people who made all the right decisions but never made it anywhere. The point is though, that its not a simple reality and there are opportunities for success provided people have the right mindset.

                I generally don't agree with the idea that its become significantly harder to become succesful, but even if we accept that as a general principle then I think we've both already accepted the underlying principle that success is possible (just harder), so the issue is whether the difficulty means that people should just resign themselves to their circumstances or make every effort to change them.

                • +1

                  @Dotaguy: Australia shouldn’t be compared with China. Comparing our bottom percentile to the chinese top is a massive overstretch, since they have the most billionaires in the world behind the US. We are more aligned with our bigger brothers like the US & UK (similar culture) who have seen a tremendous uprise in wealth & income inenquality in the last decade. Australia isn’t at that level yet, but it’s ever so steadily rising. Covid has exacerbated it even more so.

        • +3

          Sure, but its not an either or scenario as a lot of people seem to paint it out to be in here.

          There will of course be people who are making sacrifices, making the right decisions, working hard etc and who still might never reach success and wealth. That said, they're putting themselves in a better position to achieve success by making the most of the opportunities that they have, so on average people with this sort of mindset will do better than those who simply resign themselves to their circumstances and accept that they can't change their reality.

        • +1

          All we are saying is we bought a property, but we had to make sacrifices to do it.

          What is stupid is making no effort to change your circumstance, but complain about your situation.

          • @SlickMick: Well duh of course everyone has to make sacrifices to save a deposit.

            Do you think everyone is complaining without doing anything about it? Do you realise how expensive properties have become in the past few years which is making it much harder to buy a property these days?

            Maybe there are people out there complaining who are doing something about it, but getting nowhere due to the prices increasing faster than they are saving a deposit, do you think that's realistic? It's crazy how much people spend on properties, $1 mil+ on houses far from city or shoebox apartments in the CBD. People don't have any idea how much money they throw at property because they just rely on tenants to cover most of the mortgage (I say most so that they can pay less taxes).

            • +2

              @Ghost47: Isn't this a bit of hyperbole?

              If we use Melbourne as an example, 1mil+ on a house will get you wildly different things depending on what you're after. This is a good example of a townhouse which can be had for under $700k near the Melbourne CBD:
              Assuming someone is a first home buyer, they won't need a full 20% deposit either and will have the other government incentives which come along with it. This is a 2 bed townhouse in a great area.

              If its an apartment, then you just have to hop onto and filter for 2 bed+ apartments in the CBD. There's heaps of these for under 500k at the moment. A 5% deposit on a 700k home is 35k, and a 5% deposit on an apartment is 25k. This isn't an unreasonable amount for people to have saved after a few years in the workforce.

              Now, if I wanted a house on a decent block of land (600m2+), in a good suburb, and also with all the amenities etc etc then yes I'd probably be looking at 1mil+ in Melbourne at the moment.

              If you want to make the point that people have no idea how much money gets thrown at property, then let's not overstate what the reality of the situation actually is. I don't know if everyone complaining about not being able to buy a house is looking at it from the same perspective but the truth is that home ownership is absolutely achievable in Melbourne at the moment.

              • @Dotaguy: Those numbers aren't unachievable (the 550-650k town house) but the larger factor is to do with lending, very few lenders offer 5% deposits now, most want more.
                Also to service that loan amount you will need two people in decent jobs (not part time or casual or contractors that banks hate) to be able to take that on, not to do with the fact it couldn't be paid between them but its the banks are highly risk averse for new home buyers and want what seems like much higher expectations just to secure funding.

              • @Dotaguy: You're right, houses on a decent sized lot are probably more in the range of $700k-$800k in areas I've looked at in Melbourne. $1 mil was an overstatement. Whether or not said houses made of bricks and mortar are actually worth said amount of cash though, I don't think so, but that's what the "market" says it is worth.

            • +1

              @Ghost47: It's crazy how many people don't even acknowledge how the market has completely changed even though there's plenty of data and graphs on it. You can only work so hard and sacrifice so much if they're increasing well beyond what you can sacrifice or earn. My parents were farmers who could easily afford a house inner city and probably even a couple. Try doing that now.

              People don't have any idea how much money they throw at property because they just rely on tenants to cover most of the mortgage (I say most so that they can pay less taxes).

              Yeah exactly, how can someone who's just looking for a home even compete when they're getting 70% of their mortgage paid for through rent?

              • +1

                @bkhm: Wow you're really comparing inner city Melb in your boomer parent's era to today?

              • +2

                @bkhm: You can’t compare what it was back then to now, as you’ve pointed out economic circumstances are different.

                But, this isn’t correct to say that someone looking for a home vs an investor is always going to lose out. A first home buyer (or even someone who is not a first home buyer but looking for a PPR) gets significant incentives over an investor. Land tax, stamp duty exemptions or discounts, etc make a huge difference. If I have to pay stamp duty to buy a property it means a huge difference in total cash needed to complete a purchase.

                An investor also is typically less likely to be emotionally invested in a property, so if it exceeds what the investor thinks is worth they won’t buy it while a prospective home buyer might be willing to pay a premium because of a multitude of reasons.

                It’s never as simple as just comparing what something costed years ago against what it costs now even if you factor in inflation. This is just looking at it from a dollar vs dollar perspective, but you don’t take into account the fact that this isn’t the only factor which has drastically changed over the last however many years.

                • @Dotaguy: You're absolutely right.

                • @Dotaguy: Again anyone looking for funding for an investment property assuming they already have an existing property even if under mortgage can access more funding than those with none, 100-110% mortgages are possible and covers the bulk of investors costs, instantly making it an easier process for them.
                  I've been trying to buy a first property to live in, had some better off friends comment why don't i just get a 110% or 105% mortgage and just be "done with it" like they think it's normal.
                  Her partner had to explain to her that you can't do that and you need a deposit of 5-10+% (few lenders are offering 5% currently) then add LMI on top to get a start on it, she was totally oblivious as her parents handed them their deposit many years ago … But don't worry she's got two investment properties because it's not her money she has to spend.

              • @bkhm: People are stupid, just look at comments in this thread.

            • @Ghost47: You are in Melbourne. Move out of Melbourne. That's a sacrifice.

              What sort of place are you renting while saving a deposit?

              • @brendanm: Nah I'm not going to do that. I'll do what it takes to get a property in Melbourne. Lol "move elsewhere" is always such a dumb suggestion made by people who think they know things but don't really know anythingc, as if everyone can just pick up their lives and move away as if family and friends mean nothing to them.

                I spend just under 30% of my income on housing, which is the general rule of the many people will advise you to do. I share a small apartment with two other people. What else do you want to stick your nose into? I salary sacrifice into super each year, I have a weekly transfer into investments, I spend very little in general. What else do you want to know? (profanity).

                Oh, and I don't live in Melbourne as I moved interstate for work (that's right, I moved to another state for a job — a sacrifice). You're an insufferable clueless clown.

                • @Ghost47:

                  Nah I'm not going to do that

                  So you won't sacrifice then. Have to live exactly where you want, for your first house.

                  What else do you want to know? (profanity)

                  Someone's getting a bit upset that they aren't getting things handed to them, and don't get their dream property as a first home.

                  • @brendanm: You're a fool, assuming I've made no sacrifices to get what I want. Absolutely clueless, like I said. I'm blocking you now, never did like you much.

                    • @Ghost47: You are spending 30% of your wage to rent an apartment with 2 others? That is insane. My mortgage repayment for a 4 bed house is 35% of my wage.

                      You are living well beyond your means.

                      I'm sure you could find cheaper accommodation if you wanted to save more and buy, bit you have to live where you want to live, and everyone else should cater to you.

  • +3

    70% of properties in Australia are owner-occupier, only 30% are investment properties. So no, I don't think it affects the prices by what people imagine or want to believe it does.

  • +2

    Wow, this is the longest thread I’ve ever seen on ozBargains!

    I wanted to throw my experiences in with the rest.

    In regards to investors owning more than a few rentals, the assumption from most posts seams to be the assumptions that we are all money hungry billionaires (or at least millionaires) but you compare apples with oranges. While some investors might have multi-millions in their portfolio, some of us (my self included) have a few investment properties that total less than the average house price in a major city. At least one of the properties I manage cost less to buy than some people spend on a motor vehicle (<150k). We do not own new cars ourselves- mine is the newest at 12 years old. I think it depends on what you pay for the property and the rent being paid. The rents in my area are much lower than city rents so the margins are lower. We are taking a risk that these investments will pay off in the future and consider this our retirement plan.

    For those of us in this situation, negative gearing doesn’t make a huge difference to us, we don’t earn enough in our day-jobs, and return enough on the investments to really write off a lot of tax, and we still pay our taxes (we not one of those ultra wealthy who manages to pay next to no tax) but we do get some benefits from negative gearing. I am sure there are many unscrupulous people who take advantage of this scheme, just don’t tar all of us with the same brush. I personally support a cap on negative gearing, but cutting it entirely would affect so many smaller investors such as myself - which I understood was the purpose of the scheme.

    For anyone who is trying to save for their first home, I understand your frustration as I’ve not been in this game long (or maybe I’m just getting older and time passes more quickly). Don’t give up hope, getting into a property is the hardest part. To maximize your chances, I strongly suggest to try looking more regional! In my area, prices still start in the high $100,000 and you can buy a quality home for under $300k. I’m in a smaller city in regional area (we are not talking remote or mining towns) and only a few hours from a capital city. With the flexibility of remote working for some in this post COVID age - many people can work anywhere.

    I don’t want to be inflammatory and rarely post for this reason, I would just like people to remember that negative gearing isn’t just for the billionaires and that some of us are just the ma-n-pa investors trying to make a go of it. I know nothing about the stock market and don’t want to make some advisor richer, but I know and trust my local real estate market - that’s where I choose to invest.

    • +1

      Interesting point re cars - early 90s then wife and I owned three properties and the only couple we knew had both cars from the seventies.

  • All the people who are selling houses are probably loving this thread, who can sacrifice the most to pay them. Especially those who are telling others that's what they should be doing, no eating out, no coffees, not even god damn netflix (I don't watch it anyways but it's $10 a month for hours of entertainment, c'mon) to hand it all over to someone who probably paid a quarter of what they're being paid. Because well, people gotta live. Then once we have fewer and fewer restaurants and people don't have jobs or houses balloon way beyond their salaries, they will be blamed for not working hard enough and not sacrificing enough. It's a trend that should be broken.

    • -3

      Nah I agree with your logic . Here is a free house for you. Free houses for everyone !!!

      • Thanks Oprah <3

    • +2

      This is kinda silly, a lot of people who came into wealth are genuinely talking from a place of personal experience but you wouldn’t know if you just assume they’re being paid 4x what others are.

      I lived in public housing with immigrant parents who worked 3 jobs being paid cash by other migrants while going to uni/tafe. Eventually they managed to scrounge enough, along with borrowing money from friends to buy their first property in a shit suburb (which is still a shit suburb 20 years on). Now we’re in a situation where a lot of people might consider them wealthy.

      So yeah, even something like $10 for a Netflix subscription was an unnecessary luxury. Of course not everyone is willing to do what my family did, so I wouldn’t worry about restaurants etc going out of business anytime soon.

      Should people be blamed for not working hard enough? Ofc not, but it’s not fair to blame others for their circumstances either. We don’t choose our circumstances but we choose what we do about them

  • +5

    People with 0 - 1 houses: yes it is.
    People with >1 house: no it isn't.

  • +2

    The vast majority of property investors (18% or so of the general population) own just 1 and are regular, mum and dad investors on an average wage.

    If they don't provide rental accommodation for the rental market, who would?

    Unless you like the idea of council flats everywhere - that's the other option.

    • +1

      If the special tax incentives available to individual investors didn't exist (presumably the premise of this hypothetical), then most likely asset prices would be lower, and I'd suspect a commercial business model (now operating on an even playing field) would be able to competently meet the demand more efficiently than decentralised individual efforts.

      Maybe the equilibrium rental price would increase too? If you're not trying to save a huge deposit for an incredibly expensive property of your own while renting, maybe that doesn't matter? Presumably the rental market would also contract as more of those households become owner occupiers.

  • +3

    The problem you should be focused on is the mass importation of people into Melbourne/Sydney/soon to be Brisbane and giving them all access to loads of debt

    That's what's making your houses in the outer burbs $700k

  • +1

    It would be fine without preferential tax treatment and especially

    Quantitative easing

    A qe policy pit in place to protect a bubble

  • +5

    No, owning investment properties doesn't make someone evil. I mean, before you could afford a house, who are you going to rent from if nobody owns investment properties?

    However, yes, the government needs to reconsider the taxation treatment of investment properties to make them stand on their own, as is the case with all other investments. You can't claim the tax losses of investing in shares or in your side project company you set-up against your income, so why can you for investment properties? And why is there a capital gains tax discount? Why should investing in something for 11 months and making a 20% return be taxed less as investing in it for 13 months and making 25% return? It makes no sense and further distorts the market. It means labour is taxed at a higher rate than capital, which is not the bedrock to a fair, egalitarian society.

  • +2

    Welcome to the real world.

  • +4

    You have one life, do the best you can for you and your loved ones. As long as its not illegal, immoral or unethical I have no problem with it. Too much tall poppy syndrome round these neck of the woods !

  • +5

    all the people complaining are people who didn't work hard enough or didn't study hard enough when they were younger.
    I 'm 28 and spent the last 10 years saving and finally bought a house this year.
    Can't wait to get another one.
    Once i have 4 houses im retiring.

    • +1

      Were you playing monopoly when you wrote this?

      • I had Mayfair and Park Lane last time I played Monopoly. It was the best game ever. I'm never going to play again because it will only tarnish that memory.

        My real life is more like just around the corner, just after pay day and cheap rent everyone can afford.Anyone who buys those properties is either providing a community service, or intends putting hotels on them.

    • +1

      My partner and I have a few rental properties but there is no way I can retire until they are paid off, another 30 years!

      • -1

        lol I kept remortgaging to get more equity to by more, so my 30 years kept starting again.

        But I got everyone I know who couldn't afford to buy, into cheap accommodation so they could save a deposit for themselves.
        I thought I'd be able to help dozens of people, but only one has gone out on thier own.

    • I agree 100%. What has to be considered though is that as time goes on, and if things continue the way they are, the work that people have to put in will simply increase and the rewards will be less, and I am specifically talking about house prices.

  • I wish I could cheat in this monopoly game.

  • +2

    My opinion is that a House should first and foremost be about someone's home, rather than just another investment opportunity. I am ok with some investment properties but the issue is these days there are people out there with heaps and for each investment property one person has, thats another home off the market for someone looking to buy as their home to live in. I know people with 10-50 properties.

    There are so many other investment areas, I wish houses weren't so clogged up in it. Its also far easier for someone (wealthy) who already has a couple of investment properties, to keep purchasing more as opposed to someone trying to buy their first home. When I was trying to buy my home, I came across some auctions where i had no chance as these people were investors full of cash.

    • +2

      nah, the worst part is they dont need cash at all - you just draw down on the equity from property #1 and use that as the deposit. it's cross-collateral loaning

    • +1

      I haven't done it yet, but it would really suck going to an auction on a place you are really set on only for some property investor to come along and outbid you without batting an eye.

      • +1

        In one of them , after winning the auction he pulled out the deposit in cash from the boot of his AMG, He was boasting he was buying an investment property for his daughter. He then came to another auction which i was bidding on and i thought damn, hes going to bid again, but just came to watch.

        • -3

          I'll take "things that never happened" for $500 please Alex.

          • +1

            @brendanm: I will take clowns for $1 please. When people who werent there tell you what actually happened. sheesh.

            P.S I have witnesses. As I had a friend come to help me with the ropes on auctions etc. My first bidding auction. Btw His daughter was there and rocked up in her own AMG. He was so cocky the auctioneer got pissed off with him as at one point towards the end when it was just him and this other young couple who were stretched to their limits but the parents were there and told them if you really want it, we can help you with it etc and so they were able to keep bidding past a certain point. The guy who was cocky, shouted out I can keep going, I can bid 1 million if i wanted (The bidding at that time was 910k or something), the Auctioneer got quite annoyed by that stage and basically raised his voice at the guy and said, "Is that a bid, if you shout out no.s it can still count as a bid, and i will take it as a bid unless you withdraw it right now".

            • +1

              @lonewolf: Take everything that person says with a grain of salt. He supposedly knows more about my financial habits than I do lol. I don't understand people who insist they know more than you when they were not there in the first place or don't even know you. Quite pathetic really, more pathetic than that guy rocking up to the auction I'd say!

              When people who werent there tell you what actually happened.

              That's him in a nutshell, it's hilarious.

              • +1

                @Ghost47: never understand people who act like that on forums. In real life they are probably quite different.

                that Auction definitely left a sour taste in my mouth as it was my first one and i was taken aback at how it went. but then after going to a few others, i realised that one wasnt the norm.

                • @lonewolf: I'd rather not meet these sorts of people IRL at all.

                  That's good to hear that auction was more of an outlier in your experience, although I'm sure there are property investors who wouldn't act like such a douchebag at some auctions.

              • @Ghost47: I know that if you are spending 30% of your wage as a 1/3 rent share in a tiny apartment, you are doing something wrong. But hey, what do I know?

            • @lonewolf: I couldn't care less about the AMG part, it's not like they are uncommon. The "taking the deposit out of the boot in cash" part, is the bit that never happened.

              Unless of course this guy was a very rich duck, known for swimming in coins?

  • What about buying a house and renting it out before you move in? That's an investment property and entirely acceptable.

  • +2

    High rental prices are because renters will pay it. People want convenience, want nicer stuff than they can afford quick; so are prepared to pay rent so they can have it sooner. Landlords aren’t dumb (mostly) so they will charge the max people will pay. If no one will rent a rental then the rent price must decrease, unless rental income wasn’t the goal anyway.
    You can see the effect now because of covid, when the conveniences disappear the rent will decrease. Who wants to live in the city when all the shops and restaurants are closed, there aren’t many parks to goto and you have no backyard; so many city area apartments the rental price has dropped but house rental doesn’t drop. No need to rent a place close to work if you can just work from home. Expensive areas rent drop because many can no longer afford the rent, so the rent has to decrease. All without regulation changes.

  • No investment class should have its expenses deductible against employment income. Each investment should be a single 'business unit' as a company would be, where negative gearing is certainly possible but doesn't give you any income tax advantages. If the property investment makes an operating loss, maybe you could carry that forward some years (5-10) and deduct it from future operating profits, or even the capital gain on disposal. We shouldn't be artificially incentivising capital gains over operating profits.

    CGT discount should be set at the rate of the actual inflation effect over the holding period.

    Also as the land and improvements are packaged together, it's pretty clear that for most of our memory, that package appreciates rather than depreciates. There shouldn't be an operating loss from "depreciation expense incurred" allowed when the asset is gaining value…

    • I would have no problems with not having negative gearing. I'd be quite happy for investment losses to roll over like business losses.

      But removing depreciation was just plain wrong, and I can't believe we just passively let it happen. It is the only investment that assets can't be depreciated.
      That's nonsense to say that timber and bricks appreciate. They eventually need to be replaced. That's depreciation.

      • When was depreciation removed? New buildings are depreciated at 4% p.a. over 25 years from memory?

        Depreciation is reduction in value. As a package, the value of that investment generally appreciates, ergo it's not reasonable IMO to allow a depreciation expense. Certainly I can't see how it's productive to gift that as a 'default' conversion from operating profits to (concessional-taxed) capital gains

        If you can find a way to separate the buildings from the land, maybe the built portion can depreciate while the land gains value - but which part produces the assessable income from which you're deducting your expenses?

        TL;DR - an asset gaining value over time is not incurring depreciation

        • It is mostly the land that appreciates. Council rates are based on land value, land tax is also based on land value, nothing to do with the value of the structure.
          The structure is depreciating.
          Most investment properties claiming depreciation are because those properties are apartments where nearly the entire value is the structure and location(not the land) so there is heaps of stuff to depreciate.

          You go buy a 1.5mill house and try to insure it for 1.5mil, it is impossible because they only insure the structure and what is in it so maybe only 500-700k or even less.

          • @ef: If you're purchasing the structure while leasing the land, maybe your investment can depreciate. As a package with buildings and land, that package value will not generally decrease. There is simply no loss to be amortised by yearly depreciation expenses.

            Most investment properties claiming depreciation are because those properties are apartments

            No, unless the owner is an idiot, it should be every property with allowable depreciation. Maybe a greater proportion of the apartment cost is depreciable though, if that's what you mean?

            • @BobLim: this isn't rocket science. Land usually appreciates, and in any case can't be replaced, so obviously can't be depreciated. Timber and bricks and everything else that deteriorates and needs to be replaced can be depreciated and rightly so.

              The rule change, about 5 years ago, was that depreciation only continues so long as you own the original item. When you sell, no more depreciation on that building. So selling a building before 25 years (it's up to 40, depending upon expected life of the item) is just throwing money at the tax office.

              Buying an older house, you might be paying for a dozen ovens, because none of them were depreciated more than a few years.

  • +6

    I have one full-time job, two part-time jobs, and run a small business on the side.
    I work very hard and as a result am able to own 2 investment properties in inner-city capital city areas with huge mortgages.
    I don't waste time on TV, or own a TV, or waste time on Netflix. (Sadly I do waste time on Ozbargain forums and should stop this.)
    My advice: spend more time improving yourself and less time cutting other people down for their decisions to work hard and invest in real estate.

    • own 2 investment properties in inner-city capital city areas with huge mortgages.

      This while the tenants are enjoying a latte at the corner cafe and the convenience of an inner city lifestyle.

      • +3

        And will come into this thread asking to be sold the house for cheap because they "deserve" it. Entitlement 101

    • What kind of business do you own? Was thinking about doing the same thing to get myself ahead also.

  • +3

    There's actually plenty of housing that's on the market all the time with varying prices/budgets but many newer generations are hesitant to move further out away from central cities whereas older gens had a realistic view to move out to the suburbs to fit their budgets and let the real estate bloom over years as a long term investment or home. Wise investors will look at the current situation and find a way to reach their goal, not blame other people/circumstances and not make a move. It's like poker, you get given a hand and you make do with what you have as best as you can.

  • +1

    How does owning multiple properties push prices up? Sellers only care about the highest price.

    You could outbid someone with multiple properties or someone with multiple properties may not be able to borrow/deposit as much.

  • -1

    God these votes make me sick. 516 people saying it's fine to leech off other people.

    • +1

      Yes. I hate anyone with "agent" in their job title too.

    • +1

      Why is it leeching? Any proof all the landlords bought their investment properties via illegal ways?

      • I never said anything about it being illegal. It's entirely legal, which is exactly the problem.

    • Poor assumption that investment properties are negatively geared.

    • Honestly.

      I need far more negative votes for all these entitled whingers.