Why are you calculating the return of investment for a PPOR? A PPOR is a place to live. This shoud have been done with an investment property where you earn rental income and the significant amounts of tax deductions over the years including all the interest you pay the bank!!!
Because, and I can't believe I even have to explain this, many people factor in capital growth of their PPOR and more or less count is as not just an investment, but their fundamental core [and in some cases only] investment.
@@anthonyreed480 Yeah except a PPOR is not purely an investment, it is a place to live which everyone requires. If thats your argument then these guys should have also added the savings you made by not paying rent for those 10 years onto this ROI. Even if you break even on this "Investment" you still save over 300k in rent you would have needed to pay. (assuming 600/week rent). Both a PPOR and an investment property significantly outperform stocks regardless, so its a easy win either way when it comes to the best investment.
@@AB-gu9ui the total cost of renting is cheaper than owning your PPOR (mortgage + tax + expenses). If you don't mind renting, then you have to account the opportunity costs of the money you save by renting into another investment with a higher yield.
@@ferparra83 Yeah except property significantly outperforms any other investment. So not only are you throwing away money on rent, you are also recieving a lower return on your alternative investment in comparision.
Sorry, but I'm going to have to pull you up on this. You said, "I bought a property for $1.2m and sold 10 years later for $1.2m" and that's the same as you bought it for. No it's not. You haven't factored in the cost of inflation. Even at a low rate of about 3% the cost of the same property is $1.6m after 10 years. So you lise $400k before you even start calculating the losses.
I’m sorry to you, but they are exactly the same price in monetary terms. Just because the same amount of capital is worth less, you have had to pay numerous expenses and you have lost opportunity on the capital, does not change the fact that they are the same amount in the same currency.
Worst case scenario would be renting somewhere on a 12 month contract, and each year, or there abouts, the property you rent gets put on the market. I know a few people who have been forced to move up to 6 times within the last 10 years. Even if you manage to move your belongings without the need to hire a moving company or truck/van the time it takes is fairly substantial.
This is literally my situation, and I look at the moving costs as part of the rent, so $2500÷12= technically $50 ish dollars pw more on the $750 rent. Ive got a $140000 deposit, but i can't find anything worth the money, once I factor in 20% minimum deposit 😮
@@isabellortheil1182 same. I just got in recently. Prices moved so quickly that I was priced out of most of the suburbs I could afford only a couple of months earlier. Good luck!
You must factor in the rent you will paying if you were renting in the similar 1.2m apartment - which would be around 800 a week to be very conservative. That would be 416k alone over 10 year period! I am not counting rent increase that landlords putting every 6 months
If you're sitting on the fence, don't overthink it. The only way to stop rising rents and avoid being homeless is to own your own place. Try to buy something with land because apartments don't appreciate as much - especially the mass building of apartments over the coming years. This is advice from an owner of both 5 properties (apartments and houses) that were bought 19-25 years ago.
Cmon guys. Ren says at the END of this episode “you only want to include the costs if you buy”… but Bryce factored in $16k for utilities for the PPOR.. you’re still paying utilities when you rent.
I'm a landlord of 10 properties... I wouldn't pay the numbers I'm seeing. I got lucky... I was liquid enough during the GFC + COVID and didn't max out my LVR / Repayment rates during those low rates
And a place to live in with essentially a fixed payment. So long as the property i bought to live in continues to grow at inflation rates ill be happy.
@@InfinityIsland2203 If your goal is to retain your purchasing power while government devalues the dollar, bitcoin is clearly the better option - much larger returns, zero costs to maintain it, can start off without a deposit, can buy as little as $10 / week, fixed supply and in addition to being engineered to be inflation proof it is also engineered to be very easy to spend with low fees and no middle man. Now, if you like the idea of owning where you live, bitcoin cannot do that for you so that is the only benefit of owning property. There is simply no benefit to owning an investment property now that we have bitcoin. As people slowly move away from property investment into bitcoin, bitcoin will also allow property to gradually return to it's utility cost which will enable so many more people to own their own home.
That analysis is all fine and dandy, but unless you are down sizing into a tent, any profit you might make has to be spent on the next house.. yes your getting ahead but you'd need to do this several time to be able to retire off any profits I would have thought. It's called property flipping..
Buying a property to live in is not an investment property. You still have to buy another property to live in when you sell it. You should do this exercise on an actual investment property where tax benefits apply.
Aa an ex real estate agent you have to factor in government intervention in the market. Government policy is the biggest driver of property values. The government has been intervening in the property market since the 70s at least. Owning your home works because over time inflation drives up your property value, and in turn wages, but your loan repayments remain fairly static. So as your wages grow, especially if you are a public servant or in a protected union, the percentage of your income needed to service your loan reduces.
Pretty sure you double dipped the interest by deducting it from your net profit. Also you included utilities in the cost base. This is paid when you rent as well.
Do you think we could ever get the government to make interest on PPOR loans tax deductible like in the US? What would the macro effects to the Aussie economy? It should make loan serviceability better? One consideration that needs to be looked at with property is, whilst your PPOR goes up, so does everyone else's in the area. If you sell, you need somewhere to live, so this means buying another PPOR which is now also more $$$ than 10 years ago or rent which would also have increased.
@@NoRegertsHere yep. We could've been much better positioned with proper sovereign funds setup for royalties, instead of all the nation's resources being extracted for just about zilch!
@@nickhayes3882 royalties are a separate topic. Along with a company tax rate that’s 2x too high. Payroll tax etc. all those would need to be included in a royalty discussion. Need to make it cheaper for a business to employ Australians. That shouldn’t come from savings made to after tax income of employee. Should be from removal of huge taxes paid in Australia.
if it's PPOR you need to add that your not paying rent and if it investment your getting renal income. 8:30 even if your $340K in the red = $650per week which is cheaper then renting the same $1.2m house
If you want to grow wealth then buying a property is great, you can leverage the bank and use someone else’s money to pay the bank off. Once that property is paid off and you want to start generating an income from it, there are better ways to use that $1 million.
Why would you sell? If you've got such a good thing that is doubling every 10 years, why would you sell it and pay selling costs to exchange this good thing for a pile of cash that loses value over time due to inflation? And then you may not be able to get back into the market because loans are much harder to obtain these days. It doesn't make any sense to sell.
Ok after I got spruked by property couch guys who obviously used 7% per annum growth & bought a property in Melbourne I realized there is a massive asterisk on the “property doubles every 10yrs”which is lot of the stats on growth is driven by renovations. When you hear this suburb grew 10% a year, lot is from renovations which masks the true growth
Hey, did you re-upload this? Anyway, I love your work, guys. Keep at it! It's great to have some insight into the Australian market, especially as a first-home buyer trying to understand the associated costs. I did the Excel sheet with a few friends, and we came to the same conclusion. We couldn't find any long-term data for apartments specifically, which made it really difficult, but the Australian market, especially Sydney, is a huge bubble. We also need to consider what it would look like if we had a high cash flow property and reinvested it into an index fund over time. The returns looks a bit more reasonable.
How do I buy my first property... let alone an investment property. I'm on 90k/year, I share 420/week in rent with another person, and I can't rely on anyone else for anything
@axissunsoar07 idk 🤷♀️. They had some other video where a guy said buy an investment property as cheap as you can afford with good rental yield then rent somewhere else.
Not sure its worth including util costs as you pay these if you rent, they are not a cost of owning a home per se. Not that it would change the end result much :)
This content is approached with negativity. The guy with the glasses clearly knows nothing about properties - does not even know if you pay agent fees when you buy a property. Short sighted view buying an apartment with high strata fees. Not everyone buys an apartment. Your calculation does not take into account the “if you were renting, then what would you have paid during that 10 year period”. To make the comparison like for like with investing in shares, you need to take that into account.
I bought in 2014 for $1.8m. On a $300k deposit. It’s now worth $4m. It’s the leverage. But houses on well located land. Not apartments. This channel has too many negative bears afraid of action.
Yeah, but maybe in 2014 your dream house was 3.6m, but you could only afford 1.8. Now your place is worth 4m, but your dream house is now 8m. So cost to upgrade is now 4m instead of 1.8... You're not better off...
Appreciation is really the land value coupled with debasing of the currency. Without renovations, the home is the same just the value of the dollar is less…governments inflate and then call it a capital gain.
