Of course it is, and you learn a lot about wise spending. I've always said property is the classic investment to keep you broke while you're getting rich. And that's where you learn to extract good value out of every dollar.
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thats a pretty good analogy - or description of it.
It was like that too.. like wasn't poor but didn't feel "rich" until I realised cap gains gone up faster than rents hence was effectively sitting on a pile of cash that might get more in an term deposit. wasn't til I liquidated most of my portfolio and the money showed up in my bank account.. then I kinda felt like I had made it.
Moneys in index funds, managed funds etc now. Just had a fn stellar month, 3% to month ended 11th October, thats only slightly less than the annual yeild I used to get (on market value).
@alistar_mid;
Great return. Do you think any of that could be due to the managed funds provider holding properties (through health care shares/etc) and they have been updated to reflect current property valuations?
not sure, most of my stuffs in Milford which some of their funds did very well this month (Dynamic fund for example 3%), and they are big on some underlying stocks like a2 milk which have done very well. Overall my managed funds up 2.4%
I also have international ETF's that overall did close to 7%, thats both the underlying stocks going up in value, and a bit of currency stuff around NZ getting weaker cause of our political uncertainty.
So total managed funds / kiwisaver / ETF's - up 3%.
compare this to a place I had worth 675k, doing 450 a week = $23k a year rent. Less rates, body corp etc... lets say you are left with $20k
20/675 = 2.9%
nah wasn't mortgaged at that point in time as I had sold off other rentals and paid down the remaining mortgage
But with leverage if the gross yeild is less than the mortgage interest rate, leverage is just gonna make it worse
But yeah, i'm fully aware property i quite in depth to work out ROI, you have leverage, tax breaks, cap gain etc etc. Its not as straight forward as shares.
But given cap gains had gone up so much faster than rents and IMHO market was near the peak, i elected to liquidate my most of my rentals and put the money into other stuff, which happened to be managed funds, etf, private equity, harmoney etc
I own a few properties, I measure their yield on current market value and return on initial investment. Selling off the biggest one as it is mortgage free....doesn’t affect the LVR limit on the others. Money will be better used in other asset classes and providing freedom of choice to us. Many property investors measure yield on their purchase value, something I don’t agree with. And yes, the leverage has been fantastic in this past booming market with the low interest rates and some good timing. Previously I put my share profits back into the mortgage when my LVR was higher, now it doesn’t make sense so I am enjoying letting some more of my shares run rather than securing profits a bit earlier (for mortgage benefit). Shares are far more interesting than property!