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i suppose it is easier to borrow 500000 to buy an investment rental, but to do the same with shares even property shares isn't it higher risk.
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Originally Posted by Deej5
If you are thinking of property why not have shares in property? PFI ARG GMT PCT all good returns.
Another property investment with good returns is The Mutual Superannuation Fund.There returns before tax for the year ending 30/6/14 was 9.11% and for 2013 5.7%.
I think they own freehold 5/6 commercial buildings in the Auckland area and all are tenanted.
May not be suitable for everyone but it's quite inexpensive to invest into.
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Here's an interesting stat that may prove useful, in the 24 months following Black Tuesday, the market cap of public property companies in NZ fell by nearly four fifths!
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Originally Posted by Bjauck
That is a great return.
You have underlined why NZ has such a small proportion of wealth in financial investments (shares and bonds) compared with residential real estate. When people can get such good (mostly untaxed) returns from leveraged residential housing investment, it is natural that they will tend to park and accumulate their wealth there. It also helps explain why our stock exchange is small in proportion to our GDP and why our houses are expensive in relation to our incomes. NZ is going back to the future of a nation of wealthy landlord families (some absentee and foreign) and inter-generational tenants, who work for foreign-owned companies.
It would take a courageous government with vision to introduce a tax regime which increased the tax take from investment residential real estate, so that the proportion of total returns (capital profit and income) paid in tax equaled the proportion of returns(capital profit and income), from investment in shares, that are paid in tax. The ease at which investment in residential real estate can be leveraged enables large (currently untaxed) capital gains for the owner's equity.
Your right its a great return,although there has been no return,except managing tenants--It started out as our family home and something I could put my energy into--I didnt leverage as some do--and agree with some of your points,but so far Ive been taxed just like with shares--but the market HAS gone a bit crazy and it cant continue --Thats why at this point its a much harder decision(although at the time we didnt know this was going to happen with prices)--It could also crash as well..who knows.
I got lucky with prices ,but if you saw the house before ,you wouldnt recognize it --there are still places where houses are relatively cheap,but you would have to adjust your lifestyle to be in a different area....well..gotta go ..Ive just lost a tenant,and the other one doesnt knoiw how to change a light bulb.
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Originally Posted by skid
Im not so sure either would be a sure winner these days---im just wondering which share if I had put my $64000 in (1984) would be worth 1.3mil now--cant say the cash flow is great though(rent-expenses)---it will still be there in X years though and there is no executives with their noses in the trough
By my rough calculation it works out out at 20% compounding return/yr
Infratil is close to that
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Banned
I'm amazed that the government (or councils) make bugger all from property sales. Imagine how much a graduated stamp duty tax would bring in! Starting at 2% at $500,000 and over and gradually moving up to 5% on $1,000,000 .... Auckland could have that new harbour crossing paid for in weeks ;o)
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Originally Posted by BlackCross
I'm amazed that the government (or councils) make bugger all from property sales. Imagine how much a graduated stamp duty tax would bring in! Starting at 2% at $500,000 and over and gradually moving up to 5% on $1,000,000 .... Auckland could have that new harbour crossing paid for in weeks ;o)
very little tax is made from residential property investment as most gains are untaxed capital gains. Even when tax is paid in the form of rates, they are often paid grudgingly,,,At the very least perhaps, stamp duties could be paid on investor and foreign purchases.
Originally Posted by kiora
By my rough calculation it works out out at 20% compounding return/yr
Infratil is close to that
IFT is definitly one of my better investments, However it was floated in the 1990's whereas Skid bought his house in 1984. It would have been interesting to see how IFT would have coped with the 1987 meltdown.
Originally Posted by skid
Your right its a great return,although there has been no return,except managing tenants--It started out as our family home and something I could put my energy into--I didnt leverage as some do--and agree with some of your points,but so far Ive been taxed just like with shares--but the market HAS gone a bit crazy and it cant continue --Thats why at this point its a much harder decision(although at the time we didnt know this was going to happen with prices)--It could also crash as well..who knows.
I got lucky with prices ,but if you saw the house before ,you wouldnt recognize it --there are still places where houses are relatively cheap,but you would have to adjust your lifestyle to be in a different area....well..gotta go ..Ive just lost a tenant,and the other one doesnt knoiw how to change a light bulb.
A great investment and amazing that you could do it without leveraged finance. You put in hard work to turn it around - and have got a good return for your efforts. Most of that return has added value - mostly capital value - to your property, which will not be taxed when you sell. Similarly you have enjoyed periods of increasing land values. Other people work hard and their effort is rewarded by earning a high income, all of which is taxed. Society needs to determine if that is fair.
As you say maintaining a rental property, if you do it yourself, does require hard work and there can be periods when you do not have a tenant.
As property has increased in value so much more than inflation and incomes since 1984, I wonder if people could do what you did, without needing to borrow.
Certainly unleveraged landlords could pay more in the way of income tax as they do not deduct interest charges from rental income. However rental returns would still be a minor part of their total investment returns and the expectation of capital appreciation must be a dominating motivating factor especially in a market like Auckland where average gross rental return is about the same as a 1 yr term deposit interest rate.
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Originally Posted by BlackCross
I'm amazed that the government (or councils) make bugger all from property sales. Imagine how much a graduated stamp duty tax would bring in! Starting at 2% at $500,000 and over and gradually moving up to 5% on $1,000,000 .... Auckland could have that new harbour crossing paid for in weeks ;o)
In much the same way a financial transaction tax that imposes a fraction of a percentage point could yield the Government billions?
Last edited by Zaphod; 03-09-2015 at 08:32 AM.
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Member
it is so easy to buy shares and so difficult to buy an investment property in this market. Everything is up for auction and you are competing with so many competitors.
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Member
it is so easy to buy shares and so difficult to buy an investment property in this market. Everything is up for auction and you are competing with so many competitors.
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