Is property an actual investment ?

[toast2success]

I have been looking at investment classes and what is available. Some people I have spoken to have tried to warn me off property , stating it is not an investment as such (and at times a Kiwi illusion that porperty is an investment). In some respects I could see where they were coming from.

We also got into a discussion over whether one should buy property which isn't likely to increase too much in capital gains, but has rent coming in that covers a significant part of the mortgage etc (i.e. basically covers your expenses) vs. a property that will experience capital gains but your input to the mortgage etc. will be greater .

Would love to hear peoples opinions on these topics

[fungus pudding]

I have been looking at investment classes and what is available. Some people I have spoken to have tried to warn me off property , stating it is not an investment as such (and at times a Kiwi illusion that porperty is an investment). In some respects I could see where they were coming from.

We also got into a discussion over whether one should buy property which isn't likely to increase too much in capital gains, but has rent coming in that covers a significant part of the mortgage etc (i.e. basically covers your expenses) vs. a property that will experience capital gains but your input to the mortgage etc. will be greater .

Would love to hear peoples opinions on these topics

Whether the property is likely to produce a good income, or is bought purely for capital gain rather than income, it is still an investmernt.

[CJ]

It is (normally) an investment. Whether it is a wise investment is another question.

The only exception is if you buy it with some other intention, with no concern about money (ie. a beach house to secure the location).

Very few people would buy a property expecting it to go down which is why even your personal home, while probably a liability in the short term, is actual an investment in the long term.

[noodles]

Whether the property is likely to produce a good income, or is bought purely for capital gain rather than income, it is still an investmernt.

I think the thread is going to head into the Investment vs Speculation argument.

Well let me stoke the argument by saying that if your cost of capital is greater than your rental return, then it is SPECULATIVE.

[artemis]

One big advantage of investing in property is that it is easy to borrow to purchase it. Provided it is bought and managed carefully - price, condition and location for renting - equity can build quickly over the medium term, through principal pay down and capital gain. The return on the initial investment can be very significant.

[troyvdh]

Giday....Im fairly short tempered....having been a "residential investor" for some 30 plus years....at times i am somewhat loath to reveal the money we/I have made...

...trust me...it aint rocket science...buying a average house...renting it out...dealing with tenants....hold for 10-20-30 years.......aint that bad....

.....like I say to many foljk I know....Kiwis are great at making dosh....BUT THE BASTARDS CANNOT KEEP IT......cheers troy

....PS....never forget KISS.....

...oops nearly forgot...when asking folk about "investing".....ALWAYS ask what they own ...eg...how many properties....how long for....and if you can ask what they are worth....me various properties...residentail.....in CHCH...nett asset ....around $2m.....cheers

...you should expect the above folk to do the same......cheers

[ENP]

"An asset or item that is purchased with the hope that it will generate income or appreciate in the future"

1. Is property and investment? Yes refer to definition above.

2. Buying for income or capital gain depends on what you want from the asset class. Overall though, I've come to the conclusion the pennies are made from the rent and the dollars are made from the capital gain.

[In4a$]

"An asset or item that is purchased with the hope that it will generate income or appreciate in the future"

1. Is property and investment? Yes refer to definition above.

2. Buying for income or capital gain depends on what you want from the asset class. Overall though, I've come to the conclusion the pennies are made from the rent and the dollars are made from the capital gain.

I agree and the day is coming when that capital gain on residential rentals will be taxed. IE capital gains tax

[ari]

Rent/Own????
http://finance.yahoo.com/blogs/daily...143539176.html

[fungus pudding]

[QUOTE=snapiti;469062]For many ,like alot of investments, property investment is about timing.
I was fortunate to be in the right place at the right time to start a rental portfolio in 1996.
This was when residential properties with a 10% yield were very common.
Eventually,over a period of 5 years, I ended up with 6 rentals.
Most if not all of my residential properties recieved enough rent to cover all the cost. This worked for me because I cant stand negative gearing.
I was lucky to have hit the jackpot, for timing, as my rental investment value went up hugely over a 10 year period.
Tax free capital gains.
I sold every property I owned as soon as I had owned it for 10 years.
This is the undisputed time for the tax man.
/QUOTE]


I'm not sure where or how you got that idea, but I doubt if the taxman sees it so black and white. Length of ownership is one factor, but the taxman is more interested in the wider picture - and if there is one over-riding factor, it is intent.