Posted to The Age (29/12/2011) on 19/12/2011 at 5:25 PM, 5:30 PM
Commenting on "Industry divided on price rise outlook"
http://theage.domain.com.au/real-estate-news/industry-divided-on-price-rise-outlook-20111217-1ozuy.html
I would like to ask all the First Home Buyers why you are so eager to buy a house.
Many property investors are relying on negative gearing to keep their bottom line viable. Does not this tell you that they are losing money by owning a property? Some may argue that the value of the building and fixed assets can be depreciated, but this is no big deal for older properties. An investor also pays land tax and thus takes away some lustre off the bottom line.
However, let's look at the negative ledger by doing some mathematics. If the loan is $200,000 and the rent is $200 per week, the gross return is 5.2% per annum. If the interest is 6.5%, then there is loss of 1.3%. The rates and charges from authority may add another 0.3%, giving a total of 1.6%. A general maintenance of $500 will boost the total % to 1.85%, or a saving for a renter is $3,700. Do not forget that in some states, the purchaser has to pay stamp duty around 5%, or $10,000.
I shall leave the rest of the calculations to the interested purchasers.
Commenting on "Industry divided on price rise outlook"
http://theage.domain.com.au/real-estate-news/industry-divided-on-price-rise-outlook-20111217-1ozuy.html
I would like to ask all the First Home Buyers why you are so eager to buy a house.
Many property investors are relying on negative gearing to keep their bottom line viable. Does not this tell you that they are losing money by owning a property? Some may argue that the value of the building and fixed assets can be depreciated, but this is no big deal for older properties. An investor also pays land tax and thus takes away some lustre off the bottom line.
However, let's look at the negative ledger by doing some mathematics. If the loan is $200,000 and the rent is $200 per week, the gross return is 5.2% per annum. If the interest is 6.5%, then there is loss of 1.3%. The rates and charges from authority may add another 0.3%, giving a total of 1.6%. A general maintenance of $500 will boost the total % to 1.85%, or a saving for a renter is $3,700. Do not forget that in some states, the purchaser has to pay stamp duty around 5%, or $10,000.
I shall leave the rest of the calculations to the interested purchasers.
