Is Buying a Home the Best Way to Build Wealth?

Posted to Sodahead (9/2/2015) on 10/2/2015
Commenting on "Is Buying a Home the Best Way to Build Wealth?"
http://www.sodahead.com/living/is-buying-a-home-the-best-way-to-build-wealth/question-4698794/

Many people will go to great extent to shop for cheap gadget and yet do not spend enough time to check out details before spending hundreds of thousands of hard earned dollars in real properties.

Several friends have asked me for opinion and advice after they have signed the purchase contracts. My standard response is "I cannot comment on what you have told me, and hope that you've made the right decision". A contract is a legal document, and trying to void one is beyond my scope. It is advisable to seek professional advice before committing, and no point to do so after.

Land appreciates but building depreciates. Every day, land gets more and more scarce, but building becomes older and older. Buying real property with no or little land is spending money on buying "thin air". Unless money is a dirty word and you have plenty to give away to the property developer or real estate agent, DO NOT get yourself that volume of thin air! Make sure that land near waterfront is not newly reclaimed or experiencing movement. Furthermore, properties near busy train stations, shopping centres, and popular schools command a good premium in prices.

Management graduates and staff at larger organisations are likely to have learnt the concept of continuous improvement. Similarly, properties must be maintained and improved continuously so as to minimise deterioration and in many cases, it can result in positive growth in real term.

Where is the housing market headed? (Post 4 of 5)

Posted to The Age (13/12/2011) on 15/12/2011 at 5:00 AM
Commenting on "Where is the housing market headed?"
http://theage.domain.com.au/blogs/talking-property/where-is-the-housing-market-headed-20111213-1osf0.html

I seek opportunity by predicting dooms. There is nothing to worry about if everything is hunky-dory, until things get over-heated. Buying during good times give low to negative returns; one may even lose the initial capital if the property is disposed early. If one is greedy and does not understand that property is a very long term investment, he is no wiser than those who invest in the shiniest, fastest and latest car.

When there is shortage of food, we grow food. When there is insufficient housing, we build more houses or multi-storey buildings. However, growing food and building dwellings need one crucial thing, namely land. When land becomes scarce, we cannot grow land! Scarcity pushes price up!

Many baby boomers had the opportunity to work two or three jobs during their younger days, and have experienced at least two recessions prior. They are not spendthrift like the younger generations, and have tucked away a fair amount of money. Some baby boomers who are ready to hang up their boots may not want to invest in real estate directly, but give away their money to their offspring as deposits or partial payments towards their first homes. Invariably, this provides an impetus for stimulating the next buying upswing.

As long as external influences do not have direct impact on an Australian citizen’s financial position, he will continue to live his life style and invest in property. However, if the impact is negatively drastic, real estate industry will slide to the point until cash-up opportunists come along to grab a good deal!

Tips for young investors

Posted to The Age (22/11/2011) on 22/11/2011 at 1:37 PM
Commenting on "Tips for young investors"
http://theage.domain.com.au/blogs/talking-property/tips-for-young-investors-20111122-1nrhx.html

Trust me, young people, it is not very smart just to be trendy, live in area you can't afford and stay close to the CBD. Try to look for a job close to where you live after you have digested what I have said in the first sentence.

Your money in the bank can never catch up with inflation, unless you keep piling up the balance with additional income from extra sources. The rental return for most properties is still not very good in Melbourne, so it is NOT a silly idea to continue renting. Be a good tenant, and you can see your rental payment goes down in real term.

So, you want to invest? Land appreciates, house depreciates - that is the saying. Your deposit money for a house may be sufficient to BUY, I stress the word buy NOT borrowed money, one or two blocks of land - obviously not in the already expensive / unaffordable suburbs. You have to do your homework and you'll find them. Google Earth can give you an idea about the surrounding environment.

Short term pain, long term gain does not mean that you go to borrow beyond your ability to repay. Look for win-win situation whereby you can achieve short term gain and long term gain - start searching for the "Far, Far Away Land" where there is a pot of gold buried underneath but will surface in years to come!

Until next time, keep reading my comments.


Posted to The Age (22/11/2011) on 22/11/2011 at 2:58 PM
When I was younger, I worked three jobs - 7 days and 6 nights before I was attached / married. Was there any life for me then? The answer is definitely Yes. Meeting people is life; talking to people is life; moving about contributing to the society is life, etc. Changing scenery from one job to another job was exciting and mind stimulating.

Last year, I used to get up at 5:15 am to catch the 6:06 am / 6:08 am train free-of-charge to Melbourne CBD. Sometimes, I dozed off for 30 minutes, or organised my thoughts during the train journey how I would conduct my class for the day. I was always the first one to arrive at the office; it was so quiet and no interruption. I could get great heaps of work done or marked plenty of papers before the office turned into a fish market.

There are properties you can afford to buy, but you must organise your life accordingly. You can drive to and park at the train terminus where train seats are plentiful.

Money does not grow on tree, and day dreaming does not increase bank balance. There are no rule books telling you where you should live or work. There are no rules telling you how you should make use of the 24 hours in a day, or where you can recharge his brain cells.

My friend gave me a big button on my birthday few days ago. On it was the wisdom "Aged to Perfection!"