The returns on property don’t seem worth it anymore

[elguapo]

What's A LOT HIGHER than 95%....welllllllll 70% vs 95% = 6 times as much ($5k vs $30 per $100k) .... i think 6 times is fair.....6 is a lot.

Elguapo is going to show us how easy it is to buy shares @99.1% leverage....it'll be super easy for him and I'll have to stump up $10k

Roll up roll up learn how to buy $500,000 worth of shares with only $4,500 of your own money no hooks no gotchas no strings....it's easy just wait for his next post

Just to add, with a CFD you can go up 30:1*, which if my maths is correct is more leverage than 99.1%. On forex, I've seen people running at 400:1.

You may find this explanation of what leverage is and how it works helpful, because you seem quite uneducated on the topic.

https://www.ig.com/en/risk-management/what-is-leverage

*Just a note that I don't recommend this. The data shows that an optimal risk/return is achieved with a 1.3:1 ratio.

[elguapo]

Property returns will only going to get worse with new legislation and TA rulings.

There will be time when I would reduce exposure to invest elsewhere where you don't get all these headaches for same or better returns like commercial syndicates/ Index funds/manged funds etc.

I actually think they will get better, situationally at least. More regulation will create distortions that will be profitable.

[spaceman]

Just to add, with a CFD you can go up 30:1*, which if my maths is correct is more leverage than 99.1%. On forex, I've seen people running at 400:1.

You may find this explanation of what leverage is and how it works helpful, because you seem quite uneducated on the topic.

https://www.ig.com/en/risk-management/what-is-leverage

*Just a note that I don't recommend this. The data shows that an optimal risk/return is achieved with a 1.3:1 ratio.

Still waiting for you to show us where the average joe can get a house worthy lump of money to invest in shares.

My bank account details for the $10k are 06 0909 0478700 00

Cheers
Spaceman......PS I won't be waiting with bated breath for you to honour the bet......I figured you were full of BS from the start and you've only reinforced the fact

[spaceman]

…………..

BTW, I'd love to see which major bank is lending you 90-95% for an investment property.

……..

LOLZ....amateur …..my last 5 investment properties were 100% loans ...BNZ, ASB, ANZ.

Cheers
Spaceman

...PS actually last 2 were >100% as ASB and ANZ both gave me a few $K as a welcome gift

[OnTheMove]

Spaceman, leveraging ASX in Aus you mean? Most will lend to 70%. But thats IN Australia. I have no experience trying to borrow money in NZ to buy against the Aussie ASX. Its usually done with your SMSF under LRBA, people trying to leverage for ASX or for property on their Super Fund etc. You might be asking him something else, apologies if so.

https://www.williambuck.com/leverage-your-smsf-investments/

Im pretty sure it can be used for property, but buying in NZ Im not sure either.

Takes a lot of setting up and paper work, but can definitely increase super funds especially if you are nearing retirement.

[spaceman]

Spaceman, leveraging ASX in Aus you mean? Most will lend to 70%. But thats IN Australia. I have no experience trying to borrow money in NZ to buy against the Aussie ASX. Its usually done with your SMSF under LRBA, people trying to leverage for ASX or for property on their Super Fund etc. You might be asking him something else, apologies if so.

https://www.williambuck.com/leverage-your-smsf-investments/

Im pretty sure it can be used for property, but buying in NZ Im not sure either.

Takes a lot of setting up and paper work, but can definitely increase super funds especially if you are nearing retirement.

Nope....Elguapo claimed …."

Leverage can be used on shares just as much as property,"

I called BS. Yes you can leverage share....never said otherwise. But the average Joe can't leverage shares anywhere near close to the levels he could with a house.,

I posted a some loan info from banks who are ready to loan 95%....one of the banks (ASB) will also loan on shares, but their max is 70% and they have a list of approved shares.

Elguapo doubled down with ………..

that you can achieve the same leverage with share as you can with property. You can actually go a lot higher in many cases.

..

He bet me $10k that you could......of course he is unable to show us how he could do it....but also of course he won't honour the bet.

Trying to weasel out of it claiming that CFD's are investing in shares shows exactly my original point when I pointed out …

.BS....a giant steaming pile of BS

Mind you given that he thinks 30:1 is better than 99.1% leverage, he's obviously a bit special around numbers.

@ 30:1 to get $100 how many do you need?....most people would answers $3.33333..... as 30*3.3333 is 99.9999 which is pretty much close enough to 100.
OTH what is $100/99.1 = $1.0090 . On most peoples planet $3.33 is more than $1.01.....not on Elgaupo's though.

Bottom line is there is no way in the world for ordinary people to leverage the share market as much as they can property.

Except for Elgaupo though.....he's special …..and I'll never see that $10k

Cheers
Spaceman

[OnTheMove]

Im not getting involved :-)

All I care about is my Aussie Super, so it suits me for now.

Didnt they use to call high LVR lending LEM? I have a lender who will do to 95%, but I have no interest or ability at this point to do anything with the high LVR. Hind site is a great thing, Dunedin about 350k~ now close to 600k~ in 3 years. Welli had a similar period. I do think this is rather volatile though given the job markets and the capita of the cities.

My interest in property was renovate and sell, but hard to do in a market when everyone is holding onto their properties due to it going flat, ie very few 10-20% below MV seller near my day job. I could risk by visuals and organise a renovation team. but I feel the markets dont have much juice left in them before the resistance line appears.

Thats where I prefer shares,, even mutual funds. And when in Aus due to the flat market and not such a high median multiple (Bris or Newc) I can find a day job and find bargains to renovate. I LVR both is what I mean. I look forward to returning with the Iron Ore etc.

[JBM]

Of course Banks will give you more leverage with property than equity in a listed company thats well known but also not comparing apples with apples I've never held a property that's increased in value by 100% in a month>>Or a day


I personal have just over 250k loaned 3.7% I use to trade in the ASX (the ASX market worth 2.1+trillion AUD at present) ... and have been doing so for many years ..
I see no more risk than when I had 500-1mill loan in a spec build in Queenstown etc ... If anything I sleep better at night knowing I can always just sell out of my ASX positions within a few minutes when the market is open ... one of my last spec properties took over a year to sell !!

Of course Property has been a Brilliant investment over the last few years esp. ... but thats not going to continue... already seeing some very impressive gains in my resources&Energy ASX holdings over the last month.... I think we will see many smart traders move funds into the likes of these ASX sectors out of Property specs esp. in AUSSIE ... its all about market emotions GREED and FEAR....where is the money being made!! I couldn't think of anything worse than sitting on a Large Negative net Yielding Property portfolio >>>>

2020 will see the FEAR of missing out will drive many companies values much higher ,,,retail investors/trading will follow the trend and emotion just like they have did in the RES property market..

[spaceman]

Of course Banks will give you more leverage with property than equity in a listed company thats well known but also not comparing apples with apples I've never held a property that's increased in value by 100% in a month>>Or a day

Not according to Elgaupo………. OK I'll bite.....what shares have you owned that increased in value by 100% in a month ….and of course

what shares have you owned that increased in value by 100% in a day????

I never said shares and property was apples vs apples.

I personal have just over 250k loaned 3.7% I use to trade in the ASX (the ASX market worth 2.1+trillion AUD at present) ... and have been doing so for many years ..
I see no more risk than when I had 500-1mill loan in a spec build in Queenstown etc ... If anything I sleep better at night knowing I can always just sell out of my ASX positions within a few minutes when the market is open ... one of my last spec properties took over a year to sell !!

That $250k loan, what is the security???....is it just the shares or something else??

I agree that liquidity is indeed an advantage of the share market…..most of the time

Of course Property has been a Brilliant investment over the last few years esp. ... but thats not going to continue... already seeing some very impressive gains in my resources&Energy ASX holdings over the last month.... I think we will see many smart traders move funds into the likes of these ASX sectors out of Property specs esp. in AUSSIE ... its all about market emotions GREED and FEAR....where is the money being made!! I couldn't think of anything worse than sitting on a Large Negative net Yielding Property portfolio >>>>

it is a given that shares out perform property. But leverage amplifies any gains. Lets take 70% for shares (from ASB max) and 95% for property (also ASB max)

$100 in shares @ 70% lev and 10% return will give you 30% ROI....not too shabby...……$30 gets you $10 profit
$100 in property @ 95% lev and 10% return will give you 200% ROI....waaaaaaayyyyyyyy less shabby than 30%...… $5 gets you $10 profit

Given the above leverage how much does shares have to out perform property to give the same ROI????

If property goes up 10% shares would have to climb by 60%...…….now how often does the share market out perform shares buy a multiple of 6???.

Of course I'm well aware of other factors such as holding costs of property vs shares and income on property vs dividends from shares. But the simple fact is that due to the easy leverage advantage of property vs shares, in the real world property will out performs shares. In Elgaupo's world rain is lemonade and rivers are tomato sauce and …you can achieve the same leverage with share as you can with property. You can actually go a lot higher in many cases.…….

2020 will see the FEAR of missing out will drive many companies values much higher ,,,retail investors/trading will follow the trend and emotion just like they have did in the RES property market..

….maybe ….maybe not …..IDK

Cheers
Spaceman

[spaceman]

Im not getting involved :-)

...Captain Sensible

All I ….blah blah blah...…. ie very few 10-20% below MV seller near my day job. ….blah blah blan

…....

dohhhhhhhhhhhhh!!!!!!…..one of my pet hates!!!. No such thing as 10 -20% below MV.

The price it sells at IS THE MV!!!!!!!!.

BY DEFINITION....it has to be.

Unless it was a private sale, where a deal was done. If a property is for sale on the open market, the price that it sells at IS the market value.

Cheers
Spaceman

[Perry]

Keep Kalm & Karry On

dohhhhhhhhhhhhh! One of my pet hates!!!. No such thing as 10 -20% below MV. The price it sells at IS THE MV BY DEFINITION....it has to be.

Fair point.

Perhaps we need a new set of initials in this cool, calm and collected thread?

EMV = estimated market value.

---

Now, puts Mod hat on.

Please guys and gals, take a deep breath [or several] before clicking the [submit] button.

What's needed is for someone to prove that they have - akin to the average person - borrowed from a bank, 90-100% of the cost / value of the shares which were purchased with that loan.

[JBM]

Not according to Elgaupo………. OK I'll bite.....what shares have you owned that increased in value by 100% in a month ….and of course

what shares have you owned that increased in value by 100% in a day????

I never said shares and property was apples vs apples.

That $250k loan, what is the security???....is it just the shares or something else??

I agree that liquidity is indeed an advantage of the share market…..most of the time



it is a given that shares out perform property. But leverage amplifies any gains. Lets take 70% for shares (from ASB max) and 95% for property (also ASB max)

$100 in shares @ 70% lev and 10% return will give you 30% ROI....not too shabby...……$30 gets you $10 profit
$100 in property @ 95% lev and 10% return will give you 200% ROI....waaaaaaayyyyyyyy less shabby than 30%...… $5 gets you $10 profit

Given the above leverage how much does shares have to out perform property to give the same ROI????

If property goes up 10% shares would have to climb by 60%...…….now how often does the share market out perform shares buy a multiple of 6???.

Of course I'm well aware of other factors such as holding costs of property vs shares and income on property vs dividends from shares. But the simple fact is that due to the easy leverage advantage of property vs shares, in the real world property will out performs shares. In Elgaupo's world rain is lemonade and rivers are tomato sauce and …you can achieve the same leverage with share as you can with property. You can actually go a lot higher in many cases.…….

….maybe ….maybe not …..IDK

Cheers
Spaceman

I don’t disagree property here in NZ like many nations is by far the best leveraged investment one can do ... I,ve done many great property trades over the years where when you put down % return on capital invested and time are just brilliant...

Now that’s of course why we now locally have to pay $300k+ plus for section not much bigger that driveways ..only 3yrs ago you could buy much better located 2x-3x larger sections for just over a third the cost..

Now is this going to continue... I think not for some time (think we will go along the Japanese road after their property bubble)

Yes I use our own debt free RES property for equity for the 250k (actually only 200k is in the market the other 50k is invested in a small vending business that pays all the costs of the trading company)

Otherwise I would be paying much more than the 3.7%

We also use our RES equity for a commercial property (which is paying its self off at around 6% per year)

The share that’s gone up 100% since start of DEC = WWI.asx from .6c and touched 1.2c on Friday

The equity that went up 100% in a day was a share option (which you can buy just like a share on the ASX)
Can’t remember of the top of my head

Best return was share option SSNO just under 1000% in under a year hold

[Perry]

A stuff item, of underwhleming note.

Not to be read on a full stomach.

Or too soon before breakfast.

[OnTheMove]

Now is this going to continue... I think not for some time (think we will go along the Japanese road after their property bubble)

Exactly, thats all the guys were trying to say, if you are a one trick Pony, ie NZ RE, yes you would have done well in last 20 years. But the resistance line is looming and whether that is the stimulus for correction, nobody knows. All we do know is that median multiples (of income) are ludicrously high and in some towns where the work and the capita just dont justify the prices. I think the GFC was missed by everyone and had Key not printed money we would have lost more like 30-40%. If something of that nature occurs again, even something much smaller, NZ with its lending to GDP ratio just cannot borrow to save NZ again. But nobody can predict the future, but common sense can be applied and a median house price of 70% increase in 3 years in Dunedin doesnt take a more than common sense to realise $630k median house price in such a town is pushing that resistant line. Its like expecting fossil fuels to be unlimited. The push back in affordability in that market is the production of affordable electric cars like the Nissan Leaf (the best selling electric car on the global market), id rather have a tesla but not for 2.5x the price haha.

So all that was suggested is that shares are another option outside property as you have shown and yes they are able to be leveraged, perhaps not to the level of some banks for property AT THE MOMENT.

I bought a property and it will only return 3.7%, but the alternative was a crappy flat in the city that was costing me more on interest only. So as a PPOR I have zero interest in its yield.

My Aus Super on other hand Im trying to see what I can do there, Id like to be able to use it to buy my end game property. But not sure if I can buy international property under SMSF.

EMV = estimated market value.
.

Hehe thats pretty much a given right? Hence no reply, just a deep sigh. A massive database of houses sold in the area, worked out what i ESTIMATED to be MV and paid MV. Or I could have paid the RV for another $200k, would that have been MV? NO.

For me its more useful in terms of reno and sell in a flat market. In a bullish market outside Auckland it would be pretty darn hard to aquire Id think?

[OnTheMove]

A stuff item, of underwhleming note.

Not to be read on a full stomach.

Or too soon before breakfast.

They didnt really suggest a rate did they? CGT I have no issue with, am use to it in Aus. Wealth tax, well it will never effect me haha. But does seem a bit like, you can be a capitalist but we will restrict you.

Heck a property correction is enough of a concern to be worrying about wealth tax.

I do believe pensions should be assett tested. Who was that mazillionaire who is claiming the pension and was laughing at us all about it ? I think Gareth Morgans policies while unpopular do resolve the need for increasing tax to pay for pensions.

Will Boomers be the last Gen to see pensions?