On a total return basis, I would suggest that residential rental property investments have been distinctly underwhelming over the last decade.It is a much under appreciated fact just how profitable residential property investment has been over the last decade.
On a total return basis, I would suggest that residential rental property investments have been distinctly underwhelming over the last decade.
To what extent would net rental income over the last 10 years have made up for the fall in capital values? I suspect many investments have barely broken even over the last decade.
The property I bought in 2012 shows a return of 500%. That, if I sold now, would be €100k profit on a €20k leveraged investment. The property I bought in 2006 is still under water and the total return over 10 years is indeed probably negative. Each statement is true and each is meaningless. I have sold neither and do not intend to sell in the next 10 years.
the financial crash was so devastating for property investors, namely leverage.
Agreed.Residential property investment is not, or at least should not, be seen as a short term thing.
So you would hardly say that investment has been very profitable over the last decade. Maybe it will prove to be very profitable over a 20-year period. Maybe not.The property I bought in 2006 is still under water and the total return over 10 years is indeed probably negative.
Sure you can.You are buying an investment with borrowed money something you cannot do in the stock market.
For comparison purposes, the S&P500 has quadrupled in value since the financial crisis.
The property I bought in 2012 shows a return of 500%. That, if I sold now, would be €100k profit on a €20k leveraged investment.
Two things:-I think we had a discussion about that statistic on another thread, and I pointed out that it is only 40% higher than year 2000, in fact the irish property market has outperformed the S&P 500 from year 2000.
Why do you think it's not possible to invest in stocks on a leveraged basis?Another big factor of course for the outstanding returns of property since 2012 is the high octane of leverage, something not available to S&P500 investors
in that statement you have grabbed the reason why most people make money from buying a house and also why the financial crash was so devastating for property investors, namely leverage. You are buying an investment with borrowed money something you cannot do in the stock market. Therefore if i have 50k i can get a mortgage of 150k to buy an asset for 200k today. If i invest in the stock market all i can buy is 50K of stocks and shares. It also explains why the total amount of money invested in global stock markets has remained static over the last 20 years, whereas the total money invested in the global property and debt markets has exploded.
There often seems to be a doom and gloom view of property investment on this forum. I get that people were affected by the downturn but not everyone was. my investment property is the best investment iv ever made and continues to be a strong investment. Its not luck either - i bought a certain property in a certain place at a certain time. Surely it boils down to the investment itself - some are good, some are not so good.
I can only recommend property investment to friends and family based on my experience, my strategy and indeed my outlook. But each to their own.
Agreed.
I was simply responding to your statement that it is under appreciated just how profitable property investment has been over the last decade. That statement is only true if you ignore the capital position, which seems odd to me.
So you would hardly say that investment has been very profitable over the last decade. Maybe it will prove to be very profitable over a 20-year period. Maybe not.
For comparison purposes, the S&P500 has quadrupled in value since the financial crisis.
Sure you can.
Anybody that invests in stocks through a pension vehicle while carrying a mortgage on their PPR is effectively buying stocks with borrowed money.
You absolutely can, either directly or via derivatives. You may be able to get a loan from a bank to make up the €100k gap. You can setup an account with any of the CFD/spreadbetting companies and buy significantly more than €150k with €50k margin, many would give you exposure to €1m in indices for €50k margin. You could buy a bunch of options/futures which could give you exposure to well over €150k. Not suggesting you SHOULD do it, but it is certainly possible and with a lot less effort and paperwork than a property mortgage.So if I have no mortgage or loans, can I buy 150 k worth of stocks with 50 k cash ?
Didn't think so.
You absolutely can, either directly or via derivatives. You may be able to get a loan from a bank to make up the €100k gap. You can setup an account with any of the CFD/spreadbetting companies and buy significantly more than €150k with €50k margin, many would give you exposure to €1m in indices for €50k margin. You could buy a bunch of options/futures which could give you exposure to well over €150k. Not suggesting you SHOULD do it, but it is certainly possible and with a lot less effort and paperwork than a property mortgage.
That's simply untrue.The American Market is the outlier, property in every European capital has more than doubled in value since 1999 where as bar Germany, majority of local stock markets are flat for twenty years
Of course you can! There are any number of ways of buying shares on a leveraged basis - you could buy a tripled-leveraged ETF, for example.So if I have no mortgage or loans, can I buy 150 k worth of stocks with 50 k cash ?
Of course. Investing in anything on a leveraged basis always increases risk.And infinitely more risky
Definitely. Just making the point that it's actually easier to get margin to buy in the stockmarket than buying property, rather than it not being possible...And infinitely more risky, CFD, s are a way to the poor house for anyone but professional traders who are OK with thee odd margin call
That's simply untrue.
Of course you can! There are any number of ways of buying shares on a leveraged basis - you could buy a tripled-leveraged ETF, for example.
Of course. Investing in anything on a leveraged basis always increases risk.
Definitely. Just making the point that it's actually easier to get margin to buy in the stockmarket than buying property, rather than it not being possible...
You'll pay about 4% on borrowed money to spreadbet, about the same as a BTL if not slightly cheaper. You can hold for as long as you want. But I'd agree fully with you that they should not be touched by the vast majority of people.The interest rates you pay for the privelage of investing in CFDs are multiples of a btl mortgage, you can only own them for a short term if you want to make money, they are for trading and as for x long or short instruments, those should not be touched by the vast majority of people as lack of liquidity alone will kill you
Personally I think correcting false statements about financial matters, in a financial discussion/advice forum, is a little more than just academic.The point is purely academic, no practical value in it