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Ian Ugarte

Greed or ethical community investing?

By Ian Ugarte

How many times have you heard a BBQ conversation go south with accusations that property investors are greedy? They push the market upwards by buying properties. Straight-out capitalists. They don’t care about community or families. They should be ashamed. This may sound harsh, but it does happen!

You sink in your chair at the end of the table not willing to say anything just in case the vengeance and anger directs straight at you!

You already own or really want to invest and you would like to give rational points of view, but you say nothing and you know how hard it is to pay bills every week with a portfolio that is barely creating wealth or you are wanting to invest soon. Silence!

With the advent and introduction of negative gearing 30 to 40 years ago, the Australian property investor has been brainwashed into purposely making a loss in cash flow so that tax can be reduced and consequently the banks become richer with interest payments.

Property is used as a commodity and a by-product, and any investor that puts themselves in the market has been generalised as a greedy investor forcing the price of property up, when all you want is some financial security for the future.

We could talk about the many aspects and influences that drive property upwards; however, the simple point is that negative gearing hurts for a long time for the investor, and their ability to offer more to the community is diminished because the second brainwash is to build four-bedroom, two-bathroom houses (not homes!) — the worst possible product in the marketplace today.

Knowing that up to 80 per cent of tenants looking for rental accommodation are single or couples, we have a huge mismatch in the marketplace when they only require a studio or one-bedroom HOME and the marketplace shows that 80 per cent of available rentals are three-, four- or five-bedroom houses. See the mismatch that the so-called “greedy” investors have?

What if the investor could turn their portfolio around or buy something that gave a community outcome that was much better in cash flow by doubling the income of a property and, by default, actually fix a huge issue in the marketplace that serves the community? Well, it is possible.

Genuine community connection is created by providing elegant and high-quality housing diversification, just like in the late ’70s and early ’80s.

You see, by taking policies around the country and dividing these large negatively geared properties into smaller micro apartments with smaller self-contained areas and one communal area, you create a number of community outcomes that also benefit the investor.

They also benefit the resident because they are saving one-half to one-third in rent compared to the nearest available rental. Community is created and, ultimately, the government benefits because more of the correct housing is supplied to the marketplace.

Now, you may say that the government should supply housing. The fact is that they just cannot afford to, and what they do supply is for the low socio-economic demographic. The housing mentioned above is for singles with a job, professional couples up to the age of 45, 55+ single females and 70-year-olds. All they want to do is enjoy their life and save money while they live smaller. “Up-lifing” is what this is called.

For the investor, the expectation of double-digit returns or doubling of income is the absolute norm with this strategy. Not only is it normal, but the demand is huge. The potential to invest ethically, with benefit to the community and ultimately to the investor, creates an overwhelming sense of ensuring that you do not get called the GREEDY investor.

It needs to make SENSE before it makes dollars.

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About the Blogger

Ian Ugarte

Ian Ugarte

Ian Ugarte is the founder of the Australian Housing Initiative. He is a property expert, educator, author and change maker.

He is and passionate about creating co-operative partnerships between Social Agencies, Government and Private Investors to bring back the genuine connection of community through the provision of elegant housing diversification.

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Greed or ethical community investing?
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