If you are over 40 and starting to read this post, I politely suggest that you move along. There isn’t going to be anything in this post that will interest you. Just me babbling on about the past. …Have they gone? Is it just you and me now? Can we finally talk alone?
I belong to a secret society called The Youth Who Serve Landlords. We meet each morning on trains, buses, bicycles and trams as we head to our day jobs to save enough money to pay our landlords each month.
As is likely the case with peasants from previous generations, while we are aware that things could be better than they currently are, on the whole, we just carry on with our daily lot. Even so, during the day while we are bored at our jobs, we flick through blog articles on our smartphones where keyboard warriors write and graph and question the national religion and try to prod at the landlord priests.
This week we’re discussing the evils of men over 40 who serve the will of the landlords. Did you know that as men get older their intellect weakens, and they are more susceptible to being infected with the landlord disease and therefore become hosts to spreading the economic misery that accompanies landlord thinking?
How do we treat these men?
As the great military strategists have known since men started fighting each other thousands of years ago, we need to get inside their head and find those nerves that when plucked, will cause a reaction. With a violin, we only need to gently pluck the strings for it to produce sound. Likewise, we need to identify the particular strings, or tendencies, that resonate with those men over 40 who have succumbed to landlord’s disease.
One year ago an elderly male named Bernard Salt accidentally plucked one of our strings. Just as the story of a butterfly flapping its wings in a forest causing a weather storm weeks later, Bernard expressed his opinion in our national newspaper suggesting that the Youth Who Serve Landlords merely needed to stop buying multiple serves of smashed avocado on toast each week from our local hipster cafes in order to save our deposit. As he admitted recently, he didn’t intend to pluck our collective peasant string.
Let’s return to our line of enquiry.
How do we treat men carrying landlord’s disease?
As with most diseases, it is not immediately obvious to the naked eye, because it’s buried deep within the host’s mind, in their neurons to be specific.
If you were to observe a prospective landlord in their natural habitat, that is to say, listening attentively to their trusted accountant, financial planner or mortgage broker, you would find they appear quite rational. And if you were in the room listening to exactly how the landlord’s disease is transmitted from the finance professional to the male host you would see specific words are used to convey the message.
Just as innocently dropping the word “WEDDING” into conversation with a female is sure to arouse their attention, finance professionals are equally aware that dropping the word “TAX DEDUCTION” into conversations with men over 40 will illicit a similar level of interest, including increased blood flow to their right hand, elevated levels of adrenaline and a sudden desire to sign something.
Given this is what we are up against, namely a disease transmitted by finance professionals across the country, how can we vaccinate against it? How do we treat it?
We need to remove the innocence from the transaction.
Buying your first, or second, or tenth house is a transaction.
When you buy 951 shares in Woolworths, or a loaf of wholemeal bread, or 4kg of bananas, does that transaction directly harm anyone?
Does buying shares in Woolworths push up the price of the food sold in Woolworths? No.
Does buying a loaf of bread push up the price of bread? No
Does buying 4kg of bananas push up the price of bananas? No.
So what’s difference when you buy a second or subsequent house?
The difference is you have outbid a prospective homeowner and you had an unfair advantage to outbid that homeowner.
As soon as you tell your lender you’re going to be a landlord, not a homeowner, they will add (roughly 80%) of the expected rental income for the property you are going to buy to your income and increase your maximum borrowing capacity accordingly, so that, all else being equal, you will always outbid a prospective homeowner who is on the same income as you.
I’m not even talking about negative gearing.
So long as an investor can claim the expected income from the rental property as additional income when going to the lender for pre-approval, irrespective of whether the interest will be a tax deduction, investors will always outbid prospective homeowners.