The difference between capital growth and sweet equity

The difference between capital growth and sweet equity

Capital growth is dependent on the market.

Sweet equity is dependent on you.

Capital growth is passive.

Sweet equity is active.

Capital growth happens when there is too much demand.

Sweet equity occurs when you make something more valuable than you spend.

Capital growth usually takes a few years.

Sweet equity can take months.

Capital growth can happen relatively easily.

Sweet equity can be extremely hard work.

Capital growth doesn’t usually occur when a market goes down.

Sweet equity can continue to occur in any market.

How we accumulate wealth

How we accumulate wealth

We go to school and study hard to get into university.

Then go to university for a few years and become qualified.

We work for a few years and eventually buy our first home.

We continue to work and become more specialised and advanced in our field over the next 40 years.

We continue to pay off our mortgage every few weeks.

Gradually paying more as we continue to work.

Eventually we retire.

You realise the bulk of your retirement wealth was the very thing that sheltered you for those last 40 years.

First home buyer benefits

First home buyer benefits

New South Wales

First home owner grant (new home) scheme – the first home owner cap for new homes purchases is $600,000 and $750,000 when you enter into a contract to build or as an owner builder. For eligible transaction a $10,000 grant is available.

First home buyers assistance scheme – exemptions on transfer duty on vacant land below $350,000 and new and existing homes below $650,000 and concessions on duties on vacant land below $450,000 and new or existing homes below $800,000.

Queensland

First home owner grant – $15,000 first home buyer grant towards buying or building your new house, unit or townhouse valued at less than $750,000.

Renovated houses and the first home owner grant – You may be eligible for the first home buyer grant if you purchase a substantially renovated home. The renovated home must not have been lived in since the renovations and the house was a taxable supply and previously was an established house that went through substantial renovations.

Victoria
First home owner grant – A $10,000 First Home Owner Grant is available when you buy or build your first home which is valued below $750,000. For new houses built in Regional Victoria the grant becomes $20,000.

First home buyer duty exemption, concession or reduction – There is also a first home buyer duty exemption or concession reduction. If the property is worth less than $600,000 then an exemption may apply and a concession may apply under $750,000. For eligible first home buyers, it doesn’t matter if the property is new or established for the duty exemption or concession reduction.

How the market works

How the market works

The market is the ‘metric’ everyone cares about.

Whether it went up or down in the last week, month or year.

Go down or up to fast and the Government gets concerned.

This simple metric can change entire populations emotions and decisions.

There’s more to the market than this simple metric.

I believe the best time to buy is when everyone else isn’t.

The hardships of buying

The hardships of buying

Usually it’s hardest to do something for the first time.

Riding your bike, driving a car or talking to a large crowd.

By the second time these things become slightly easier.

Buying a property for the first time is like this for many.

It can be nerve wracking and scary.

A process you have never experienced and you certainly don’t want to make a mistake.

The amazing thing is buying for the first time can also be fun and exciting.

However it goes it’s a learning experience for your second.