My Question to those of you with a few + ca$h flow properties ( WESTAN, STEVE ETC )is this-
Is investing in rural properties a ‘momentum’ strategy of investing.. i.e purchase a property for example at $70k, (min deposit and costs put in by you ) rented at $140 p/wk, ( 11 sec) the tenant signs up for 6mths, in the next few months ( before the six is up ) purchase another property ( assuming the same ) then another, and another..etc ( assuming tenants in place, so very positive investments, working on best case scenario ) as your figures look good the bank is happy to loan to you on each successive purchase.
Suddenly the first property and the third have the tenants move out, it takes you a while to source new tenants, as some of the properties are in smaller rural areas ( and no where has tenants waiting but no properties at all ) however due to the fact you have several properties, cash flow positive, these can cover the untenanted properties..
If you did not use the momentum strategy and just bought 1 to 3 properties, you would be finding it hard as your properties would be costing you, assuming the 1st and 3rd properties are vacant.
Also, if one property has a maintenance issue ( as others have queried in their posts ) your ‘spread’ covers it, the downside is slow or no growth over a short period of time, but who cares as it’s income your after not rapidly rising growth..As they say however Leveraging can maximise your Wealth, but it can also decrease it just as rapidly, choose carefully
[}
]devils advocate.. real estate agents and rural property owners are aware of + gearing investors so advertise their properties in a declining area as cash flow positive, build in a years rent onto sale of property, state they will sign on for a years lease and advertise a cash flow positive investment for those who don’t conduct ‘due diligence’..[}] after the lease they move on, you find a very low or no ! tenant base as the towns population is in decline, you have an empty old house in a rural area costing you money…Or as another Forumite [
] said to me –
Rental guarantees – off the plan CBD apartments!!!
What do you think ??? HmmmmmmmREDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
I dont have any rural properties, but from what I hear the key is to invest in regional towns and research population trends etc. So to sum up – make sure you know the AREA well.
Thats why I have been insular and only invest near home. I know that area and I know it will serve me well.
Hmmm not much input ??
Westan, still in School , guys ??
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Hi Redwing,
my idea is a little different about +ve cashflow, as a replacement of working income(job), personally for me, anything that is +ve cashflow, i like to think of them as products of financial managment still means you can take time off work, but does allow you, that extra equity (dependant again on how the deal is achieved) and cashflow.
With the extra cashflow, use it as financial management, for what ever reason you wish for, like shorter working hours, reinvestng the extra cashflow, or offsetting other expenditures… though still, you need some capital in reserve in worse case senario like you suggested, though im vary wary and do stay away from properties that the vendor does want to rent back, especially if its +vely geared and cashflow.
not really sure, but im guessing Westan and Steve, might agree on, using your +ve cashflow properties as “products of financial management”
Cheers,
sissis
Could you tell more the “”products of financial management””
, Does it touch the points what Redwing said?Regards
JulianTHERE IS ALWAYS A BETTER WAY!
Redwing,
The idea of buying +ve cashflow properties is to make money and I am sure you know that to make money there’s alway risk and in this case the risk of no tenant ie. turn +ve to -ve cash flow property. But that’s is part of the investing process.
For me I like to buy +ve cash flow property (PCFP) where there is a chance of capital gain (…prediction with due diligence and market researches)….
If I do buy -ve cash flow property (NCFP) then I will choose the area of where there’s more chance of CG than PCFP.
Warm Regards
ChanDollars
[Keep going, you’re on your way to financial freedom]Hey Sis,
Where are you?Julain
THERE IS ALWAYS A BETTER WAY!
Hi Julian,
im here, ill call, say in about 15 mins
Cheers,
sis
]devils advocate.. real estate agents and rural property owners are aware of + gearing investors so advertise their properties in a declining area as cash flow positive, build in a years rent onto sale of property, state they will sign on for a years lease and advertise a cash flow positive investment for those who don’t conduct ‘due diligence’..[}
] said to me –
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