Bottom rung of ladder

Base on my personal experienced I will do step 2 first. May be buy 3 PCFPs and rent it out. Then I do step 3 but I won’t sale it, just buy, reno then rent it out.

Warm Regards

ChanDollars
[Keep going, you’re on your way to financial freedom]

Hi Nobleone,

Thought this post may have been about my tenants from the title.

Regardless, I would think that your strategy would on a macro scale depend on your existing situation, time horizon, cash flow & reserves etc.

All being equal though if you are trying to build wealth in the medium to long term I would personally suggest the buy, renovate and hold approach. This will give you access to neutral or positive gearing in areas in which it is otherwise unavailable. It would appear from your question that you have ability in construction and you should take advantage of that if you can.

Building a house from scratch is notoriously problematic, expensive and not tax effective(as until the property is an income producing asset it is non-deductable). Selling a completed property is also expensive particularly when you can have it ‘optomistically’ valued and refinanced in a much more timely fashion. I believe that future wealth is simply a factor of total portfolio value and time so I’m all for measured accumulation.

More specifically I would find a nice little brick & tile 3 bedder in SE QLD for about $240k and another further north for about 160k if you have the serviceability to support it in the short term.

But then that’s just my 2cs

Good luck with it.
[]

Terry said : “From what I have seen and experienced, I would forget postive cashlfow property unless you want to make $2000 or so.”

If one wraps the +ve cashflow can be a lot more than that however.

>>The real money is made from building.<<

Unfortunately one is in the hands of the builder who may cause all kinds of headaches such as long delay to complete, shoddy work all of which adds to one’s holding costs.

Often problems with the builder can be avoided by asking for references of previous jobs. Ask these previous customers whether they have had any bad experiences with the builder and also ask whether they would employ him again.

Always have an architect or another builder inspect the job for you at intervals. Even if the builder insists that you don’t inspect until completion, one can always go to the site after hours.

>>Renovations can often end up not making much money unless your handy.<<

How true in many cases. On the other hand making a property more attractive by cleaning up the house, perhaps painting and/or freshening up the kitchen or bathroom is sometimes very necessary.

In the end, anyone of the three suggested methods can make money for one. All also have pitfalls.

Pisces

I remember reading in BRW about a recent court ruling regarding interest while building a house. The result was that interest can be claimed IF the house was being built with the intention of renting upon completion.

Josh