All Topics / General Property / help with property query

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  • Profile photo of debarondebaron
    Member
    @debaron
    Join Date: 2006
    Post Count: 15

    Hie guys,

    Ive got a nagging questions about property gains that i hope someone can help with.
    If i dont use my current PPOR equity to purchase more IPs via refinancing (thus continuing to generate profit), will i actually be making any gains at all say.. in the 5 years time i spend paying off the high interest rates of my home and discovering that my 300k property had been valued at 15% higher than my orignal house price.
    Doesnt that mean that technically whatever increment my house made actually evens out with the enormous amount of interest rates i have to pay??

    Sorry property noob here.

    Cheers,
    Deb

    Profile photo of sallyannsallyann
    Member
    @sallyann
    Join Date: 2005
    Post Count: 53

    This is why you would look for a cash flow positive property, ie one where rent + tax deduction exceeds interest + other costs. Then you can afford to hold it and benefit from even low growth. Also if it is CF+ when you buy it, rents should increase more than interest + other costs over time so it may start making money.

    Certainly a really good question imo, for many properties I think you are right, holding costs can exceed growth.

    Profile photo of debarondebaron
    Member
    @debaron
    Join Date: 2006
    Post Count: 15

    Oh yes, the almost mythical cash flow positive properties. Do they still exist nowadays?!! -certainly not in my area (SE QLD)

    The reason i asked is alot of people actually proclaimed happily that their houses has increased by x% but when i look deeper they are infact making a loss from the enourmous interests they've had to pay all these years..

    Profile photo of imugliimugli
    Member
    @imugli
    Join Date: 2005
    Post Count: 87

    CF+ do still exist but you need to look hard, put a higher deposit up and structure it correctly. Patience, preparation and cash.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Totally agree they certainly do exist even in SE Qld.

    Purchased a nice little block of 3 units only a week ago and when we have finished they will be very very positive cash flow and thats here in Brisbane.

    Richard Taylor | Australia's leading private lender

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