help/thoughts around property investing.

Hi smart cube

Welcome aboard.

You mention “saving on tax” a couple of times.

I think you need to change your mindset here.

Some of the tax benefits associated with property investing a great – but investing in property primary to reduce your tax bill is flawed because it involves losing money to get back a litte bit.

In terms of the type of property to purchase – you’ll need to devise a plan that fits with your risk profile and goals.

Cheers

Jamie

Hi Smartcube

Similar goal to most I think. Use property and the leveraging aspect on borrowings to increase net worth and then be able to relax with residual income.
An idea may be to look at the various strategy options first, to get where you want to be. Find what is the best suited strategy to your needs over the time you are giving yourself.

A simple tax saving ( which is a negatively geared option) may not be the best in the longterm. Thats for you to decide. There are many considerations but you cannot build true wealth passively and quickly by one strategy alone, except capital gain in good times. +CF properties will not build you real wealth unless you have a swag of them or your LVR is low. Negatively geared high capital gain potential strategies will be limiting because you will reach a ceiling where the negative side really becomes negative when you cannot buy anymore. It's a flawed strategy for building wealth, but great for one or two properties short term.

Capital gain is where your gains are propelled above all else, beyond your efforts, so that is a hefty consideration. Earning $5000 a year from a +CF property will not make you wealthy, but earning $50,000 per year per property from gains may do so.

A balance is where you may like to go to reduce your risk. Depends where in investing you feel comfortable and what your risk tolerance is, what you can afford, how long you give yourself to achieve success and the education you give yourself, before you start, to be able to make that decision.

My advise for what it's worth is, if it's residential, buy in as high a capital growth area as you can afford in the major cities and buy a property with an add value element to it which you can implement in your own time. For more reading you can have a squiz at my website.

Ian
http://www.theblockblog.com.au
Free Property Investment Info, Tools & Resources For Investors

Hi Smartcube,

Your investment strategy of having 5-10 properties within 10 years is great but also aggressive. You need heavy capital growth to ensure this is achieved. The property you have provided is great to live in but will most likely not deliver you hugh CG. Why? Its already renovated and its smaller block (can’t really develop it). Your other option of an extension will also be costly as the property is already renovated ground floor. Try and look for properties you can renovate or properties which you can develop (subdivide, build a granny flat, etc).

Shahin Afarin – Property Finance Consultant
http://elitepropertyfinance.wordpress.com/