Hi all,
I’ve just finished reading the latest edition of Steve’s book “From 0 to 130 properties in 3.5 years”, and I’m a little bit confused about the best strategy to meet my financial goals.
My ultimate goal is to buy debt-free commercial property and live off the passive income generated by it. From initial estimates, I would need approx. $2m+ in capital to achieve this.
My question is, what is the best way to build up capital? It seems from reading the book, that ‘quick turnaround’ property deals are the best and fastest way of generating capital. What I’m mostly confused about is where general positive cashflow properties fit into all this. Given my financial goals, should I bother looking for positive cashflow residential property to generate a relatively good yield or simply focus on ‘quick turnaround’ properties. I understand that every situation is probably different, but is positive cashflow property generally viewed as a good way to generate capital (assuming all the generated income is reinvested/saved)? Or would my time be best spent looking for quick turnaround deals such as renovations etc.Thanks for your help.
By ‘Quick turnaround’ deals are you talking about flipping (selling) the properties post reno?
You may find with all the related govt charges and taxes, it’s a case of two steps forward, one step forward and would require immense effort to achieve the same result that growing a residential portfolio, then transitioning over to commercial could achieve.
Do you factor in a PPOR into this equation? It makes more financial sense to have no non-deductible debt than an unencumbered commercial property for taxation purposes, so you might need more than than the ~2M+ estimated.
Just some food for thought.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Fabs, there are a number of strategies to get the best bang for your buck with quickly turning over properties.
A few people I know have purchased land and constructed, moved in, to avoid the CGT and then started on the next one.
If this is done properly, you can pick up $50K to $100K each project. This can also be done as live in Renovation.You have to do a lot of research on your location and the type of property in demand in that location.
I could give you many stories of where people have achieved great results over a number of years, mainly the ones who can resist the temptation of spending their new found income on toys.WA Handy Man | Loan Market
http://andy-iriks.loanmarket.com.au/
Email Me | Phone MeHi Corey,
Thanks for the reply.
At this point, I am renting my PPOR and am happy to keep doing that for the forseeable future. However, rent is non-deductable also, so it probably amounts to the same thing.Yes, with ‘quick turnaround’ I do basically mean flipping property.
I guess my main question is the benefit of a positive cashflow property compared to buying and selling quickly. Personally, I would prefer owning positive cashflow property to build up capital, because it doesn’t require as much time investment after the initial purchase (I’m on a quite limited time budget, which I think may hurt my success with renovations etc…).
Basically I want to know if positive cashflow property is more of a way to just provide some supporting income to help with lifestyle expenses and/or deposit for another purchase – or if it is a valid wealth generating strategy on its own.
Thanks for your help.
Hi fabs
If you are on a limited time budget and aren’t able to renovate then most likely you won’t have much success with flipping property.
As Corey said the govt charges and taxes are too high and will eat away any returns.
Buying neutral/positive geared properties with potential for capital growth would be a good strategy to start with.
Cheers
Andrew
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.au
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