Forum Replies Created
Thanks for the fast reply guys, much appreciated!
Cheers,
Brad
Fantastic ! Thanks heaps Terry and Amanda,
Cheers,
Brad
Great feedback guys, much appreciated !
I agree with all of your comments, you know what they say, a bird in the hand …… !
I think I will just cut my losses, make a fresh start and put it down to experience ! The $55k will still give me a descent deposit to buy another IP and I will probably save myself a lot of headaches over the next 12 months !
Cheers !
Any other thoughts ?
Brad
Thanks Michael !
In my opinion buying 6 positive cashflow properties given the current market conditions could be an absolute disaster ! To buy positive cashflow properties they would need to be in rural areas. These areas have experienced HUGE growth over the past 6 years and in my opinion prices will be going down over the next few years rather than up. Interest rates are sure to go up over the next few years so potentially these positive cashflow properties could go negative. The end result could be 6 negative cashflow properties with little (if any) capital growth over the next 5 to 10 years.
The positive cashflow strategy would have worked well in 1999 prior to the boom that we just experienced. Steve obviously did extremely well ! I think everyone has jumped on board since reading Steve’s book and they have started buying positive cashflow properties in rural areas. This has inflated rural prices well above sustainable levels and these prices will fall back to a more sustainable level over the next few years.
I have also read Steve’s second book and I think that his new strategy will still work. Finding solutions to solve problems. Eg: Buying a property with Dual Occ potential, renovating the front property and building a unit out the back. Rent both properties and receive positive cashflow.
The market has changed and we need to change our strategies to suit the current market. I read Steve’s first book last year and I was pretty dissapointed to find that his original strategy doesn’t work in the current market. To all newbies out there (like myself) start thinking of a new strategy that will suit your individual style. Stop asking “where do I find positive cashflow properties” and start finding solutions for problems ! Positive cashflow properties are created not brought (read Steve’s second book !).
I am sure there will be many people who disagree with my ideas so let me have it ! I love a good debate [biggrin]
Bradles
Thanks Herb !
Sounds like you are doing a fantastic job with Dual Occs. I think Dual Occs have huge potential. Once I buy my first 1 or 2 IP’s I will definately branch into this area.
Surely there are some positive cashflow investors out there who think my investment strategy is flawed ? What would you do with $420k given the current market conditions ? Are you turning to shares, managed funds, etc over property ? With interest rates rising I think it will become harder and harder to find quality positive cashflow property ! Any thoughts ???
Thanks for the advice Michael ! Interest rate rises, rental vacancy, etc could place some pressure on the serviceabilty so I think its important not to borrow to the absolute limit. I think you have to take a certain degree of risk for this plan to work but I will always keep some spare cash in case things go “pear shaped” !
Easymoney, I would LOVE to buy a Ferrari too ! My car is an old VR commodore and its done over 310,000 kms ! It’s very tempting to spend some of my cash on a new car now but if I can be financially free in 10 years time I will be able to buy a 2015 model Ferrari ! Now that is something to keep me motivated !!! [biggrin]
Thanks Herb and Marisa !
Herb, I am also very interested in dual occ and hope to branch into this area when my portfolio grows a little ! Do you see dual occ investing as too risky for beginners ? Is it a nightmare trying to get council approval for subdivision ?
I love the idea of purchasing a run down property with a large backyard, subdividing, building a new unit at the back and renovating the original house. Then you can either rent both properties (probably positive cashflow) or sell for profit.
Marisa, I have never been to WA (would love to go !) and have no idea about the property market over there ? Unfortunatelty I can’t afford the plane ticket to check it out ! Once I get some cashflow I will definately organise a trip. I am very jealous of the weather in Perth. Always seems fine and sunny !!!
Bofclark,
Congratulations on your property portfolio ! Several million in real estate is a fantastic achievement ! Have you also invested in shares, property trusts, etc to help pay for your negatively geared properties ?
Why don’t you start drawing down some of your equity to start living ? Go on a holiday, buy a new car, have some fun ! I think you deserve it after 26 years of hard work !
Thanks for the advice Luci and Bofclark !
Luci, if you put “my” 420k in your back pocket its not going to earn any interest ! I would invest it, much better return !!! [biggrin]
Serviceability will be my biggest issue over the next few years but I still prefer the idea of negative cashflow over positive. My plan is to use the Peter Spann strategy where I will buy quality property in prime locations (close to cbd). Do a basic reno (paint, floor coverings, general tidy up), then rent the proeprty for long term. The property will most likely cost me between $30 – $90 per week. As equity rises I can purchase more property OR if serviceability is a problem I can start investing in positive cashflow investments such as Shares, Commercial Property Trusts, etc. These positive cashflow investments will pay for my negatively geared properties. My negative properties should also go positive after 3 to 5 years (with increased rent).
This is the plan anyway ! I still think that buying quality property in great locations will pay off more in the long run (10 – 15 years). While I am young I would rather focus on long term growth than immediate cashflow !
Any thoughts or ideas on my “plan” ??? I know there are many “positive cashflowers” out there so I would be interested to hear your point of view !
Thanks Terry,
I have considered buying my girlfriend out but our current loan on the PPOR is $400k. I would also need to borrow an extra $60k to pay her out ($460k total). I would love to do it but I think that would be stretching things just a tad !!!
Thanks for the fast reply guys !
Personally, I think mortgage insurance is pretty minimal when you look at the big picture. It will allow me to borrow an extra $40 or $50k and when that is invested and compounded over 10 – 15 years the difference is amazing !
My goal is to be financially free in 10 years time. Some people may laugh at this goal but I see it as being realistic and I am willing to do whatever it takes to achieve this !
I am not scared of taking risk and I am happy renting for the next 10 years. This will allow me to use the majority of my income for investing.
I am interested to see what other people would do in my situation to fast track the road to financial freedom ?
No worries Jo !
We are now going to sell after 3 months so that means IP number 2 will come faster than I first thought !
You have put a HUGE smile on my face [biggrin] I thought I was going to have to wait over 12 months before getting any cash ! I think we need a new solicitor who knows what they are talking about !!!
Cheers,
Brad
Thanks for the fast reply guys !
Jo, I realise I asked this question earlier and that is why I asked for some clarification. My ex just told me that her solicitor said she must live in it for 12 months to avoid Capital Gains. I told her that was a crock of <edited> and she didn’t believe me that you could sell after 6 months. If it 3 months then that is even better for me ! [biggrin]
Cheers,
Brad
Thanks for the advice guys, much appreciated !
I have asked all of my friends and family and have a few contacts to follow up on.
Cheers,
Brad
Northern suburbs (near Whittlesea),
Cheers [biggrin]
Cheers Jo, you have mail too ! [biggrin]
I thought the Scoresby and the Mitcham / Frankston freeway were the same thing ??? [blush2]
Thanks heaps for the advice, I will take a drive down there within the next few weeks and check out some of the houses !
Brad
Hi guys,
I was just about to ask the same question about Franskston and Julie beat me to it !!!
I think Frankston has HUGE potential, especially with the Scoresby Freeway due for completition in 2008. This will provide easy access to the city and also the eastern suburbs.
There are many cheap properties in desperate need of a reno and the possibilities are endless !
I think buy, renovate, rent and then hold for 3 to 5 years for Capital Gains might be a good option ?
I would be interested to see what other more “experienced” investors think about this area !
Bradles
Thanks Terry and Kerri, great advice !
In theory, if I had 4 cash flow neutral deals that were paying off my loan, is it possible to borrow an extra $300,000 on top of the $300,000 already borrowed ? Do the banks regard rental income the same as the income from your job ? I assume they use a percentage of the rental income (to safeguard against possible vacancy) ?
Cheers [biggrin]
Thanks heaps for the feedback guys !
Terry, can you please give me a few ideas as to how I can be “creative” to fast track my property purchases. Trying to save for future deposits while I am paying off a $300,000 loan on a single income could take years !!!
Brad
Thanks heaps Monopoly !
You have put a big smile on my face !!! [biggrin]
