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Hi Nads,
Time for some honesty. Its not up to your accountant to give you the confidence or advice to determine wether or not you can pos. gear. Its up to you to educate yourself enough so that you do not have to ask anyone else to confirm your beleif that you can pos. gear.
All an accountant is for is to formulate a strategy to make you more money and/or save you tax and give advice in that particular area. They are not advisors on property investing.In fact you should ask your potential accountant what their investing track record is like, particulalry property investing.
I would say just about every successful property investor has at one time got over the confidence hump and then prosepered, albeit its much harder and needs more confidence in this market than in the previous 5 years. If you are going to succeed at this game you need to eduacte and research so much that you dont have to ask anyone, you’ll know your self and probably be advising other people. If you cant get to that level, then i would suggest not to invest in this market with its low yields and poor cap. growth prospects. You would be better off putting you hard earned money elsewhere until you are eduacted fully to make decisions on your own and/or the market looks better. (including yields).
Also, if you stuff up you wont be able to go back to your accountant and blame them for giving you bad advice, (they arent qualified to give property advice. ikewise if you make a great decision you can praise yourself. That feels great
My final point on investing self education is that you will have that knowledge for the rest of your life. Thats much more valuable than any good accountant and you can use that knowledge whenever you want to make money in property at any time in your life. Just keep learning and researching and dont buy til you are confident in your own right. Good Luck.
Originally posted by Nads73:I am very new to property investing however arming myself with several good books and starting to attend investmnt seminars I can see the tremendous possibilities available for passive income. I am currently sourcing a good accountant and met with one yesterday who tells me that positive cash flow properties are not possible and that if you take out a loan for 70 – 80% of the cost you will have to negative gear it until it rises in value or you have paid for a large part of the mortgage. That, combined with my partner who is keen for me to do this but just doesn’t understand that property investing isn’t just about negative gearing, it is starting to take a toll on my confidence. Can someone please tell me, someone who has been in the position – starting out, that it can be done, I can find positive cash flow properties and that I should just keep looking for a good accountant who is willing to work with me and not tell me the oppositie to everything I have read. I really do believe I can do this and that I’m smart enough (well like to think so) to do this but I’m afraid my confidence is wavering. I would love to hear of anyone who has been in my shoes, succeeded and showed the world that they could do it!
Thanks, NLW
I like to rememember a famous stockmarket(my other investing love) saying:
‘Never confuse brains with a bull market’
and that applies to property as well.Im sure i dont need to explain it.
As for Nads dilemna. The situation is if you buy pos cashlow property you need to buy a lot to make any decent money and with no cap growth, $50 a week extra doesnt do much for your net worth and makes it hard to borrow for further investing.Also if a property is cashflow pos at this stage of the cycle (right after the biggest boom in history it doesnt say much for the long term cap growth does it, and cap growth is where the real wealth is)
Negative gearing is really only useful in a rising market and when you are on a high wage to take advantage of the tax benefits so neg gearing is an absolute last resort at the moment.
So, the situation is pos cashflow property is out and neg gearing is out. Both are out because of the state of the property market, not because there is anything inherently wrong with either strategy.When the market bottoms and starts to turn around (this usually happens when yields are high enough to interest investors to enter the market again in large numbers), then-and only then- look to buy as much property as you can at neutral or pos. cashflow and hold on to get rich and i mean rich. This is how to make serious money in property and is how the mega wealthy do it. Time the market to your advantage.
As for your confidence, well education is the key there. If you dont feel confident enough to invest in property its only because you dont know enough. So educate yourself fully in the time while waiting for the market turnaround.
Look for things like:
Increasing volumes of sales.
Decreasing time required to sell a property from listing.
Decreasing discount from asking price to selling price of property.(in a boom the selling price can be above the asking price and by then you are probabaly too late, depending on yield)
Rental yields peaked or starting to fall.
Auction clearance rates rising.
Increasing median prices.
When you see the above indicators occuring for 3-6-9 consecutive months you’ll know a positive upswing in the market is happening and then -and only then- is the time to buy big time.But you’ll only be able to see it all if you are fully educated to the ways of property investing and the market. If you dont want to take the effort to educate your self fully (to the point where you know its the correct time and you’ll feel totally confident in buying 10 properties at once, not just one) then you will never become really wealthy.
There are more indicators you can use to detect the turning of the market, but i dont have time right now, taking my kids to the beach.
Good Luck.
Bedean,
If you have trouble getting local tradesman to do work , get your property manager to handle it, a lot less grief. Thats if you done self manage which is a bit hard from that far away.
By the way does anyone have a view on where in regional NSW would have the highest yield at the moment, excluding towns like Broken Hill. [
]Thanks.
Hi there,Thanks for your input. We have a little experience with rentals a reasonable distance from home. We live at Wollongong and have had a place at Port Macquarie for a couple of years. We did initial reno ourselves and have used local tradesman for any other repairs. No worries!! We also have a place at Tamworth we bought this year.Same deal on reno’s, but local tradesman not interested when they know you are from out of town.{hence we won’t buy there again}. Both towns are fairly large regional centres, so I dont know how they would compare to somewhere like Cobar. Might have to take a trip out there and have a look!
Cheers, Bedean
