Forum Replies Created
Burt,
I agree with the guys above – a renovation of some sort may be a good way for you to get started.
My own plan consists of doing some basic (cosmetic not structural) renovations to generate extra cash, and then either selling or refinancing. This depends on how the balance of selling (and capital gains tax) against holding with tenants (is it positively geared enough not to impact servicability)works out.
Either way, my intention with each is to take the profit and reinvest in further positively geared property.Cameron
PS: my own starting point is not far different to yours, although I have some experience in prior negatively geared investment.
Hi DanandFi,
I feel you are probably making the right choice to unload the -ve cashflow property, especially if you can take the cash gain and turn it into 2 or more +ve cashflow properties.
I prefer a buy and hold strategy myself, but (from experience) I also know it does you little good to hold a property that is costing you money each week. In the hope that a property may eventually increase in value, you can actually decrease your borrowing capacity through -ve cashflow property.
The ideal to aim for I think is +ve cashflow immediately (your borrowing capacity may even increase by a bit) with some possibility for capital growth – maybe through a reno, or because the area is growing.
Cheers,
Cameron [biggrin]A simple rule of thumb I have read alot about is “the best risk is the one you are comfortable with”. Generally, most advisors will tell you that higher reward means higher risk, and in many cases that is true.
However, I believe one of the true arts of investment, or business for that matter, is risk management.
I personally am not happy with the thought of working for many years to come, so I am now going all out with a plan to stop work and full time invest within 18 months. This primarily involves positive cashflow real-estate.
I certainly believe that I can achieve this plan, however the risks that I will take to achieve this (including a high level of leverage) may not be comfortable for some people.
Also, I will try to force myself to treat my failures (of which I expect there to be some at least) as learning experiences.
And I think everyone will agree with the importance of setting goals. I like small goals – they give me a regular sense of achievement, and help to maintain momentum….regardless of how fast you elect to move along your path to financial freedom.
Hope this helps.
Cameron [cap]
