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Good luck with your search. You are reading the right books. Keep reading and re reading them. It is easy to get frustrated. Positive cashflow properties are hard to find but as the property market falls they may become a reality again. Long term negative gearing investments probably don't make sense at the moment.
There are a few threads on here on how to find/turn properties into positive cashflow.
I personally like to look for properties with property that can be subdivided off reducing your debt to a level where it becomes positive cashflow. This is not a quick fix and can be frustrating as there will be a period of negative gearing and the frustrations of dealing with council. You also need to do your homework on these to make sure it can be done before you buy it. I'm doing one at the moment but it may take a year to subdivide and sell off a block. It's a winner when I get through the pain.
Not a great market for flipping. Declining prices and long resale times.
The reno might be a goer if prices decrease at the lower end of the market. Buy cheap, a quick makeover and a fast buck. I find the reno too painful and quite risky as the expenses of labor can erode profits pretty quickly.
Don't forget to look at commercial real estate deals. Buy and lease can be good.
Good luck with your journey
Thankyou comrade Stalin
I share your frustrations with politicians however, in order for a society to function, someone has to make rules to abide by so we can all get along. There has to be ways of negotiating disagreements as we don't all believe the same things or share the same visions. Someone also has to build roads, public utilities, shopping centers, schools, universities, community centers…….hence the formation of government. If you think left wing politics is successful, compare Eastern Europe to Western Europe (although there has been significant changes since the fall of communism).
Unfortunately, your comments about central banking are unfounded. Without a lender, everybody would live in mud huts. Yes, banking is a business but a strong central bank has enables most Australians to attain a very high standard of living, sadly of which most of us take for granted. Unless you inherit vast wealth or somebody buys you a house, you need to borrow money to get started in life or live at home for 30 years after school to save for your own. Banks are a necessary evil. Lending people large sums of money carries enormous risk. Would you lend someone you don't know $500, 000? Why would you do it unless there was something in it for you? Banks are businesses. They make profit. Without them where would we be. They are a necessary evil but the relationship is win win. They make money and we get what we want in life. We use each other.
Capitalism and business comes in for a lot of criticism from left wing romantics that think the world would be a simpler place without laws, rules and money. I direct you to the African continent for evidence of countries with weak monetary policy and the poverty it brings. Entire countries were sent to the brink of collapse by communism. If you think China is the perfect example of how to run society, then you are kidding yourself.
Neck up. Buy a house and thank your bank for the opportunity.
It is smarter to work out how the system works and to make this work in your favor. History is littered with the corpses of the rebellious. A system as good as Australia's isn't worth dying for. It isn't perfect but try getting 20 million people to agree on something. You need a government to arbitrate and to build a civilisationIf it costs roughly $200K to build a basic 3-4 bedroom home and anything from $150-$200K for a small suburban block, can houses really fall below the cost of building them? I expect 5-10% is certainly possible but can they really halve in price? I suppose if the cost of the land itself decreases this is possible.
I have been to a few property investment seminars. Everybnody assumes property will always double in value every 7-10 years. This is the whole premise for negative gearing. I'm not convinced this will happen in the next decade. I believe the boomers will flood the market and prices will at best stagnate and at worst suffer significant price drops.
This is not of course relevant to highly sort after locations like Sydney Harbour forshore etc. Location location location will always hold some value.
Houses in the burbs may not appreciate much. Rural houses will decrease as these economies decline and the houses age and fall apart.
It may return to positive cashflow country. Watching, waiting
Subdivision can still be lucrative despite up front costs. You need to do research on what you can sell the land parcels for as the final product. Is it worth the pus and pain? If you will make a motza, go for it
1. Sell properties/assets that were unlikely to experience growth in value. I would probably offload them prior to interest rates getting this high. Monitoring the economy is important. If you are positively geared, you may be OK anyway. Increase the rent
2. Hold. A decrease in value is only a problem if you need to sell
3. Interesting. I would refinance
4. I am self employed and have insurance to cover such a scenario. However, you would get another job/jobs pronto
5. Sell it. Mistakes happen to risk takers. If it's a lemon, you take a hit and move on. Your first loss is your best loss. Learn from the mistake and don't do it again. The only person that's never made a mistake has never tried anything.I guess it is really a long term investment. It isn't an asset as it takes money out of my pocket. It's the opportunity cost of what else I could do with the money. I checked on one of those interest calculators. I will pay about $700K in interest. It's cheaper to go for a holiday there a few times a year.
I personally believe there would be some synergy of capital gain by building a house on it. Land + House > cost of 1+1. It's the puss and pain of paying interest on a block until a house is built. Can you claim interest on the repayments whilst it is still dirt if it is intended to be an investment which will be rented out?I like the analogy with the hole. I think it would be smart to stop digging. It's a shitter when you like the real estate
My guess is that Perth has had its boom. With the downturn in the economy and high interest rates, the Perth property market will flatline or recede slightly (10-15%?) over the next couple of years. Pure speculation but that seems to be the general consensus
Qlds007 wrote:Depending on the numbers might be a case for considering selling your existing PPOR into a Trust structure and borrowing 100% of the current valuation and then using the entire net amount raised for your new PPOR.Because the purpose of the loan is for investment 100% of the interest is deductible. Depending on the purchase price of your new PPOR you may still need to take out a small non deductible mortgage.
Whilst Stamp duty would be payable on the Transfer depending on the figures involved could certainly be well worth it.
Outstanding advice. Excellent idea. That keeps the dream alive.
I'm not actually a fan of negative gearing but I hate selling assetsEdvico_kvn wrote:Hi Chis,
The Tax Legislation looks at the "purpose" of the loan taken out. Because you will be drawing out a loan for the purpose of purchasing your "home" (and not to purchase/renovate an investment property), the interest on this loan wil not be tax deductible.
Your rent will be considered income and you will be positively gearing while the interest on your new home loan cannot be deducted.
Hope this clarifies your understanding.
Thanks
Can you buy it in Australia or do you need to go to the richdad web site?
ormeau wrote:At the end of the day our economies are based on exponential growth, unfortunately the minority understand that the world is a finite area of habitable and sustainable limits on population growth. The laws of physics tell us that we are on a massive course of global correction for the dominant species. Has anyone here ever considered this possibility happening?The human race is headed for armageddon. There are too many people in the world and we are using the finite resources and energy at unsustainable levels. It cannot go on globally. Again, Australia is a separate microcosm. Our country and resources are vast and our population relatively small. Evolution determines that our species is on a collison course with extinction as our behaviour will not be sustainable.
In the meantime, buy lots of properties. Australia needs plenty more of them. Greed is goodI was hoping for graphs over the past 50 years to compare price trends with respect to the economy. The best I can find is over the past 1-5 years when the house prices have gone up. The shizen has hit the fan and is about to get worse
Continue to offer
Reality will bite them soonThis has been the fear of generations. As a child and for the last two decades I have heard people say…………."I'm waiting till house prices come down". Not smart. However, I see your point. There are some different circumstances surrounding property now. A worldwide downturn. An overheated Australian market where the buyers wages have been stretched so far that mortgage repayments are difficult. There is only so much the market can pay and it seems we have reached this point
It's probably good advice to observe the market for a while.
I accept nobody can read the future and it's fascinating to read the differences of opinion from people involved in the industry. I posted it for peoples interest, not because I believe any view in particular. There was consistent gloom for 1-2 years with only the magnitude varying.Then again, there is a popular saying that "now is always the right time in real estate" and "time in the market is better than market timing"
It does look as though house prices may fall in some areas. There are parts of the Australian market in positive growth however. It is always driven by demand
1. With $100 K and a bearish market you could possibly buy a positive cashflow property as an investment and stay at home. Haggle hard on the price. $100K deposit.
2. Depending on your salary, put $50K down on two investment properties to negative gear.Stay at home and buy IP's
You could really set yourself up well. Buying a property for yourself is great but probably not the best way to go in terms of wealth creationIt depends on your attitude to risk
1. Conservative. Sell it, and save the repayment drain from interest payments but perhaps make a loss when considering interest paid , stamp duties and possible capital loss
2. Moderately conservative. Park it and take the pain until you can afford to build. Will lose money on interest but may be able to make a gain in the future.
3. Risky : Build. Find a mortgage broker. Someone will find you a loan. Build. Pay interest only on the loan. Sell it or your current house. Hopefully make a small gain.
4. High risk. Find the broker. Borrow the money. Build. Get a tenant to help pay the mortgage. Hold it. Create an asset. Build wealth. The first step in becoming a property millionaire.Positive cashflow properties are better of course. I personally believe everybody can afford one negatively geared property with the ATO paying the mortgage for you. After that it can get tight depending on your salary.
Go for it
The ChisRoads and earthworks are ridiculous. You need to crunch the numbers. Costs of development + CGT after sales………….are you in front? Allow interest on loans during development. Are you still in front? If not, don't do it
Event Horizon wrote:chat2howieI have a 80yr old 60yr old and 120yr properties and i still get back substancial tax on depreciation, you cant generalise that its not worth depreciating becuase its 20yrs old, there is cutains, flooring, appliances any building work relating to maintainance, plant, fittings fixtures etc etc, you would be suprised what you can dig up for about $500 you can get a profession depreciation expert (rather than an accountant) to asess the property on site and this of course is tax deductable and if they cant find $500 in deductions then you dont pay, highly recommended.
I think the ATO may come looking for you
