Forum Replies Created
Hi, Katie
It is important to understand why you want to get into property investing at the first place. Has there been a reduction in your sense of security, hence you are viewing property as a potential source of security? (Economic security vs Wealth accumulation?)
With that understanding, have a read of ‘Rich dad, Poor dad’ by Robert Kiyosaki and both of Steve’s books. Just a drive for money alone will not see your passion last for property investing, or any other forms of investing.
For example, if I have a goal of achieving $1 million in income-producing assets by the age of 40, then I would look at property investing as one of my investment vehicles, Income-producing (instead of capital growth) Managed funds and even cash savings in internet accounts are also viable options.
Property investing can be quite a commitment in both time and money. You might also want to see how much time / money you are willing to commit and for how long a time period.
Some food for thought. I hope it helps.
Regards
Daniel [specs]Hi, James
I agree with some of the views, in that paying $300 per wk to hold over a million in property is not too bad. Just need to figure out creative financing methods to balance the cash flow.
As for property prices rising every 7 – 10 yrs, that is like saying computer processing power doubling every 18 months (Which is not true, or else most people would have a super computer in their home by now.)
Like Steve mentioned, with each doubling in property pricing, it takes longer to double again. Salaries and wages cannot keep up at the same rate as property inceases. Eventually, there could be a ‘plateauing’ effect (That is my view).
Regards
Daniel [specs]Hi, alotti
True about what you said. Eventually, a CF- property can become CF+. The main issue is how long are you willing to wait, and how much money are you willing to fork out from your own income?
Even if you have a large disposable income, there is a limit to the number of CF- properties you can eventually hold. There is also a lilmit to how much tax deduction you can make. When your taxes paid runs out…
Depends on your objectives. If you earn a large income, am willing to work for many more years to pay off your IPs, that is fine. Eventually, those IPs will go CF+. If you are looking to slow down and take it easy from work for other more important matters much sooner, then using cash inflow from CF+ properties is the way to go.
Cheers
Daniel [specs]Hi, mentee
Definitely CF-. Your outflow will be more than $500 pm factoring all other fees.
Perhaps you can look at ways to adjust the loan, such as a bigger initial cash deposit or longer loan period. Getting a CF- property is not most people in this forum would recommend. You might save some money in tax, but a loss is still a loss.
To answer your question, the amount of cash outflow into an IP really depends. If you can claim negative gearing via taxation and turn your CF- IP into a CF+ one, then good for you.
However, with such a large cash outflow, it will be difficult.
Check out Steve’s first book or this month’s Money mag, where there is an article on negative gearing.
Hope this helps.
Cheers
Daniel [specs]Hi, rgranger
Your situation looks pretty good. With A$300k in equity, you are looking at 3 CF+ investment properties or more (With smart investing).
In 5 – 7 years time, you could be all set for retirement.
I agree with many of the other respondents. You are not in ‘a pretty bad way’.
Just learn more about various forms in investing from books and magazines.
We will all get there some day.
Cheers
Daniel [specs]Hi, Ivan
Definitely start reading investment books and magazines. The first step to investment starts with changing the way you look at money, assets and liabilities.
With your current income, you should not have a problem with saving $20k of your after -tax income (With a downscale in your lifestyle).
Since you are only 21 years old, you can more than afford to take a few months to a year (before plugging in) to learn about property investing and other forms of invesments. There are many other vehicles to building your wealth.
All the best.
Regards
Daniel [specs]Hi, Chris
I agree with many of the entries that ‘converting’ your GF to the idea of property investing takes time. Like youself, I just got into property investing last month, and like others, have been into managed funds for years.
My experience is that when it comes to partners who are not as into investments in general as yourself, it just takes time. I worked my partner into managed funds, and now we are moving into property investment. She does not need to know the full details, but she is supportive of the idea.
Most importantly, managed your partner’s needs first. When her concerns are addressed, she will be more open to new ideas.
Regards
Daniel [specs]Hi
I would like to join the Melbourne club. Please let me know how to proceed.
Thank you.
Daniel Lee [specs]Hi, everyone
My first posting. Just started reading up on Steve’s first book on property investment a few days back.
Spend some time reading this post, and found it really insightful. Was wondering about Big Ben’s figures on the $500k property. Did a very rough calculation.
90% LVR 450000
monthly payment @ 7% -$3,180.51
25 yrsCash deposit 50000
Closing cost @ 5% 2500
Cash invested 52500Annual cash in ($300 *52) 15600
Annual cash out
Loan pyt -38166.12
LMI @ 3% -13500
Maintainance @ 1% -4500
Total Cashout -56166.12Net Cash in/out -40566.12
CoCR Net cash/Cash invested
-77.27%Seems like the property is negative cashflow! Too much speculation over in WA and it is inflating the property pricing sky high.
I am definitely missing out some figures, as I am new to property. Can someone give feedback on the calculations. Wanna know I am on the right track.
Cheers
Daniel [specs]
