Hi foundation,
You've won the debate hands down as far as I am concerned.
I do have one question, what are the other investments that you are talking about?
If assets do go down with a recession, it will affect shares as well.
share dividends, even with a large portfolio, don't really give you enough income to live on, unless you are heavily leveraged with installment warrants.
Managed funds also rely on the same asset groups and add fees on top of that, even if they make losses.
Commercial property, in bad times can suffer from high vacancy rates.
That leaves personal exertion, as in employment.
I agree, in dissecting Rus' strategy, that it's based on a huge amount of speculation and debt.
if and when the bubble bursts, the highly leveraged are the first to go.
it's quite possible that people like Rus(with the help of lenders) have added to the speculative bubble.
The bubble is deflating rapidly in the US and there is quite a possibility of an impact of the world economy in the longer term.
The wealth creation path does not rely on debt alone but a sound debt free base of assets, be it a good deposit for a home or attempting to reduce debt as quickly as possible.

couldn't agree more, there are some very misguided people out there putting it mildly!
Property prices have grown way beyond wages increase, something has to give.
Rental income has no where near kept up with the cost of borrowing and PROPERTY Maintenance costs.
The cost of a $400,000 property in terms of interest, management, repairs,council etc easily amounts to $35,000 pa.
Rental income does not even cover half of that cost.
The rent per week would have to be around $700, to just cover costs, that's about half the weekly average gross wage.
Property owners therefore are subsidizing housing HEAVILY and no wonder we need negative gearing, to keep people of the streets.
why would you even bother unless you assume that property will continue to increase every year, beyond the holding costs (out of pocket 15-to 20,000 per year and ignoring the tax deduction) and ignoring the possibility of a recession/depression.
The rot has started in America, the cost of borrowing is increasing and finally, easy credit is starting to dry up.
Government (both parties) continue to make spending promises with OUR TAX money like there is no tomorrow.
I read with amazement how, even on this web site, people seek max themselves out with borrowings to buy yet another property!!

Hi,
Great, can we have a job like that?
Why not go for something likely to provide good CG, rather than cash positive.
Cash pos. is unlikely to produce good capital gain.
Do you need to be cash positive on that sort of income?
From my experience, the capital gain out performs the cash positive by a long shot.
Buy a quality duaL occ. site and get plans/permits and build.
It's almost like getting a free block of land.

agree, with all of the above.
My next project will be in safety Beach, no experience with that council yet but with the Marina,  a lot of development happening.
I've found a builder who will build a 3 bedroom unit at reasonable cost.
he is building some of the marina townhouses.
in this case, I hope to build and hold for the longterm, as I can only see upside in that suburb, sea change, marina etc.
I hope to refinance and then do another one.
The potential CG is much higher than Knox/Maroondah.
However, having done this in those suburbs, has allowed me to 'trade up".
interest rates will continue to increase, so I am careful about over gearing at this time.
Building and moving every couple of years is just not personally feasible for us.
That would be hugely stressful.
In my suburb, I note a brick house has had the bricks taken off and is being take away as a shell for resale.
This house was a 70's colonial style, so clearly, land value has increased enough to make this viable.

I may look at selling a 4 bedroom, 2 bathroom home in Canungra, which has had excellent growth and never any tenant vacancies.
Current rental return $320, but that is a little low (should be around $350).
Please contact me if interested.

Hi, great user friendly tool!
Good on you Steve!
so far: 2870, financial survival until 2015.
It should have been much better, except for some very silly investment mistakes.
so, there is hope for everyone yet.
it means that I should triple that score in the next 10 years and spend it all the next 20, providing I avoid too many mistakes and continue to invest wisely.

if you are renting out the unit, and don't want to spoil aesthetics with a built in WR, get some cheap but modern looking metal type units from freedom or ikea.
They are easy to assemble, easy to take from house to house and lightweight.

It probably takes 3 to 4 years for a neg geared average price property to become cash neutral and then slowly it starts to become positive as rents starts to increase beyond loan repayments.
The negative cash flow is offset against your income, so approx. half ends up tax deductible.
I therefore expect capital gain every year to outstrip my shortfall, in order to make the purchase worth while in the long term.
e.g.
purchased 2003, canungra (SE QLD),$249,000
Interest only loan, loan amount remains constant.
Cash flow negative until this year, now almost cash neutral, or minimal cash negative.
Rents have gone from 220 pw to around 340 per week.
Property value now around $350000.
Shortfall between expenses and rental income are about $20,000 over 4 years, or $10,000 with the tax deduction.
This still leaves me with a capital gain of around $20,000 per annum on average, if I exclude buying and possible selling costs.
From this year, the holding costs will become fairly minimal and probably cash pos in a year or two, if I continue to increase the annual rent.
an excellent deal, wouldn't you agree.
there is no miracle instant capital gain or cash positive, its a slow and steady process.
Your income will also steadily increase, so you can actually start to buy more property, without too much hassle.
You can generate cash positive in some country towns, but I am not sure if its worth the poor tenant hassles and poor capital gains. or perhaps buying a house with self contained bungalow.
another possibility is a cabin in a caravan park. We've brought one for under $100,000, holiday rental furnished it should return net around 10 to 12%.
Eventually the property with the capital gain will pay of the cabin loan and it will be a steady income.