Lloyd,

I agree with your sentiments. I have set up trusts with corporate trustee and a beneficiary structure which includes family, companies.

Also It would be better to not purchase a property that does not have secure cash flow enough to support itself.

As the portfolio grows it important to create buffers that correlate to volatility in valuations and interest rates (sensitivity analysis)

If you are greedy, and are compelled to continue to tighten up you borrowing to the maximum limits to keep buying property. You will have to be prepared to sell when economic shocks hit such as deflation , or increasing interest rates. Often, depending on the shock, it will be your better properties that will sell. Over the course cycle you portfolio will decrease in quality and deflate in value.

I think the Dominique’s are encouraging people to take on more risk than they should. The banks are protected. Just because they will lend doesn’t mean it’s right to take the loan and double down.

RP: Remember, the higher the return, the higher the risk, and risk is volatility.

There are great opportunities on the Sunshine Coast.

Also the Gold Coast…its early but I am seeing great prices on projects including apartments and house and land.
Brisbane in the right area. Bullish on Springfield, Cooparoo,Logan,some inner city apartment areas, Locations in suburbs near train stations.

Toowoomba in the right areas as well

Jerry Parker
Capital Growth Property
http://www.capgrowth.com.au

The intrinsic vale in a property is in it location. All buildings depreciate to zero value over time.

So just finding an old how that is cash flow positive just because you have not counted the R&M required is not the best strategy.

Location is key, as well as scarcity in order to drive capital gain.

If you are borrowing 80-90% you don’t really own the property…but you get 100% rights to the capital gain.

Often properties are CF+ for a reason…because nobody wants them.

Investors should buy new properties for capital gain above the average. If you are a hobbyist investor /renovator, great thats a hobby.

<moderator: delete advertising>

Sammie,

Here is what I do. When I buy, I make sure I am going to get an early capital gain on the property. I research for an area thats about to take off. Then build a house and land package. Or if it’s a new unit development, I get the best location in the building. Renovate a property, only if it is a very cheap buy. Renovating is more of a hobby with the amount of time you spend, you don’t make wages.

It becomes almost a full time job while you are in the process. It takes focus.

When you have established an early capital gain, sometimes immediately or in 6-12 months at least. Use a valuer that is approved by the bank, but works for you. Then get the property revalued and get the bank to give you more cash as a draw down based on the increased valuation. Often you need to have another bank ready to refinance if they don’t give you the money. This is mainly a negotiating tool though.

Build for your next deposit. Set up a trust, or company and use that entity, and a different bank to buy again with.

Don’t tell the banks everything you have and keep the loans separate. You don’t have to tell them of other trust or company holdings. But in your personal name they want to know.

For your third IP purchase , you reverse the same strategy back to your personal name to suck up any other taxable income you may have.

You can also group the companies and loan money back and forth as you need it between companies or trust

I am not an accountant or lawyer, but have had a lot of advice as I build my portfolio.

I do however, help people find early capital growth opportunities.

Hope this helps