Forum Replies Created
My definition of CF+ is the ruling interest rate (currently about 7%) PLUS running costs (usually about 3%).
This makes 10% at present. I use 10% of the LOAN amount (not my 20% deposit). HOWEVER the property must be capable of recycling my 20% deposit (By value adding and creative development and then re-valuing) within ONE YEAR. Hence I accept the holding costs on the deposit money but only for a limited time.I don’t think it is probable at present to get 10% return on the entire value of residential property from the outset. There will be some holding costs which could be viewed as “Negative gearing” for a limited time. However I don’t consider this as negative gearing because I have the money available/organised to cover this period. i.e. I don’t have to rely on my income from a job to support the property. Tax deductions for depreciation are only tax deferral systems. They do not make a property CF+ in my view.
Robert Kyosaki’s definition (puts money in your pocket) is very simplistic but it works as a philosophy. To his definition you could add “do I need to have a job to support the property or will the property support me”
pS I break these rules regularly based on no more than a gut feeling. So who’s perfect?
LawmedMy definition of CF+ is the ruling interest rate (currently about 7%) PLUS running costs (usually about 3%).
This makes 10% at present. I use 10% of the LOAN amount (not my 20% deposit). HOWEVER the property must be capable of recycling my 20% deposit (By value adding and creative development and then re-valuing) within ONE YEAR. Hence I accept the holding costs on the deposit money but only for a limited time.I don’t think it is probable at present to get 10% return on the entire value of residential property from the outset. There will be some holding costs which could be viewed as “Negative gearing” for a limited time. However I don’t consider this as negative gearing because I have the money available/organised to cover this period. i.e. I don’t have to rely on my income from a job to support the property. Tax deductions for depreciation are only tax deferral systems. They do not make a property CF+ in my view.
Robert Kyosaki’s definition (puts money in your pocket) is very simplistic but it works as a philosophy. To his definition you could add “do I need to have a job to support the property or will the property support me”
pS I break these rules regularly based on no more than a gut feeling. So who’s perfect?
LawmedDear Badgers_R_us,
I. That many peoply are “hopeless” is good news for those who think they can do better – it gives them the edge.
2. No we’re not all obsessed with money. We like property as our chosen field. Money is a bye product of 1 and 2. (In the final analysis you’re going to give it all back to someone else anyway so have fun doing what you’re doing or do something else)
Learning to put a positive spin on things is the creative force in whatever field you choose – including real estate and man management. Forgive me if I sound like I’m preaching – it’s just that I found there were so many things that I was hopeless at and becoming positive turned things around for ME.
Lawmed
Hi Pepsi,
Everyone’s circumstanses are different – so when to quit you day job will depend on many things. That doesn’t help much but it does mean that you have to think broadly.
EVERYBODY has a full life. Before you do anything you have to first decide what to take out of your life to make the time to do what the new thing is. This is simply a creative exercise – no different from investing and converting something someone doesn’t want into something someone does want.
If you need money then you need to find something that takes less time -eg vending machines may give you the same income and free up time. (NO I am not suggesting vending machines I’m just giving you an example of creative thinking.)
As a final thought remember that the banks treat rental income even more favourably than earned income in terms of lending you money. Why not talk to you lender(s) about low doc loans and what you could realistically borrow if you had less income from quitting your day job.
Hope some of this helps
lawmed
