Forum Replies Created
Thanks FXD, break-even exit is much better suited than taking in a loss.
Hi TheNewGuy,
I agree with your view as it would bleed more cash out now, for the thought of making more gain on the value of the property which is questionable at this stage. The rent is very low due to the current market conditions in Perth. The tenants are on a lease just to cover the outgoings (i.e. property held for capital growth purposes).
Raasta
Hi Benny,
I was away on work and just got back. Thanks for getting back to me. I understand now what you are trying to convey.
As Property B is the one which is clearly non-performing on a larger scale, i will consider on its sale. There may not be much received from selling Property B as the market value is very close to the loan payout (plus factor in selling costs & settlement fees, etc).
Raasta
Hi Benny and Terryw, thanks for your thoughts.
Benny – True, I am indeed in a highly geared position at the moment and Property B is the main culprit. In this market, spending $30k or more on a renovation for Property B will not increase the amount of desired equity and will also provide negligible amount of increased rent.
Terryw – Expenses are at the least they can truly be. I am claiming all deductions, depreciation schedule is already in place, there is no travel involved, all borrowing costs are being claimed. Capitalising interest or borrowing to pay interest is an option however it won’t change the situation much – will only buy limited time.
Possible strategies to explore ahead:
-Review all loans to see if lowered borrowing costs are achievable
-Increase wages
-Increase rentsIf I had $100,000 extra cash at the moment, with the above scenario in place, what could be changed to make my position more neutral?
I am aiming to get towards positive gearing based on advice seen given by Steve McKnight and Simon Buckingham (Results Mentoring).
The properties should bring in atleast $2,000 a week which may mean a high number of properties to replace my job income. That is how I can currently see me achieving the desired outcome of leaving my job. The areas where the properties are to be picked would be selected based on population growth expectations, transport, infrastructure, mining, etc.
Thanks Don. The way I thought is that first i would look at the outcome desired (i.e. positive cash flow), then look at the strategy and then last the property itself. However, where I am getting stuck is the strategy to achieve the outcome with the amount of funds on hand. Any thoughts?
At the moment, I have 2 options: Save to gather enough deposit or vendor financing deals
Thanks Chris. Yes, the reason I bought the investment was to demolish and build units when the rezoning occurs. The homework and due diligence on this was carried out before purchasing.
Thanks very much for this advice. I will incorporate your suggestion after step 4 below:
1. To start searching for populations in towns in WA greater than 10,000 people (I have this on hand now) – DONE
2. Search for properties via realestate.com.au in each location one by one (say Town A) – DONE
3. Call some real estate agents within the Town to find properties on their books – OUTSTANDING
4. Do the figures on the properties to see if you can have more positive cash flow – OUTSTANDING
5. Send Contract Offers on those that meet the positive criteria i.e. properties yielding >7% or 8%
Since I have the list of towns in WA greater than 10,000 people ready, I have opted to look at the following nearby towns with corresponding population figures:
Busselton 21,898
Bunbury 17,109
Rockingham 14,826
Kalgoorlie 13,947 (Gold mining)
After this, I am getting stuck!
Thanks for your comments. Totally correct about the amount to bucket in each year. But there must be a way to get into property using no money down deals and achieve the desired yields
Thanks for your comments.
I agree that 15k is not enough and I am working on it to increase the initial deposit requirements. However, I was considering doing no money down deals to speed up in the meantime. The difficult part I am finding is how to find positive cash flow deals coupled with no money down deals. Just cant get my head around this in my current situation.
After looking at various people such as Steve McKnight, Dymphna Boholt who are proposers for positive cash flow properties, I would want the properties to bring in a minimum of $100,000 and increasing time by time. Whilst this is not easy, others have achieved this and that is why I am trying to see what avenues are possible to reach this goal.
Thanks Jamie. I have checked the value of the property i am residing which i bought 2 years ago, The value has gone up by approx $60k, however that has only taken my LVR from 95% to 86%. Not much to use from equity. The 2nd property,I purchased about 4 months ago, more like development potential due to potential rezoning to occur in 2-3 years where I can build 6 units on a block of land, where currently, there is an old house through which i am getting some rent. Any thoughts?
Hi Terryw.
Thanks for your comments. I acknowledge that capital growth potential is the main wealth creation avenue, however at this stage, I am trying to look for ways to supplement/replace my work income so that I can leave work and continue investing in capital growth properties. The replacement of income is why I thought of buying positive cash flow properties. Any feedback?
