Forum Replies Created
Hi,
I would concur with Derek’s comments.
Also, we always invested automatically 10% of our gross income and we never touch it, we never take on personal debt and we add a further 10% of our gross income to the minimum payment on our home mortgage so that it will be gone soon.
I have had annual household/personal budgets since I was 20 (quite a while ago) so I have always saved and yet had everything I ever wanted ie cars, overseas holidays, shares, managed funds, super, clothes, etc. all paid for by cash and rabid shopper comparison. We even had Baby Budget 1 and Baby Budget 2 and strategies to handle the 1 income times.
Then over the last few years we’ve bought pos cashflow IP’s (well, one’s vacant at the moment).
It’s the mindset and the system/rules you adopt.
Cheers
Skippygirl
)Niki,
Just a suggestion if you are looking for a creative solution to your portfolio problem.
Why don’t you write to each of your current tenants asking them if they would like to buy the house they live in at fair market value, at a reasonable interest rate on vendor terms.
The repayments on a high yielding property will probably be lower than their current rent (favour 1), they get to become owners of the house and enjoy all of the associated wellbeing and economic benefits that come from that (favour 2) and they could use a really low deposit of $2K or so (favour 3), maybe even FHOG.
You will therefore have a similar cashflow to what you have now, plus cash deposits, plus NO MAINTENANCE hassles. I bet some will jump at it.
Just my $0.02.
Cheers
skippygirl)Maybe you could think about not relying on the market for capital gorwth but adding value to the property yourself. We have a +CF property in a regional town and spetn alittle on paint/carpet etc and added another $10K to the value after costs.
Cheers
skippygirl)Clearly it was a joke, Joyce.
Cheers
skippygirl
)Yes maybe a panel of monitoring organisations could stratify the market into, for e.g., 2 bed houses, 3 bed houses, 4 bed houses, 5 bed houses, 1 bed flats, 2 bed flats, 3 bed flats, etc etc and run a normal statistical analysis for each strata, and the medians and other measures would be a bit more meaningful.
Inside each strata they can look at variances for different factors such as land size, zoning, age or condition of house, construction Bv/weatherboard and they should be able to come up with a regression analysis/lnear equation to hopefully predict the value of any property shouldn’t they?
Surely developers have this down pat.
Cheers
SkippygirlYou don’t say if the house is near her current home (was it the neighbour’s house or a house somewhere else that the neighbour owned?) but couldn’t she move into the house she has inherited (if that’s the term) and immediately sell it, so no CGT becuase it’s her PPOR, and structure the payment for the house over 20 years plus a 5% deposit to pay the agent/legals ie 95% of the purchase price paid every year to her as monthly instalments over the next 19 years.
Then she moves back straight back into her current home and receives 19 years of a monthly income stream possibly tax free plus her pension? What a great gift from her neighbour to give her a comfortable retirement. Of course, all qualified accountants should comment as to how Centrelink would regard this but worth researching.
Cheers
skippygirl)Hi Bennido,
Just my $0.02, I agree with the comments made, mostly. Especially the strategies given to minimise the weekly cash drain.
We don’t know your investment strategy so it’s a little hard to tell what your goal was when you bought the flat but I gather (since it was pre-Steve) that you thought the negative cashflow would somehow be paid off in the future with a rise in the apartment’s value.
If this was the reason, guess what, that’s exactly what my first IP investment was based on so you’re not on your own there. It was before I read Steve’s books and educated myself more.
The first year our apartment was positvely geared (ie it put money into our pocket after tax) but now it is neutral-geared and will head into negative geared next year as the depreciation claims reduce.
Once I realised that forking out money every week may not be a good strategy and any possible capital gains was:
1. entirely speculative (even though there are many factors I identified in my research pre-sale to support excellent capital growth in this area)and
2. eroded by the amount of negative cash flow I’d have to sustain over the years and
3. you can’t re-invest negative cash flow and you can’t pay your bills with a paper capital gain, IF it happensthen I decided to lease-option it early next year just before it goes negative CF. This will put it back into positive cash flow and secure the potential for capital gain at the same time.
It’s one option you might like to research to see if it suits you.
I wouldn’t hold on to your flat and do nothing. The “buy, hold and pray” strategy is too risky and you could find your situation getting worse and worse over item if the falt’s value goes nowhere. But like me and everyone else, you don’t want to sell and take a loss – who would? So that’s why I am lease-optioning ours – I’ll make a profit.
Decide what’s right for you.
Cheers
skippygirl)Scott,
One of my dearest friends (who also happens to be a property valuer) is in Turkey right now. She’s been there many times and says it is the best part of Europe. I know she’ll be looking at the local prop market – we both can’t help it wherever we go.
When she returns in 4 weeks I’ll get her feedback about the market and if there is anything interesting I’ll post it.Cheers
skippygirl)Hi Everyone, congrats to all of you doing so well off the smokes. I gave up about 9 years ago and know what it’s like but now never feel like having a smoke, don’t even think about it.
Just in case you are interested, I have listened to a tape of a guy called Don Wolfe and he is someone who works on psychology, NLP, that sort of thing. He says, two powerful forces in your brain are your imagination and your will. But your imagination is far more powerful than your will. It always wins.
However, when people try to give up smoking they try to use their willpower, and it doesn’t face a chance compared to the imagination, which is conjuring up images of having a smoke, the smell etc. So we go and have a ciggie. Same thing with dieting. We try to use our will but during the day our mind will produce images of all those foods which made us put on the weight in the first place (for me, sweets).
So he says we will without doubt have success in giving up smoking if we use our imagination AND our willpower. How? He says you have to fill your mind with visions of being a non-smoker and once you have imagined that, your mind will see you as a non-smoker and stop triggering visions of you being a smoker.
That is, stick a photo of yourself, sans ciggie, up at your desk, in your bathroom etc. so you see an image of yourself as a person who does not have cigarettes. You have to say out loud “I’m a non-smoker, I don’t smoke” etc and make a point of spending a few minutes every now and again running a movie reel in your head of you in lots of different situations where cigarettes play no part.
Also, you have to DO what a non-smoker does if that’s what you want to be ie act like one, not like a smoker temporarily on sabbatical. So don’t even speak about cigarettes, (non-smokers don’t) don’t look at them, take no interest in them.
Put this all together and when your mind thinks you are a non-smoker you will be. Easier than willpower.
He also applies this principle to breaking through psychological barriers to investing, finance, success etc.
Anyhoo, good luck, you’re not smokers any more.
Cheersskippygirl
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