Forum Replies Created
Hi Guys,
thought i’d show you guys quickly why i voted for the property for 160K with only a 5% return AND a 7% CG rate expectancy.
simply based on the information…
Property @ $160 @ 5% rental = $153.84 a week in rental 0r $8000 an annum
based on an interest only rate of 6% and overhead weekly expenses of $60 per week or $3120 per annum
Total Cost $11,120 per the annum
but at a capital growth of 7% annual and compounding each year..
this is how the property would look like after 5 years.
1st year $171,200 an increase of $11,200
2nd year $183,184 an increase of $23,184
3rd year $196,006 an increase of $36,006
4th year $209,727 an increase of $49,727
5th year $224,408 an increase of $64,408so you may have made a lost of $11,120 roughly each year, if all expenses and interest rates stay the same, but lets say if your able to claim a minimal 30% tax rebate on this of $3336 a year or so, this property has virtually looked after it self as its neutral geared, same follows each year, but after the 5 years, still this property has virtually cost you nothing, but being conservative on a 7% growth annually, you have actually made a whooping $64,408 and had to do absolutely nothing.
Feeling that the figures are too conservative and on relevant information on hand, that most of all know…
… property doubles in price on average every 7 years…
either way, you made $64,408 or could have doubled your returned and made a whooping $160,000 more and being even more conservative, if we were able to increase rentals every 6 months by $10, by year 4 this property would be cashflow positive (based on 11 second solution) that the loan could then rollover from interest only to principal and interest, in perfect timing and manner.
… not only has this property, given you plenty of tax incentives, rebates, and taxes breaks, it even looks after it self and provides you with +ve cashflow and guaranteed capital growth each year.
… with the cashflow positive property at spend 80K with a 10% return (minimal CG)
maybe no capital gain, very hard to increase rentals at the same demand as the negative geared one, and as such maybe a passive income of $50 a week… and very small tax rebate
… i honestly dont see you building up your wealth to quick and having large access to immediate equity and funds as such as the negative geared property…
… anyway, everybody has there own way of working out what is the best wealth creation plan for them, but just playing with that very basic IRR, you can see now, why a +ve cashflow property with no capital growth is a profit at a blinded loss.
Cheers,
sis.Hi Andy123,
im with DD, havent had any problems with the credit card limit, and personally am finding it, that, i am recieving better benefits and discounts, due to having a large credit card limit.
Cheers,
sisHi Kaloni,
to be very honest, every month i take a holiday, either it be a quick weekender or a full week, this year alone have taken 2 overseas trip, and, so far this year, every month has had a holiday, look forward to nexts month holiday already…
Cheers,
sisHi fjficm,
thats kinda strange… havent had any problems with CBA, apart from slow service every now and again, but cant complain. Actually, im finding it the opposite, every now and again, CBA will call up, and just check if everything is ok, if all account are in order, and they even asked a few times, if i would like some further more loans and credit cards increase…
… not sure what the go is, but i do know for platinum holders, there are plenty and many courtesy calls and vip treatments [thumbsup2]
Cheers,
sisHi PurpleKiss,
Answers in blue…
Originally posted by PurpleKiss:a) Whether your first porperty was a PPOR or an IP,
IP
b) What made you think about buying a first property and
capital gains…
c)When you found the one you bought, why do that one suit?
Its a number game, and it fitted the criteria.
d) Was the first purchase emotive or done under proper due diligence.
done under a thorough due dilligence… besides, there are no emotions, for me, when investing…
Cheers,
sisWoohoo!Congratulations
To Both Westan and Mini!
Thanks for all your Forum Contribution and for reaching the 10 tonnerKeep those posts coming…
Cheers,
sisOriginally posted by Monopoly:Loser > Loser > Loser > Loser > Loser
I hope that as an investor, you have more confidence in your transactions that you do in judging the market!!!
There’s one in every crowd, and it is usually that one, who knows the least, yet manages to speak the loudest!!!
Jo
Agree,
Cheers,
sisi’d wish for a packet of TimTams that would never run out…
Cheers,
sisOriginally posted by residentialwealth:Interesting comments but back on the point at hand – the market has changed so are you brave eneough to to enter and where is your best bet … ?
Hi Residentialwealth,
not sure, what the so called scare is, but just signed another contract up tonight, for another quick property, but am in the current demand to purchase more properties, before this financial year ends…
… best bets, well… that i have to keep to myself…
Cheers,
sisOriginally posted by SteveMcKnight:Hi,
Just remember that depreciation is tax deferral, not tax saving.
but, there is a benefit, if you dont plan on selling the property ever, best to claim as much depreciation as possible.
On a slightly different topic, on last nights MAP conference call, one of the participants as found a property that is $4k p.a. +ve cashflow based on 100% finance… any thoughts about this?well done, for the Map participant, cant complain about +ve cashflow on 100% finance.
though, the topic about +ve vs -ve has been an issue lately and still, theres a border line drawn against one another…
… how i love these debates…
Cheers,
sisOriginally posted by Monopoly:a. Buying a property which yielded a 5% rental return, and with a capital growth rate expectancy of approx. 7%
Hi Monopoly,
you probably guessed straight away what my honest answer would be, because im a negative gearer, and have not much interest in +ve cashflow properties, i wouldnt even bother with a 10% yeild, but also because over time, that +ve cashflow property and with is IRR, it would be profit at a blinded lost.
Cheers,
sisOriginally posted by Chan$:I will knock them out and sign the dot. This is an investment decision. If I want to help other then I will, but not at auction where money can be made.
Agree, will push the couple to their limits, and then place a knock out bid.
Cheers,
sisHi Guys,
alrightie, cant wait so ill tell ya what my approach will be.
first up, with the equity that is available, will be looking for 1-2 possibly negative geared properties, but with a minimal market growth return of 80%.
secondly, being conservative and saying that i will have about $80k to spend and invest… this is my out line, of what im seeking to do.
at the moment my younger brother, whos a bit similar to me, has just dropped out of school… so ideally he has a good idea on how to invest, but for his interest he likes the idea and wants to learn about shares…
- $5k in course material and courses for my younger brother to learn about shares.
- $5k to play with and invest online
- $20k for myself to further invest in the share market, but also will seek a 30% LVR margin loan
- $15k to be put into an offset account, but which will be linked to my cc
- $25k to be transferred into an offshore account, where im currently setting up my first corporation.
- $5k for miscallenous use
- $5k further more to cover, expenses for a holiday trip, to NZ, but also to cover costs in teaching and mentoring my brother about investing.
in a month or 2, soon afterwards of recieving this money, will have access again to the same amount or more coming through, but will be further spent and accelerated into more speculation areas of investing… for the moments its just getting my brother up to scratch, and to a position, where i can feel comfortable, but also feel avail to give him more money to play with and invest with, so that we can seek risker and larger returns, but give him a real taste of investing.
though, do have some other things happening, but there things that im offering to my sister, but will wait and see what her decision is in mid July
Cheers,
sisHi Emzy,
this is a path i wished, i could have took, when i first started out, but because it never crossed my mind till later on… and now its a bit late for me, it could possibly work for you.
… first up i would go to the 3 main lenders who provide student loans. Westpac, NAB and CBA the reason being is with student loans that are available, you can apply i believe for a loan with each of these banks for $10k each maximal, best part is, that you just have to find some one will guarantor the loans for you and that also taking out the loans will not effect you in any way, what so ever.
how the loans work with the banks is, they will give you the amount you wish and once you complete your studies you have to pay back the loans and only then do the loans have interst hit on them, so for example, if you were to borrow $10k from NAB, and your studies were not be completed for another year or 2, you will not have to pay any interest during this time period…
so this is what i would do, i would apply for the maximal amount with each bank, giving you quick access to about $30k, with this you could either invest it into +ve or neutral geared property, but go partnerships with someone, who could supply the repayments as you are the capital depositor, other option is, if this doesnt interest you, i would just put the money into a manage fund or open an online share account and invest in some blue chip stocks…
… this way, there is still return on your money, but the risk is less exposed and can be mitigated….
… work as much as you can, but savings im not too sure about it, personally i like to invest savings straight away, and if possible apply for a student credit card straight away, as i think and can recall, that the most you will pay on a cash advance is $1.50 on a $500 limit maximal, but this is just what im trying to recall, that also the credit card will work differently to you, because you will be charged the cash advance interest after the 44 or 55 days on what amount is still owing, the cc’s are different for students…
… other thing is, on your electives at uni, try to pick up on accounting subjects were possible, but take it easy at uni, just get the marks to pass, but dont be aiming for too higher marks, as you will emphasis to much time on your studies and not allow yourself enough time in learning how to invest and ways to increase your cashflow and capital…
Cheers and hope this helps,
sisHi Monopoly,
am going aways soon, but wont be till mid July o/s, but really right now, just trying to get everything inline before leaving, but will only be away for a short period…
Cheers,
sishmmm Chan,
we must think alike…
anymore ideas guys…
Cheers,
sisHi Guys,
i thought i might give this a shot…
ok.. in my current position at the moment, i have a good lazy amount of equity of about $200 – $300k that i can quickly access…
… for me, im just sitting on it at the moment, but it is readily availabe for access immediately…
secondly… i have around $80 – $90k cash coming my way in the next 8 weeks, by this time, will be credit card debt free…
any suggestion, on how you think i should spend and invest the cash money, and the equity i have now available…
… one other thing to mention, it doesnt have to be all tied in properties, im open to other investment vehicles like shares and what the international market has to offer…
… ill wait for a few reponses, and then share abouts how im actually going to invest and spend the cash and equity…
but you will see definetly i have a different approach to most people…
Cheers,
sisquite agree with you Elves, even if its a couple hundred a week +ve, still that wouldnt cut it for me either…
Cheers,
sisHi Russ,
believe me, once you start making capital gains, either small or big… the opportunity of being able to purchase another IP, and have gains left over to purchase say for eg. new car, holidays, commodites and items…
… you will be wanting to chase those bigger figures…
remember, with the more money you have to play with, the more you can enjoy, but also the more opportunity you have in property investing…
… both +ve cashflow and -ve are fine, but it really just depends on what the person wants…
Cheers,
sisHi Glenetti,
someone who speaks my language!
… i totally agree about the IRR, the CoCR is fine but more appropriate for uses such as knowing, what a small renovation and the increase of rent from it, and how long it will take to get your money back with the use of CoCR, but IRR is the best way to go, for me, i will not use any other tool, and that with IRR’s, you can also predict the growth of an asset vs its repayments if its negative geared…
Cheers,
sis
