Also it depends on whether the yields are net or gross, I haven’t read the book but it would be entirely possible to have a gross yield of %30 and still be losing money…

Why not do both?

Reduce the amount of your LOC by $50000 then borrow to buy an ip (or two or three depending on how cheap & country you want to go…) using your newly generated equity

thats what I’d do…

cheers David

Thats very interesting Westan

He was the very chap we dealt with originally though the property is managed by someone else, their name slips my mind at the moment whats more in the last month or so they have taken over management for
my mother in law’s property in Wriggly rd which I would characterise as the bad end of Fordlands.

I know they…[Read more]

On and on the being cashflow positive front the best thing to do is to budget out all the expected costs and all the expected profits (How you calculate these is upto you and your level of risk aversity, we wouldn’t usually take depreciation or capital gains into consideration… but we would count the principal repayments) if there is more…[Read more]

Actually if you take a close look at your mortage agreement with the bank you will find they can pretty much sell it whenever they want to by simply asking you to repay the loan right now! Now I agree that in general they won’t because a mortagee sale is the last resort of a bank but they do happen, and are a great way of picking up…[Read more]

Depends on how you calculate your yeilds, if it is simply rent x 50/purchase price then at least in NZ there are still plenty of deals out there, in the last year we have purchased 4 properties with the following yeilds:

Rotorua 4 bdroom brick house 170 rent & $50000 cost = %17 yeild

Rotorua 2 x 2 bdroom unit 300 Rent & $130000 cost
= %12…[Read more]

Hello All

For instance one area of Rotorua calleed Fordlands is a no go area In defence of Fordlands, it isn’t all a no go zone, whilst I would be loath to buy on Wriggly Rd, some of the back streets are down right neighbourly, with good prices & returns. We bought an IP in Ewert St (Nominally in Fordlands) 4 bdr brick house for $40000 spent…[Read more]

Okay now here is a question for you all especially those who negatively gear. Do you take into account inflation when you work out whether you have made a profit?

Secondly what do you do with the profits?
Do you put them back into housing?
If so do you think that your house beat the market, and you are now going to buy another house which will…[Read more]

There seems an odd presumption that the +ve involves having lots of properties paying you very little. Why not pay off your properties faster than the 25 year mortgage? Especially with cheap properties this can be easy to do and increases your return from those properties exponetially. Better stil it doesn’t have to slow you purchasing more ips…[Read more]

Hi Rnat
Now I haven’t read the book either so I might not get the context but I have seen gross ROI used to refer to the total rent for a year divided by the cost of the property. Or alternatively you divide by the deposit to determine the rate of return you are getting on the cash it cost you.

I have also seen net ROI used to refer to the the…[Read more]