So we can buy +ve cash flow properties that will return a before tax $1,000 to $2,000 per year. I agree with early postings that this is better than nothing but to secure a passive income of 50,000 pa we would need to own between 25 an 50 properties. Is this where we are heading ? What are peoples ideas about paying of loans. To me +ve cash flow is best with minimal borrowing.
Assumptions: borrowing 100%, 75,000 property with 10% purchase costs, using 11 sec rule @ 150pw rent.MJKMJK
I am struggling to get my first +ve cashflow property. The thought of needing another 49 makes me shudder.
I have just finished reading Jan Somer’s Building Wealth in Changing Times, having ready her first book, Building Wealth through Investment Property some time ago. She manages to make negative gearing sound OK. You only need say 12 properties, because you are relying more on capital growth. So if it costs you $50 per week out of your own pocket, to my way of thinking, that is forced savings. Better that than takeaway food, and junk for the kids. As years go on, they will gradually turn positive.
Confused.
Ally
I feel that cf+ is very possible and what is wrong with 25 + properties, when they are cf+ then they are paying the mortgage for you. You still have a mortgage to pay with -gearing. And a cf+ property will still gain capital growth while you haven’t paid a penny (or only pennies) for it.
Sounds like the best of both worlds to me.
I am quite excited at the moment as I have finally found an area that I feel could be quite an optimal place for me to start my cf+ adventure and am looking forward to buying many in the months and years to come.
I already have a -geared investment and with the benefit of hindsite it could have been a better deal … but it will turn around one day[
]Leigh K
Ally & Liegh K
Thanks for your candid responses it is daunting but I suppose possible. I do believe many have done it before us. I was wondering if a mix of capital growth oriented properties that are mildly negative and some positive cash flow propperties could offset each other.Thus allowing us not to over extend ourselves with regards to our repayments. Of course (it is my personal opinion ) the paradox is that cash flow positive rarely offer capital growth ( especially in this climate and Capital growth properties rarely are neutral or positive, but a mixture of both may offset each other.
MJK[
]This certainly sounds like a valid strategy (mixture of +ve and -ve to offset each other) if it suits your goals. I don’t think anyone here advocates that there is only one right way to invest.
Rod.
Thanks RC,
To my way of thinking” variety is the spice of life” A mixture of;
New -ve geared with high depreciaton benifits.( capital gainers )
Old -ve geared but large enough land to subdivide later. Will become +ve after subdivision and have great depreciation benifits and equity added )
+ve geared to cover short term expenses and create real passive income when capital gains are realised on other propertys.( capital gains can be redirected into paying down loans on +ve properties )
Note that a property that is new has far superior tax benifits and if it is converted to +ve in the long term will mean that some of the passive income will be be sheltered from tax.( on paper tax deductions )
Not trying to be smart, its just these ideas swim around in my head all day and its great to hear other peoples ideas. What are other peoples strategies.
The hard thing about all this is not having any lump cash to pay of the first so it can pay of the second.Large amounts of borrowing definitly reduce the income from a property don’t they?
MJK
Hi,
Anything worth doing is worth doing well!
50 properties sounds like a lot until you get there!
If you can develop a system rather than a deal-by-deal focus you will find that it becomes a replicable process and as such your results will accelerate.
This will be wise words to people with a system, and cryptic nonsense to those without.
It’s difficult to describe the view from the top of the mountain if you have never climbed before.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hello there Negative gearing to me means that i would have to stay at my job until they become + tve ,i hate my job even though i work for myself,so anything that ties me down longer is not an option
BYE AndyI think you’re absoloutely right Steve, 50 properties sounds like a lot until you get out there and do it. “The journey of a thousand miles starts with a single step”.
I definitely agree that you need to have a plan/system in place and most importantly you need to TAKE ACTION!!! Once you get in the game it is amazing how much you pick up and learn along the way.
I like the quote that is mentioned in Rich Dad Poor Dad “The reason so many talented people are poor is because they focus on building a better hamburger and know little to nothing about business systems”
i hear u MR hedge!!
Very interesting. By the way, in percentage terms what would be the minimum or optimal nett positive return on a property that meets the 11 sec rule. Assuming it is dead on 11 sec rather than heaps better. Is a 1 – 2 percent return acceptable or will this be demolished by maintenance costs. Assuming 100% plus costs (10%) financing.Does PI.com advocate 110% borrowing ?
MJK
Hi everyone,
I am just wondering… How do you keep track of all the paper work when you have more than 10 properties (Let alone 50!!).
All the bills etc… Seems like a good program is needed
Can anyone tell us how they do it (their thoughts on this and a few explanations.)
Thanks
*************
APIM coming soon …*************
I use an accounting system called CASH FLOW MANAGER which is supplied by my accountant, and is quite simple to use – happy to give u her details if u want to email me 4 it. I think it costs about $250, but don’t quote me on that.[^]
APIM, we have also purchased a system which I will set up soon but in the meantime I have used one of those plastic ring files for each property, with dividers for each section, eg, purchase/settlement, property management, expenses, lender, strata,BC,general. I also have a page where I note down any time I have to contact someone re the property, what it is about, etc. I have a photo of the property at the front and all details should I need to contact anyone from the lender to the property manager. I will continue the files as it is all easy to access, and I have a home office but will also set up the system for the accountant this financial year.
Anna2
]
]
The topic ‘What is the strategy ?’ is closed to new replies.
