First of all I just wanted to say a big hello to everyone out there. It is great to finally find something like this.
I am facing a few dilemmas at the moment. I am 22, live in an apartment that I am paying off, and I purchased my first investment property about 6 months ago. Here is my problem: I don’t know where to go from here? I am alsways reading about people buying numerous properties properties in short periods of time, other people who buy 6, 7, or whatever apartments off the plan and then on-sell them to make a huge profit, etc, etc, all with relatively small outlays.
Everything I know at the moment, I have taught/researched myself. My family has never ventured in to investing, and being young, all of my friends are more worried about buying new cars and working out how they are going to pay for their credit card each month.
I am slowly starting to make contacts, but it is very difficult to find mentors and people who are willing to nurture me and provide guidance and advice.
I have big plans and goals over the next 8-10 years, but I am not too sure how to get there…all these seminars I see promising fantastic results sound good and interest me, but I guess I am a bit hesitant
If anyone can offer any suggestions as to where I go from here, it would be greatly apprecited.
I have big plans and goals over the next 8-10 years, but I am not too sure how to get thereThis seems like a good place to start [
] Perhaps if you explain to us what your goals/plans over this time period, it would put us in a better position to help you achieve them.Regards,
Brett []“Even if you’re on the right track you’ll get run over if you just sit there.”
Welcome Jus,
Hope you find much knowledge here that will help. Dig back through the posts and you will find heaps of info. Which part of the world are you in Jus ?
As Brett said…What do you want to achieve and what are you willing to do to achieve it ?Talk soon….
Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinI am in sunny Sydney…
OK well here is what I want to achieve over the next 8-10 years…
I currently work in a high paying (for a 22yo) job that I hate. I am basically using this as a means to an end…a tool to help get to where I want to go by providing adequate income in the mean time. Fortunately it is not very demanding, which generally leaves me time to do research and work on things outside of work.
Within 8-10 years I would like to be in a position where I can “retire” from my current day-job, and become a full-time investor and manager of my portfolio. I use “retire” because for me that means I am retiring from “work” full-stop. I see investing as something I am passionate about, and thus don’t classify it as work. (Just to clear that up)
From reading through some of the info on this site, it looks as though I am going to have to start focusing on +ve cash flow properties…
As for what I will do to achieve my goal….well I will do what ever it takes, and I seriously mean that. I love business, money and property (in no particular order) and I want to succeed.
If I have to quite my current job and focus on another area for while in order to go forward, then I will do it….as I said, I will do(and spend)whatever it takes…
I think that is about all I have at the moment. I am always working through things in my head, but the end result just seems so far away at the moment, that I can’t get my head around all my different options and tactics.
Can anyone provide any advice on things that I should be looking to include/consider in my plan?
First thing you need to do is write down your goals for the future.
Break it down to short term (12 months), medium term (3-5 years) and long term (10 years plus) goals. Under each of these goals and time frames, write down what action is required to achieve these goals.Perhaps if you told us more specific details such as what your property is worth, what you owe (current equity) and your gross income, we may be able to provide better information.
This will also give you a better idea as to how much you can borrow based on your equity and DSR.
See a mortgage broker to see how much you can borrow, and then look at what type of property investing you want to do. You need to decide on what niche area of property investing (buy & hold, wrap, flip, renovate etc.) you prefer and which strategy is best for you so that you can move towards that.You say “From reading through some of the info on this site, it looks as though I am going to have to start focusing on +ve cash flow properties…”
WHY?
Only you can decide which area you’d like to invest in and what is comfortable for you.
Don’t let a forum such as this influence what is in your best interests. At your age, you should be seeking out quality property that will show cap gains and perhaps negatively gear if you’re on a high income. It doesn’t sound like +ve cash flow properties are suitable in your situation.You have to remember that this forum is dedicated to selling Steve’s products and the emphasis is on cashflow +ive properties and wraps.
If you want really good, unbiased information from friendly people who are knowledgeable and have plenty of experience, log onto Jan Somer’s forum at:
http://www.somersoft.com/forums/You should also be investigating what structure is best to buy your future IP’s in, depending on the strategy that you use.
It’s unfortunate that Steve is an accountant yet he won’t give people on this forum any information on what options are available, and what structures he recommends. You have to buy a product from him to get this information!There are several excellent accountants, financial advisors and mortgage brokers who moderate on Jan Somer’s forum and provide excellent advice to specific questions.
For example, you may want to buy an IP in a trust structure and then rent it back to yourself.Check it out – repost your question there and you will be pleasantly surprised at the response you get.
Hey Jus10,
I agree with Quentin up to a point. Writing down your aims, etc is an excellent idea and a neccessary one. Quentin is also right that you have to look at all the options and decide which one is for you. As to ignoring cash flow positive properties in favour of Capital gains I would say that Quentin is wrong. What is right for you has to fit what you want to do. For example you may wish to leave your job sooner rather than later and cashflow property may be an important part of that process. It is not the be all and end all by any stretch but it should be considered.
As to this site merely selling Steve’s stuff….. I really think people don’t believe that and I think from the discussions that happens here daily there is evidence of this.
Yes it may be more “positive” in it’s focus but that is not a bad thing.
Somersoft is a great site with lots of knowledgable people who are happy to share their experience. Hopefully kinda like here. I enjoy somersoft forum and I think it is great.Jus10 back to the issue. Sit down write your plan and follow it. Read good books like “One Minute Millionaire”, that challenge your thinking. Also “Think and Grow Rich” by Napoleon Hill. Another beauty is “The Richest Man in Babylon” by George Clason.
These books will help you with your thinking they will not give you answers but help you find them for yourself.
Hope this helps and keep on asking the questions and bring your plan to the table.Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinI definitely think you should be focusing on neg gearing properties that will show good cap gains for 2 reasons.
Firstly, being on a high tax bracket will bring you some tax relief, and secondly because cash flow +ive properties will further increase the amount of tax you already have to pay.
I think this is pretty obvious, so i’m not sure why AD is recommending something that isn’t beneficial for your particular circumstances. And i don’t think AD’s use of the word “wrong” to describe my suggestions is correct from the 2 reasons i have just stated.
If you invested in cashflow +ive properties now, you’d be paying more income tax.I guess AD is saying that having cashflow +ive properties will allow you to retire earlier. But at your age, you have another good 30 years to invest in property. If you buy a fully financed IP that is neg geared and located for cap gains, you’ll find that this will turn around down the track when you have paid some principle off and your interest deductions are reduced. At this point you’ll find that you are cashflow +ive and will then be paying more tax rather than receiving a tax refund.
This exact same thing happened to me in the space of about 8 years. I bought an old Victorian house that i renovated and let out. I was neg geared and getting tax refunds back of about $4,000 to $6,000 each year. I then got to a point where i had paid off too much principle and was becoming positively geared because i had reduced the size of my loan. I was in a situation where i had more equity through a combination of reducing my loan size and cap gains.
Nothing at all wrong with being cashflow +ive except that i now had to start paying provisional tax.
So i decided to go out and borrow more money to buy another property. I then started getting tax refunds back as well as building up equity in another property.My point is that your neg geared properties today will benefit you now, and they will also benefit you in the future when they become cashflow +ive when you want to retire earlier.
You can have your cake and eat it too! [][8]It’s difficult to find cashflow +ive properties in the current market mainly because of the strong cap gains we’ve had recently. Rents haven’t been keeping up and that’s why cashflow is not so positive. [xx(]
Example, the last property i bought in Melbourne for $112k. That was in 1998 and after renovating it, i was able to get a tenant for $190 pw. At that point it was cashflow +ive. In fact it still is for me, but because it’s now worth $220k and the rent hasn’t changed, if i sold it the new purchaser wouldn’t be buying something cashflow +ive.
If you were to actively seek cashflow +ive properties, you’d be looking in rural areas where cap gains aren’t so easy to get.
Some things to ponder…
Can’t argue with your logic Quentin but I still don’t wholly agree….(good to have different opinions – makes me think). [
]
Tax relief is all very well but yuo are still paying for the privelege of owning the property. As long as the property market goes up like the market we have experienced over the last 5 years(approx) then all is well. In a flat market what then ?
Yes you have to pay tax on the cashflow but I have always figured that paying tax means you are making money….Isn’t that a good thing ?[?]Personally I hope I have another good 30 years to invest in property also but I still want to retire in under 10 years so I need cashflow to support my habits and the habits of my family…
In conclusion I am not against negative gearing but I think you have to consider both options and what suits you. It’s always hard to crystal ball but it’s also worth considering what might happen over the next few years. [
]Lots to think about Jus-10. [
]Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinOK well thanks for all of that [
]The reason I have said that I may need to consider CF +ve properties is because I don’t want to work for an employer! If I am not employed, and thus not getting a wage each week, I can’t keep funding negatively geared properties can I?
I understand what you are saying about -ve now, +ve later, and I would like to think that I have more than 30 years left in me….but my aim is to do this all full-time, and as soon as possible. I therefore need to start focusing on investments that are going to produce an income.
My current situation is this:
Income:
Me – $60,000
Wife – $35,000
Rent – $10,500Debt:
House 1 – $165,000 (valued at $320,000)
House 2 – $225,000 (-ve geared – valued at $280,000)I re-financed my place late last year before things started to slow down in Sydney, and I have a LOC of $85,000. I currently have $50,000 remaining.
I guess I am still working through what will work best for my situation and what I want to achieve, and as such, all of your opinions are invaluable. They help me to think and challenge what I already know, and that is the main reason I am here. I am old enough and ugly enough to make my own decisions and mistakes in the end.
Thanks for all of your responses…greatly appreciated
Happy Easter to all as well
[
]Jus,
looks like you got some good info from Quentin and AD there. Good to see both sides at all times.
I am in a similar situation as yourself (other than the age bit). Great desire to get out of my ‘job’ and work full-time on investing.
Rule 1. You need an income from something if you are going to invest!
I think you have already answered your own questions. You want to get out of your job asap so you need alternative income.Helps me to turn my plan into boxes and lines to get it clear in my head. My plan has boxes with +ve, wraps & reno/flips. These boxes are cash producing & will take the place of my present income. At some stage you need to put that income into an investment with good growth. Therefore all these boxes have a line going to ‘buy & hold’ for CG. (don’t forget living & lifestyle must be deducted) I tend not to focus on the tax issues too much. Of course it is very important & must not be ignored. However your business structure, combined with accountant/advisor when the time is right, will take care of this side of things to a certain degree. As they say “Death and Taxes……..”
An important part of my plan is flexability. If I find an excellent propisition for CG – I don’t ignore it just because my focus is on +ve at the moment.
Hope all these views combined get you off in the direction you are wanting.
Good Luck
Essykay
] Perhaps if you explain to us what your goals/plans over this time period, it would put us in a better position to help you achieve them.
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