Dear fellow investors,
I am a Perth property investor with just one investment property at the moment. Obviously, I am fairly new in this game, because I am not sure how to proceed and purchase another property without causing financial strain.
My concern is this: Since I am negatively gearing a $180 property, borrowing 100% including purchase costs, repayments are roughly $1000 per month. Take the worst case scenario where the property is untenanted, I do not understand how one can maintain multiple properties and have the cash to pay off the loan (I know of course there are many other factors not mentioned here such as tax deductions, but even with that considered, for someone who is on middle class income the repayments involved can be quite daunting)
Also, for someone to be able to buy a property once every year or so to top their portfolio, that would assume that their properties are undergoing substantial capital gain, or where else would their equity come from, assuming that they want to borrow 100%?
Looking forward to some enlightening responses..
Daniel
Hi Daniel,
I think you need to have a look at why you’re investing in property in the first place.
You mention that investing in property is placing financial strain on you. Is this what you intended when you were first investing in property? I get the feeling you invested in property because you wanted to end up in a better financial position.
Perhaps you need to take a step away from the process – and have a look at the benefits you hope to achieve. Do you want an increased net worth? Do you want to retire on the income your property portfolio generates? Do you want to eventually sell your portfolio for retirement?
Start with a goal, and then look at investing in property in ways that get you closer to the goal.
If your current investing plan isn’t sustainable, I think you need to re-evaluate your investment options.
Cheers
Brent Hodgson
Also, for someone to be able to buy a property once every year or so to top their portfolio, that would assume that their properties are undergoing substantial capital gain, or where else would their equity come from, assuming that they want to borrow 100%?The other option to be able to purchase a one property every year (minimum) is to get creative and find positive cashflow properties – ones where the income (rents) are higher then the outgoings (tax,rates etc).
Which is basically, the basis of this entire site and investing community…
Wishing you the best of luck….
Pete
…Beware of the dreamtakers…
[
]Hey Daniel,Given your very first investment property is cash flow negative (congrats by the way) a strategy you could look at moving forward is to get creative and purchase some with a positive cash flow.
Be mindful when purchasing cashflow negative properties you should do your sums on the following basis, i.e if rates go up or if you have to drop the rent. if you can still afford the property on this basis then its worth considering. If you continued to purchase properties that were cash flow negative you would run out of income to sustain these properties… hope this helps
hi,
i suggest u look closely at what you want to acheive, everyone has different goals, do u really need (or want) to buy a property every year?
why not spend a little more time looking for a +ve cash flow property, while using this time to save up a small deposit. i only have one property, but i’m looking for a second at the moment. im only going to buy house’s around or under the $100,000 mark.. if your is more than this maybe u could try selling up and get a few cheaper ones…
Hi,
It’s all fine and dandy to say “buy some positive cashflow properties”, but I still don’t quite understand how you can stop from reaching a limit or plato with the amount you can buy & borrow.
Is Steve’s idea of dividing the property income into thirds the answer?
– 1/3 back into property
– 1/3 into lifestyle
– 1/3 into capital gains ventures
What do people think?
]Hey Daniel,
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