I’m a newbie and this opportunity could not have come at a better time. I have one negative geared property (for obvious tax reasons) but has had significant capital gain in the past 2 years. Will seek to gain some finance from that. I’ve just read the goal setting piece in Steve’s book and will hopefully be up and running once all is in place. Good Luck to us all.
Have our PPOR, which we paid off in under 4 years and has since more than dbld in value since we bought it, and 2 -ve grd older aptmts in South Yarra & Toorak which have gained appreciably since we bought them over 3 yrs ago. My job has just been made redundant so have considerable cash injection plus good savings to invest with. Will look at either buying +ve cashlow prop in inner burbs again, or 2 or 3 in regional areas. Am a little concerned though about the number of investors flooding regional areas. Will there be too many rental props on the market and not enough people wanting to rent? Will this force returns down in a competitive market? I digress, my apologies. Well done everyone.
I’m 19 and bought my first place 6 months ago with an 80% loan and am using it as my PPOR to satisfy the FHOG but will be renting it out soon, it will be positively geared and has also increased in value by over 20%. My goal also is to be financially independant by 30. At the moment i’m researching for future investment properties.
I’ve just found this site after reading Steven’s book which i bought Wednesday. I currently have 2 negatively geared properties. After reading his book, i won’t be buying another, a light bulb has gone off in my head. Wish i’d known about positive cash flow properties before. I had worked out that it would take me at least 15years to have enough negitavely geared property before i could retire. I’ve tossed this plan out the window. Who wants to work that long when there is an easier way. Plan to now retire in 5 years.
We have 1 PPOR, 3 IPs and 1 vacant block of land to build IP#4 on.
We started 16 months ago with our first property, signing the contract within 2 hours of seeing the property – mind you we had been looking for a few months so were on top of things when we saw the opportunity. It is a 4 B/R house in Windsor, about 5 Kms to Brisbane CBD. We were lucky to get it, as the agent had 9 other callers while we were signing the contract. It is a double block with a post-war house on it, so we can build units on it later. This one costs us about $10/week, but has been going up in value by at least $1500/week. We were able to borrow 110% to cover all of the costs as we owned our PPOR outright and had a few hundred thousand in the bank. It was tenanted from the day after settlement and has had 100% occupancy. From here we then moved into a new PPOR and bought number 2 at the same time. It was a bit of a hassle as we no longer had a house for security to get #2, so had to lock in a term deposit for the bank and settle #2 a few days after the new PPOR. It was quite messy, but we got there. The new PPOR left us with around $500K of equity, so was relatively easy to keep buying.
We got #2 in Bridgeman Downs. It was a 3 bedroom house, but we were easily able to turn it into a 4 bedroom house and added airconditioning. We had a tenant lined up to move in 2 days after settlement. This is neutral.
Number 3 took a while longer as we were settling into the new PPOR and doing a few things to it. We just bought this one on the 17th of June in McDowall and pre-paid the interest. The owners rented back for a few weeks and then vacated it, which allowed us to re-carpet, re-paint, add in ducted airconditioning and some minor plumbing work. It gets tenanted next Friday, and will also be neutral.
While all of this was happening, the block of land next to our PPOR came up for sale. This was more of an emotional purchase, as it means we can build a house on it that does not effect our views. In the mean time we can tax-deduct the interest while we work out the plans for the house. This all happened on the 30th of June, and again we pre-paid the interest. Unfortunately, no income on this one until we get a house on it, which might take us another 12+ months.
We have learnt a lot in doing this, and I think we will always have so much more to learn. We have built up a list of trades people who are really good and easy to work with. For example, our electrician, I needed to get some lights replaced in #3 so gave him a call. He met me at the house at 9pm one evening to do the work, did not have everything and came back the next morning at 7am. I had forgotten to bring my extension cord over, so he loaned me his for the night. Bloody Brilliant! If you need an electrician in Brisbane, I can certainly recommend him, friendly, courteous, does good work and is reasonably priced.
I’m new to these forums. My fiancee and I have 1 IP but wish to expand to many. Only thing is, we have good amount of equity but when I do the maths on buying another property to rent out, it doesn’t seem to provide a positive cashflow. Do all people here who have many properties use their own cash or do you use equity and still get a positive cashflow. Please I would be greatful if someone could help me on this topic.
I have 0 currently. I am only 22 but hearing of how other people have amassed many IP’s in a few years gives me much motivation. Looking at getting an IP within a year or two to begin my journey to financial independance[]
A big fat ‘0’ at the moment – but have just started looking. Have read 2 real estate books in the past month (Anita Bell & Real Estate Riches) and purchased Steve’s on Sunday night.
Looking forward to reading Steve’s book after the wrap everyone has given it.
Hope to purchase our first investment property by the end of the year – once we know we we’re doing!!!!!
I’m 22 and bought my first unit property using the fhog and used none of my own money at the start of the year and I just bought a house to do my first wrap my goal is to have 12 houses by 2008 and be financial independ by 30 and i believe if I can do it anyone can I’m not the smartest person.
I also have a big 0. Too busy reading books people have advised me about & waiting for Steve’s book to come in the mail. Coming from adelaide, I wonder if there are too many other investors here & the rental market is becoming saturated. How many people invest in states they do not live in, & is it? Is this an option I should consider, or is there plenty of room for me in Adelaide?
> Will there be too many rental props on the market and not >enough people wanting to rent? Will this force returns down >in a competitive market?
Hi there,
I believe the trend is that houses are getting less affordable and that the percentage of renters is rising. It follows that we need more investors. I’m no economist but it is logical to me that if interest rates are down now that’s part of the reason why more investors than ever are buying. The moment they rise, the borderline investors hanging by a thread will dump.
Then rents will go up because not such a glut….
at the moment we have a bit of a glut of rental properties so i reckon if you can make them work now it can only get better. Long term, the world has an increasing population, so short of major catastrophe, I can’t imagine property ever being a dud.
if you are worried about gluts make sure you buy a good quality property that is always gonna get rented over other ones, whatever that means in your area.
I too have properties in regional parts of qld and also sydney, I am now looking at regional wa, however I am worried they are all becomming to far apart, does this worry you in any way, that yours are all over the country, julie
Bill,
Mine are in regional centres in VIC, QLD, and WA also some in outer suburbs of capitol cities in these sates. I think once you start buying, and begin to know what you are looking for, the areas become easier to find.
I wouldn’t care to mention town names, not because of greed or anything, but because this board gets such a strong readership that mentioning a specific town could result in an unnatural flood of investors to an area.
Welcome to the forum [], it must have taken some courage to finally write a post [^]
The hardest part is over, now you can get in here and ask away……
A PPOR is Principle Place of Residence, if I remember correctly.
That’s great to hear that you have 4 IP’s. Have you had your 4 IP’s valued? You might be pleasantly surprised, they could have equity that you didn’t know you had []
Welcome again and I hope to see you around asking lots of questions..
I started September last year (2002). Have 4 IP’s now plus our PPOR. Would love to increase my collection but have run out of equity in our PPOR!! Not enough IP equity yet to borrow against them.If I could get the finance I would keep going. It just amazes me how people do keep going! Tell me the secret.
Many have written on this post, so I think I will follow. It’s great to read many of your posts, you have added to my search for information in real estate.
Started 2 years back, and we have 3 commercial and 4 residental properties in the US only. We can’t wait to start investing in Australia in the near future. We have a goal of $60,000 passive income within the next 3 years, and by what I’ve read, it is definately feasible to do in this market.
(My very first post so here goes) I have 1 PPoR, 4 IPs in Goodna & Brisbane + a 10% share of commercial property (shopping centre) in Beaudesert.
Hi Fester, I believe that banks usually have two main criteria: 1 is equity/cash typically 20% for no mortgage insurance (perhaps accepting mortgage insurance is normal for investors though in order to qualify with a lower deposit) and 2 is the loan servicing ratio ie income vs interest. It doesn’t matter how much excess equity I may have if I can’t service the loan with available wage & other income. The banks typically will only count 80% of the rent money, and they don’t count the depreciation tax benefit you get from negatively geared props.
This is another bummer of negative gearing, ie although I am cash flow positive, the bank doesn’t think so. I thought it would be fine if my depreciation effect lasted until my rent went up proportionally (I’m about 5 years into my basically 8 year long depreciation life on 4 IPs (2 houses in Goodna & two units closer to Brisbane CBD) Interestingly the houses are going to go close to achieving this but the rent I’m getting for the units hasn’t moved in 5 years.
Back to your question, I believe that multiple properties aren’t possible with negative gearing (as well stressed in Steve’s book) despite the depreciation “cashless” deductions. If you have positively geared IPs then banks will still only accept 80% of your rent, but this should still (hopefully) cover your interest payments and keep your servicing ratio up. The equity aspect has to rely on capital gain plus income (increased by positive gearing of course!)
Steve has obviously relied on Wrap Mortgages to obtain so many properties, because the “tenant” is effectively sharing the deposit and paying a higher “rent”.
Hope this makes sense Its just my two cents worth as a would be multi property investor who has “plateaued” some time ago. I’ll write about why in another post.