My Property Theory – Your thoughts

Hi Yack,
Your theory, I already did it for many years.
It works.

[8D]
Julian

This comment sums up the difference between attaining wealth or a comfortable living..

“It is the capital growth that makes people rich, not the income.” [Terryw]

Why set your goal at $1M in 5-7 years – aim for accumulating wealth at $1M+ per annum from year five. If the investment strategy you have outlined is successful, this is a very realistic objective.

— Michael

Yack

Good on ya mate you have worked out a strategy that works for you and that’s fantastic. But that same strategy would not work for me and my circumstances.

Some one made the comment that the capital cities have the best CP growth? Well Kay has posted a link in the forum that shows the town with the highest cp in 2003 was a small rural country town. 100% within 3 months. Guess what I have invested in that town and didn’t pay anywhere near $250k more like $27k and its Positive cash flow to. HMMMMM I hear the mouse clicks looking for that link right now ………..LOL

Regards Bear

THe theory sounds good Andrew, but I think you need a high-paid job to be able to keep borrowing, or am I missing the point?
Say that I buy a $250K unit somewhere in Sydney.
First of all, this unit will be quite heavily neg geared, even if you pay IO.
(Like Kay says, who can afford those prices? One’s OK but I certainly can’t affford a few of these high-priced IPs!)[]
OK then after patiently waiting a few years (hopefully) you’ll be taking equity out and use this for a 20% deposit to buy another neg geared property. But will the lenders let me borrow the 80%, knowing that I would now have to support 2 loans?
We earn average wages (from our own company). We have 1 neg geared property. But already it would be hard for us to borrow for (and service) another neg geared IP. Even though we have a lot of equity in our PPOR and no debt except for our IP loan. SO I have no choice but look for a CF+, and the only place to find those are in rural areas (still haven’t found one in a 6 hour drive radius from Sydney).
[]
But I think once I’ve bought a few CF+ IPs to support the neg geared one, I can then look at buying another neg geared IP.

Yes I definitely have to wait for the next boat!
But I’m not getting any younger[]

Tell me if I’m missing something, cause I do like your strategy as well as Steve’s. But I think for me a mixture would work rather than sticking to just 1 strategy casue I wouldn’t be able to service the high payments.

Here’s the thing:

Neg gear = exxy property
Pozz gear = cheapy property.

This ain’t “theory”- it’s “strategy”.

Do as you can afford. Harbour views are lovely if yer rich

As for me, I am gonna use depreciation allowances, charge median rents and slowly, I might be able to have some choices about the future, and maybe one day own my own home!!

I don;t do things by textbook, and there isn’t a “one size fits all” strategy. we’re all different, and we all have a different psychology and income, and all those things that make for differing choices.

A couple of cheapies – like 50k- might make some people feel that they have an “exit strategy” if some difficulty arises with work (like redundancy). what’s the exit strategy if you’ve just bought an OTP an are in debt for hundreds of thousands?

As with everything, we make business decisions based upon what we can handle. I like the points made by some people- either here or elsewhere on this forum- about people sleeping peacefully at night. RE can be risky business. noone wants to lose the shirts off our backs.

Exit strategies- thought of *before* you buy- can be just as important as “due diligence” in purchasing a property.

kay henry

quote:

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Hi markpatrick,
I would love you to elaborate on you comment “North of Brisbane is going to explode in the future, plenty of opportunities, why?….the weather and the lifestyle and the room to breathe.
All other areas will come second in the near future imo.”

We are currently trying to learn all we can about Steve’s approach and are looking in Queensland to apply the approach. (Two years ago we went looking for positively geared properties and ended up with a negatively geared one….Great capital gains but we can’t afford to do that again!)

Cheers,
The forum’s newest member
Richmond

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It`s about as much info as I can give, without giving away my own plans and reasons for them.
My advise is go for a two week drive up the coast from Brisbane check it all out, that`s what I did and the only way to get a feel for where many will likely retire to in the next ten yrs, I think people like to retire to a warmer climate, they do not want big city, they want beaches, low crime rate, room to move, there is plenty of land up there close to the coast and roads are currently being upgraded costing billions, I have a strong feeling it is only now flexing it`s muscles, and will explode and become the premier place to live in Aussie, from Brissie definately to Bundy, and much much further up, you have the Great Barrier reef and all the incredible islands of the whitsundays not far away. This is the place to invest.This is all relatively untapped imo, and not just with R/E.

Hi Chan$,

Definetly will be coming to the next meeting for sure, have noticed exactly the same thing too, many good investments are just being snapped and taken so quick.

They are getting much harder to find, yet i wouldnt be too worried, your doing very well still. And i gotta admit, you have a healthy, but very well diverse property portfolio.

You definelty planted some good property seeds, and keeping your property portfolio, well diverse, you’ve definiety given yourself more opportunity and success, than doing one strategy, but using a combination of strategies (offset gearing) allowing and giving yourself a more, but unlimited amount of success.

Best of luck and your success with your achievements.

cheers,
s.i.s

“People 4 get that by saving just $3 aday & investing it sensibly over a working life, you’ll end up wit around $1 million.”

I adopted a similar approach to a property that was neg geared – doom and gloom was abound and everyone was saying the market had peaked, so thought I would be clever by selling out. Unfortunately prices continued racing upwards such that I missed out on a 40% capital gain in 12 months. Several other similar lessons made me vow to forget about timing the market and focus on buying at a discount to the current market. Buying property at good prices will always be rewarded! Out of interest – the amount of inquiries I am receiving (as a real estate agent) and the feedback from mortgage brokers is that there is still plenty of steam left in this market!

Alternatively, become a joint venture partner in one of our property development partnerships – contact me to find out why our developments are unique. John – 0419 198 856