My Property Theory – Your thoughts

OK I stand corrected on it being filmed entirely there. When I was there I was informed it was. Im not comparing the towns as towns, just as a tourism observation. Other small towns I have visited also in Tassie the locals have told me the tourism is what has put them on the map. They say people travel there, fall in love and buy there. In other cases it just brings in alot more $$$$$$$$$$$

Regards Bear

quote:

---

Originally posted by BEAR1964

Thanks Richmond

…My experience many years ago when interest rates got as hi as 18%…Many people lost alot of money in these areas…but if ya can’t service the loan u have to get out.

Regards Bear

---

And this was my original point – whether you convince yourself that because X happened in area Y means it’s going to take off – is not worth worring about if you are living on the edge, financially.

+ve cashflow is fine for some, as is -ve cashflow. Rural, regional, urban IP’s – it’s all a matter of what your attitude is to the risk associated with each and every buy. But underpinning each and every purchase also must be the realisation that you must be able to service the debt – in bad times as well as good.

How many of you have looked on with envy at those people who coolly advise that they have $120,000 income from rent per annum. Did they also tell you how much the interest bill on the debt was and how much higher that debt grows when interest rates rise and they don’t/can’t adjust their rental yields more than once a year?[?]

By the way Bear, locals telling you how good the area is, is a bit like the cabbie giving you a red hot share tip []

Be careful out there – study the market, make a plan, and stick to it!

Cheers,
Rowan

Hi All,

I want to do a longer reply but am at an internet cafe on holidays, so can’t talk long.

Briefly, I think it all comes down to the old ‘negative gearing versus positive gearing’ argument.

The best thing about cash yields is that you don’t have to revalue, refinance, sell, or otherwise frig around to ‘get your money’ – it arrives in the bank regularly, courtesy of your tenants and property managers. It’s actual cash, which pays your groceries if you spend it, and earns MORE cash for you if you don’t. Cash that can be put towards further CF properties that will *increase* your income/lifetstyle /serviceability to a bank, as well as put you closer to being able to retire and live off your properties.

I’m not saying that a well-placed negatively geared property would look out of place in my portfolio, and if the chance to make silly money comes up I will definitely go for it. But personally, I will be making sure that my portfolio is always positively geared overall. Really, that my *life* is positively geared, overall. That way you can use the positive cashflow properties to support the (let’s face it) more speculative ‘negatively-geared for growth’ properties. Yet not be more ‘broke’ every week.

cheers-
mini

well some people are just forum addicts *cough* PropertyGuru *cough* [:p]

Matt

“If you do what you have always done, you will get what you have always had.”

“Isn’t it time for a change?”