Hi Kay,
I did buy at the first, cheaper price, after looking at population, location, industry, price etc. I wasn’t buying for CG, I was buying for cash flow… the CG is a bonus. My whole point was that these pro negative gearing people write off the regional areas, and I think they’re extremely narrow minded…
And Kay, buying in a place where there’s been 30 or 40% CG and expecting it to happen again is like buying into a managed fund that’s had 30 or 40% growth and expecting it to continue… sure, it might, but it also might not, and I wouldn’t want to be betting everything that it would..
Cheers
rHi
Everywhere in Australia has doubled in the past few years. Even Orbost has doubled. But that does not mean its going to double again soon.
So why even consider a place like that. Steve made his money at the right time and decided to now write a book of his experiences. Now many people have read the book and think they can emulate this. His timing has been great as he has got capital gains and positive cash flow.
Now its very difficult to do this. I am not going to waste my time looking for rural properties. I dont want the rental management hassles. The long drives to sort difficult repairs.
I want a property in a growth area, in a capital city that i know will grow over the long term.
I am not totally against rural properties. Its just at this stage of my life, with a good job and two young children its just not worth my time.
Cheers
Andrew
Hi all, Interesting topic.
First off I believe both camps have both their pros and cons and I think a portfolio should probably have a combination of both.
However as far as the cashflow goes I generally am all for it. I think that they will generally have lower CG than the city centers over the long term. Like angie! says the cg may be there now but is this to do with the fact that the whole prop market has moved?
I live in bowen which is probably considered quite rural and talking to the locals they say that over the last few years the cg have close to doubled but that was after prices were stagnant for the previous 20 years.
It will be interesting to see what happens to all the high cashflow positive props in rural areas after a good number of years.
(BTW I would probably exclude townsville and toowomba from the above description of rural)
Josh
richmond- yes, I agree with your comments
) But I guess we all see people saying “I want to buy in blah- it’s had blah% CG and therefore I think it’s a good prospect.”Buy in gloom, sell in boom, I say. Buying in gloom does not mean using other people’s misery, of course. It just means, to me, that I am happy buying in a place without much CG if it meets my affordability level and doesn’t cause me too much risk.
And I think most of us would agree it’s harder to get a cheaper place these days without it being a dump (a restump dump?) We can still find CF+ places possibly, but they are often of a much poorer standard than for the same price in the pre-boom days.
Then again, rural scares me. You lose that one rental family, you may not get another one for a long time.
kay henry
G.day.Just responding to Yack thinking Steve & co bought at the right time and that it could not be emulated. Well this is just not so. I am about to visit a regional centre that is returning to prosperity, has v. cheap housing and returns of around 10-15%. You just have to look basically. For eg. I found heaps of possible areas on the net just using one search site (propertypath.com) and was able to research those areas using the Google search engine and doing exactly what Steve did; typing in the name. I also think that it is very limiting to think there is only one way to invest, i.e. in CG property. Just think what you could achieve if you had 10 properties bringing in a +ve amount that added to your DSR.The banks would recognize your capacity v. quickly because all income as you know informs their decision to fund your investments. By all means buy CG if yout research says so, but don’t discount the value of money coming in on a regular basis. Who cares if it comes from a low CG area? Income is income. Regards Brown boy
Yack
Guess it all depends on your financial situation and what you can afford to do or buy, with two kids and a wife to support? plus the – geared properties you are probally on a better wage than most, property will appreciate in time ( even in rural areas – just slower)
A dollar spent on your – geared property only gives you 30% back on the median wage, spend $1 get 30c back at tax time ( basically)
– gearing does limit you to the number of properties you can accquire in a given time frame, Still In School has the right idea- a ‘balanced’ portfolio, the don’t put all your eggs in one basket methodology : )
My – geared properties have appreciated nicely over the last few years, so has PPOR ( 38% in last 12 months), IP’s are nearing + geared, be great when we have next child and down to 1 income. and i’m looking for next IP… a + geared one, plus allocating some ca$h to shares.
My portfolio-A Place for everything and everything in its place [
]Some people are too indoctrinated into – gearing,some years back a Friend in the Police Service i knew sold his IP as he had it for many years and was no longer getting the tax breaks.. Things that make you go Hmmmmmmm
REDWING
G’day Yack,
A year ago I said the same as you,except my perfect location was Sydney-Northern Beaches.I went on to say
why have one dozen (or even two dozen) properties costing you twelve (twenty-four) times the overheads of
a person who has four Sydney properties(me).
Sydney/Melbourne properties growth are KILLING all those country towns.
I borrowed just over one million dollars in 1999, bought four properties, over two years.Today they’re worth just under three milliom dollars.
There’s only so much coastline.GOD ISN’T MAKING ANY MORE!!!!(sorry S.MC K.).
The country boys(and girls),on this website gave me a huge mouth full about sneering at country folk.(Rightly so).I jokingly said plastic food was far better for you than that fresh country stuff they grew.
The posting was so heated that the powers to be put a lock on the post.(Richmond,I think).
Eventually I got the FLICK from this website.I’ve only just returned.My sense of humour was not appreciated.
Damn and blast!
So no more humour.
NEVER!!!!!This old fart is are here for ever.
bbruham.
Winners make it happen.
Losers let it happen.Hi Bruce,
I know you were banned from the somersoft website, I didn’t realise you were given the “flick” from this one…
I’ll just reiterate that both sides clearly have their pros and cons… I personally wouldn’t invest in a tiny country town… regional centres are more my go, because I can’t afford to buy heavily negatively geared places in the metro areas. Surely you can’t scoff at people for that. It’s horses for courses. With my plan I will have the choice not to work by the time I’m 40… hopefully sooner. If I was to heavily negatively gear, I doubt I could do it. As you well know, everything’s different now to what it was in 1999… if I was starting back then I’d have bought metro (hindsight’s a wonderful thing), but now, I can’t. When the cycle takes it’s next charge, perhaps I will be able to… we’ll see.Cheers
rrichmond,
I wanted to buy metro also- 3 years ago- before i had much CG on my coastal property- and guess what? The bank said i couldn’t- even with lender’s mortgage insurance. I totally had my eyes set on that place- but my eyes were bigger than my wallet.
Even hindsight doesn’t work when you can’t get into the market.
Should we have bought in sydney 3-4 years ago? yeah, no doubt. Could all of us been able to afford it? Not at all.
The neg gearing vs pozz gearing debate isn’t even practical when people actually *can’t* afford it! I consider myself lucky to have bought in a coastal place when the market was so flat. It even had neg growth for a few years after I bought it.
It’s funny how people in sydney say they’ve had so much growth and people aren’t sensible to buy regional or country. But we all buy what we can afford.
kay henry
the thing about apartments is that – well, you know the old saying – land appreciates, buildings depreciate. i think CG is going to work for you much better if you buy a house with land, rather than an apartment which will start to be seriously dated in 5-10 years and will have ever-increasing strata fees – outside your control, not to mention competition from other newer apartments.
i just have this ‘beware’ feeling about new apartments in general.
Old apartments i think can be OK, they have hidden potential because they can be ‘cathy jayne’d for CG in the future (cathyjayne.com.au)
and don’t have the hefty price tag the newer ones do and so can more likely be CF+ve or close to it.I also read or heard somewhere that where the land has the higest value compared to the house you get the most CG. (i.e. places like sydney, for example the house we rent would be worth 800k but the land alone would be 600k, and the house probably only 200K. You just don’t get that kind of land value with apartments. All you’re really getting when you buy an apartment – it seems to me – is the ‘improvements’ which to me don’t seem like a true ‘appreciating asset’. More like a depreciating one.
I have bought +ve CF properties where let’s say the house is worth 27K the land is only worth 1500. So, the opposite of Sydney. but the rental returns are the opposite of Sydney too. haha. So maybe the perfect portfolio has a few CF+ve’s supporting one or two beachy kinda up and coming -CF properties with a high land value.
Hmmm i think i’ll shoot for that actually…
PS welcome back bbruham. Yeah we’ve had some doozies…looking forward to getting stuck in some more. I didn’t read page two before I replied and wish i had.- a lot of the people said the same thing as me which is ‘balanced portfolio’.
it would be nice to be able to raise a million to get started, and it would depend on your equity, income, and credit rating. However if I needed to raise a million to get started i wouldn’t have started. My tiny little deals are so accessible that even a dreadlocked freelance muso could afford them, and the income from them will help me (eventually) be able to service the ‘bigger deals’ which are those such as beachfront, city, or other A-grade locations which almost guarantee CG over time but are nearly always pricey and -vely geared. And which hold you back or keep you in a job, if that’s the only kind of properties you own.
cheers-
miniG’day Richmond and Minimogal,
IF ONLY!! Yes,with hindsight I would have also bought some of those properties that you both bought.
I had a rough idea that the next properties would have too be pos.geared.I looked at Armidale NSW, loved what I saw,did nothing.Checked out Lismore. Found a block of units for sale .Checked out OK.Not in the flood area.Did nothing.
That’s what blew my mind,this website.people were buying country properties like buying lollies.
I dithered like an old fart(which I am).
What’s this year going to hold? NO IDEA.bbruham
bb,
wow! I’m amazed at what you wrote. Does this mean we won’t be arguing as madly as we used to?
!!! anyway,
re:
“What’s this year going to hold? NO IDEA.”I think that even if I had a good amount of Aussie $$$ to spend (as compared to NZ prices are still comparatively higher) I don’t know if the bargains have started popping back up yet as they probably will when everybody en masse starts to get jack of property and says it doesn’t work any more. on that day there will be more sellers than buyers. Maybe that day is approaching and maybe that will be the day I enter the aussie real estate market.
In the meantime i’m still focussing on NZ but i see the same thing happening as happened in Aus, just a couple of years later – prices are moving, so yields aren’t as good as they were, but you can still find some bargains.
cheers-
miniI think the new year has brought a much more mellow Bruce, which is great…
cheers
rHello Rich (mond) and Mini.
I was becoming a little addicted to this website.
So when the FLICK came,which supprised me, I was at a loss for awhile. I went and annoyed the Yanks. they’re too thick to insult. I also tried the Kiwis, no fun there.They are just too serious.
Mellowed Rich, yes my court case is getting closer.
I’m being sued for four hundred thousand dollars. Never
trust anyone,especially family.My bloody mother-in-law. I also made a mistake of telling her that I had a bullet with her name on it. Another court case there.
This the third time some one has sued me. The others were not related.I won the other two cases.Fun,fun,fun.Not just a boring old fart!!!
Mini, I would love to buy property in N.Z. but…. I
can’t go there to have a look.
I’m not allowed out of Australia.No passport.I owe the tax dept a couple of dollars.I’m paying them back very slowly, at five dollars a week. Let them wait. So no passport until I “do the right thing”.I owned a couple of business once and I creamed too much off the top, leaving very little for tax.Sprung!
Anyway, back to property.One of my taxi passengers had bought in the North Island, a place called Whangarei.She said the place is going to be big. Pronounced Whangarei if you’re white,”Fong-er-ray” if you some other colour.
Careful…
You learn so much when you drive taxis.
So there you are Mini.Question,how does ONE buy property over there without ONE seeing it?
YOU DON’T!!!Seen on a back of a Sydney bus.
“When will I earn as much as I spend”.
Bruce G.
bbruham .
The old fart.
(what ever).[][][]
) But I guess we all see people saying “I want to buy in blah- it’s had blah% CG and therefore I think it’s a good prospect.”
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