Hi All,
I was interesed to clarify Steve’s views on the following property ideas as they were not stated in the book…1. New or Old … what age of property is Steve’s favourite? Does he like newer properties to take advantage of tax benefits at all? Obviously his initial purchases outside of Melbourne were all very old.
2. Houses or Apartments … Does Steve prefer house and land over apartments or is it purely +CF that he is chasing?Cheers Karen B!
Defintely not speaking for Steve, but a couple of comments/questions.
There are varied positions regarding negative gearing versus +ve geared property.
Are you working? Negative gearing requires you to work and pay tax
How much tax do you pay? Will dictate the scope of reductions in tax and whther it is worth pursuing in principle.
How long do you intend to work for? Retiring early & how earlyDo you have some knowledge/resources/time to repair/update properties if they are older, if required?
Obviously negative gearing requires you to work and pay tax. However, as a general principle, from my experience and knowledge, many of the +ve geared properties are not in the higher growth areas. (I can feel a wave of e-mails contradicting me!).Or at the very least they are much cheaper
Property Value Growth Nominal capital gain
$100k 20% $20k
$300k 20% $60kAssuming that both properties grow at the same level, there is a $40k benefit in the $300k.
On the subject of apartment v house – the arguments for houses over apartments is that the land component in houses is significantly greater and it is land that appreciates and makes you the capital growth. Buildings depreciate.
(Sounding like a politician now), after saying that, let me say this…. I have two IP, both which are apartments. One that was my PPOR and another which I was able to secure the first in a small development (of 5), at a significant discount to the current market valuation, as the builder needed to sell one before commencing construction. The next one i am looking at will be either a townhouse or house though..
What I am saying, ultimately horses for courses. Your decision needs to be based on your criteria and the individual property’s value proposition.
Of course, I am not Steve and do not own 100 plus properties!
Thanks georgisj,
Thanks for your feedback on my enquiry. It is interesting to hear that you have purchased aparmtents as we have only older house and land (x4) at this stage and I feel that there may be more opportunities for +CF from apartments as the rents can often be higher for an apartment than a house.Yes, we are both working and have one – geared property. The added benefits (tax, maintenance, appeal) of newer properties interests me greatly and I am thinking that a mix of old and new wouldn’t go astray.
Cheers Karen B!
Ultimately it depends on the area that you are looking to invest in and what suits the area. Apartments tend to suit younger people and to a lesser extent empty nesters.
not familes.You make a valid point to negative geared property, that eventually, either tax benefits are exhausted or you do not qualify because of serviceability issues. A balanced portfolio, with a combination ot both -/+ ve prop. to suit your own circumstances is an excellent point.
James
I guess the type of property that one intend to invest is not important as long as they are making money for you now or in the future.
If you are in a high tax bracket I think it is wise to invest some in -ve gearing property, but at the same time you can also investing in +ve gearing property.
If the area that you intent to invest with a lot of houses and it is doing well. why not invest there. And it is apply to unit/apartment as well.
I have houses, units/apartments, townhouses, villas in my portfolios. And I am happy with them all.
Good luck with your investing…..
Warm Regards
ChanDollars
[Keep going, you’re on your way to financial freedom]
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