howdy partners
as i get further into this property investing gig.
i see a pattern i look into rural/regional centres and find positive rent returns like $2000 p/a profit.(after expenses)
these kind of properties give the good rental return but little or no capital gain which is a little risky for such a little return.
now if u look at the more desirable locations such as mandurah/busselton w.a (growing population)future train line from perth etc u are garunteed a great capital return. unfortunately without a big deposit u have to negative gear these properties.
but on the flipside the capital gains are working a lot harder than rural property that recieves $2000p/a.
it seems in this game that it is all about acquiring more equity to buy again and again. which these rural properties dont really do.in my situation the bank has just given me the nod that i can borrow up to 100gs for my first investment property using my equity .this is more than enough for rural but to low for the for the high capital gain areas(in my eyes).i want to keep buying property and feel if i go rural i will stop the ball rolling.any thoughts much appreciated cheers.
p.s i am sick of procastinating i gotta have a go.One thought would be that if they are +ve cash flow, this will improve your servicibility which also affects how much you can borrow. Why not borrow 95% of the purchase price, that way you’ll only need small deposits and you might be able to buy more properties straight off.
Regards
JudiMake sure you see a few banks. There can be a big difference.
Or see a broker who can tell you who will lend the most for your situation.
All the best,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
hey there.
The way I see it there are a few ways to look at this. It depends on what you are looking for from your investments.
1. If you are looking for strictly capital gains and growth of your investment, looking for something to give you returns in the long run, then -ve gearing is one option.
2. If you are looking for investments that give you returns immediately, and are not so worried about the capital growth (which should occur over a long period of time any way), then cf+ properties will get you there.
3. You may be looking for a mixture of the two. Owning cf+ properties and using the extra funds you receive from these to fund your -ve geared properties. This way you are still acheiveing the capital growth you so desire, but aren’t working as hard to pay for it.
Lisa
The gap will always be too large if you don’t at least try to make the jump.
hi Beerboy
I totally agree with Lisa77 comments.We purchased all neg geared properties, one being Mandurah which you mentioned, the capital growth was 47% in (12 months) this was the best.
We are now looking at positively geared properties to assist with the cashflow.I am really not totally convinced that the ALL pos geared properties with little or no capital growth is the way to go. Though a mix of positive and negative would be ideal. We are presently looking for positively geared props.
Hi Guys,
again this is a very debatable topic, i’ve probably now swaded more to the -ve gearing side, but have now begun to purchase more of them, it really depends, what you want, ask yourself are you going to be happy to spend $50 or so week if +ve, but be able to blow it, but know you will get that $50 again next week, or have a few -ve geared property and have $100k to spend and do more what you want and choose what you want…
Cheers,
sisThe secret to me atleast is.
Borrowing as much of other peoples money as you can at little or no cost.Then putting it to work to return you capital growth on your borrowed capital.
The repeating the exercise again and again.
You need capital growth to build your empire,passive incomes can be a product of sound empire building.
Gearing as close to possible to neutral if not positive particularly in times of slow equity growth are keys I feel.
Negative is fine in high growth.(You have something to offset the losses — increasing equity).Seems you have found a “Reason” in some areas for Price growth—there would be my search.
John
thanks for the great replies. i think my sequence is to
buy negative geared properties first to acquire equity then buy the p/$flow to make the repayments for the -geared investments.only problem is i am buying at the peak of the market .
i know oppurtunities are around all the time regrdless of the state of the market so low offers is the key eventually someone will be motivated enough to sell to me.cheers .Hi There,
if you are interested in neg geared prop with high capital growth and are looking at the Mandurah area. You might like to research the south coastal town of Golden Bay (north of Mandurah) which is still I believe reasonably cheap and has a long way to go.
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