Finding CF+ve properties is proving difficult

Bear,

It’s a secret… so many secrets…

cheers
r

I love the techniques so called ‘Domino Effect’ that SIS used. One day I will use it as well.

Good on you SIS.

SIS, are you going to use your domino effect’s techniques this year as well?

Kind regards

Chan Dollars
[Retire Young, Retire Rich] [strum]

Oh wait,

you still there Bear,

… Chan does know the “domino effect” and Yack is sorta on the lines of it…

though its all secret…

Cheers,
sis

ps… do you guys know why is called the domino effect, if it fails, your in trouble…

People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million

thanks SIS.

OK, as i understand it, what you call offset gearing, I would call ‘having an overall portfolio which is CF+VE’.

In that case you are a person after my own heart, which is what I am aiming to do. but since we’re not in a boom right now and i think I’d be buying at top dollar right now and not get much growth for a while maybe, I’m not doing any neg gearing right now. But I’m still buying CF+ve because as a freelancer, the other thing i want to do is replace my income both for me and for the banks. not only to live on eventually but to support the odd negatively geared growth property which i’ll purchase in 2-3 years time, once I have enough caash surplus.

So SIS, you say you got to 2.1 mill in a year, but from what amount a year ago? How much actual capital did you start with of your own? You must have at least had a guarantor? I mean, it’s not easy to get finance at the best of times, is it, and you must have had a few extra challenges due to being young, without a track record or whatever with lenders, no full time job (or did you? ) and a student and all that…i mean how did you start and with how much and when?

cheers-
mini

PS as for the domino effect, is secret dodgy?
Or is it just, that if everyone knows about it, it won’t work for you any more?

If it means highly geared and pray that something doesn’t go wrong because otherwise everything will fall, that sounds high risk *to me*.

If interest rates rise (though hopefully you fixed them) or you didn’t get a tenant for a while or property prices fall just when you need to ‘liquidate’ and by selling you’ll suffer a worse loss than what you owe, i can quite see that it could be a dangerous strategy. What’s your LVR on your property portfolio?

But it kind of does explain why you need to do so many fancy calculations to feel like you’re making money.

but it does sound pretty fancy, a student controlling 2.1 million of property….

Hi Mini,

actually i was thinking about, offset gearing would definetly suit you, in your current position, the reason being is that you have an excellent lot of cashflow, but some of that can be used to subsidise a -ve geared property, which could further fund you more finance and quick asset growth… do have a look at it, as your properties can carry the load of a -ve geared property.

Hey Mini, heres a link to an old post, but covers most your questions…Link to old post

People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million

> hi SIs,
>
> “Hi Mini,
> actually i was thinking about, offset gearing would definetly suit you, in
> your current position, the reason being is that you have an excellent lot of
> cashflow,

when you say ‘excellent’ it’s about the average NZ wage, about enough to top up a 300K 5 percent yielding Q’land property. And be neutral.

but I am thinking more along the lines of buying some -or work my way up to- some blocks of flats in NZ towns yielding 15 percent or better for the next 2 years, ending up with the equivalent of 8-10 properties in the next 2-3 years, because I still want to grow the serviceability cashflow part of my portfolio up a bit more until I ‘neutralise it down’ – offset it – with some neg geared growth properties. I am feeling the vibe that the confidence has gone out of the property market, because it’s full of people like yack and Billfromoz and other voices, who reckon ‘don’t buy now’ and ‘i’m sitting out for a bit’. That mass sentiment is going to make prices flatten and sure in a year there will be some good deals about compared to now, but they still won’t be magically CF+ve.

>So but some of that can be used to subsidise a -ve geared property,
> which could further fund you more finance and quick asset growth…

http://bulletin.ninemsn.com.au/bulletin/EdDesk.nsf/0/716ca9a406a48fdaca256c170010bf31?OpenDocument

Quick asset growth, eh?

“The new study by property analyst Charter Keck Cramer of the 3000-plus new central Melbourne apartments sold since 1992 shows the average price gain was 1.3% a year after inflation. “

…… the resale market has been characterised by stagnant prices with the majority of resales achieving minimal, if any, capital appreciation over and above inflation,” says the study.

This analysis, covering more than 3000 apartments resold since 1992, shows annual capital growth of 10%-plus only occurred in 6.8% of the sample. So much for marketing promises of more than double-digit growth from day one. “

“A breakdown of the study showed the St Kilda Road precinct did best – although average growth of 2% a year can hardly be seen as earth-shattering – and one-bedroom apartments also scored better than their bigger counterparts.

Of course, as Papaleo points out, the other component of investment return is rental income. “The market for tenants is becoming more competitive. While there is no bloodbath yet, incentives are creeping into the rental market.” He says these “bells and whistles” include furniture, rent-free holidays and more flexible leases. With gross rental returns only about 3.5% to 4%, there is not much room to move. “

So it seems that we haven’t had ‘quick asset growth’ in apartments, since 1992!!! I’m sureprised actually because I did a websearch to try and find out what some actual growth data was for Aus, and got stopped dead in my tracks when this site was the first one I read.

I can only assume house with land properties did better, BUT, I’ll take 10 percent cash return after costs over 3.5 percent yields plus 2 percent growth a year, any day.

And if growth (houses) is so much better than the apartment market, then fine, like i said I’m getting ready to do some growth properties in 2-3 years, just before the next big rise. but I don’t think it will get really good again for a while. This is because the government doesn’t want it to. They *want* the property market to deflate.

So while they are deflating away, people will still need somewhere to live….

So although I like the overall longterm strategy of balanced portfolio with +ves balancing or outweighing the neg’s, I won’t be adding any negatives NOW.

Quick (which is all rather relative in property terms) asset growth is great, but now?

I don’t know.
I know some are, but I’m not prepared to take the risk.

> look at it, as your properties can carry the load of a -ve geared property.
> Hey Mini, heres a link to an old post, but covers most your questions.

cheers-
mini

So SIS, what you’re saying is, that in a bit over 12 months or even less, you’ve gone to a net worth of 700k? (70% LVR on portfolio of $2.1 million?) How do you do this as a student working part time as the maintenance guy in a night club (or something along those lines?)… Is it just through off set gearing and your domino theory?

Mini, I’m not into the term “quality investment properties” either- I think it’s bourgeois- not what I’m into at all. [thumbsdownanim

When I saw the pics of your properties all done up, I thought romantically of them- they looked cosy. Yeah, I know- I’m not supposed to have emotion about RE, but I do. I have also had the awareness, from since I was a child and mum and I used to drive around on weekends looking at houses, that each person’s home needs to be treated respectfully. Noone wants their home put down. I always cringe at the thought of people walking into some old person’s home and trashing it verbally- would make the old person feel terrible, I think :o((

One person’s trash is a homeowner’s treasure, often.

kay henry

To All

Does anyone have any ideas on where to look for +ve cash properties in QLD or Northern NSW.

wayne, it’s likely to be the area with the lowest median house price.