what would you recomend a
good deposit for a -ve geared property
would be???
I am debating to use all my
deposit on 1 PI or split it up and
buy moreThanks in advance
Kaloni,
Details are scant for your situation, so I will answer based on what I have done for me.10% has been the deposit I have paid. Happy to pay mortgage insurance as it doesn’ tie up other funds for next IP purchase.
Given that you will negative gear, the greater “loss” by borrowing more is probably more of an advantage….
James
kaloni
just purchased an IP 2 months ago with 0% deposit. no joke. we borrowed 100%, but only by using a gurantor. hard work with the banks but we got it. the rent compared to the price of the house was excellent enough so that this situation was not volatile or susceptible to be affected by interest rate rises. gurantor has to be solid & in tune with your goals, yet not looking to benefit from the deal in any way.
property will build up it’s equity gradually whilst we have excess $ to put towards other properties (to actually save for a deposit!)
depends on what you feel comfortable with putting down as a deposit.
[biggrin]
Hi
My situation is a bit different
here we go
I have about$100000 Bank $65000 shares
own my ppor
own some ip’s
No dept cuyrrently
so looking at properties around $300000 markkaloni,
If you have no debt, shares, savings , IP’s and PPOR all paid off, then I would guess you could borrow 100% plus costs for your next IP.
James
Originally posted by georgisj:kaloni,
If you have no debt, shares, savings , IP’s and PPOR all paid off, then I would guess you could borrow 100% plus costs for your next IP.
James
Yes i know BUT
I would like to add to capital
so repayments are reduced
would about 20% be suficient??In that case, why don’t you determine a specific $ figure for payments you would be happy or comfortable with…that will dictate a maximum level of borrowing….That will give you your deposit required.
James
Kaloni, you are in an awesome situation.
I would probably look at a minimum of 20% deposit, you can avoid mortgage insurance and borrow a good amount.
Realistically, whether you buy one or many will come down to your comfort factor.
Cheers
MelHmm,
I wish I was stuck with this sorta problem!!
J
What a dilemma! Personally I can,t understand why anyone would want to spend a dollar to save fifty cents but there ya go its a wierd world..I,m just generalising here so dont take offence.[biggrin]Whats wrong with positive cashflow.Your doing this to make money ,so as small a deposit as necessary and use the leverage of OPM to make you money.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
Originally posted by RussH:What a dilemma! Personally I can,t understand why anyone would want to spend a dollar to save fifty cents but there ya go its a wierd world..I,m just generalising here so dont take offence.[biggrin]Whats wrong with positive cashflow.Your doing this to make money ,so as small a deposit as necessary and use the leverage of OPM to make you money.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
Russ
I know you are a one eyed +ve CF investor, but there are some of us who look at negative gearing as a way to make much more money, albeit in the long term.
I personally want a varied portfolio with many -ve, neutral and +ve CF properties. This, I believe will be the best solution for me.
You may be in a different position than I am, so I am not going to tell you that you should diversify your portfolio. Only you can measure the benefits of having an brick IP in Ocean Reef as opposed to a fibro shack in Albany.
Sure +ve CF property is great week to week, and if you get some CG then that is even better. On the other side of the coin, we have had one -ve geared IP increase by $200,000 in two years. So you can see as long as you do your homework and have the spare cash to do it, -ve gearing does work (even Steve Mc agrees in his book).
Kaloni, in reference to your deposit dilema, I think 20% sounds reasonable but why don’t you plug in the figures into a investment property calculator (I have a fairly rudimentry one) and see what the different size deposits do for your cash flow. You may be able to get away with 10 or 15% on a $300,000 property and not be out of pocket too much.
‘Eat rich food, barbeque a yuppie’ [greedy]
I have a varied portfolio, not just properties. This way it balances out.
But if you want all positive cash flows before or after tax dedcutions, then thats up to the individual.
my accountant didnt care if I spent the money and bought a property outright or got a loan to finance it, he said it doesnt really matter for me,.
cheers
” a blind man may see what a sighted man may not”
For those who owned property in the city before the boom great you all made a huge profit but what now .I think a lot of people will get burnt in the city when there is no more huge growth .How long will you have to put the dollars in to a -ve IP until it goes boom again.??????We dont all make big $ to support -ve deals.So a foot in the door on a small +cf is good choice.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
Originally posted by RussH:For those who owned property in the city before the boom great you all made a huge profit but what now .I think a lot of people will get burnt in the city when there is no more huge growth .How long will you have to put the dollars in to a -ve IP until it goes boom again.??????We dont all make big $ to support -ve deals.So a foot in the door on a small +cf is good choice.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
I agree with you here Russ. There will be a slow down in growth in capital cities but not a stop. At the property expo residex was predicting areas that will lose, stay the same and increase in value. There are still plenty of places that will see a CG in the next few years but maybe not at the 20% plus we have seen in some areas.
I was talking from Kaloni’s perspective (who started the thread) who has made it quite clear that he/she has the cash and income to fund the -ve gearing aspect of a property.
I have stated previously too that +ve CF is great. I am negotiating on two (one is a cert.) but think personally that a diverse investment portfolio is the way to go. If your +ve CF can offset your -ve CF properties, and the -ve ones are big in CG (and are in areas that will continue to show CG), I don’t think you can go wrong. The downside is that you may take a couple more years before your financial freedom is attained, the upside is there is much less risk.
I agree with Elves about shares too, but as everyone does not have the resources to put $1000’s into the stock market, +ve CF is a good thing.
‘Eat rich food, barbeque a yuppie’ [greedy]
Sorry to change the subject like that guys.Still new here and a bit out of place at times.learning fast though.I,LL try not to upset anyone with my views.Happy investing everyone.[biggrin]
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.
Me – I dont worry about deposits.
I borrow as much as the bank will lend me and only the amt I am comfortable in making repayments on.
eg. if bank says you can borrow $550k but I only feel comfortable borrowing $450k – then I only borrow $450k.
I always borrow $110% of the invest property as I take my deposit from the equity in prop A (ie.refinance) and borrow 80% of property B. That way the property is 110% borrowed.
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