Ive been thinking about the claim in Steves book that 97% of investors only own 1 or 2 properties (or something to that effect). Why is it so good to base investor’s success using a stat like that, on how many properties they own. If Steve & Dave hadn’t have used wraps, then imagine the tenant problems they would have now, with the property market sliding and houses becoming more easily available within the next few years. This is a fairly broad assumption, but honestly, who cares if you have 5 properties to someone else’s one… Its the quality of the property that is important. Maybe most investors dont need so many properties, maybe they have the decent ones with real growth, rather than the returns people think are good when aiming for +ve CF.
Dont get me wrong, Im sure most of the successful members on this site are past all the shitty little +ve CF country/small properties, and are able to get +ve CF properties that will appreciate with CG too – which is the aim for everyone.
Im not canning +ve CF properties, but really, considering the potential problems & outlays, I think a lot of people are focusing on getting CF over CG. Purchased at the right time, someone could probably purchase one good quality property every 4 or 5 years and have made more than all the young ones (like I initially was!) who focus too much on getting the passive income that Steve manages to make sound like the ‘be all & end all.’
Id Love passive income, but Im unable to get into the market that also allows CG as well as CF. Therefore, I think my stategy for the moment will be to learn a niche market/area… to know it really well, that way Ill know when a good deal comes up, and it wont bother me if its -vely geared, as it is what I consider the only way to make the BIG money Im after.
Please respond with any constructive criticsm (<– doesnt look like I spelt that right!) as I am only young, but open to most strategies that are going to lead me to the good life with the least amount of stress within 11 years time (I want to be able to retire when Im 30… maybe then Ill be all-for +ve CF propeties! lol)
Thanks everyone [biggrin]
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
Some advice…
“Im sure most of the successful members on this site are past all the shitty little +ve CF country/small properties,”
This statment is very naive, if u want advice i can tell u that my success has come from these exact properties. I dont know if u hav any IP’s as yet, but perhaps a “cheap” “shitty” country place is a good place for a young investor to start… u will learn alot from this, and if u do get burnt, the money u lose wouldnt be as much as if u had bought in a place where everyone else is typacally buying. but not all places that are small or in the country are cheap and shitty, as your blanket statment implies.
then again, u can start off by getting one of those trendy inner city apartments, and see what happens, i know what i would prefer…
If im guessing ur 20, and u want to retire at 30, and ur financial plan is to buy 1 property every 4 or 5 years then that will mean u need to make either huge capital gains, or u need to make huge incomes, this would be very hard to achieve and live off with only 2 properties i would think…
Open your mind to different ideas, but dont take my comments in offence to your question, as i hav “been there” and “dun that”…
Jason
You are both right. Why? because I believe there is no right or wrong answer. Investing your own money should be something you are comfortable with but by all means don’t put blinkers on.
You will find many people on this forum have a varied portfolio and some will have on -ve geared, some only +ve geared and some only +ve CF.
I personally think a diverse portfolio suits my strategy. I have properties with good CG in capital cities and about to sign at least one +ve CF this week. This will offset my -ve geared property.
Holden Commodore, There are also plenty of people on this forum like Westan, Wilandel and SiS that have many +ve CF properties. It is certainly working for them. They are certainly not ‘past all the shitty little +ve CF country/small properties,’.
The ultimate aim is to by property that is +ve and also achieves CG. Where Steve bought his first property (and subsequently many more) has done just that.
Marcus Ambrose (just stirring)
‘Eat rich food, barbeque a yuppie’ [greedy]
Here here.Wellspoken.
I think a lot of people get the wrong idea about +cf properties.Stop looking at the big bucks and concentrate on the cocr.If you stick 100k in the bank what do you get for the year.5% if you are lucky and chances are most wiil dip into this for one reason or another.
If you put that same 100k down on say 7 properties thenyou have the potential to earn a lot more than 5% and chances are you wont be dipping into the fund.Keep reinvesting the returns over a few years and see what position you are in when you are ready to retire.I think it will be a very favourable one.
The only time I think about capital gain is when I want more money to invest in those shitty little country properties.So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.0438 659 411
Capital Growth is absolutely wonderful and if it was constantly sustainable would be the way to go. It can though stagnate for years after a boom.
Also, if you have one ip in the middle of Sydney, the rent is unlikely to be able to help you pay off any debt or even meet the interest repayments.
Therefore, you are going to have to stay in your JOB for a very long time to help you hang on to the ip.[eh]
Retiring to a passive income is what it is all about so sooner or later, you will need those cheaper, cashflow properties.[grad]
If you want to get out of a hole, first stop digging.
Originally posted by Brenda Irwin:
Retiring to a passive income is what it is all about so sooner or later, you will need those cheaper, cashflow properties.[grad]Not so sure I agree with this line Brenda. I have no intentions of retiring early, and don’t think retirement would agree with me at all (even though it is about 35 years away).
I’m also not convinced that 50k small town properties are the way to financial freedom.
Rugbyfan is right – horses for courses. Many people here love buying the cheap places because they make $100 profit a year, or wrapping for a $30 a week profit. Personally my time is more valuable than that, and buying property isn’t the only game in town.
A.
Just because it is expected that the little cheap country places will not have much CG does not mean that in the greater future those same blocks don’t go on a price surge, and for most of the time they have been giving you money back.
I think the issue with the +ve is that you really never have to sell them to make money on them. Also with multiple small ones it would be rare that you would strike the problems of having all of them not tenanted so even if the cg doesn’t move or in fact goes down as long as the rent still keeps coming in you are set.
A single large IP could remain vacant, or go down in value (over valued rather than bursting the bubble) or in the case of some areas price stagnation for an extended period of time.
I’m only speaking mathematically btw.
HoldenCommodore, have a look again at your post.
It is one big blob of words. I haven’t, just couldn’t finish it.
Pleeze, next time, break it up into several paragraphs. It makes it so much easier for others to understand. [wink2]
Pisces
Its like the pyramid game, the more people that buy these (quote) Shitty little cash flow properties the higher the prices will go. Good if you get in at the start as you then get capital gains as well ,but the new buyers may need to wait for the next influx of buyers to get there cap gains.Its all about supply and demmand.
If you want the rainbow youve got to put up with the rain!
Crummydore ( I love FORD!!!! [evil4])
I appreciate your passionate views, but at the end of the day, each of us has a different end goal.
At the end of the day many people dont think 1 or 2 properties is going to get them to where they want to be, which in general is to be financially free…
On an average income, just how many -ve cf houses can you get to before the well runs dry ?
With +CF houses, you can not only have a house, but potentially the extra cashflow is helping you save for the next IP….. kind of like a snowball effect…..
I’m sure you are happy following the path you are on, but many of us are on different pathways… and doing very nicely…..
Cheers
GO MARCUS !!!! YAY !!! [blush2]
Scott
Pelican Investments
http://www.pelican-invest.comto be happy and financially free…
… it takes an average of 6 fully paid down rental properties… to be financially free…
Cheers,
sisWhat would be the point in negative gearing if ones income isn’t large enough to pay any tax?
There is a way around this with Cash Bonds, however its still pays to have a large portfolio or a reasonable wage for this to really work significantly.
It’s Horses for courses, pending on the individual circumstances.
Regards Bear
POSITVE CASHFLOW properties and Joint Ventures available!
For the BEST deals register via E-mail [email protected]
DONT MISS OUT!!!!!Hey everyone, thanks for the comments, Ive read them all and will definately take them on board. I understand that the nature of +CF properties is simply that they pay for themselves as long as they’re tenanted. I also understand that buying a random property that if -vely geared is a big risk, as there’s no guarantee that it will appreciate (probably will, but money might have been better spend elsewhere).
What I want before I do retire, is a neutrally balanced portfolio of properties, or probably even a little +vely geared. Enter my so called ‘shitty little properties!’ This is all I really see that they are good for, just +CF. My interpretation of these properties is a small town, i.e. 1000-2000 people. So if I offended anyone by my original comments, I apologise.
The reason I want the above is so that the negatively geared ones will be paid off by my wage & the positively geared properties, and hopefully if I have enough spare cash, Ill invest in shares or occasionally treat loyal tenants, or renovate to obtain higher rent on other properties. (Note, Im rather naive opportunity cost wise, so Ill probably try to decrease the loans on the -vely geared properties if I get hold of extra cash along the way, but thats another topic in itself!)
Im not discounting the importance and benefits of +CF properties at all, but dont see it as the ‘bees knees’ of making it work in the Real Estate game. A lot of people you come across only care about +CF, but Ive become a little cautious/sceptical, as Im not 100% confident yet that my due dilligence is accurate enough to get into the game, especially one where a mistake in my perceptions of a property early-on could eat up all my profits from that property for the year.
I think this is enough for one post, lol, I always seem to just sit & type too much! Sorry everyone! But thanks very much for the help, it’s still appreciated, so please keep the comments/ford jokes coming! (Note to Pisces – paragraphs! Lol, sorry!)
Cheers.
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
Hi HoldenCommodore,
much a ford fan… myself… go craig lownes go! [thumbsup2]
…one thing you should try to remember, sourcing out cashflow or growth properties are just as hard as one another, even when determing for the right deal and when searching for the right one…. with a thorough due dillegence, the hard work can be very rewarding… good luck on your road of success!
Cheers,
sisGee I dunno.
Holdens Fords
+CF -CF Neutral CF
So many decisions
And none of them right in somebody elses eyes
What a wonderful world!So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.0438 659 411
Hi guys,
as i mentioned earlier i just brought my 1st IP,
it is a -geard at moment but by next 3.5 years i want 10 +cf property to pay off the -geared one i just brought and mixing all of my investments.
so i come off neutral geared.
then buy homes which need like $30 per week donation to them but the land content will of course go up so then i appreciate both cg and +cf.I am a real estate agent, thingwith properties is they never really loose value, coz what u pay today will still be worth double in 7 years.
i have seen crap homes sell in like 99 that couldnt sell for ages and now the come backl on market like 200,000 above what they were 2 years ago(they hav like creeks, power lines etc…), even +cf shitty small towns do go up in value just that u dont notice it all that much because prices are relativly cheap.
anyways guys thats my two cents worth.
remember KEEP INVESTING,
BTW i would never sell real estate (even though i do it for a living) i would never sell mine, only if u fal in a position of cant affording repayments.Ok, I’ll decide for everyone what the best choices are:
1. NO gearing
2. No properties for anyone, (yes, sell now bad choice guys)
3. buy 100 pairs lime green happy pants
2. buy 1 tartan top hat and a gold cane
3. limp on every third step
4. Join my cult as a sub-leader (FREE BADGE!)All your path should be changed to the correct one which is the path of an AUSTRALIAN IDOL.
Got it![strum]
lifexperience
[offtopic] lifeexperience… hmmm, dont know what youre on, but im glad youre happy… now back to the topic![offtopic]
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
[baaa]….p.s. see my shiny stars
lifexperience
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