Hi Forum-Folk
From a new investor and forum member’s perspective, I feel a little bewildered when trying to determine a sensible investment strategy for a long-term future in IP investment.
What I do know is that the saltier forum members and investors have been through many of the methods, and have their own opinions. On this basis, I wonder whether members might offer their opinion on their preferred methods, with perhaps a few pros and cons? Ie.Wraps, flips, LO’s, buy and holds, renovate and sell etc.
Thanks for your experience,
Fish
Buy and hold. This strategy also works and is least demanding on ones affort and knowlegde
A combination of (buy and hold) and then (buy and sell).
When purchasing keep the ones that are the most lucrative.
Fix up the cheapies and then sell for good profit to enable larger cashflow for more buy and holds.
The trick is to have a lot of property returning you an income when you choose to retire.
In my view you are better to have 100 cheap properties returning $50? p/w 260 000 p/a
Than say owning 5 expensive properties outright returning $200 p/w 52 000 p/aWhile I don’t consider myself particularly salty, Fish – in my experience every method works provided it is properly executed and maintained.
High flyer is correct that buy & hold is the simplest strategy with the least amount of active management required.
IMHO it is one a new investor should always evaluate before choosing the direction that is best for them.
Cheers,
Aceyducey
Define “cheap” and “expensive” Russ – it’s all relative.
If your cheap property is $50k you have 100x$50k – $5mill of property, so your expensive props must be $1 mill a piece. How many $1mill props return as little as 200p/w?
What is your gearing level? Is it cash in hand or rent on prop?
You need to make realistic comparisons if you want to give someone advice on planning their future. It is nice you have set your goals on 100 cheapies but it doesn’t work or add up for me, and I suspect, many others.
I think Russ’s point Anubis was that high yield properties are usually cheaper and thus cheaper properties, on average, may give a higher cashflow per dollar of capital spent.
Regards,
SiOriginally posted by RussH:In my view you are better to have 100 cheap properties returning $50? p/w 260 000 p/a
Than say owning 5 expensive properties outright returning $200 p/w 52 000 p/aHi Russ,
i like your idea, and the way you think, but to be honestly i can make the same money with 2-3 good -ve geared properties and turnover that same large amount of money each year, and still not cost myself a single cent…
… it really depends, on the individual, and how risk exposed they like to be, but there are many other stragies that have much higher returns than just simple +ve cashflow propertied and direct paid off invesment properties….
… though, ive heard you are doing very well and wish you best of luck, and i can see that +ve cashflow properties is your niche…
Cheers and goodluck,
sisOriginally posted by Sibo:I think Russ’s point Anubis was that high yield properties are usually cheaper and thus cheaper properties, on average, may give a higher cashflow per dollar of capital spent.
Regards,
SiYes but it is not a fully valid point. If I use make believe figures I can make any option better than another, which is my point.
As SIS says you can generate the revenues Russ mentions without having to control 100 properties.
Neither option is right or wrong but there are a lot of impressionable people coming here for the answers and leaving with less than half of the story, just trying to fill in the other half of the story.
Thanks for the feedback everyone!
Its nice to see some of your ideas, especially how negative and positive cashflow properties can both equate to good investments if done correctly.
I think Anubus hit the nail on the head – a lot of us novices read a few books, get some knowledge, become confused when it comes time to forming a strategy, then come to the site to seek more answers. Although it’s easy to walk away with only half the story, I think it’s up to each of us to slow down, take a breath and get educated before we run out there and invest.
It’s also nice to see SIS’s comments that negatively geared properties can yield good results. After my reading, I’d almost given up on NG property as an investment. Any chance of elaborating on this SIS or is it a trade secret?
Thanks all
Fish
Ok my figures are a bit wishy washy but it is the point i,m trying to make that is important in my view.
If you own one house at $150 000 and rent it out at $150 p/w you have $7800 p/a to live off in retirement.
Now if you take that $150 000 and invest it in 10 +CF properties using other peoples money(bank loan)you have a possible return of $50 p/w ea.
So we now have $500 p/w or $26 000 p/a.
In my view it is better to have a few +CF properties returning you a passive income to live off in retirement than just owning 1 home and having very little money.
And anyway all advice on here is only that.Advice.
Before you jump in the water go and seek proffesional advice.
Russ.It is true that 100 properties worth 50k each returning a profit of $50 is better than 10 properties worth 500k returning $500 a week . . .(?)
Perhaps. Depends if everything else is the same may be, but how can everything else be the same?The logic in such reasoning is that you spread the risk, but if you own 100 properties in the same town, and the local mill closes down, you are in some serious trouble.
Another reasoning is that the lower the price the higher the return, since the rent is not directly proportional to the price. This one is true but another truth is that the higher the price, the more chances of CG, so it is difficult to make a generalisation that can be applied.
Perhaps a little game would come handy.
Suppose you play the Boy’s Town raffle and you win the 1 million dollar house on the gold coast fully frunished with $50,000 worth of stuff inside including a grand piano.
What would you do with it?May God bless you
and prosper you.
MarcA combination of buy & holds, buy, renovate & sell, houses and units, I/O loans, +cf &-cf. We set our goals, planned strategies for maximum in short term,(12 months) achieved it, and now are resetting the goals and will be buying more. A couple of years of great learning, researching, listening, physical work in renos, reading and evaluating our ideas.
Anna
Also imagine the rates repairs on 100 Properties
lets say 10 hot water units go in 1 year$$$$$$$I would sell the Gold Coast home – could put that sort of money to better use elsewhere.
Extensive list of new Perth property available for sale.Alternatively, become a joint venture partner in one of our property development partnerships – contact me to find out why our developments are unique. John – 0419 198 856
How do you get an income off the negative geared invetments when you retire.In WA the rents are a lot lower on an expensive house than they are in the east.
You could own a $300 000 house and still only get 2-250p/w at best.
If you own a $150 000 house you get about $150 p/w.
Yet if you have a $50 000 house you get about $100 p/w.
So it makes sense to spread youre investments around the state(so you dont go broke if the mill closes)in $50 000 houses.
If you have 2 houses at $300 000 and lose a tenant you lose 50% of your income.
If you have 6 houses at $50 000 and lose a tenant you lose 16.6% of your income.
Income on 2 houses=$500 -50%=$250
Income on 6 houses=$600 -16.6%=$500.40
The older you get the more you need to protect your income.
Russ.Originally posted by RussH:How do you get an income off the negative geared invetments when you retire.
you could do a reverse mortgage, though i wouldnt suggest this, unless is you were to sell the place and it appreciated in value at the same time and out grew the reverse mortgage.
but if you can manage to keep and control -ve geared properties and also learn the ways of keeping a -ve geared property costing you nothing, you can have huge capital gains of $100k’s each year, and still not have to work, but have a life style and expense that would out exceed the income from +ve cashflow properties…
… its just really depends on how much money you want to make, but also to agree how much you want to spend on a life style you want…
… there are no right or wrong answer, just people have different way of investment vehicles and income streams…
Cheers,
sisHuge capital gains.But how does that put money in your pocket each week when you retire.You have to sell a property to get the gain.Then you pay a shitload of tax.Then you have to invest that money somewhere to give you instant access so you have a weekly wage.
I still think the idea sucks.
Russ.Hi Russ,
believe me, once you start making capital gains, either small or big… the opportunity of being able to purchase another IP, and have gains left over to purchase say for eg. new car, holidays, commodites and items…
… you will be wanting to chase those bigger figures…
remember, with the more money you have to play with, the more you can enjoy, but also the more opportunity you have in property investing…
… both +ve cashflow and -ve are fine, but it really just depends on what the person wants…
Cheers,
sisThere can be good gains to be had in negative properties in terms of CG, but there comes a point dont you think, where the ability to service a loan or loans, has to be met, and all negatives dont make for a positive in terms of income in.
this is less limiting when properties are positive. A few dollars a week just wouldnt cut it for me though.
” a blind man may see what a sighted man may not”
Hi guys
i’m with russ on this one.
lets look at how it all starts. your mister average Joe on an average salary you buy one negative geared property and you have blown your servicability straight away.
gotta go i’ll finish it later, i just meet a girl here in a interent cafe in wellington NZ who is friends with my cousins kids
gee and i was about to get right into this topic
bye westan
byeI find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
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