- Originally posted by HotRod:
Hi Marisa
Happy to……..
Make ~$25K from 5 +CF B&H’s and lose ~$5K from a -CF
Later………
Congrats Hotrod, $100 a week in your hand on each property, that’s unreal!
Can you give us some figures on them. When did you buy them? What sort of deposit did you put in?
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Its gotta be WA folks….. Hotrod we should rename you “HOTSHOT” you are a champion …
My thoughts on this come down to one word…Balance
Chasing both..not exclusively one or the other but go after both depending on the market conditions. When property is hot, i will be chasing prop that has a good likelihood of increasing in value (as long as any neg cashflow can be absorbed) – hold, not to sell and continue to refinance, draw down equity for more property.
When not so hot or stable, look for pos geared property to assist with servicing and allow greater borrowing capacity in future.I see this as increasing my asset base, increasing my income, allowing further divestment into other areas, shares, business, art, etc.
Just my perspective. Each to their own
I’ve never found one to be mutually exclusive of the other. All our properties that we have bought (over a 7 year period) have been cashflow positive and all have shown substantial CG. I found this even before the latest “boom”. Why not have both??
None of my “money” in the deals.
$40K of collateral on the +CF using the -CF collateral or something like that.
Looking about 60% ROI and I think a very similar IRR (from memory).
Later………..
If you think you can you can, if you think you can’t you can’t.
What does B&H mean? Bothels and Hotels? Only kidding, but would love to know what the abbreviation is?
And HotRod, well done on the return you’re making.
PK
I believe its a “Buy & Hold” property.
ie.. one you intend to keep……KP
It seem like nearly everyone hear falling in love with -ve gearing property because of the capital gain. And yes they make money 2 years ago.
I just wondering if they are still buying -ve gearing now? if so I would also love to know in 2 years time, they will be happy with the gain that they will make.
Kind regards
Jet Dollars
[Retire Young, Retire Rich]
Share Investing Forum: http://www.aussiestockforums.comChan
I will stick my hand up and say – I will, as long as I have complete faith in the area. It would need to be something I am very comfortable with i.e. coastal, water views, underdeveloped area etc etc.
I have no problems as I still see some areas will show CG in the next few years.
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
I’m with Rugs, Chan. I mean, one should only buy neg geared props if there is an opportunity for CG- not just because it’s cheap. When the market flattens out, it will flatten out for all properties… but which ones will recover? Perhaps “location location location” will again become de rigeur. As Rugs said, unique properties, near water, or other properties that will appeal to both owner/occupiers and investors (well, I added bits- sorry Rug).
CF+ properties will probably always do ok- if they have tenants, and if there’s not too many repairs. but if negative gearing, well- does the property have the qualities for growth?
Chan Jet, I don’t care what my properties will do in the next few years. This is a time for me to pay them off. I think if people are expecting their properties to double in the next few years, like they may have done in the last few years… well, in market change, perhaps expectations need to change too. The get-rich-quick fashion was so 3 years ago.
kay henry
I think +vely geared IP’s sometimes have a much greater risk associated with them. I am a full-time student and have just bought my 3rd IP. My first is well and truly +vely geared, the second is just tipping the scales to negatively geared and with the third one, i am putting approx. $150 of my own money in every week. I bought this property for $175,000 and could put it back on the market tom. for well over $200,000 (without doing any work to it). I am relying on CG on this property – however, as they say – don’t put all your eggs in one basket – i am trying to build up a balanced portfolio, eg. some positively geared properties for the long run and properties that will deliver a substantial amount of CG for the short term.
Cheers, Hayley.I think you have to have both kinds of properties. Unless you want to live of equity draw downs, you will have to sell a property that has had good capital growth. Once sold the gain can be paid into high yeilding +ve cash flow investments to create the passive income stream.
I like to use commercial property as the +cash flow part of the equation because this type of investment often offers excellent tax benifits which protect the income stream.MJK[cap]
Kay & Rugs,
Thank you for your replied. I agreed with both of you that if the area with opportunity growth.
But I don’t agreed with Kay when she said that she does not care whether the property will be growing in the next 2-3 years. Because I believe in opportunity cost. If there is no capital growth then should you use your money to invest somewhere else until such time when the opportunity arrive then you jump to it?
Nice to hear from both of you.
Kind regards
Jet Dollars
[Retire Young, Retire Rich]
Share Investing Forum: http://www.aussiestockforums.comJet, you said:
“If there is no capital growth then should you use your money to invest somewhere else…”
Yeah, you’re right Jet. However, given that I also owe $$$ to the Bank, then I intend to pay some off. I just bought an IP, mate, and I still have that old-fashioned idea of paying property off (a la Bell). The aim is to reduce the LVR, and pay off some debt for the next couple of years. This “money” that you’ve suggested I should be investing elsewhere… hehe- I’ll be investing that money into my IP’s
)kay henry
Hey Kay,
so you are an interest and principle person. I thought I was a dying breed. Although the “smart money” argues for interest only — and I do understand the logic behind this concept — I also like the idea of owning, (even if slowly) an increasing share of my property.
What do others think???
[cap]Kay,
I understand where you coming from. It just that we are using different strategy. As you probably know all my loans are interest only and all fixed. I never intend to pay it off even one cent, but that’s just me.
But I still believe that if you have say $20k to payoff your loan (say interest at 7%) and you can invest somewhere else which return much higher than 7% would you do it? if you ask me then I would say yes.
Kind regards
Jet Dollars
[Retire Young, Retire Rich]
Share Investing Forum: http://www.aussiestockforums.comOriginally posted by elika7264:so you are an interest and principle person. I thought I was a dying breed.
Here’s another P & I person: http://www.somersoft.com/forums/showthread.php?s=&threadid=8756
She posts in PI every now & then too.
P & I is a good approach to build equity in high cashflow/low CG properties. We’re not using it ATM ourselves though.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
+ve cash flow properties just take a little more effort to find, but not all require repairs and PMs
If People like Rick Otten/De Roos/McKnight swear by it, it must have its merits. My thinking is, would i like money comming into my pocket or going out.Also as a one income family, we can’t afford multiple -ve geared properties, that’s where -ve gearing comes unstuck (for us anyway)
Hi All, [biggrin]
I started this thread [gossip] and I just wanted to say to all those who contributed — THANK YOU. Everyone has been so very generous with their knowledge. I feel sure that in the weeks and months to come, this thread will be reviewed time and time again — the depth of information has been truly remarkable.[grad]Regards,
Helen [thumbsup2]
)
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