Just want some help/advise from all or any of you good people out there.
I am about to put my quivering toes into the “shark” infested property investment market. So much to know so much to read. I have been doing a lot of that lately. Have read all of Margaret Lomas’s books and Steve McKnight’s 0-103 properties. They are avid cash +ive property gurus. Monique Wakelin of the Wakelin Property Group on the other hand is an avoved capital growth fan. Now I know there is no way you can have both in any of our major capital cities!! So what to do? Get -ive geared property in a city and hope for capital growth, or go to “hicksville” and make a few dollars a week on cash +ive properties. Proponents of both types of investments are so strong in their beliefs that it leaves us poor neophites wondering which way to go.So c’mon all you experienced investors out there give us some of your learned opinions.
Cheers
Rotorog[dunce]Positive cashflow property is probably the easier of the two to grasp, and really not a hell of a lot needed to be learnt to get started.
But can add to amount you learn as you go. And when you get more experience can maybee branch out into -cashflow as well. But I think negative cashflow is a little bit more risky then positive cashflow, where you can rely more on science, rather then taking a gamble sometimes with negative gearing.
You can buy both +ve and -ve cash flow property but its all depends what you want to get at the end. If you want to save your tax and gain CG ( which is not happening much right now) then may be go for -ve gearing.
But if you know some good area you can get +ve cash flow and gain some CG also same time.
Cheers
PropertyGuRu
[sultan]Mortgage Consultant
Hi Rotorog
i’m with property Guru on this one, you must get cash positive but buy in areas that you expect (not just hope) to get some capital appreciation. It has been possible in the past to buy cash positive and have higher capital appreciation than the so called growth areas that Wakelin etc insist on.
No one knows what will happen in the future.regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Rotorog,
It depends also, on how much money you have to chuck around. With neg gearing, you have to have some cash to put into the investments. I don’t see that as a problem in itself. Others do- and want to only make profit, without any contribution themselves.
Given that growth might be limited in the next few years with a slower market, yield can be an important factor. As for me, I’m happy with a yield of 6-9% with prospects for capital growth. If you see property as a long-term prospect, then the rush for capital gain is not the primary reason for purchase. A mix of yield and growth is my philosophy. My properties are negatively geared, but I’m ok with that. Even if they don’t go up in price hugely over the next decade, I’ll still own them one day and property is a good asset.
I go for the old-fashioned Somers idea: tax dude pays them off, tenant pays them off, and I pay them off. Between the 3 of us, property doesn’t cost that much.
kay henry
I guess your post was written to some extent as tongue in cheek.
Property investing does not have to be an experience which involves working in a shark infested market.( not my experience to date)And anyone not living in a capital city does not automatically qualify as being a hick, living in hicksville.
Even if there are hicks out there who happen to live in hicksvilles, its not nice to refer to them as such…I don’t think too many investors set out on purpose to negative gear.
Its just that unless you have bucket loads of money to tip into a property to keep the borrowings down, by default you end up with expenses greater than the rental income.
Quite often this is your only avenue to get into the property market as an investor.My choice: If you have a choice between positive gearing and negative gearing, then positive gear, if your choice is between negative gearing and and not investing, then negative gear..
Gotta go as I have the hiccups……
HICK !!
KP
Sorry Kp. I did not intend to ridicule any one not living in a capital city. What I meant to say was trying to get +ive cash flow out in smaller areas was easier than getting them in the bigger cities. I have lived in the “country” and have nothing but admiration and praise for country folk. Please accept my apologises if you were offended.
Originally posted by kp:I guess your post was written to some extent as tongue in cheek.
Property investing does not have to be an experience which involves working in a shark infested market.( not my experience to date)And anyone not living in a capital city does not automatically qualify as being a hick, living in hicksville.
Even if there are hicks out there who happen to live in hicksvilles, its not nice to refer to them as such…I don’t think too many investors set out on purpose to negative gear.
Its just that unless you have bucket loads of money to tip into a property to keep the borrowings down, by default you end up with expenses greater than the rental income.
Quite often this is your only avenue to get into the property market as an investor.My choice: If you have a choice between positive gearing and negative gearing, then positive gear, if your choice is between negative gearing and and not investing, then negative gear..
Gotta go as I have the hiccups……
HICK !!
KP
Just watch out for the sharp-infested pool of not investing….where rapacious employers & superannuation fund managers manage to erode your wealth & leave you destitute and at the mercy of the Great White Pension.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Acey! I just love your posts!! Thanks for a good giggle!!
Still smiling… that was so spot on.
Ali G
Hi Rotorog,
Not all positive cash flow properties are only found in small towns, most of my properties which are cash flow positive are in towns of over 70,000 people. Not all of the properties started off as cash flow positive. But due to falling interest rates, increases in rent,or reducing the amount borrowed turned them into cah flow positive. I’m sure a number of investors in this forum have sold properties due to the capital gain and reinvested back into their debt thus creating cash flow positive returns, and then went looking for other opportunities.[biggrin].Its been a good time for those people who bought properties when interest rates were much higher and the buzz word was all about negative gearing. There are I still believe bargains to be found and with interest rates on the rise so will opportunities arise.Good luck.Martin
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