Hi all,
I have silently observed this list for a while but this is my first posting. There are so many different situations/opinions out there it is all a bit confusing really.
I have two investment properties that are about neutrally geared. I am happy with those becase I have already benefited from capital gain, so feel they are safe enough investments – if I have to sell one I will be ahead overall.
However, now that things have slowed down and I continue to look for positive cash flows, I find that the net returns are quite low, but without the benefit of SHORT term capital gain.
Do you think it is a worthwhile investment to receive low net yeild (say between 1.5 to 5 percent) with the belief that the LONG term capital gains will come later, say after 5 years? Hopefully rents would go up in this 5 year period too, increasing the yield a little in the short term?
Or should I just go invest in shares?
Looking forward to your opinion.
Beverle
Welcome to posting Beverle.
I guess the answer comes down to why are you investing? What is your goal?
Sounds a silly question but after attending Steve’s Masterclass on the weekend I think it is a valid one.
Once you really know why you are investing and what you want to get out of it then making decisions on how to invest are a little easier.
If there is no point to your investing then its all rather pointless yes?
______________________
I know I can, I know I can
Obviously the game is to make money over time while protecting our position in the market. I believe most people lack a target they hope to get to, which is your choice.
The Aus statistics tell us that if we achieve 1.5 million dollars of income producing cryitical mass not including the value of our family home we will make it into the top 5% wealthiest people in australia which is quite frightening in itself.
So as Gramyre said – how mush do you want to make $xxxxxxxxxxxx ??? and what is your time frame ??[gossip][gossip]
Hi Residentialwealth
Can you explain what you mean by “critical mass”? Is this like net assets?
Thanks
WakeAs the others said ‘it depends on your goals’.
Some people just want enough to support their lifestyle if they were fired (where they would find another job quite quickly). Others use it to add extra luxuries (or other – education, etc) in their life (as an example the once in a lifetime holiday for the family every couple of years orpay uni fees for their children).
Then there are people who want an income for retiremnet, so their goal is to use the excess rent and capital gains to buy more properties – it can take a while, but it’s a long term plan (so they don’t really worry about it too much).
Others want to retire from their job, and so the idea is to replace their current income.
Then there are the capitalist investors. They do it because they love dong deals (artists make art because they love it, capitalist investors are the same). For them it’s not the income per say it’s doing bigger and bigger deals (they love the challenge, rather than the money). (please note I’ve decided to call these people capitalist investors for want of a better word – but these are the people who are never satisfied with their status quo and have a desire to do more than the year before).
So as you can see – it depends! The fun part is deciding in which category you want to go in.
Rgds.
Lucifer_auI think the basic question here is – how much positive cash flow should I get in a deal to make it worth my while investing in that property? eg. should it be $1000 positive cash flow or more.
T o me it depends on the property. Where is it located. To me, I invest for capital gain. I prefer to invest in surburban properties with better growth prospects than rural / regional towns.
I would need to get more than $1000 positive cashflow to invest in a rural/regional area – especially now that interest rates will tend upwards over the next 5-10 years.
Hello beverle,
I don’t have any investments at the moment except those in the shares at the moment (my husband insisted on this – I prefer properties myself).
It is much to the personal preference and comfort, as well as time.
I intend to have enough cash flow so that I don’t have to go work at all (I have two kids with one on way) and my husband wants to leave his options open in future (he loves what he is doing at the moment). I am not sure how much that would be, but I would like to have at least $25, 000 pa of income for myself (and kids, of course!).
From the discussion with our financial planner, we’d need to have at least 3 million dollars to enjoy our retirement well enough! This includes education fees for our kids, money for my mother when she needs extra care (nursing home, etc), and our ‘luxuries’ (read this as travelling!)…
So with all this, I’d think we’d need at least $100, 000 pa (plus any extra stored for our retirement) to live comfortably off our ‘investments’ if my husband decided to hate his job as a sales manager in future…
Sorry for a long post, but something that bugs me too so glad you brought it up, smiles.
By the way, when others refer to the cash flow, I wonder if it means per week, per month or per year, smiles…
Cheers
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