so what would you guys and girls go for.
1. a single deal that gives you instant equity of 50k to 70k but will cost less than $100 per week for a total cost/debt of 230k (brand new home)
OR
2. positive cashflow in the sticks with very little growth potential, different class of tennants, maybe maitenance issues as these properties tend to be older etc etc for around 20 bucks a week with a comparible entry point.
curious to see your views
3. Quality property, that will provide a modest (at this point in time) rental yield, but with ENORMOUS Capital Growth potential.
I buy for the long term, and as such, immediate high cashflow returns (albeit worthwhile and always welcomed) will not necessarily sustain the lifestyle I currently enjoy and wish to maintain.
For me, cashflow is not king, although it does have a place at the royal table!!! [biggrin]
Cheers,
Jo
out of those choices, 1 of course. Why bother making $50 pw when you can get $50,000 in a week?
Terryw
Discover Home Loans
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[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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unfortunatly the down side is you have to wait 9 months before it can be sold or better still refinace if the numbers work
Only a slight hiccup in maintenance is required to knock out your $20 per week with the older property in the sticks, and it’s more likely with an older place. New places require less maintenence for the first 5 years, provide higher depreciation to claim p.a, and for longer. They tend to attract better tenants, be in better neighbourhoods, higher CG, lower REA fees because easier to manage.
I choose option 1 – the new property – so I can retire early and live like Jo, who’s really a princess in hiding. [biggrin]
oooh promised I wouldn’t tell[sealed]
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
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Email Me | Phone Meselling motels in NSW
Deal 1,,,,,,but Where can I get my instant 50k-70k equity in reality?
I see your point freedom fighter, the only problem with deal 1 is that usually you have to wait for a lucky break with the market upsinging (or a bargain buy) to get that equity ….picture a flat market for 10 years.
With deal 2, you could replicate it unlimited times like steve built his fortune? And retire in 3 years (0-130).
Its the age old argument on these forum boards of +ve versus -ve. With neither argument being the totally correct answer that you can generalise as being the best for everybody.
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Live, Learn and GrowLifexperience
Hi LifeX
While Steve’s fundamentals are based on positive cashflow, even he admits capital gain has been a MAJOR factor in amassing his fortune with Dave.
Cheers
rrichmond,
Well I can’t argue with words out of the great mans own mouth.Personally my current portfolio aim is 50/50. So I have a balanced preference.
I love the idea of money coming in every month.
I also love the idea of holding an asset that appreciates greatly in boom times, (I haven’t yet experienced that, but will not cut out that chance by going 100% pos. cashflow.)
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Live, Learn and GrowLifexperience
Cashflow cashflow, if you dont get this right and cant access your equity for a year its useless as you have to sell early and loose all of your cap gain in tax anyway.
Do it right so its at lease neutral(rates and BC out of your pocket worst case), and with incresing rents it becomes positive over time.
Out in the sticks, yes please, I always feel that the only way for properties in the entry level suburbs to go is up. So get the cashflow right and you will always sell higher in the long run.
Maintainance is not really a major issue, allow $1k per property on average and you shopuld be right if you have done your building and pest right to start with.
I usually do a reno for $5-6k to start with and this alleviates a lot of maintainance and interupting tenants. I have a couple who, even though they have been broken into twice in the last few months, will happily stay on as we do maintainance straight away and add the odd security screen and rangehood to the property from time to time.
Your cashflow OR cap gains isnt true either as all of the low priced houses/townhouses have all had good cap gains even after good cashflow has occurred. Entry level properties are just that, the place where all of the new buyers start so the re is always some upward pressure on pricing.
Or did I just get bloody lucky with my 22 IP choices?? Im now selling a few to more accurately balance the portfolio and pay down bad debt first.
Great topic, good discussions
DD
Don’t sweat the small stuff,and it’s all small stuff!!
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