Hi
I am only new to the idea of property investing although have done heaps of reading but not actually found the courage to take the first step – in this market I think I have time to do more learning so as not to make a mistake.
In reading Steves book 0 – 130 properties I realise that he continually refers to cash deposits on each of the properties he buys therefore reducing the weekly cost becasue the repayments are lower. I am challenged by the fact that he says negative geared properties limit investors as they run out of income to finance them but if his methods are always based on cash deposits then I see this as the same thing. Cash flow positive Investors are limited by the properties they can buy until they save / earn enough for the next property. Unfortunatly my husband and I are low income earners and there is no excess from our pay each week to save the sort of money needed for a deposit being $20,000 for each investment property in todays market. We can manage 2 but then run out of money and the cash flow approx at $60 per week will take a very long time to save to make the next $20,000. How then can even 10 properties in the next 5 years in todays market be a realistic goal. Doesn’t this just place us in the same investing position as those who are nagtive gearing? Or am I completely missing the mark?Yep, there is no easy way to buy many properties quickly unless values are rising quickly and/or you have a large income to save the deposits.
You will find over time, your rents will slowly increase and your wages will rise, so you can save more. Also the values will hopefully go up to enable you use equity as well.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Do you have a deposit already saved?? If you do, then the best thing to do when you are starting out to raise cash fairly quickly is to do a renovation. Renos don’t have to be huge, it could just mean painting, tidying up an overgrown lawn, prettying up kitchens etc – and if you look hard enough, there are plenty of bargains when it comes to building materials and stuff like that. All you need is a bit of imagination and a strong will to not overspend.
If you are able to buy below market value (i.e – if a house you are looking at would typically sell for $100,000, and you are able to get it for $80,000, then you’ve got $20,000 ‘instant’ equity.)
So, let’s say you spent $5000 on a renovation (and for each $ you spend you should get $5 back in value) and the house was revalued at $125,000, now you’ve got $45,000 in ‘equity’. You can then either rent it out and draw on that equity and use it to purchase another home to do exactly the same thing, or you can buy, renovate, sell.
Just keep in mind that if you sell you will need to pay tax on the capital gain, and you need to work out what sort of profit you are prepared to make out of each property if you choose that path.I have just completed a renovation where we bought for $195,000 spent $7000, and have had it revalued by the bank at $230,000 – so a gain of $35,000. That money is now going into purchasing another house which I have bought for $156,000 (market value is $165,000) and after spending $10,000 on it, it should revalue if all goes according to plan, at $210,000 (although me thinks that this one will go a little higher to maybe $225,000 – $235,000 depending on what the market is doing)
All this I have done without any of my own money – I found a money partner, who had the money but had a fear of doing it by herself, and struck a deal that she provides the money and I provide the grunt work and we split the profits 50/50. If you do this however, make sure you get your solicitor to draft up an agreement between the 2 parties so there are no disagreements when it comes to splitting money.
This may be something you may like to look at yourself to get you started – start with a reno, and then use the money to get into rental properties that you can buy and hold.
Cheers [biggrin]
JunkersIf you are needing to access good quality kitchens/benchtops/handles as a renovation strategy and are in NSW…. to make your buck go further let me know as I can access them with upto 50% off retail prices.
For example I did a kitchen renovation which retailed at $25,000 (value added to the home) for less than $10,000 including all stainless equipment (range hoods, ovens, cooktops, dishwashers etc.- not bad for 15 days work. – got house revalued and was shocked at the new valuation rise! – Time to sell it now and access all the cash to reinvest again.
Cheers, KiwiLooking for Positive cashflow solutions?
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