First of all let me congratulate you all on an excellent forum that has evolved here. I have been lurking for some time now and after reading the posts thought it about time to dive in and buy another IP.
My name is David and I live in an outer South East suburb of Melbourne called Guys Hill. I live on a 3 acre property which one day I hope the council will allow me to subdivide. If they don’t it won’t disappoint me too much as in the five years I have lived here the property has gone from a purchase price of $269,000 to a current value of $650,000. When I told someone I know through work that I owned the place outright he told me to use the equity I had in the property to buy investment properties. He went on to tell me how he was investing in property and had four investment properties himself. He also told me about some investment advisors like Jan Somers and Steve McKnight. Having reviewed both these people and some others I decided to buy Steve’s book “1,000,000 in property in one year†and also “Fast Track 2â€. I have listened to the CD and have almost finished the book. All I can say is WOW.
About 3 months ago (before finding this site) I purchased a unit in Beaconsfield, a neighboring suburb of Guys Hill. The unit cost $240,000 and I borrowed $200,000. This property is a negatively geared one which is not what I want now after reading all the info that I have. The saving grace here is that the value has jumped up by about $15,000 since the completion of the complex and the sale of the last of the 3 units. It might be time to cut my losses here and sell.
I am now ready to buy another property but this time it will be positive cash flow. I’m looking in Bendigo which is a large country town in Victoria. Before I sign on the dotted line I thought I would ask you people on the forum for your thoughts on Bendigo as a place to invest in as you have much more experience than myself. I know that ultimately I am responsible for the decisions I make but comments from yourselves will lessen the likelihood of me making a decision that I may regret.
I hope I haven’t rambled on too much but I thought it about time I contributed to the forum.
P.S. The purchase of the PPOR was not an investment strategy, it was a case of a very bad neighbor at our last PPOR who forced us to move. The decision was made to move to a property where we didn’t have neighbors, hence the 3 acres. At the time I had bitter feelings toward the neighbor but now I could not thank him enough. Everything happens for a reason weather it be good or bad. It’s just a matter of finding the positive and using it to your advantage. It’s amazing how different I look at situations now.
Hi Toolman,
I have lived in Bendigo for most of my life. I have also invested here in residential property. Bendigo had stagnant house prices for many years until the property boom.Ie properties bought 6-7 years ago for $80000 are now selling for $190000-$200000.Rents unfortunately havent risen as fast. Rent for this type of property then would be approx.$130pw are now $190-$200 pw.Bendigo is a great city approx 90000-100000 people, all facilities, good Uni,good schools etc. My only concerns are that the prices have now slowed markedly if not stalled and retreating a little.Houses are taking longer to sell, also there a large number of knew subdivisions happening more than I can ever remember and I’m wondering how many people are they expecting?There are good areas and bad areas please if you want to where you want to invest in Bendigo and I’ll endevour to help.Good Luck Martin[biggrin][biggrin]There are 3 types of people:1. People who make things happen.
2. People who watch what happens.
3. People who wondered what happened.Hi Toolman
I’m relatively new to property investing myself and far from an expert. However, I’ve read a lot of books and other material from both the ‘positive cashflow’ camp (Steve McKnight, Robert Kiyosaki etc) and the ‘capital growth’ camp (pretty much everyone else), so lets just say I’ve heard both sides of the story many times over. After doing a lot of research myself I have tried to form my own oppinion about how to invest based on all the information available rather than follow one person or company’s formula. I know that’s not for everyone, but that’s my approach anyway…
My advise to you is this: do more research before jumping the gun, especially in relation to selling your property! After reading “0-130 properties in one year” by Steve M I felt exactly the same way you do. Let me just warn you though, there are a lot of hidden risks with positive cash flow property that might not be plain to see, especially if you intend to buy and hold as your main strategy. Remember that Steve made most of his money using Wraps, this wasn’t apparent to me in the book I read..
My personal oppinion is that if you only buy one type of investment property (positive cashflow or capital growth) then you are exposing yourself to a particular collection of risks (for example, buy and hold used with positive cash flow is VERY vulnerable to interest rates, and capital growth is obviously a slave to the property cycles). Just be careful to not put yourself in a situation where factors that are out of your control can put your strategy at risk, or at least have a plan B if things to bad (selling 100 properties over night in country victoria that are no longer profitable just because interest rates jumped 2% would be a bit of a nightmare).
I look at it this way, negative gearing is great for people that pay too much tax, but there is a limit which you reach very quickly depending on your income after which you can no longer keep growing your portfolio due to the negative cash flow. However, even when you reach that point, as long as you have EQUITY you can still buy positive cashflow property or invest in other things that generate cash flow, so owning some good growth properties is certainly not a bad investment choice in itself, unless it stops you from living the life you want and investing in other things too.
I certainly wouldn’t advise to sell your negatively geared property simply because it’s negatively geared. If it’s a good property in a good location, and it’s likey to attract good growth in the future then there is no reason to get rid of it. Unless of course owning the property is stopping you from investing in other things because your cashflow is so damaged, in which case it may be better to pull the plug on it, I don’t know. Just don’t discount it as being a bad investment over all just becuase it’s not improving your cash flow right now.
That’s my two cents, and I’m sure a lot of people on this forum will disagree with me.
Cheers,
Carl
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