I have 1 neg geared property although it has a business use attatched to it which saves me renting 2 storage sheds.
Who would buy a negative geared property today and for what reasons? For me it would have to be something special like opposite a beach with development potential or something i could strata or subdivide down the track and less than 100pw. Sort of like a uni fund for my kids if needed or a super fund for myself.
Anyone else?
RoboI’ve made alot of money on negative geared properties in the past because there just “happened” to be a boom. Would only buy negative geared now, if I had enough positive cashflow available to cover the shortfall!
We buy properties in Adelaide. Immediate Cash Settlements, No Agent Fees.
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phone 0412 437 582We continue to hold a prime riverfront block with a small 3 x 1 house on it. 5km from Perth CBD. It is a very negative cashflow situation.
With the residential tenant who whinges only slightly, I still think about selling it every day.
It needs to grow by 3.4% p.a. compounded for us to break even. It did about 6% last year. I’m still not happy with this, but as we have bugger all equity in it, there is no equity advantage in selling it.
Cashflow wise, this one prop is a big factor in keeping me overseas and away from the family…it’s averaged 15.8% compounded over the past 25 years, so I’m thinking there are better times ahead….who knows…maybe Foundation is right ??
Negative or neutral to slightly negative is a great way to invest as it’s not costing too much out of pocket but having all the advantages of capital growth which is what allows you to buy multiples against it. (having done your research and bought the right investment)
Personally, that’s all we focus on as it weighs up better for us that way.
Happy to help.
Roy H.
L.R.E.A., Dip FS (FP)Guardian Property Specialists (GPS) is a research-focused company that specialises in sourcing and providing residential investment properties Australia wide!
Hi Robo,
my under-developed thoughts are to alternat (subject to availability) but that way I’d get the best of both worlds (this is in a buy abd hold stradgety). Whether I can pull itoff is yet to be seen!Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonThere are strong inner city suburbs in Melbourne still getting 10% capital growth annually.
The rental yield is about 3.5%.
I would negative gear these properties if I had half the chance.
These babies are making money. You only need about a half million to get in.
Live, Learn and GrowLifexperience
Yes
hi robo
drx idea is the best and is similar to what I do,
you invest in a positive that then off sets negative property making both neutral but the neg usually has high capital growth.
the structure must be set up for each group and they work very well.
It helps also if you build the neg property.
As you can lend on the property and get cash flow.here to help
Originally posted by grossrealisation:hi robo
drx idea is the best and is similar to what I do,
you invest in a positive that then off sets negative property making both neutral but the neg usually has high capital growth.
the structure must be set up for each group and they work very well.
It helps also if you build the neg property.
As you can lend on the property and get cash flow.here to help
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Dear Gross Realisation,1. Brad Sugars also briefly talks about using such similar investment structure concept which you are proposing, in one of his books on property investing in the Australian Real Estate.
2. How exactly does it work in real life? Have you tried it yourself and successfully validate the concept through your present property investing practices?
3. What are its key critical success factors and major risks involved in using such an approach? Why?
4. Looking forward to hearing and learning from you soon.
5. Thank you.
regards,
Kenneth KOHHi kenkoh2000
Sorry not a great book reader so I haven’t read his book but yes I do use this system as one of my systems.
It work relativeley easy my criteria is a bit different from others but basically here it is.
1. I build something (units is the simplest as its current in a company/trust structure the profit flows thru and a unit comes to me (again simplest version)
2. prior to completion I find 1 or 2 posi properties.
3.I setup a second company/trust which purchases the posi properties and sits and waits for completion of the unit.
4. on completion the unit flows thru the first trust and drops into the second trust.
5. I lend the maximum that the rent from the posi’s and the rent from the unit will allow and thats my cash flow for the next project.
6. As I have very high growth from the neg property and is held by very low growth but high cash flow it works well.
As they are trusts they can be moved as I wish.
You must look at this as being part of a system and there are other parts that also work off this and intergarte with this system( its a bit like saying can you tell me how your car gets from sydney to penrith and start at the steering wheel)( and I don’t know what a car is or a steering wheel)
but this is a very simplistic version.
risk
you must know who and where you are building, so the end product(in the above the unit) must be high growth but continued high growth (current marrickville Sydney)(not your double bays of this world but places that will continue to grow)
high rental
current comm dulwich hill
Tennant on 5 x 5 rental with cpi or 6% which ever is higher.
Make sure the tennant is going to be around for 10 years ( this tennant has shown interest to purchase the property)
I do this not as a part time job this is my job.
I am always on the look out for a few properties for different parts to my structure.
once a development site has been found.
current site which will come on line very soon.
I look for posi’s (have three lined up) then I organise the structure to suit.
Its very similar to developing you don’t build a block of units, sell, sit and then start looking for another site.
When you are 3/4 finished you look for your next site.
I do the same with my structures.
Mine is a little more refind.
and for anyone reading this I would not recommend this system for you.
As you must build your structures for your requirements this system is and has been designed for my requirements and they will be different to yours by all means you can intergrate it into your structure and it will work very well.
from reading my posts you will see I send alot of my time on research ( I have 2 computers and laptop, one on one straight into telstra backbone) to research my projects.
hope this helphere to help
Hard question on the home of positive cashflow investing.
Would I? Yes!!
Why?
I goes like this. IMO only of course.
Growth: (of the capital kind) is how we get wealthier over time. That is pretty straight forward.
Gearing: Use debt to get into more investments and multiple potential growth streams.
Cashflow: How we pay for investments with strong fundamentals.
DO the sums like Dazzling has. Work out what the investment costs you and how much capital growth pa you need to make the investment decision.
What is the EXIT strategy? What are your goals? What is the purpose of the investment? Who will want it when you are finished with it? How can you add value? How can you increase yield? What is happening in your town? Your Street? Next door? How will you structure the investment? What is the holding cost? Cost of finance alone? and on and on? The cash flow component of an investment is significant but it is not the be all and end all.
Cheers
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