I guess everyone agrees that it is easy to buy a property but it takes time to find the pos.geared properties. I live overseas and really think investing in property is the way to go but I have only recently been introduced to the idea of pos.gearing. When I am in the country I have a week or so to buy something and then just hold it cause history does suggest that prices go up over time. I end up buying properties that are neg.geared and then I focus on reducing my debt before I buy my next property. I know Steve says that we dont know the future so we are just hoping for Capital gains and that is a risk…if it does happen it is just icing on the cake. Does anybody have any suggestions as to what kind of properties to go for when time isnt on your side? Also, when you buy and hold and in 10 years or so have capital growth (with your IO loan) you can borrow against that growth and you dont pay tax on it….is anybody familiar with that concept (how does that work?)…..from the Far East and greatful for these forums cause I feel so isolated. Pieter
Pieter,
In my amateur opinion:
1. If one does not have time to look for properties which will give you a good return, don’t buy. Perhaps you can hook up with someone who has the time to look and be an investor with them.
2. I would go for houses rather than townhouses or units as land tends to increase in value and buildings tend to decrease in value. Also having land on which a house sits increases the likelihood of capital gain through redevelopment. I would prefer a suburb with increasing development expected in future due to urban sprawl and/or future transport development.
3. You are only taxed on capital growth when you have a capital gain ‘event’, such as selling the property. Otherwise, you are not taxed on the increase in value of the property.
Okay?
Andrew
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