hi
i can understand how a negative geared property is not such a good wealth building strategy unless you have significant capital growth.
but what if people have already bought a negatively geared property in the cbd or elsewhere through the slick advertising with rental gurantees etc.
what is the best position to take hold and hope that values will increase overtime to perform better than the investment
or sell and change direction and go for the positive cashflow properties in the residential market. however these are not easy to find.
i noticed more of the experts seem to be going to commercial property
this is another area of expertise i guessid like to hear from anyone in this site with perhaps more experience than i.
if anyone is interested in my story feel free to email me
kind regards
alf
If you sell something, you will have a number of costs.
I would consider selling if the amount that I have left after selling can be used in a way that returns a better result than holding on to it.If your negatively geared property is currently performing as you expected, how about holding it and purchasing a number of positively geared properties to help pay for it?
Cheers,
AndrewHi Alf! We have been in a similar position to you. 8 years ago we bought 2 units in a town north of Brisbane. In that time, they have lost their value by about 30% and cost us $3500 p.a. each to own!. Since learning about wraps, we have recently wrapped 1 unit, taking a small loss on what we paid, but at a price above current market. We also were able to get our weekly payments up from $130 (rent) to $160 (option licence fee) as well as the new purchaser paying $35 p/w for outgoings. We have now moved from a negative position to breakeven which is a relief, plus we have a buffer in the price which is good if prices remain depressed for some time yet. We expect to wrap the 2nd one when the lease expires later. So you can sell outright, take a loss and get on with things or maybe wraps will work for you too. Regards John.
hi Alf , maybe another way to go if your thinking about selling is to rent it out on a lease/purchase agreement , this way you could ask top price for it , get above market rent and option fee up front with the promise of a purchase sometime down the track, maybe this alone could be enough it make it positive, also if you give the tenant/buyer a 5 year option then you can increase the price to refleck this. cheers richard
There is nothing wrong with negative gearing provided you can afford the cash loss per week. In fact, after having made 1-2m in property within 6 years I would say it is a key strategy. Problem is, with all the cashflow loss, how do you support it?? Wrapping is one way, but you lose your long term wealth by giving away freehold. Provided you realise that you will be fine. Positive cashflow/wrap to cover the loss on the ‘prestige’ neg gearing things you own seems to be the thing that everyone gets to eventually. So….you own a couple of neg gearing things…no problem at all. Work out a way (and wrapping is one) to get a passive income to cover that loss. There ends your cashflow problem!
The topic ‘already bought negative geared property’ is closed to new replies.
