Hi Guys,
Im now in the process of purchasing the next IP, However i hear all the talk by every1 on buying Pos. Geared properties.
For one, most of these properties are located in Mining towns thats a no no for me. Way too much risk.
So If you were only to buy properies in and around melb. or other cities they most likely will be neg geared. So how can you build 10-20 properties if your dumping cash on top of the rent returns to pay these baby's off.
Is there a ways to achieve 10, 20 or more properties on buying neg. geared property's.
I might sound like a silly man but that's what it comes down too rental income!!!
If anyone out there can help you would be helping me.
Regards,
Peter Pith.
If you buy properties that are negatively geared and pay the loans down over time you will eventually have a property that has grown in capital value and also in rental income.
At the beginning it is extremely hard because 99%of your repayment goes to interest but if you can pay more than the schedule you eventually pay down the loan quicker than 20 years.In time you will build up equity that you can borrow to use for the next property purchase deposit.
Equity = Value of house – mortgage of houseIt takes time to pay down a house loan ! (property is a long term investment)
Eventually it becomes cash flow positiveI think you should buy Australian Property Investor Magazine and read the case studies in it.
With unlimitted personal income..
Hi there, Check out our website – http://www.multiplepropertyservices.com.au.
We don't tell you what we think you should do nor do we try to sell you house and land packages, off the plan apartments, books, CDs etc!
We work with you – and your own circumstances to help you achieve the goals and dreams you have, using property as the vehicle! We provide ONE ON ONE coaching – not sitting in a room with 100s of others and only giving you half of the story/skills etc.. We work out your goals and objectives, the timeframe you want to acheive it in and then start working through structures, finance, different strategies, asset protection etc.
I too have many postively geared properties – some stand alone tenancy, some dual occupancy, some units.. I have and also assisted my clients through property reno's/flips, add value – buy and holds, options, developments (I just helped one of my clients through their first development which is going to provide them a minimum return of over $300,000!)
We have also done JV's between clients as well. We also have experience in buying property through their self managed super funds..
There is no wrong strategy or venture you just need to ensure that you are fully informed and aware of the pros and cons of each – continually referring back to your goals to ensure that each step or decision you make gets you closer to achieving your goals! Its also beneficial to have someone there to call upon to help, support and motivate you to make your dreams a reality!
Would be happy to catch up if you would like to discuss further, you can email me at [email protected]
Take care and best wishes on your property journey!
Hi Peter
It's fashionable these days to put down Negative Gearing as a tool for building your property portfolio. However, in the Australian market, it seems to be an underlying truth that initial negative gearing translates into substantial capital gain over the long term.
By using only negative gearing, the number of properties you can add to your portfolio is limited. Limited by your ability to cover your portfolio's cash shortfall, i.e. the shortfall between the rent you receive and the mortgage you have to pay. When you can no longer afford the shortfall of an additional property, your portfolio building comes to a grinding halt.
However what if there was a way to:
1. Buy a property that generates fixed positive cash flow and has fixed capital gain
2. Use this positive cash flow to subsidise a negatively geared property that has good long term capital gain prospects?Let's go through that again:
Cash Flow. The first property may have, for example, positive cashflow of $400 per month and the second property may have a cash shortfall of $400 per month. A cash flow neutral situation.
Capital Gain. The first property is setup so that it generates a fixed level of capital gain, for example $40,000. The second property is purchased in an area with good future capital gain prospects and has unlimited capital gain potential.Question 1. If we use only negative gearing as a portfolio building tool, how many properties can we buy? Answer: As many as we can afford.
Question 2. If we use a system where one property subsidises the next property, how many properties can we afford? Answer: As many as we can find
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Peter
I would suggest a combination of both is an ideal mix in any portfolio.
As Paul has mentioned wrapping or LTO offers excellent cash flow to offset the cash flow shortfall on higher capital growth properties.
Depending on which State you start wrapping in you could well find that your purchaser can give you your deposit for the next deal upfront from a combination of Deposit and FHOG.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
