Hi everyone! Well this is my first post on the site
.. My question relates to whether or not it's better to have more properties with less equity or less properties with more equity? From an equity growth perspective I don't think it would really matter as the equity (using the assumption that all the properties go up equally over time) would increase by the same factor regardless of how many properties it's held in. I can see there would be benefits from a tax perspective if your equity is dispersed amongst more negatively geared properties but is this the only real advantage? Can anyone point out some of the other benefits/drawbacks of these scenarios?Kind Regards
If your servicing capacity supports … more property using what equity you have to increase the size of your asset is the way to go in my opinion. Its the size of the asset that your return on investment is dependent on, and the bigger the overall asset the high the return. My personal strategy has been to borrow as much as possible using as much equity as possible to build as big an asset base as possible as quickly as possible. Then sit back and let the magic of compounding growth take it away. This is not advise its mearly my own preference and may not suit you or any one else. It has certainly worked for me however. You just need to make sure you can service the debt well and manage your risk according to your investing rules.
It depends on your view of property growth. If property were to grow more than your cost of holding it, then it would be better to hold more properties.
How good is your crystal ball?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
.. My question relates to whether or not it's better to have more properties with less equity or less properties with more equity? From an equity growth perspective I don't think it would really matter as the equity (using the assumption that all the properties go up equally over time) would increase by the same factor regardless of how many properties it's held in. I can see there would be benefits from a tax perspective if your equity is dispersed amongst more negatively geared properties but is this the only real advantage? Can anyone point out some of the other benefits/drawbacks of these scenarios?
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