Property Strategy

Hi PDimi,

Welcome to the Forum.

Short answer to your first question is look for an IP that has land content. Buying a 1 bedroom unit close to the city will have a higher rental yield compared to the block of land in Penrith however the block of land in Penrith will have more potential for capital growth. Not negating the importance of rental income, however capital growth is important particularly as a vehicle to fund further IP purchases. 

Units are great IP's and in fact I have 2 units in my personal portfolio but land is much better than a unit in most strategies. So why a house over a unit? You can renovate it much more extensively, extend (up, down, sideways) and develop (even if you just get the DA and CC).

The answer to your second question – I find that 9 out of 10 people do not have an issue with servicing/borrowing capacity whereas most have an issue with having enough deposit to actually purchase a place. If you are in this situation then I would recommend that you save for the deposit instead of paying the debt down.

The above is a very general statement so ultimately I would suggest sitting down with a mentor and nutting out several strategies and see how they look over a 5 – 10 year period.

Hi ,  Ive been an investor for over 30 years and while  you should not ignore any tax benefits you may get from property , both negative gearing and deprecation etc I feel that the more you invest in positive cash flow properties the better. I have been living on my property income for 20 years now and dont mind paying tax if i have to but i certainly do minimize it legally where i can.

Its easier to pay some tax on positive cash flow than to try to earn more money to support neg gear property.

Dont forget to have a look at commercial property as part of your portfolio. often it is positive cash flow from day one and you can buy commercial for the same price as a 1 bed residential unit.

 I recommend owning the land as well , I have several comm investments that have commercial tenants on the ground floor and residential above. I own the whole building and dont have to concern myself with strata rules etc.

As part of my cash flow strategy  I  can let the apartments as furnished for a much higher rent and also are able to strata the properties into two or more lots down the track.

If you are short of deposit cash to get in dont forget vendor finance. I have done several deals where i have borrowed the dep from the vendor for 5 years or so.

best of luckJames

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Every now and then leave everything you know behind and think free;

Let say I have a property that worth $20k and I sell it to you for $200k and you can rent it out for $10/week… and oh boy, it will double up in 7 years! you don't believe me look at price of the houses in the last 7 years (2005 to 2012)

Does it sound like a perfect opportunity to offset all of your taxes with negative gearing?

Even if a property is positively geared, you still can deduct depreciation AND have money in your pocket to buy more.

Find the balance between capital growth and positively geared my friend

I bought in blacktown a few years back for just over $300k but now prices have gone beyond the $300k mark.