Positive or Negative?

Nope. They're tradies who've stopped selling their services for a pittance (comparably) and subcontract their services. Basically you set up a company ($600 on the net all done and dusted takes about an hour at most) and subcontract to the many and varied clients available in the mining areas. 

I used to do it with trucks and know many up your way and Hedland who sub themselves at $120 +/hr. Your investment will run to about $60k initially (mine spec'd vehicle) and up to $100k as you get geared up. You get that back within the first 6 months usually.

Most of the guys I know who do this pull around $8 -10k /wk. Add staff to that and you start to see where 500k/yr comes in.  That's a really basic operation.

So instead of farting around with property why don't you figure out how to leverage your trade into a self employed opportunity, run your own business and really make serious money. 

You put money into property to diversify your investments (surpluses from business) and to store your wealth somewhere at relatively  low risk.

The real money is in business not property.

Hi,

Investors prefer units to houses, because prices don’t fluctuate as much.

To make the most of your investment, carefully consider the mortgage broker you want to work with, the depreciation and tax deductions, and the location. Check what’s fueling the local economy, choose a spot where the industry is active and produces jobs that attract people to the area. This will get you significant capital gains, not just positive gearing.

Cheers,

Emil

Sunbuild Invest

Good post xdrew . I am refinancing an IP at the moment and looking to buy another . My broker initially said to get a LOC but now seems to have gone cold on the idea , ive never used a credit card. He prefers now to only borrow for a deposit .

In researching HELOC one point that stuck out is its better to setup a LOC while your healthy because if you break a leg say or off work for an extended period it will be more difficult to obtain any credit to pay the mortgage bills etc.

Income insurance seems very expensive and my wife is a long way from a good salary.

Is it possible to get an LOC at home loan rates or is there always a premium ? What is the normal premium?

Any other thoughts on an LOC welcome

Hi Jotham,

Lots of good advice here from all these wise, generous and no doubt wealthy people.

You don't mention your age, but I assume you are in your 20's, given that you mention living with family, and don't appear to have any kids.  So you've got a lot of time on your side.

for what it's worth (and its probably not much given I'm only a newbie) I'd suggest you just buy something.  Soon.  It doesn't have to be expensive, in fact, the cheaper the better.  The less you spend, the less you can lose, right?  And your knowledge trajectory will reach new heights as soon as you actually get truly involved and committed.  I just bought my 2nd IP (first one bought 15 years ago, so I'm just about a ……  again) last weekend for my SMSF and going looking again this weekend, also expanded search interstate.  Now I'm committed, I've learnt more in the last week than I had in the last year (a big thanks to Richard Taylor or QLD007 on this site).

The house I have bought is a 3 bedroom brick veneer on a 600m block.  It's in a regional Victorian town of 20,000 people with good infrastructure, and a rental vacancy rate of less than 1%.  Rent is $235 per week.  House cost $153,000.  So it's cash flow positive.  Its a good house for a good price.  It's easily rentable or re-sellable.  So even if it's not 100% 'right' strategy wise, it will do until I find something better.

And there's thousands of such properties around Australia.  Good nursery school, I reckon.

At some point, you need to buy something.  You may well feel under prepared, but you will learn very quickly once you get started. 

Great to see you joining the journey, cheers

If you currently have a high income and are paying a lot of tax then you should buy a property with capital growth (which most likely will be negatively geared).

What this means is that you will pay more interest on your loan than the rental income you will get from your property. The shortfall you will be able to claim back from your tax. This way you are basically using your tax money to own your investment property instead of giving it to the government.

The gain from this strategy will come from the capital growth of the property (which wont be taxed unlike a cash flow positive property where you will be taxed on top of your salary).

Theoretically you can use this strategy until you lower your tax to 0. However your cashflow will suffer from this.

This would then be a good time to buy positive cash flow properties. However positive cash flow properties are hard to find. So to increase your cashflow I would rather focus on getting a higher paid position or investing/setting up a business.

This is just my opinion and the strategies I use personally and may not necessarily apply to your situation.

I'm an accountant, one of my favourite stories is from a colleague.

back in the early part of last decade when everyone was buying, and property was going to double every 7 years, one of his clients, bit the bullet and bought up big. (never asked the accountant first, but that is pretty usual).

At the end of the year he had managed to completely wipe out his income, (property losses exceeded wages).

He got back around 30K in tax, and asked is "that all" ????. My friend tried to explain that you can only get back what you pay…

he said …  "but that man at the seminar had said he would get back 45% ($50K) … are you sure you are right …"

"the man at the seminar "… wonder how many times people hear this

Stupid, i would rather be taxed on a profit rather than subsidised on a loss.