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how is possible still get positive gear propertymrkueh80 [20 Posts] I never have any Investment property, but i wish i can get one... but how is possible still invest in positive gear as the interest is so high?? P Terrance CHIS [79 Posts]  They are pretty hard to find at the moment with the boom in prices and now the spike in interest rates.
I wish I was smarter   BanjoSmyth [40 Posts]  Hi Terrance You need to think about why you want to buy the Investment property? Generally the properties that are more likely to be positively geared aren't likely to increase in value as much So obviously positively geared properties in Australia are great for your short term cash flow but not so great for your long term capital gains. Obviously this isn't always the case - but its generally true Good luck http://www.BanjoSmyth.com Wealth Accumulator [66 Posts] The reason why property investing works for many is that it is a forced savings plan using the tenants money, the investors money and in most cases the investors tax money (negatively geared). As already stated, to have a positively geared property the income from the property needs to be more than ALL the expenses of the property, as most rental yields are still under 5% and interest rates are at about 9.5% you need to have enogh cash for a deposit that is over half the property purchase price plus costs. That is the issue for most - they don't have any cash to invest that is their own and not someone elses. Depending on your marginal tax rate you might actually need a lot more deposit as for many now on the 30% tax rate $70 per $100 of interest is raw investment cost. Maybe try teaming up with some other investors - have a good investor agreement though!! There is hope - just think outside the square! Yours in wealth and lifestyle! Damian Ebzery B.Bus M.Bus AFPA ASA Any comments made of for the purpose of general discussion - these are not to be considered general or personal advice. mrkueh80 [20 Posts] so...i would reckon is not a good time to buy property this year though......example in Perth.only 1-3% increment from last year. Iet say 100% loan from bank based on interest rate 9% minus net rental return let say 4%. it actually making lost!!!!!! and more headache...!! esp now u can put on term deposit for 8.7% for one year. and is much better return. if really want to find those provide reasonable growth area approx 10-15%. which really need to take risk and deep research. I would reckon wait for few months and see how RBA react the interest rate.. god_of_money [207 Posts] Back in old days (not long time ago), people who earned 50-60k will hit the highest tax margin 46.5%. mrkueh80 [20 Posts] i wont think to save tax as still need to pay tax anyway......no matter how.. you cant escape TAX MAN. thats why i am looking for reasonably nagative gear..or may be even..that woudl be an idea investment... too much nagative gear...will make you pain.... craig.hill [2 Posts] You can get _closer_ to positive gearing by either reducing your ongoing costs and/or increasing your income. Reducing costs can include: 1. Performing maintenance yourself (obviously where legal to do so!) Increasing your income can include: 1. Increase rent. Can be justified by providing new/upgraded facilities (ie reno) Of course, once you've sorted these out, you would apply to the Tax office for a ITWV (Income Tax Withholding Variation) so you receive the benefits of your negative gearing immediately, rather than end-of-year. Craig Hill Linar [280 Posts] Positively geared properties ARE out there. You just need to look. Earlier this year I sold an existing 1br apartment in the CBD for $200,000. It was renting at $300pw and had never been vacant. Right now I am building a couple of houses that will sell at about $230,000 and will rent at about $280pw. With depreciation on a new property that is just about positively geared. They are out there. I remember my first post on this forum back in 2004 when I basically asked the same question. I just wasn't looking properly. Since then I have bought and sold over 20 positively geared properties. Cheers K Scott No Mates [854 Posts]  There were even a couple in this week's Realtor magazine - Western Sydney suburbs with rail line, 3 bed house + granny flat. You just have to interpret what is on offer, maybe do a little bit of work eg add a bedroom/knock down an internal wall but it is achieveable. frosty1 [37 Posts] hi Linar, mpertile [44 Posts] Think outside the square - if you want cashflow positive property, read steve's bit on lease options, under "investor HQ". Buy low and sell higher (usually a little higher than market value). Lease options are really a low-doc loan from you to the buyer, so you can charge a higher interest rate than you are paying to the bank - that's where your positive cashflow comes from. IMPORTANT TIP THOUGH - MAKE SURE YOU FIND A SOLICITOR THAT KNOWS THESE KIND OF DEALS TO DO UP YOUR CONTRACTS!! Linar [280 Posts] Hi Frosty Our investing strategy has changed over the years. Just over 4 years ago we started buying positively geared property in Darwin and also in a Qld mining town. We sold out of the mining town because, although we were getting a 10% return, dealing with the property manager was more hassle than it was worth. Darwin property prices went through the roof so we decided to sell up and pocket the cash. Darwin is a funny old town. You can have magnificent houses next to a housing trust slum. There is no one fantastic street or suburb in Darwin (except the new suburbs). We bought old units that were getting a very high yield, but they weren't quality stock, that is, something I was prepared to hold on to for the next 20 years. I felt that Darwin had seen most of the growth it was going to see for a while so my husband and I took our money. Even at the price I sold them, those units are still positively geared. We have now both quit work and are full time developers/investors. Generally speaking, there is more money for us in building than buying established houses. The houses I am building I would normally keep for myself and rent them out but we have overextended ourselves a bit financially this year and want to consolidate our position. We have a couple of young little kids and I am tired of saying to them "I'll be with you in a minute". I just want to be with them while I can. So I am currently selling out of most of our stock and chilling out for a while. Horses for courses. I started out being a strict adherent to Steve McKnight's positively geared strategies but along the way I found a combination of strategies that worked for me. PM me if you want more detailed info. Cheers K devo76 [375 Posts] They are around. One im looking at now has a 2 bed house with 2 commercial buildings attached. Total rent potential $450 to $500 pw befor reno plus it is on a corner block of over 1000 sqr with subdivision approval. Asking $240,000 and open to offers. Playa Chicken [22 Posts]  Something that's working investment wise over here in NZ at present to create +CF is Lease Options. Example: Yearly cashflow = $8,370 and For more info on deals like this, PM me. -------------------------------------------------------------------------------- Qlds007 [4379 Posts]  Sounds like NZ is a wee bit behind the times. We have been actively doing this in Qld for 12 years now. Cheers Yours in Finance Playa Chicken [22 Posts] Richard, Terrance the original poster seemed unsure how to create +CF with interest rates so high, maybe you can help him out. I've struggled to make lease options work in a hot market, how have you got around that in Qld's boom times Richard? -------------------------------------------------------------------------------- |
User loginIn The NewsRBA Rate Drops Rate The RBA has just announced a 100 basis point drop to its benchmark cash target rate. Developers Expectant The Federal Government's $1.5 billion first-home package has stimulated the development market. RBA Rate Cut RBA delivers investors an early xmas present by cutting its benchmark by 75 basis points to 5.25% Today's TipYou should never pay more than 30 cents in the dollar in income tax <more> Active forum topicsBreaking a fixed interest contract Author: marie07 Where is the bottom Author: wealth4life.com Who's OnlineTake The Test
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