Forum Replies Created
Hi wealthyivd,
Most of the views so far have covered it for you. With good investments, "time in the market" will help you have the ability to build your property portfolio. Alongside this there are two primary strategies:
1) Capital growth and then refinace – Chris Gray / Michael Yardley strategy
– Property goes up in value
– Property is refinanced
– Some of the increased captial growth is used for deposit, some to help service the increasing debt
– Over time you will need to get into low doc or no doc loans as the banks will be nervous of your serviceability
– As long as capital growth increase is faster than debt levels then you are okay, but there is risk2) Positive Cashflow properties – Steve McNight / Hans Jacobi strategy
– Positive cashflows enable you to make money and save for deposits
– You can continue to get further loans as your serviceablility is still good
– In this strategy it is all about trying to find a good property that has positve cashflow without too much risk (watch out for short term wonders) and whilst still having reasonable capital growth (this is where most of the money is made in property)Of course, many people combine both in their portfolio
In both 1) & 2) investors look for opportunities to fast track their ability to leap frog into more properties quicker e.g.
– renovation opportunities
– strata titling opportunities
– buying below market value
– buying at the bottom of the market
– property development opportunities etc.As always with property, I recommend that you build up your property education and then work (or get help to work out) an individual strategy that works for your own needs, goals and financial profile.
Cheers
Mark
Hi there,
I went to an evening seminar with Michael Yardney and learnt some things; but you have to remember that most things that are free or minimal expense will have a degree of self promotion contained within them. You will also need to bear in mind that they will also tend to advocate their own particular property strategy….
Mark
Hi Young Investor,
As you can probably gather from the posts, everyone has a view and there are pros and cons of different strategies. You also need to factor in your individual circumstances (salary, cash reserve) and risk appetite. The type of property you buy also makes a big difference ( gearing, maintenance costs etc)
My own strategy has been to minimise my deposits whilst I have been able to get full doc loans. This kept my cash reserves high so that I was able to leap into more properties earlier and use more of the bank's money rather than my own. I was also aiming to build my asset base quickly.
Of course the net benefit of a given strategy will depend on the market conditions and your specific investment decisions, but I have done fine so far.
Commercial tends to scare off early investors, but many seasoned investors swear by it. If you go down this route, tap into someone who has some experience in this field
Mark Taylor
Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser
Hi there,
I don't like to use the forum to directly reference my own site, but your specific needs are so aligned that I felt I should at least give you opportunity to check it out and make your own decision
I fully support the view that you need to get yourself educated to be able to make the right decisions. I bought heaps of books and went on tons of seminars / courses (some good some bad). Cost me alot but worth it for sure.
I set Keys To Success Club up to help other people have an easier journey than mine. One of the principal aims is to provide people with access to lots of experts to help them get educated. It is a paid site (but very reasonable compared to buying individual books). Both property and trading are categories and you can see what is available by using the in built search engine
There are also some free downloads, one specifically on property by Gordon Green.
Rich Dad, Poor Dad is also a good recommendation, need to get your mindset in the right place and change your paradigms!
Good luck, and remember to keep at it. It can be a little overwhelming in the early days, but persistance wills ee you through and it does get easier…
Mark
Hi there,
I would suggest that you provide a little more detail on the specific strategies that you are interested in understanding. Also be careful as companies will have a prejudice to their specific strategy. Keep working on your understanding of the different strategies and your personal circumstances / objectives so that you can make the right decision for you.
Established v newly completed properties:
Off the plan / newly completed property are typically less maintenance and have some depreciation benefits (more significant for high income earners). On the downside, newcomers can often pay too much and with established properties there is more likelihood of getting under market value, Try and find someone who is street wise to help / support you on your first few investments…
As always, saying one route is better than the other is dangerous as every investment deal should be considered on its own merits. Look at the numbers and do your own research.
I have a mix of both in my portfolio, but this is what fits my particularly circumstances. Here are some questions you might want to be asking re the property:
1) What sort of gearing/cashflow strategy would they be recommending?
2) Are they advocating a hold and refiance, or a buy and sell strategy?
3) How would you source the properties?I am not so across the covered call options on managed funds, mainly having done CFD trading and general managed funds.
However, I would be looking at how you extract your returns with sharemarket investments, the risk profile and then how this investment strategy interacts with your chosen property strategy…
Hope this helps!!
Mark
Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Martin,
It can get a bit confusing especially when there seem to be different views from experts.
I am a multiple property investor so can share my personal experiences with you. I have a mix of older and newer properties as well.
As I am more into the hold and refinance strategy rather than selling, the downside of depreciation does not really affect me, so I merely use it as a tool to improve my cash flow. Whilst the impact is better with newer properties I still get some good impact from my older properties.
You really need to consider the whole equation when looking at a particular investment property and align this to your own personal strategy and needs… depreciation considerations are just one apect.
I prefer to look at the investment deal as a whole and consider depreciation as an added bonus
Mark
HI there,
There are a few considerations you need to take into account.
When buying a house you need to look at all the entry costs (e.g. stamp duty etc) of purchasing not just the deposit
The banks will also look at your ability to service the loan, which based on the answers given, you would probably need a guarantor to cover it.
Don't forget that you also need to consider the ability to cover any cashflow shortages.
If you can find a way into the property market earlier rather than later then it is normally a good thing, but you will probably need to partner with someone to make it happen.
Cheers
Mark
Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Steve,
Firstly I would be wanting some more evidence on likely rental returns post the 12 months paid as this is often different.
Secondly, I would be wanting more information on likely capital growth before settlement. There are plenty of deals around at the moment, so you are competing with opportunities where investors are able to get them under market value.
You might gain interest with some of your perks over the 1st 12 months, but a seasoned investor would always look at the longer term numbers to see if the deal stacks up..
Hope his helps
Mark
Hi there,
You will need to verify with good property accountant, but in terms of negative gearing and trusts, then what I have seen is the following:
1) A unit trust is set up with beneficiaries. When a property is bought you allocate the capital growth units and the income units to the stated beneficiaries
2) A company is set up to adminster the trust with some directors
3) The beneficiary who has the income units takes out the loan with the bank
4) This beneficiary can claim negative gearing on the difference between the income from the property and the loan amountMark
