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This is my first time on this forum but this topic hit straight at a issues that I emailed Steve before signing up so Steve you are welcome to disregard.
Having only recently reading through Steve’s 0-130 book, it become quickly apparent to me that the market has quickly changed from the late 90’s. No problem with what was said in the book and it reinforced alot of what I thought about neg gearing etc but the 11 sec rule application may have to be modified (by the user) to account for the current market, particulaly in residential IP.
For the 11 sec rule to work, roughly you are looking at a 10%+ return on the property value, whereas rentals these days, in the SE NSW are more like 5% and that includes regional NSW ie townhouse Wagga, rental income each week 225-230, asking price $225-230,000 .
Now no doubt you can still be positively geared on some properties, however I believe now you would need to factor in tax effect to do so.
Or have I got it wrong? Any thoughts appreciated? Looking at buying my first IP this year but to positively geared in SE NSW (generally) you need to have about a 40-50% deposit so any advice is appreciated.
thanks
