Forum Replies Created
I would love to here from those of you who are capital rich and cashflow poor that are using Michaels strategy
of using Equity for cashflow ie borrowing against Equity as Michael describes below and how it is working for them.I can understand how it works over the longer term for good properties in goood capital growth areas as the Capital growth over 10 years will more than pay for all annual borrowings plus interest but it would be great to hear how this actually works in reality on a day to day basis
Takeaction
Originally posted by MichaelYardney:Originally posted by AUSPROP:Michael – even at 80% retail I suspect your properties are still quite neagtive…. are you saying you refinance your other properties to cover your annual shortfall? The stamp duty and loan application fees would be huge wouldn’t they?
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
You are right that it is difficult to positively gear a new investment property, even when we build them ourselves.
Theer is no stamp duty on mortages any more and my bank (NAB) does not usually charge me establishment fees, and even if they did, it would be irrelevant.
Imagine I went and got a real job and earned $100,000 After tax and medicare levy I would have $50,000 and even less after super.
If I have a property portfolio worth say $2million in good capital growth areas my properties go up by say $200,000 per annum (on average).
The bank will lend me against this extra equity and I borrow $100k at 7%. (I could borrow more)
This would cost me $7,000 interest and I would be left with $93,000 to live off or invest, or pay off other loans.
If I worked for the $100k and paid tax I would only have half that.
When you own enough equity; cashflow is not important.
Equity = cashflow.
Banks will lend against the equity of your properties,and you don’t need income (lo or no doc)
Having debt is not risky, not being able to have it is
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auHi all Aussies once again
It is great to be part of this very lively forum
with some very talented investorsI agree with many of the comments made
“there are good deals and bad deals in every town.”I totally agree’ and I guess there are hardluck stories everywhere.
Hey my comments were only comments and opinions held by some Aucklanders for what they are worth.
They obviously touched a few nerves but if it makes us all the more wary of all the due diligence one should do before investing as Mini points out, well and good.
I might even take treak down to Tok in the middle of our Winter when all the Aussies have left and the mkt has softened.
Cheers
TakeActionHi All Aussies
As a Kiwi investor living in Auckland
What we hear up here is that
Mainly Australians are targeted as kiwis are aware of the downside of Tokoroa.
Sure the returns are great but beware of the
vacancy rates. Small town, one key dependant industry. No major or substantial new growth I am aware of.
I hate to put you off but all I have heard of up here in Auckland is hard luck stories in Tokoroa.
BUT may be if you buy at a discount and can sustain the great returns one can do well.I guess not all Aussies and Steve Mc Knight can all be wrong. Steve what is that you guys know that we at home don’t know. I would be very keen to hear.
What would I know!!. I can only tell you what what I hear from here.
Cheers
TakeActionAs a Kiwi in Auckland I have used both State Ins. and NZI with no problems with either. State is probably a little cheaper
Cheers
TakeAction
