Hi all,
Can I have recommendations of the best book solely dedicated o +ve cashflow investing? Obviously, I’ve read From 0-130, but I’m looking for some more of the same!
Cheers
MarcusElectric
Money secrets of the rich- John Burley
Rich dad, poor dad (the philosophy of +cf) Robert Kiyosaki
Success stories- KiyosakiMd,
Look at some of Margaret Lomas’ books. She buys newer properties and uses depreciation to make properties CF+. I was just readingf an article on CF+ property in API magazine. It says that properties only need to have a yield of about 6% to be CF+. Go figure… but depreciation on newer (post 1985/87) properties help to get the yield up by getting the money back in your tax as an offset.
kay henry
Isn’t your book coming out soon Kay Henry? (Joking)
Hi Marcus,
from my reading of +CF books, the best enlightening one was Steve’s (0-130). I believe you’ll get most from this book than from the others – just my opinion anyway…
kind regards,
Geo.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
The best book?
Depends on what you want.
The big flaw in Lomas’ book is that she relies too heavily on tax deductions. Many people on average wages would run out of tax deductions after they buy 3 or 4 properties.
This is not quite enough even for a modest income (you really need to own at least 4-6 outright, and maybe 2 or 3 extra to provide some leverage and growth prospects.)
McKnight relies on smallish margins from a large portfolio of cf+ IPs to provide income, even before the debt has been paid off (or significantly reduced). Assuming you hadn’t fixed interest rates, you’ve had no capital growth AND interest rates rise, you could be forced back to working if properties become negative.
Even if using PMs, such a large number of IPs, this must present a management nightmare, especially if you don’t have established infrastructure such as your own business, a business partner and spouses.
Others rely more heavily on capital growth, with some authors saying that -ve properties eventually become +ve (ie repayments remain constant while rents rise with CPI). There are huge -ve gearing losses in the interim which would mean massive cuts to living standards and other savings programs for me.
None of these approaches by themselves are quite right for me, but I am happy to choose and take from these (and others) for my requirements.
Regards, Peter
Excellent synopsis Peter,
Straight to the point..and accurate as well.Another point with using depreciation ( non cost tax deduction) is that it erodes the value of you asset base by the amount of the depreciation you have claimed as a tax deduction.
If and when you sell, you will be liable for capital gains on the sale price minus the WRITTEN DOWN VALUE of the asset, not the initial purchase price of the asset.
In effect, you are getting a tax deduction today, and foregoing a profit in the future by paying a greater amount of capital gains tax…when you sell.
KP
Originally posted by kp:Excellent synopsis Peter,
Straight to the point..and accurate as well.Another point with using depreciation ( non cost tax deduction) is that it erodes the value of you asset base by the amount of the depreciation you have claimed as a tax deduction.
If and when you sell, you will be liable for capital gains on the sale price minus the WRITTEN DOWN VALUE of the asset, not the initial purchase price of the asset.
In effect, you are getting a tax deduction today, and foregoing a profit in the future by paying a greater amount of capital gains tax…when you sell.
KP
Very good KP a fact often overlooked in most books and forums.
People can check this out at:
http://ato.gov.au/individuals/content.asp?doc=/content/42787.htm&page=12#H59
Depreciator, I wonder if you wouldn’t mind putting up an example of how the “balancing adjustment event” works on an IP.
kay henry
This is all very interesting but it seems like everyone is sitting on the fence a little when it comes to whole heartedly backing +ve cashflow as the best property investment strategy. Would I be right??
Anyway … if Lomas’s books aren’t so good and we’ve read Steve’s first book (looking forward to the second) … are there any other GREAT books devoted to +ve cashflow?
Electric
Hi mdpearce,
For mine I would also suggest that reading a variety of property investment books, irrespective of whether or not they are CF+ orientated, will make you are better, more rounded investor.
I recommend a skim through the following link
https://www.propertyinvesting.com/forum/topic/6845.html
will give you a summary, and some thoughts, about other PI books and resources.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi mdpearce,
People aren’t “sitting on the fence” in backing +CF properties at all; they are being realistic and understand that these properties are hard to come by ATM especially in Australia. You will still do ok in NZ, but again, +CF properties are becoming scarcer!!! If your focuss is ONLY +CF positive you will IMO risk becoming very disappointed, not only because of their scarcity but also because of limited growth potential.
As for the books, the other forumities are probably more qualified to answer this query.
Jo
Originally posted by Derek:For mine I would also suggest that reading a variety of property investment books, irrespective of whether or not they are CF+ orientated, will make you are better, more rounded investor.
Agreed 110% Derek!
A lot of stuff in books that advocate -ve gearing (eg due diligence, choosing a property manager, selecting an IP that will rent, etc) are relevant to everyone.
Thus it’s relevant to mention my own site, which reviews most well-known Australian property books: http://www.alphalink.com.au/~parkerp/invest.htm
(click on book reviews)Regards, Peter
Originally posted by mdpearce:… it seems like everyone is sitting on the fence a little when it comes to whole heartedly backing +ve cashflow as the best property investment strategy. Would I be right??
Electric
Electric,
I think you’ll find there are all kinds of investors on here. But if we were all only after CF+ properties, noone would have bought IP’s in sydney, right?
The issue for CF+ properties in 2004, that there is less and less stock- although some is still available. But many of them are so remote now- in Australia- in mining towns or the outback, and that just doesn’t suit everyone’s needs. When Steve wrote his book, there were more opportunities.. but even regionally now, you’d be lucky to find CF+ properties.
In the time that I’ve been on this board- some 10 months now, I’ve seen the emphasis change from one where people are not totally focussed on yields… to one where people are discussing the necessity of CG AND yield. That’s indicative of the RE market in general now, though. With a slower market, and less CG (check out the latest data on prices) in most major markets, then people see the importance of how CG will be the key to property investment, rather than just having that extra $20 in your pocket each week.
RE books date, although the *concepts* in Steve’s book are great. But the market has changed, and I think people are developing different ideas which reflect that. As an example, people could have bought up books on flipping off the plan apartments a few years ago… but that strategy is finished now.
CF+ investing still has currency, but Steve’s book had such an influence, that many of the properties are now bought up, and have increased in value, so that if one bought them now, they wouldn’t have such a great yield.
Can’t think of any more CF+ books right now
) Maybe something will come to me soon- hehe- probably not kay henry
) Maybe something will come to me soon- hehe- probably not 
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