If someone sells you a positively geared property then there is something wrong with the area it is in or something is about to go wrong. Do you buy all your shares on dividends alone? I don’t think so. So why would you only buy positively geared properties? There is probably high unemployment in the area or the local mine or some other local industry is leaving the town, so YOUR investment is up the preverbial creek without a paddle. Try selling this positively geared property or maintaining it when you can’t get a tenant. Is it still a “positive” investment? NO. Chances are it will probably sit on realestate.com.au for quite a while before you get a bite. THAT’S WHY IT”S POSITIVELY GEARED. The chance of re-leasing is harder than it is in the city. You shouldn’t buy a property in Cobar NSW if thats all you can afford and the rent return looks good. It can go very sour. I have purchased 3 properties that are in Eastern Sydney in the last year and they are negatively geared, however the capital growth in them probably equal 30 of Steve’s country ones. They are all with the one agent and I have no worries. I don’t have to worry about a mass exodus of the Eastern Suburbs. True, you can screw up too in the city and you need capital but still one must be careful where you buy. Tell me if you agree. CAVEAT EMPTOR.wilandelMember@wilandelJoin Date: 2003Post Count: 761
No – I DON’T AGREE WITH YOU.
You will have to keep working a lot longer than me!!
Maybe you can come and work for me someday!
EACH TO THEIR OWN.[8D]
It depends on your perception of wealth. By the sounds of your noveau riche attidue your perception and actual wealth would be a lot lower than mine. However, thank you for the job offer but my answer is NO. I don’t work for anybody and never will. From what I have done in property, my kids and my grandchildren can turn your job offers down too and I am only 26.wannabe2Member@wannabe2Join Date: 2003Post Count: 65
i think whatever works for yourself,each to his or her own live and let live blah blah blahVonnie2Member@vonnie2Join Date: 2003Post Count: 1
i think whatever works for yourself,each to his or her own live and let live blah blah blah
George, I understand what you are saying, but you are obviously on a very good income in order to validate what you are saying. However some of us who work our asses off are not paid so well which would enable us to purchase such properties in high capital growth areas. That is why Steve obviously came up with alternatives for the average Jo -Blo.
Yvonne, I am only putting the point across that buy purchasing a parcel of positively geared dirt at Cobar is going to bring you more headaches than dollars in the long run. Positive gear brings more risk. I’ll give you 1 example. In Trundle NSW, there is a house for sale $50,000. It is getting $100 a week. The house is rented by a cook who is not originally from the town. The towns population is decreasing. The cook may decide to leave. Who will rent this property if he decides to leave? Can you rent it within a week – especially to a local? There are towns like this all over Australia and in the long run, your investment dies along with the town. BIS SHRAPNEL have tracked positive population growth to Sydney, Melbourne, Brisbane and the Gold Coast from provincial and country towns. How does this stack up in the long run to country properties? This proves that ownership of these +ve geared properties is not good for anybody in the long run regardless of how much or how lttle they earn. Ownership does not always bring benefits.
blah blah blah all right
you can tell people ‘it can be done, I’ve done it, i’m continuing to do it, right now, in this market’
till you’re blue in the face and they still won’t believe it, because it’s not true for *them*
And their attitude will ensure that it continues to be true for them
but what else can we do? I’ve posted pretty much my life-story of +ve cashflow investing here over the last months
in order to share, help, shoot the breeze, etc.
nothing else to say but, again, ‘they’re out there!’.
Was talking to a Q’lander yesterday who was telling me she knows *exactly* where the +ve deals are in that state, and how? because she’s been looking.
If you guys want to be spoon-fed deals, just post that you’re willing to pay a finder’s fee here and see what happens, or check out richmastery, et al
OK sorry I kinda missed the point of this post, sorry George.
I’ll get back to you…just want to check some figuresEcclesMember@ecclesJoin Date: 2003Post Count: 69
Cobar may not be a HIGH growth area but people still wish to live in these towns. I know you most likely randomly picked it out of the air but unless there is a large population decline then there is always room for rental chances especially if you offer something just a little better then the norm.
But if your capital growth is large and you are happy with it then I am happy for you but there is no way that I can afford that outlay.
I am looking at small country towns for my first investment, and IF I still lived in Geurie (an even smaller place then cobar with huge capital gains for such a small place) then I would be looking at Cobar.
You need to look, do your homework and make an informed judgement.
If the good die young then I will live foreverShootingBlanksMember@shootingblanksJoin Date: 2003Post Count: 3
I’m new to all this but this is what I think. It’s a lot easier to get positively geared property in Melbourne/Brisbane than it is in Sydney. You can drive 1 hours west/south/north of Sydney and the property prices are still over $500,000 (which is just ridiculous). You drive 1 hour away from Melbourne and you hit the country areas where in more likelihood you get positive cashflow. I have read Steve McKnight’s book. I am happy for him and that he has made it work. It is just not something which is easy to do in Sydney. The property prices here are ridiculously high. Hence, most people have to negatively gear. A mix of both wouldn’t hurt at all. That’s my 2cents worth. 
I agree, shootingblanks,
a mix, and +ve CF properties are a great way of building up your passive income so you can afford to buy a negatively geared one
in fact I just went off an looked at some properties on the net at mcgrath.com.au
HMMMM very interesting
$255K to BUY on bondi beach, studio apartment, looked lovely, absolute beachfront building on campbell parade? Huh?
Have prices gone down or something?
i thought it would be heaps more.
to rent, can’t quite figure out how much a place like that would rent for.
so a five percent return. Heinous amounts of fees though (strata, etc)
very interesting though
I think i will be watching this market for bargainswolfeyMember@wolfeyJoin Date: 2003Post Count: 1
Even in Perth, where house prices are lower than just about everwhere else, +ve geared property is not easy to find. The house price is lower but so is the rent.
I like the idea of Steve’s and will start digging in country WA.ClancyParticipant@clancyJoin Date: 2003Post Count: 9
Where is Cobar? Can someone give me the number for the local real estate agent so I can see if there are any properties worth considering.westanMember@westanJoin Date: 2002Post Count: 1,950
George you are right in some of the things you say but you are also miainformed about the true benifits of positive cash properties.
Firstly you may be right some areas, perhaps Cobar (i’ve never researched it or been there) will be a bad investment, even if they are cash positive. Just because a property is pos does not make it a winner.
But if you can combine cash positive and capital gains you can amass a huge property empire. my net worth 6 yrs ago was 25k my income was about 40k, today i have 25 cash positive properties and i should never have to work again (unless i stuff up somewhere).
You seem to think that cash positive properties can only exist in little outback towns. i bought 5 last week including one in a city of 100,000 people for 58k the rent is 170pw.
Another misunderstanding is that you give up capital growth by buying cash positive, most of the properties i have purchased have outperformed the best performing suburbs of Melb and Sydney. For example in Hamilton Vic i purchased 3 properties all for under 42k last year today they are all worth over 80k. (over 100% increase in 14 months). If you keep an eye out for areas on the improve you can get excellent returns.
Another advantages of positive cash properties is even people on low incomes can build large property portfolios. all of the properties i buy actually improve my servicability ratio with the bank i use, unlike negative geared properties where each one deteriates it. how many negative geared properties can someone on 45k afford ?
Finally just because a cities population has been in decline doesn’t mean it is going to disappear. there has been a shift back to regional and rural living in very recent times. many people recognise that life style is more important than trying to make a living in the rat race, these people are selling properties fetching record prices in Melb and Sydney and moving into better homes in less expensive areas.
westanbrewzaParticipant@brewzaJoin Date: 2003Post Count: 1
Where do we find these +ve c/f properties and who do we pay the finders fee to. I’m keen to find out more.
brewzaEcclesMember@ecclesJoin Date: 2003Post Count: 69
Where is Cobar? Can someone give me the number for the local real estate agent so I can see if there are any properties worth considering.
Cobar is north west of Dubbo NSW about 2hours it is a mining area (large transient population). It isn’t everybodies cup of tea, dry, hot and plonked in the middle of nowhere but really a lot of people rent there because of the mines.
02 68362402 Elders Real Estate
If the good die young then I will live foreverkendallMember@kendallJoin Date: 2003Post Count: 1
I think there’s another important point worth mentioning here. and that is if these +ve c/f properties qualify for finance. Generally speaking, the town needs a population of 10K plus Even then, the lending institution may restrict the LVR to a max of 75%
Eric………..jackadderMember@jackadderJoin Date: 2003Post Count: 16
Isn’t it kind of pointless to throw up all the negatives such as “you’ll never get finance” when we know people who have dozens or even hundreds of proerties with no problem??
With -ve properties, you pour in money until you can afford no more (unually 2-3). Then you have to SELL them to get your money back. So you have a profit (maybe) but no more investment. You have to start all over again by buying more properties.
Also, with a REAL average annual growth of only 3% over the last 20 years, there are a lot of -ve gearers who didn’t make any money at all.
The point of cashflow is not that you make a million dollars in the first 3 years, but that you slowly build an income stream which will last for life and let you retire if you wish.
I don’t believe all of Steve’s properties are in areas that have something wrong with them or where something is about to go wrong. And yes, there ARE people such as retirees who buy shares and live off the dividends rather than speculating on what might happen to the price.
Im not comparing postive cashflow properties to Sydney in general, I’m comparing them to decent properties in the eastern suburbs. Purchasing 100 studios in Bondi is not going to put you on the Rich 200 list for example. I purchased a property in Vaucluse in ’99 for $2,300,000 and had it rented for $2,000 a week. This time last year I was paid $4,970,000 for it. I didn’t go anywhere to invest the profit thats for sure.vluu27Member@vluu27Join Date: 2003Post Count: 59
Please teach me oh master. Holy cow. Thats profiting 2 mill plus in one deal.
My hat off to you.
there was a recent thread (or a couple of them) called finder’s fees, spotters fees, –
do a search,
if no luck start a new thread
all I remember is that there were people from this forum that were interested in passing on deals they’d found but couldn’t get
there are some ‘legit’ businesses doing the same kind of thing such as richmastery.co.nz for NZ deals
*eyes popping out on stalks*
when’s YOUR book coming out!! Wow!
Is your last name Packer or something?
Am i allowed to ask some questions – or even take you out to lunch!??? (really!)
Like was that your first home purchase?
Did you have a huge-paying job or other income streams to be able to borrow that much? (i.e. you must have been able to service the debt even if it was vacant?)
Either that or you bought with cash…the mind boggles –
Anyway, how did you make your money – business? Shares? real estate? Basically how did you get to that point?
or were you born there?
“Purchasing 100 studios in Bondi is not going to put you on the Rich 200 list for example.”
Well – it might not. (i take it you are on the rich list 200?)
But don’t you think it would be a good start? I mean, bondi beachfront is always going to hold it’s value surely? And at the ‘bottom of the market’ it’s always going to have a large rental base, no matter what happens to the economy – right?
more than you can say about top end millionaire homes…?
Interesting that you sold it now. What does that say about what you think might have happened if you’d held on to it?
Yeah and if one was in the realm of buying 100 bondi beach studios, surely it would make sense to buy blocks?
anyway – it’s all very interesting!