- BrownParticipant@brownJoin Date: 2004Post Count: 4
I live in Queensland and after having read Steve’s book, i am trying to apply his rules to positive gearing however i have found it very difficult to find an area with such returns. The areas that i thought to have good returns don’t even come close to standing up to Steve’s figures. Can you give me an idea where to look.Ambo72_2Participant@ambo72_2Join Date: 2004Post Count: 102
If I recall in Steves second book, the 11 second solution doesn’t really cut it anymore and is just a guide. It is more how you invest not where – problem + solution = profit.
IangeoMember@geoJoin Date: 2003Post Count: 1,194
You’ll have to go out further and look into country towns
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 howyackMember@yackJoin Date: 2003Post Count: 1,206
Geo – And why would you want to do that?geoMember@geoJoin Date: 2003Post Count: 1,194
If he really wanted +CF that met the 11 second guide, most of the properties that meet this criteria are in country towns – approx. 3 hours out of the CBD.
Don’t get me wrong – you can also create a deal in the CBD or close to it that meets the 11 sec. guide – but this usually means that you have to put down a large deposit or have most of your equity against the investment.
But Ian’s view is also correct – that nowadays, it’s how you create the deal and solve the problem.
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
I think Yack’s question was broader than just where to look. I think he was questioning the wisdom of looking further afield to chase positive cash flow. He’s questioning the methodology, not its execution.
I too would not be looking further afield at the moment. I think the ripple effect that rural housing has experienced has passed. Spann describes it like dropping a pebble in a pond. City prices go up so people look further afield to get the yield they want. Of course, the equity growth follows this as people chase these types of house. But once the ripple has passed its time to look back to the centre for the next pebble.
I’d be sticking close to big city centres and waiting for yields to increase and then buy on the lead indicator of the pending market growth. Then let the CG return the big bucks and let the rents catch up once the market softens again.
But hey, its horses for courses, and if you want to make 30 bucks on a $20K investment, don’t let me talk you outta it.
Michael.Supa FreakMember@supa-freakJoin Date: 2004Post Count: 101
There are many methods you can employ to generate a +ive cashflow. We just bought a unit 5 km out of the city of Melbourne and we are making a positive cahflow by wrapping it. So it’s not WHERE it’s HOW [angel]
Helps to have a client who earns a sh*t load of money…BrownParticipant@brownJoin Date: 2004Post Count: 4
Thanks everyone for your input i realise now you can’t just buy positive property anymore you must make them. P.S I am FEMALE….
You can still buy positive property, and don’t have to wrap them to get positive returns. Its just you can’t pick them up as readily as you used to be able to. Be careful though, even Steve is now saying be cautious about +ve CF in the current market.
Michael.crjParticipant@crjJoin Date: 2004Post Count: 618
I’ve seen a number of properties recently where the returns are cf+. The issue is whether the towns they are in are good risks, prices in many of the smaller towns have dropped, some of the smaller towns based on agricultural industries in NSW particularly in the north west where irrigation farming has been a driver of employment are going to have to adjust to restricted water availability, in many small towns managing agents don’t exist.
Look for things like demand from gov’t dep’ts for longterm leases eg police force etc which might minimise vacancy risk/tenant selection riskinezMember@inezJoin Date: 2004Post Count: 32
Michael, what do we have to be careful of when buying +ve CF properties at this time? Where can I read what Steve said? Thanks very much.
Unfortunately, I am breaking the golden rule of posting and that is, quoting another post I read on this forum (and not actually referencing as I don’t know where I read it [biggrin]). I read on the forum somewhere that Steve’s second book was written to allow for the fact that the market economics today have changed since he wrote his first book. A lot of Steve’s gains in “from 0 to 100” were maid from capital gain, even though he was buying for +ve CF. The warning is that you can not necessarily aim to replicate Steve’s achievements in today’s market. If you buy for +ve CF, then that may be all you get and potentially run the risk of -ve CG more than offsetting the cash flow. ie. you go backwards. In today’s market you need to consider the potential for -ve CG in any purchase decision whether you’re buying for cash flow or not. eg. Why would you invest $10K to make $10 a week on a property losing $10K pa in value? Sure you’re CF +ve, but in a years time you’re net worth has gone down by $9.5K. This is a really simple example with no real detail applied, just to illustrate the risk in today’s market.
IMHO, you always have to factor CG in to your purchase decisions. I think CF is all about servicibility, and you make your money on CG. You won’t get rich on 10 bucks a week on your $10K.