Looking for some advice on how to change from having two negatively geared investment properties to positively geared properties. Does it mean that we should sell the properties and start again? Any advice greatly appreciated.
Hi,
I depends on why you want to change them to positive geared. Is it a manageable loss each week? Could you do something easy to increase the rent? Could you claim more tax each week rather than wait for the end of the financial year?
We have had negative gearing all our married life (19 years). Sometimes it has been hard, but rents DO go up and payments don’t, so if you can hang in there, I’d recommend you don’t sell. Of course, if you really are in trouble, maybe look at selling one.
We have sold IPs when it has meant a change of lifestyle OR sell an IP. Example, to complete our renovation on our house and repay some private debt, I either went back to work with three small children or we sold an IP. We sold an IP because our main aim in life is a happy family, not to accumulate wealth at the expense of family life.
We each have to make that decision as to which way we want to go. There is no right or wrong, only the way that is right for your particular circumstance.
I suppose my point is, don’t be swayed into believing you have to have positive geared properties to be a success at investing. It is one of many paths to success. If that is the reason you are considering selling both your negative geared IPs, I would say don’t do it. If you hold them long enough without causing you pain, they will be positive one day.
Hope this helps.
Regards, Wylie.
Thanks Wylie. It is not that we have to sell but we are also not getting any income from them either and wonder if it would be better to sell one when the capital gains will only be minimal as opposed to keeping the property. We could then look at positively gearing the other property.
Got to agree with Wylie.
If you have negatively geared property then you mustn’t have bought them for the income, instead you bought them for the capital growth. So why are you now using just income as the criteria for whether you keep them, that is not what the investment was designed for, right?
Property is a great generator of capital growth, but not an asset class that produces good income, that asset class is called “shares”.
Don’t sell unless you can’t sustain the loss, if you sell you will be giving up the capital grow on that asset forever, and capital growth is what makes you rich, not rental income.
Originally posted by Wylie:I suppose my point is, don’t be swayed into believing you have to have positive geared properties to be a success at investing. It is one of many paths to success. If that is the reason you are considering selling both your negative geared IPs, I would say don’t do it. If you hold them long enough without causing you pain, they will be positive one day.
Wylie…
propertyinvesting.com is the home of positive cashflow real estate isn’t it??? Why are you posting advice towards negative gearing on this site?[weird]
Mossie…
It’s hard to know exactly what you should or shouldn’t do with the little amount of info you gave us on your IP’s.
Can I ask how much you are loosing on each property every month? What are your investing goals? etc…Daniel
Mossie – You ask two questions:
1. Changing -ve to +ve geared IPs. In your position, it doesn’t seem like they even need to be +ve, maybe just neutral or less -ve? Search the site here for ways to incr. rental, depreciation, etc. Then look for ways to decrease your loan costs, maybe refinance.
2. Should you sell and start again. Take a look around for a good +ve cashflow prop first. Good luck with that one – every man and his dog is looking right now. Then decide how you will purchase it. Don’t sell and then start again.
The question I’d be asking is this, they may be negatively geared, but how are/will/can they actually perform? Can I maximise my investments or utilise my investing capital in a better way?
Hope it helps
Hi DannyBoi, I post here because I can. Surely you have noticed that not everybody has said SELL, SELL, SELL because it is negatively geared.
We have been reasonably successful investors with all but one of our properties over 27 years being negatively geared. We are not rich but we are comfortable and our retirement is assured (apart from world events which we cannot control).
I am simply trying to advise someone else not to rush in and sell properties just because they are currently negatively geared. Time ensures that one day they will turn positive as long as you can wear the loss and as long as the capital gain makes up for the loss.
Apart from the one house we bought which was positive from day one, each time we have bought we have been negatively geared, and without fail, time ensures they turn positive. We just have to be able to afford to wait.
Quite apart from that, what a boring forum this would be if everyone was just a yes man (or woman). For goodness sake, give everyone the chance to read differing opinions.
Regards Wylie.
Many thanks to you all for your good and differing opinions.
Hi Mossie
Another strategy might be to use any extra equity you may have in the properties to invest in low risk high return (or at least higher than the interest you are currently are paying) investment(s). That should reduce the amount you are outlaying each month, at least.
***Edited***
Hi Mum
Sorry are you authorised to offer this investment advice?
Just curious.Cheers Richard
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
Hi Richard.
What is the difference between advice and information?
No, I do not have a “Proper Authority” to give advice but I didn’t think I was advising, only giving information gleaned from people who do this sort of thing.
Correct me if I am wrong.
Mossie,
I don’t have advisory qualifications, however I agree with other postings suggesting you hang on to your current IP’s. Maybe start by sourcing cf+ or +ive geared property and building on your portfolio – first reducing net cash required then moving into +ive over time. Cash +ive properties are out there. A lot will depend on your income/financial situation also.best of luck
Steve BHi Mossie,
It’s hard to give advise or information when you don’t have a full uderstanding of where you are right now and where you want to be, to determine the appropriate vehicle to do the job for you.. Ask yourself these questions and establish the answers if you can and the vehicle part is easy..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
