All Topics / Creative Investing / Wanted Opinions – Buy & Hold Strategy, -ve Gearing Vs +ve Cashflow/Gearing

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of loveinvestingloveinvesting
    Join Date: 2007
    Post Count: 11

    Hi All,

    Just wanted some opinions/strategies.

    I have purchased Steve’s Masterclass DVDs and watched through them and found them very interesting and picked up some great tips, but am a little lost/confused (not with the videos, but at our strat.).

    My wife and I have several “Buy & Hold” IPs all under our names (mistake one). It is negatively geared (mistake two) and have them for several years now. Most of them have small capital gains on it, but after CGT and selling cost, might not be too much.

    I wondered if it better for us let ALL or SOME of my properties go (let the water out of the dam – as Steve might have put it) and start over again with some +ve gear / +ve cashflow properties under a discretionary trust and make better use of our taxes and make our income go further. We have reached a point now our income (salaries) has peak and no longer about to substain any further purchases according to the Bank. What are our options? Hold and do nothing? Sell and re-start?

    Appreciate your opinion.

    Thanks in advance.


    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    Its hard to say.

    Probably the markets have changed signifcantly since those materials were produced. Its much hard to find cashflow positive properties now and the ones you can find may not be worth purchasing.
    Why don't you start looking at what you have, checking out the growth prospects on the area, seeing if you can add value, increase rents etc. If you sell now, then you may incur a loss, and then the area could take off!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

    Profile photo of Tim HartTim Hart
    Join Date: 2007
    Post Count: 4

    Hello loveinvesting

    Have you considered wrapping your properties to turn them into +ve cashflow. This will also help you achieve a great sale price aswell. If you would like to know more about exploring this option then drop me an e-mail at: tim AT russet dot com dot au.


    Profile photo of loveinvestingloveinvesting
    Join Date: 2007
    Post Count: 11


    Thanks for the opinion. Yes, we are exploring the option of adding values to the props and increase the rent given we have really raise the rent for few years.

    We thought about adding a deck to a villa we have to expand the living area and the quote I got so far is around $7k. The backyard is sloppy and not usable. I think this allows the tennant to have an area for a bar-b or a deck to relax. What do u think?


    Haven't really investigated into wrapping and yes I certainly listen to what you have to say.



    Profile photo of gafamagafama
    Join Date: 2004
    Post Count: 118

    Have been in the same position myself.  Sometimes it's just a matter of sitting it out.  Depending on where the properties are, there's a thought that the market is about to pick up esp in view of the fact that up to 30th June there are huge advantages to making large super conts.   Some of the banks economists are predicting that the market will see an upswing of purchasing after 1st July from super fund monies – and I'm inclined to agree.

    As well, rents are on the rise – and have been for a while.  There's not a lot around so you might find that your cf position changes too.

    The other thing to bear in mind – as Terry quite rightly points out – is that cf+ properties are getting harder and harder to find so if you were to sell, you might find it hard to buy anything back that gives you +cf anyway.

    I find that the path to investing isn't a graduated slope but rather a path with plateaus every now again while the effects of your investing need to be adjusted against you personal cashflow (hope that makes sense). Perhaps you just need to ride it out for a little while and revisit in 6 months time.

    My thoughts – for what they're worth!


    Profile photo of loveinvestingloveinvesting
    Join Date: 2007
    Post Count: 11

    Hi Megan,

    Agreed with you. We've holding out for few years now and really never question the strategies as cap growth is there. I also think with rental yield picking up, we should see some price movement with it. At the moment, we don't have any CF issues, funding from rent, our salaries and doing the old 221D helps a lot.

    I only question that if we were to achieve +ve CF, would we need to sell our -vely geared prop and start again. Like you and Terry said, +ve CF props is harder to come by these days.

    Thanks again for the feedback. Much appreciated.


    Profile photo of rudolphrudolph
    Join Date: 2003
    Post Count: 23

    after reading your last comment I am concerned that you think you need to sell to invest. Have you investigated no doc loans. Some lenders will give these out with up tp 70% lend if you have an ABN ( these can be obtained over the net with no delay) Some lenders  require you to have this number for several months but others have no time limit. As long as you are comfortable with the repayment level.  Also remember that most lenders will top up your loan ( for a small fee) to take advantage in the increased equity you you hae gained which is great for the deposit of your next purchase.

    Dont be put off by what the major banks say if you can find a good deal then you will find the money if you ask the right question.

    Enjoy the journey


    Profile photo of Richard TaylorRichard Taylor
    Join Date: 2003
    Post Count: 12,024

    Remember each lender has different serviceability criteria and what one Bank says you can borrow another may say you can borrow double that.

    Nodoc loans are available upto 80 or even 85% these days without declaration of any income and Lodoc loans to 95% LVR.

    There are so many ways to work out borrowing capacity it is not funny these days. Lenders take between 70% and 100% of rent and some sensitise the borrowing rate and some take the actual charged rate into account. Some apply their own living allowance scale and some adopt the Henderson Poverty chart. Really horses for course and a good MB should be able to work through this for you.

    Richard Taylor | Australia's leading private lender

    Profile photo of chumpchump
    Join Date: 2005
    Post Count: 21

    What is your plan for the properties?
    Do you have a number written down or in your head about the type of yield you want and the capital appreciation you want out of the properties?  If not maybe start there.
    Then if they are not meeting your desired plan I would consider other optoins eg selling.  Maybe not all of them but the one to at least free up some equity or cash to go and purchase other properties or pay down debt on the existing ones.

    Yes +ve cashflow is hard to find but maybe you could change your strategy to build some cash and then purcahse some properties with little or no debt in a higer growth area.


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