All Topics / General Property / Postive geared property? Fact or fallacy in todays market

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  • Profile photo of jlvenagjlvenag
    Member
    @jlvenag
    Join Date: 2007
    Post Count: 2

    Hello,

    My investing background has been limited to the stock market and more recently businesses. I've always known that any serious strategy to become wealthy involves owning real estate. But I've always pushed it aside because I've never really understood it. But I've decided that this has to change. I've started reading McKnights "0 to 150 Properties in 3.5 Years" which is how I found this site.

    At the time when McKnight would have been buying his properties you could expect to pay 40K-60K for a single family home. Which would make positive gearing a viable strategy. Is it still possible though in todays overpriced market? Or has it become fantasy like unicorns and elves?

    I would be interested to hear if anyone today is still using this strategy successfully.

    Cheers
    Jason

    Profile photo of Luke.SLuke.S
    Member
    @luke.s
    Join Date: 2006
    Post Count: 23

    Hi Jason,

    Pos Gearing is still out there, It can be done.

    It's a lot harder to find outright though…

    You have to be tricky by buying and subdividing off part of the land to bring your costs down or adding enough value to bring the rents up.

    OR looking outside of the suburbs… Get outa the big city.

    I recently bought a house that gives a 14.5% pos geared return in the country.

    Looking at another that gives 11.5% return.

    Lots of renters, lots of employment in the country areas as well.

    I actually don't own any city property and when people say it's the only way to get capital growth i just smile and think to myself about the 200-400% growth returns over the last 7 years i have had in the country towns. Along with + gearing rental returns.

    Keep looking mate, they sure are out there.

    Cheers, Luke.

    Profile photo of propertypowerpropertypower
    Member
    @propertypower
    Join Date: 2006
    Post Count: 312

    G'day Jason
    Couple of properties I own are returning 10% yield. Positive cash flow properties are there….but not that easy to find. You have to look into some regional towns or as Luke said, be creative. Strata title, subdivide, renovate, corporate lease, lease fully furnished, student lease, short term accommodation, etc. are some ways of improving the cash flow. All these things obviously require more time commitment.
    Hope this helps and good luck

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    It is still possible to pick up houses in the Greater Sydney Basin which will return 6% as is, with a little work that will increase.

    Profile photo of jlvenagjlvenag
    Member
    @jlvenag
    Join Date: 2007
    Post Count: 2

    Thanks for the replies and it's great to know that it is still possible today. And I'm not scared of a bit of hard work and some creativity when it pays off. That's why I've enjoyed getting into business so much. They have plenty of opportunities for both :-)

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

    I have  a client who purchased a place for $29,000 and a year later is getting $700 pw rent. Not a bad yield.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Similar to Terry i purchased a place for $32,000 Nov 2007 (Yes i now what you are going to say) and now get $388 / week on a fixed 10 year lease with lease renewals every 3 years.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of shaun0011shaun0011
    Member
    @shaun0011
    Join Date: 2006
    Post Count: 11

    I will take ten of those deals Richard

    Profile photo of propertypowerpropertypower
    Member
    @propertypower
    Join Date: 2006
    Post Count: 312

    Wow, Terry and Richard – those are amazing yields.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Shaun

    You can get in the queue behind me.

    PP you are right they are very good yields especially when you do the transaction in your SMSF so only pay 15% tax on the profit.

    They are out there it is just a matter of looking and looking.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

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