HI All
I am thinking about buying another IP. And I am looking to get some ideas from other investors in this forum.My current situation.
I currently have 3 IP which are cash flow positive at the moment.My two strategies.
1. I was thinking of buying property on the outside of Sydney (penrith)and converting rooms or add value and sell to use the profit to pay down large chunks of cash onto my other IPs.
2. I currently found 2 more cash flow properties (country) should I continue with my current successful strategy?
What I am finding at the moment is that I am not getting ahead fast enough with cash flow properties.
Ideas comments welcome !
Cheers
G0bg0biin wrote:2. I currently found 2 more cash flow properties (country) should I continue with my current successful strategy?Hi G0b – if it's succesful so far, why not just stick with it? Are you seeing a lack of growth with these properties?
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
If you want growth you might want to consider areas like Gladstone right now. Cash flow is great but if you have room to expand, why not work on getting some return on your investment with a slight change of direction?
Hi Jamie M
Yes Capital growth has not been to bad actually. But to relise this value I need to sell and I dont really want to sell at this stage.Hi Tony
I had a look on RE.com at some property for Gladstone. Maybe I am looking in the wrong area. Do you have a link of a property to start me off.
Cheers“Hi Tony
I had a look on RE.com at some property for Gladstone. Maybe I am looking in the wrong area. Do you have a link of a property to start me off. Cheers”Hi G0b yes I have access to residex property search and can find some available in Gladstone, whats your email address and I will send you some info, also, whats your price range? Maybe just shoot me an email address below.
g0biin wrote:Yes Capital growth has not been to bad actually. But to relise this value I need to sell and I dont really want to sell at this stage.Why would you have to sell? Why not get a valuation and refinance on the new value?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi jacm
Use the value to purchase more ?Hi G0blin if you have equity (the difference between the value of a property and the mortgage owing) you dont have to sell to access the equity. In fact it will cost you more to sell if its an investment property with CGTax etc. You can simply top-up or refinance to access the equity for cash to buy another property. I have a video on my website about this.
The problem with most cash flow positive properties is two fold. First in order to purchase a cash flow property where the rents exceed the outgoings the amount of Capital growth is often limited because of the location. The second issue if it is cash flow positive is that your invested funds have to work harder because you pay more tax when compared with a city property that is negatively geared and you often have better non cash depreciation benefits in the higher valued negatively geared appreciating assets.
Accessing your equity in a cash flow positive property often means it is no loger cash flow positive unless the next asset your purchasing is also cash flow positive as well and so again your sacrifice growth in your portfolio because you pay more tax as well as not having as much capital growth.
The other option is if you build up 7 negatively geared properties and hold them over two property cycles (a cycle being 7-10 years) your capital growth and your rental incomes should allow you to live off your equity comfortably without selling anything. The key to this strategy rather than selling you take a non deductable L.O.C. of say $50,000 for property 1 in the first year, $52,000 from property 2 in the second year and so on. At the end of 7 years you go back to property 1 and start again another 7 years of capital growth has occurred.
The interest you will pay currently around 7.5% per annum on the nondeductable debt is much lower than the individual tax rate of around 30%
When you die and leave your children your properties and non deductable debt it will still only be half geared. They then have the choice of selling 1 or 2, pay some capital gain and the rest pay off the non deductable debt or if they have a comfortable income use the rents to pay off the non deductable debt if they so desire or… continue what you startedRegards NR
When you die and leave your children your properties and non deductable debt it will still only be half geared. They then have the choice of selling 1 or 2, pay some capital gain and the rest pay off the non deductable debt or if they have a comfortable income use the rents to pay off the non deductable debt if they so desire or… continue what you started
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