Hi there,
Looking at gurus such as Margaret Lomas or Michael Yardney, or anyone else who claims to have a zillion properties in the buy and hold strategy…
What is the end goal on this? If you never sell and keep using equity/capital to simply buy more properties then you're only rich on paper.
If they do sell then there's a lot of capital gains to pay.
if they take equity out and use it as a salary then there's interest to pay and the risk that the property goes down in value later.
astroboy71
Email MeThe end goal is to make money selling books and doing seminars.
While it is true you can leverage the equity to use as a salary (and as you say, pay interest accordingly), yes you can do that, or if not comfortable with that approach, you could instead aim to live off the rental income. The more property you own, the bigger the rental roll. Buy carefully and your portfolio will have plenty of cashflow positive property and this strategy will work just fine.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
If there was an award for the best answer to a question, paullie would have it in the bag
Paullie wrote:The end goal is to make money selling books and doing seminars.and don't forget property funds where you can really score big time with upfront fees.
Almost forgot… overseas RE tours. Luv that perk
And with all that dosh you make you can buy land on the moon… only $29.99/acre. Think what it'll be worth in a few years.
Astro
Sorry i have to disagree.
I certainly have always adopted a buy and hold strategy but also believe in paying down debt like it is going out of fashion so i can quite comfortably live off rental income. Of course i understand when starting out or indeed if you have non deductible debt this is not a financial wise or accepted method but for me it worked very well.
My lvr sits at just under 13% of an $18.5M property portfolio and we will probably discharge the balance of the loans within the next 24 months of less.
I am looking to buy again inter state for a change and have 3 children who can carry on the business when i call a day for the second and final time.
No i don't sell books, organise property funds or do Tv appearances. Everyone to their own but that is just not me.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I would go with Richard's strategy. I only have a very small property portfolio but have no debts on any of the properties.
whathouse wrote:I would go with Richard's strategy. I only have a very small property portfolio but have no debts on any of the properties.Why???
With some "good" debt you could have a very large portfolio.
A large portfolio will grow faster than a small portfolio. I'm not against paying down debt but when you are starting out you need to leverage in order to grow.
Reasons to pay off debt would include:
If you find you don't sleep so well at night due to being slightly uncomfortable with your debt level, or if you spend all your days worrying about it, then perhaps your life would be happier if the debt level were a bit lower.
If there is some money left from your rental roll after paying bills and the mortgage, then this money can be used towards your living costs. If it is a lot of money then one could say you are able to retire. Seeing as this is the main objective everyone has, then paying down some of the debt is not a silly idea.
Property Investing is something that requires you to be in it for a good few years before you can start to enjoy the fruits of your efforts. No need for you to have no life or be stressed out of your mind for years in the meantime.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hey Richard,
I want to learn more about your approach, this is definetly a path I want to follow but I fear a lack of patience on my part is making think and do the wrong thing. I make a very healthy income and feel like I am stagnant……
Hi Ben
Trouble is you need a combination of equity or cash deposit and serviceabllity.
Market has certainly changed over the last few years finance wise. Remember it was less than 48 months ago you could borrow 105% of the purchase price.
Whilst i am not saying this was a good thing i am merely pointing out that if you had the income (whether it be salary or rent) you didn’t much in the way of saving.
I am currently working on a 100% product with a couple of lenders so will keep you informed if we get it past credit.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Miaow Freckle,
Why don't you bit the hand that funds this website……..
People write books because they think they have something to say that is of value to others, and I think many people got started because of some of the "books and seminars" that are available.
Personally I'm getting a bit tired of hearing the same (unsubtle) Steve bashing out of you Freckle. Steve McKnight is running market updates in every state, why don't you put your money where you mouth is and head along. Then you can Freckle Heckle all you like, you might even learn something and understand why people on this site respect him and the knowledge he shares.
I like to do people puzzles, and I like to look at motivation. Why would someone do something, why would they go to a foreign country and spend all their money there? Why would they encourage others to do this, what do they have to gain.
I've been looking at Steve's actions (and many other investment 'gurus') for awhile now, and looking at motivation. And I'm speculating here, I think Steve went to America and found that some of it was a dump. I think he got there and found people living in squalor that you wouldn't find in clean and shiny Oz. Steve is a Christian. So I speculate that he has seen an opportunity to not only made a bundle of cash, but to improve peoples lives at the same time. And really if he is investing for other people he should profit off that, it's a reasonable expectation.
Go to the market update (pay up, it's stupidly cheap) then tell me all about Steve and how he's doing it wrong.
You'd do all the research in the world on other stuff, do it on Steve too.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHi Richard,
Thanks for your comments (and everybody else's!).
To start a portfolio, at some stage you would have had to have ramped up with little or no equity and THEN made the decision at some point to pay them down?
Otherwise, how could you pay down AND save for further deposits to expand the portfolio?
I can see how as you pay them down your cashflow increases and it would accelerate the reduction of your LVR, but there must be a point when you decided to do that; that you had enough property?
astroboy71
Email Me
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