- shangrila00Member@shangrila00Join Date: 2009Post Count: 65
For all those seasoned investors out there – what would be the first thing that would come to mind when speaking of CF neutral IPs? It'll cost nothing to hold and you have a property on the side, but if unexpected costs arise? Or interest rates go up? And it's still money being tied up somewhere.
Appreciate any input!
Thanks!Gazza21Participant@gazza21Join Date: 2012Post Count: 54
If you’re not making capital gains there is not much point being negative or neutrally geared. If you are making capital gains and they outweigh any unforeseen expenses that may arise then that’s the advantage. There’s no sense in investing in something that is standing still..shangrila00Member@shangrila00Join Date: 2009Post Count: 65
The IP I have in mind is in capital city metro area, with sales history since 2003 indicating there's been a 50-60% increase in values since. So they've doubled for a decade. That's not to say it'll happen again in the next 10 years, but it's a comforting thought, at least, that the area's been growing.DerekMember@derekJoin Date: 2004Post Count: 3,544
Nothing wrong with neutral gearing if the property goes up in value.
Rental returns may be able to increased or you can pay down debt (if there is no non-deductible debt on your balance sheet) both of which will increase your rental returns.