My point of view is that you have to define your exit strategy and work backwards. What do you want to achieve and then look at how to do it. If you have a mindset that one thing is better than another then it probably makes it a bit hard to have enough creativity to get out of the rate race. People somehow think that cashflow and capital growth are mutually exclusive. This is not the case especially in todays market. I thinks Steves first book was largely misinterpreted.
The are a lot of detractors of the idea of cash flow investing but ask yourself. If I lost my job tomorrow who will pay your investment loans. If a plan relies on you having to continue to work until to pay off your portfolio then you just may as well buy all your properties inside you super fund and forget about it. Cash flow is oxygen. I think part of the answer is that building a cash positive or 100% self supporting portfolio is about twice as hard as doing it the other way. That is the only difference. This is the main reason people don't do it. Basically, you have to learn twice as much and work twice as hard. That is the only trick. However, at the end of the process you will either have the skills of about the top 20% of investors or a team with those skills.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I have found that country areas provide the best opportunities for cash flow positive, however you do trade of capital growth for it, which hasnt been such a bad idea for late.
Shame I have to sell mine.
Thanks Don. The way I thought is that first i would look at the outcome desired (i.e. positive cash flow), then look at the strategy and then last the property itself. However, where I am getting stuck is the strategy to achieve the outcome with the amount of funds on hand. Any thoughts?
The properties should bring in atleast $2,000 a week which may mean a high number of properties to replace my job income. That is how I can currently see me achieving the desired outcome of leaving my job. The areas where the properties are to be picked would be selected based on population growth expectations, transport, infrastructure, mining, etc.
I would be careful about buying properties that might return 6% in low growth areas. These deals may sound great now but when rates move up to 7% as they will in time these deals will not look to attractive. In Australia unless you are in the mining areas.it is difficult to get high returns. You can get much higher returns in the United States but it is important that you do you research carefully.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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Is Don is good!
You need to begin with the end in mind. I hold 8 +CF properties right now and the plan is to sell them if and when the yield drops from the current 9-10% to less than 7%.
Nigel is also right. I don’t think a 6% return is really going to be positive cashlow in the medium to long term.
Best of luck,
Dwight
Dwight
Cashflow Positive Investor
Is Don is good!
You need to begin with the end in mind. I hold 8 +CF properties right now and the plan is to sell them if and when the yield drops from the current 9-10% to less than 7%.
Nigel is also right. I don’t think a 6% return is really going to be positive cashlow in the medium to long term.
Best of luck,
Dwight
If you sell out of the assets at sub 7% yields, what would your plan be from there?
I’d say the opposite re; 6% yields, unlikely to be CF+ in the short term, but long term growth will make the investment CF+.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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