My investment strategy

Personally i would never buy a property that is loosing money from day 1 and rely on the fact that it might grow in value as i prefer some guarantee on return.

By following your strategy with each new purchase you are reducing your borrowing capacity accordingly and this will of course limit your wealth accumullation.

Also unless i own the whole block i personally don't buy property that has a body corporarate.

Cheers

Yours in Finance

It sound like a profitable plan for the banker, agent, solicitor, property manager, even the tenants, but not you.

However, if you have a superior knowledge or even a crystal ball in finding captial growth, then it might be a different story.

I maybe wrong

Let me address some of your concerns

A) Supply and demand generally determines growth. Although people say "it is the land that appreciates in value" this is not always true. Generally land grows in value as demand increases and the government is not releasing new land. But livable units also increase in value despite their small land ownership if people are in demand for units.

So instead of thinking "land goes up in value" think of things in terms of supply and demand.

Older units will have less depreciation available to you (building depreciation will probably be all dried up) and remember that buying a unit means you are forgoing almost all control over how you manage your costs. That becomes an issue of the body corporate and you only get your vote. If home owners want to spend money on something that won't be good for you as an investor but they outnumber you then you're going to have issues.

C) Negative gearing is easy, especially with units. You have increased costs due to strata costs. You need to work out if the capital gains will offset the negative cash flow enough for it to be worth it.

D) Here is an article I wrote that may help you if you decide to use this strategy – 7 things to check before buying an investment unit – but truthfully if I was you I would look into this strategy in more detail and see if it will actually bank you a profit and if anyone has become rich using this strategy. Sounds to me like you may acting out of fear a little bit and want to secure housing close to the CBD as you know the area and think it is safe.

Become a smarter investor through education and the world will open up to you.

Sent you an email Richard so I can try and fix these inaccuracies.

But yes, always seek professional advice before proceeding with any investment deal.