Investment property

[quickstraw]

. Be careful though, if it's a true investment property you're not really looking for capital gains.

Who told you this rubbish?

 

[Yellow Feathers]

Who told you this rubbish?

Rubbish?

Investing for capital gains is speculation. You're hoping that your property goes up- this isn't always going to be the case. If the market drops you're screwed.

Invest for cash flow. Use the equity built up over time to invest in more property. This is how you become wealthy- not by flipping property. Have you seen what happened in the US? Someone investing for capital gains would be ruined.

Invest for cash flow. If your property does go up in value? Great. It's a BONUS. Use the equity for more property. Or, depending on the situation, you COULD sell for capital gains. This is an option and shouldn't from the basis of your entire investment strategy.

Capital gains investing isn't investing. It's speculation. Investing is holding onto something for the long term, just ask Warren Buffett.

The value of a property is subjective. It's someones opinion on what it's worth. The real value of a property is what someone will actually give you for it on the day. You know what is a tangible value of a property? The guaranteed rent coming in every week. $500 in your pocket is $500 in your pocket, not some make believe number that the property valuer gives you.

 

[quickstraw]

Rubbish?

Uhuh, rubbish

Investing for capital gains is speculation.

Investing for capital gains is also investing, and hence the term "investment property".

You're hoping that your property goes up- this isn't always going to be the case. If the market drops you're screwed.

What makes you think if someone loses money then it was investment? You have heard the term "poor investment" right?

Invest for cash flow. Use the equity built up over time to invest in more property. This is how you become wealthy- not by flipping property. Have you seen what happened in the US? Someone investing for capital gains would be ruined.

I'm gobsmacked by your arrogance and naivety.

1. You're standing on a pedestal as some sort of authority claiming investing for CG is a bad strategy. That's arrogant and naive.
2. You imply that there are only 2 options; investing for cashflow or flipping property. You know a lot of people invest for CG and don't flip, right? Again shows your naivety in not having a broad understanding of property investing, and shows your arrogance by telling other people how it works when you're a novice yourself.

Invest for cash flow. If your property does go up in value? Great. It's a BONUS. Use the equity for more property. Or, depending on the situation, you COULD sell for capital gains. This is an option and shouldn't from the basis of your entire investment strategy.

Ever heard the term "there's more than one way to skin a cat"? You're strategy is a legitimate strategy, except you're tunnel visioned about it and don't seem to be able to accept there's a heap of other strategies that are just as, if not more workable.

Capital gains investing isn't investing. It's speculation. Investing is holding onto something for the long term, just ask Warren Buffett.

You sound like you're been brain washed by Nathan Birch. An (allegedly) successful guy but so young and naive he shouts down every opposing strategy.

He's strategy is fine but guys like him are dangerous because they're so tunnel visioned. That guy has rubbed a lot of fellow professionals up the wrong for no other reason than being an arrogant know-all dick head.

The value of a property is subjective. It's someones opinion on what it's worth. The real value of a property is what someone will actually give you for it on the day. You know what is a tangible value of a property? The guaranteed rent coming in every week. $500 in your pocket is $500 in your pocket, not some make believe number that the property valuer gives you.

Don't lecture me son. Been a successful property investor for a long time. Telling a successful person they have their strategy wrong just makes you look like a light-weight.

 

[Yellow Feathers]

Very aggressive?

I bet you probably sell "dream packages" to young and naive people... Your blurting out the same industry salesman crap that is there to rope people in.

You don't fool me.

Besides, there's nothing wrong with the way I like to invest. It performs in any market and builds wealth. I'm not simply hoping prices go up.

 

[quickstraw]

Very aggressive?

I have little time for people who pass themselves off as subject authorities when they really don't know much at all.

I bet you probably sell "dream packages" to young and naive people... Your blurting out the same industry salesman crap that is there to rope people in.

I'm not the one spruiking regurgitated content from a brainwash seminar on the internet and being naive enough to believe it's the only strategy.

Besides, there's nothing wrong with the way I like to invest.

I don't recall saying there was. The problem I have is you're tried to say everyone else's strategy is foolish.

Let me repeat that: You're the one bagging others' strategies.

You come across like a "my strategy is right so anyone who prefers a different strategy is against me so the more I shout that they're wrong, the more wrong they actually are".

Straight out of that massive floglodite Nathan Birch's play book.

I'm not simply hoping prices go up.

If you don't have the required understanding of property markets and cycles then no wonder you think it's a game of hope. Some of have a bit of ability so don't have to gallivant across the country side buying $20 per week positively geared properties.

You need to get the **** down from that pedestal you have placed yourself on because all you seem to be is a brainwashed follower unable to understand other strategies.

 

[Power Raid]

yep good advice..goal is to get it positively geared..

i have one but i rushed into it got it at the wrong time, payed too much, not a great area and it has made no capital growth...but it is now positively geared someone is paying it off for me. I will hold onto it for ten years and try not to think about it.

even though i fkd up with my first one i wont make the same mistakes next time..i am looking at getting another.

better still is positive cash flow but remain in the negative gearing category

 

[freshazimiz]

Hi there guys first time posting in here, read the threads and there are some very knowledgeable people in here with some very good discussions.

Just like to ask some investors in here with your previous experience with your first property you've invested in, price wise, type of property, your goals with it and what step you guys took in purchasing your next investment property.

 

[Power Raid]

Hi there guys first time posting in here, read the threads and there are some very knowledgeable people in here with some very good discussions.

Just like to ask some investors in here with your previous experience with your first property you've invested in, price wise, type of property, your goals with it and what step you guys took in purchasing your next investment property.

back in the 80s I bought a cheap apartment in semaphore (Adelaide) for $27k (wages were much lower then so the mortgage was still a burden).

For me buying it was really my parents idea who believed 20% interest rates wouldn't last forever and thus property prices would increase as the rates decreased. It was also a form of forced savings.


I don't have a big property portfolio in Oz but it is useful to keep in a cash flow positive position on the investments but still be able to negative gear (depreciation etc).

 

[quickstraw]

Hi there guys first time posting in here, read the threads and there are some very knowledgeable people in here with some very good discussions.

Just like to ask some investors in here with your previous experience with your first property you've invested in, price wise, type of property, your goals with it and what step you guys took in purchasing your next investment property.

Without knowing your financial situation, and without doing a heap of research, I think you should be looking at units in the $200-$350 price range depending on where you invest.

Steps you should take:

1. Research and diligence. Read books. Michael Yardney and John Fitzgerald are good start. Don't buy into their clubs and "work with us" crap. Read books, gain knowledge. Don't buy products off these people, or go into packages through them. You need to learn, understand the best you can, then implement.
2. If you already have a house with euqity try and buy using deposit from your equity. No money down essentially.
3. Don't believe the hype that houses are better. I fell for this and whilst I still prefer houses, units have had more growth over the last 15 years. Your budget determines whether you get house or unit, nothing else.
4. Be prepared to invest interstate. I'd suggest getting on Brisbane right now.
5. Determine your area. Residex reports are a good guide. Be aware that some new suburbs will be right at top of growth figures. This is because when the land was sold at block value (say $100k) then next time were sold after house built on for $350k, is sems like massive growth but doesn't take into account build costs.
6. Calculate, don't speculate. Calc the rental return, expenses, how much it will cost you per week to hold
7. Interest only loans. Always. If you fix, just be aware their are costs for breaking it if you need to sell. Interests will never be lower and they will rise.
8. For first time investor, I'm still thinking unit, close to a CBD (within 12km), old block, small block, not ground floor, close to public transport, and in an area you have earmarked for good growth.

Now is a good time to invest in Brisbane and perth. Sydney has gone, Melbourne not much left, Adelaide not yet in premiership window.

 

[freshazimiz]

Without knowing your financial situation, and without doing a heap of research, I think you should be looking at units in the $200-$350 price range depending on where you invest.

Steps you should take:

1. Research and diligence. Read books. Michael Yardney and John Fitzgerald are good start. Don't buy into their clubs and "work with us" crap. Read books, gain knowledge. Don't buy products off these people, or go into packages through them. You need to learn, understand the best you can, then implement.
2. If you already have a house with euqity try and buy using deposit from your equity. No money down essentially.
3. Don't believe the hype that houses are better. I fell for this and whilst I still prefer houses, units have had more growth over the last 15 years. Your budget determines whether you get house or unit, nothing else.
4. Be prepared to invest interstate. I'd suggest getting on Brisbane right now.
5. Determine your area. Residex reports are a good guide. Be aware that some new suburbs will be right at top of growth figures. This is because when the land was sold at block value (say $100k) then next time were sold after house built on for $350k, is sems like massive growth but doesn't take into account build costs.
6. Calculate, don't speculate. Calc the rental return, expenses, how much it will cost you per week to hold
7. Interest only loans. Always. If you fix, just be aware their are costs for breaking it if you need to sell. Interests will never be lower and they will rise.
8. For first time investor, I'm still thinking unit, close to a CBD (within 12km), old block, small block, not ground floor, close to public transport, and in an area you have earmarked for good growth.

Now is a good time to invest in Brisbane and perth. Sydney has gone, Melbourne not much left, Adelaide not yet in premiership window.

Thanks for that, I've got one 2 bedroom apartment in the CBD right now for about a year now and my next goal is ideally another property in a couple years by using the equity.

I see there are heaps of ways and places to invest but i'd probably like to stay within my comfort zone but i guess the bold ones usually reap the bigger reward.

 

[Power Raid]

Thanks for that, I've got one 2 bedroom apartment in the CBD right now for about a year now and my next goal is ideally another property in a couple years by using the equity.

I see there are heaps of ways and places to invest but i'd probably like to stay within my comfort zone but i guess the bold ones usually reap the bigger reward.

Don't be frightened to look overseas. My biggest returns have been in Singapore and Jakarta.

Plenty have gone to the US seeking higher returns.

The issue is you have to deal with fx, different regulations and further removed from the asset.


Rental returns in Jakarta are in US dollars, pre paid and 25% returns. That's not bad if you can handle the risk.

 

[Bloods]

Without knowing your financial situation, and without doing a heap of research, I think you should be looking at units in the $200-$350 price range depending on where you invest.

Steps you should take:

1. Research and diligence. Read books. Michael Yardney and John Fitzgerald are good start. Don't buy into their clubs and "work with us" crap. Read books, gain knowledge. Don't buy products off these people, or go into packages through them. You need to learn, understand the best you can, then implement.
2. If you already have a house with euqity try and buy using deposit from your equity. No money down essentially.
3. Don't believe the hype that houses are better. I fell for this and whilst I still prefer houses, units have had more growth over the last 15 years. Your budget determines whether you get house or unit, nothing else.
4. Be prepared to invest interstate. I'd suggest getting on Brisbane right now.
5. Determine your area. Residex reports are a good guide. Be aware that some new suburbs will be right at top of growth figures. This is because when the land was sold at block value (say $100k) then next time were sold after house built on for $350k, is sems like massive growth but doesn't take into account build costs.
6. Calculate, don't speculate. Calc the rental return, expenses, how much it will cost you per week to hold
7. Interest only loans. Always. If you fix, just be aware their are costs for breaking it if you need to sell. Interests will never be lower and they will rise.
8. For first time investor, I'm still thinking unit, close to a CBD (within 12km), old block, small block, not ground floor, close to public transport, and in an area you have earmarked for good growth.

Now is a good time to invest in Brisbane and perth. Sydney has gone, Melbourne not much left, Adelaide not yet in premiership window.

Don't know much about this but I'm interested to know more. Couple of questions if I may:

- Why interest only loans?
- Would you use a property manager?

 

[Hawthorn United]

Don't know much about this but I'm interested to know more. Couple of questions if I may:

- Why interest only loans?
- Would you use a property manager?

As it's an investment, rather than principle place of residence, you want to maximise your tax deductions. Interest only will keep the loan balance constant so interest repayments at it's maximum.

 

[Power Raid]

Don't know much about this but I'm interested to know more. Couple of questions if I may:

- Why interest only loans?
- Would you use a property manager?

We all have different investment philosophies but I preferred when I had a mortgage to have an offset account which means I saved on interest, had greater savings and full access to my excess cash.

I can never understand why you would want to spend $1 in interest and give it to the bank to save $0.30-$0.47 in tax. I prefer being cash flow positive but negative geared. That way I kept my $1 and still got my $0.48 back from the ATO.


I guess you have to ask yourself a simple question: are you in this to make money and grow an investment or save on tax. If you manage it well you can have both but you have to choose which is you goal to make decision making easier.

 

[quickstraw]

I can never understand why you would want to spend $1 in interest and give it to the bank to save $0.30-$0.47 in tax. I prefer being cash flow positive but negative geared. That way I kept my $1 and still got my $0.48 back from the ATO.

Firsly, this is unrealistic because the average investor doesn't have the offset funds to strike the CFP while -ve geared balance.

Secondly, it's inefficient. That money you have in offest (above your buffer) is better off invested in another IP.

I don't know one professional property guru who doesn't preach interest only. That should say a lot.

 

[quickstraw]

- Would you use a property manager?

Always. For 9% it's way worth it. Be prepared that most won't look after your best interest though. You need to monitor them because they will try to take the piss, especially if your IP is interstate. Still the better option though.

 

[KENT2008]

Don't be frightened to look overseas. My biggest returns have been in Singapore and Jakarta.

Plenty have gone to the US seeking higher returns.

The issue is you have to deal with fx, different regulations and further removed from the asset.


Rental returns in Jakarta are in US dollars, pre paid and 25% returns. That's not bad if you can handle the risk.

where does one begin to look if they are interested in investing in these countries though?

 

[Power Raid]

where does one begin to look if they are interested in investing in these countries though?

I just made enquiries whilst on holidays to both locations. I would hold off on Singapore but Indonesia will have a tough time this year (elections may = riots, low fx and low property prices) which means good buying opportunities.

oh and stick with apartments or town houses in expat areas.

 

[quickstraw]

I just made enquiries whilst on holidays to both locations. I would hold off on Singapore but Indonesia will have a tough time this year (elections may = riots, low fx and low property prices) which means good buying opportunities.

oh and stick with apartments or town houses in expat areas.

Out of curiosity:


Where are you buying?
Who is typical tenant?
Is there any growth?
What's the risk? I image at 25% return it limits loss.

Can you just give us a quick snap shot:

How much are you spending per place
Are they any hairy laws to look out for? i.e is it all freehold? any tax implications
How does property management work?
I know it's a volatile environment but what is the risk? Crash? Change in laws? Coup and seizure of property?

 

[Bloods]

Thanks for the responses guys.

 

[Power Raid]

Out of curiosity:


Where are you buying?
Who is typical tenant?
Is there any growth?
What's the risk? I image at 25% return it limits loss.

Can you just give us a quick snap shot:

How much are you spending per place
Are they any hairy laws to look out for? i.e is it all freehold? any tax implications
How does property management work?
I know it's a volatile environment but what is the risk? Crash? Change in laws? Coup and seizure of property?

Where are you buying? One of the best performers was Capital Residence in Jakarta. They are quite palatial for an apartment with three rooms, two bathrooms and a maids quarters. It is right next to the Jakarta stock exchange, international schools, the Carlton and connects underground to Pacific Plaza.

Another decent one was Oakwood which most of the Indo politicians keep their girlfriends (away from their wives) which is close to the Marriott (which got bombed)

In Singapore, we bought mainly commercial but have a family home 5 minutes from Orchard (subject to strict foreign ownership laws) and apartments on Wilkie (just behind the palace) which have more relaxed foreign ownership laws.

Who is typical tenant? Expats only as foreign ownership restriction (which are easy to work around) mean they pay high rents, paid by the company and paid one year in advance in USD.


Is there any growth? A Wilkie apartment was transferred within the family (to finalise a divorce) but a condition was it was done at market price assessed by an independent valuer three years ago. The value was S$1.3m which is now valued at S$1.8m.

The Jakarta assets were purchased of the plan at around AUD$180-300k. I have no idea of their value today but rents would be USD$50-80k per annum and haven't changed much.

What's the risk? I image at 25% return it limits loss. Singapore is "normal risk" but lower returns whilst Indonesia has economic risk, riot risk, political risk and risk risk. Thus the 25% returns.

Can you just give us a quick snap shot:

My girlfriend manages the properties so I may have some facts and figures here wrong but....

How much are you spending per place Jakarta - haven't bought for a while as the prices seem a little high at the moment but the 2014 elections should see the IDR drop and property prices drop. $180k-500k would feel right but you need to negotiate and be very patient (don't pay asking prices which could start at double that).
Are they any hairy laws to look out for? i.e is it all freehold? any tax implications Laws in Indo change like the wind but mean nothing. There is tax in Indo but that is paid by paper bag and there can be a tax difference (an additional amount) payable to the ATO but this can be avoided using trust structures in Singapore and companies in Indo.
How does property management work? We have informal agents in Indo as everything is done by "commissions" to people that help but formal agent relationships in Singapore
I know it's a volatile environment but what is the risk? Crash? Change in laws? Coup and seizure of property? Singapore is very low risk for this as if Singapore has gone down, the rest of the world has too. Indo is its own world but things work provided the right wheels are greased. As mentioned 2014 could get quite colourful in Indo which brings risk and opportunity. I can't see the politicians building being fire bombed.......things like that in Indo rarely happen by accident or without warning.


I see the next century being very successful for Asia which means property in Asia should rise with the increased wealth, population and centralisation into big cities. But who knows....

 

[Power Raid]

oh, I forgot to mention some town houses in Jakarta, in expat areas, can go for as little as $120-200k and attract around USD$40k-50k per annum

 

[quickstraw]

Cheers, thanks for the run down.

 

[Mofra]

Interesting PR - re: Finance, are you drawing on equity from Australian property to purchase or using local lenders?

Is the equivalent of FIRB approval difficult?
(Years ago I worked in secured finance for high-net worth individuals, did plenty of FIRB lending which was fairly easy if 25% deposit + costs were demonstrated).

 

[Power Raid]

Interesting PR - re: Finance, are you drawing on equity from Australian property to purchase or using local lenders?

Is the equivalent of FIRB approval difficult?
(Years ago I worked in secured finance for high-net worth individuals, did plenty of FIRB lending which was fairly easy if 25% deposit + costs were demonstrated).

just parking overseas income tied up in companies so no bank funding. I will eventually retire overseas which means there will be no Australian tax when the funds are finally distributed.

I don't deal with the FIRB type issues as the girlfriend manages the properties and the related issues such as settlement and regulations. But I do know strata type acquisitions are always easier than land as it is in all countries.

I should disclose my girlfriend is Chinese Indonesian who was educated in Singapore. Although she has given up her Indo passport, it has made the investment process much easier. She is considered a foreigner in Indo but the language and culture gap is narrowed.