Combined Cash Flow/CG Strategy

I actually laughed out loud at this. There's no "lol" button so I had to post.

 

MTR....get those Louis Vuitton bags loaded on your Lear Jet in the morning...you should be able to make it by 6pm Sydney time....we'll keep a space open at Wenty.

 

Hi @sash,

I'm bit confused over CF+ & NG. In the book 'More Wealth' Jan Somers was of the view that NG is good for those on higher incomes. Also in one of the articles I have read recently (dont remember if it was Steve McKnight or Micheal Yardney) where it questioned the purpose of CF+ for high income earner which is in turn paying more tax.

With recent APRA tightening, am of the view that CF+ is a must to get ahead for serviceability. Am I correct?

Appreciate your views on NG vs CF+

 

That is a double edged sort and a slippery slope...but here are my thoughts:

1. With APRA involved ....the quality of assets are also important. The banks now will only consider up to 6% return...why...because any more returns and they are infering the asset quality is not good.

2. Having positive CF is good with and without depreciation is great as it helps serviceability.

3. NG in short term is good but over the longer term it is going to impede you building a significant portfolio.

 

If you don't mind, could you please share source for this 6% return check from banks? TA.

 

It depends on the bank....for example CBA will no longer accept more than 6% return.

The banks don't like discussing the policies...I have people I know who are tweaking the systems who let me know this. If you ask the average bankie...they have no idea as their systems are doing this for them. The experienced guys though seem to know the policy changes inside out....getting to them is another issue.

 

Hi Sash, I reckon you need to start your own mortgage broking business, just for the fun of doing it.

 

Nah...that would be no one...people would give me a hard time as to why the loan is taking so long instead of moi!

Having said that...I kid you not I have submitted at least over a hundred pages of documentation for latest loans...what a farce....

 

Hehe! I believe you!

 

Our 2 Brisbane Bayside properties (Thorneside & Wynnum), were purchased with CG in mind, but positive cashflow is inevitable as rentals increase over time. Over 3 years the property in Thorneside has gone from 5 to 5.2% return and over 2 year in Wynnum from 5.8 to 6.1% return. All this at the same time as getting 15 & 21 % equity releases.