Grow Capital First

Discussion in 'Investment Strategy' started by MTR, 29th Apr, 2016.

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  1. sash

    sash Well-Known Member

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    OK...agree with the prospects for the next 5 years or so...the biggest risk is currency..I can't see the USD staying strong for much longer. We might see the AUD at 0.85 US on the next 2 years....
     
  2. MTR

    MTR Material Girl Premium Member

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    Not according to report by Westpac economists they are predicting 68 AUD by mid 2018. Who knows, time will tell

    Look at averages for AUD over last decade?I think mid 70s and thread on AUD
     
  3. MTR

    MTR Material Girl Premium Member

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    So capital first...... but how/where??? Markets in Oz are changing....perhaps a soft landing???

    For me increasing capital via USA acquisitions.

    Also perhaps finding a suitable small development project in Perth..... if this is possible? I would flip not hold therefore it needs to stack up after all expenses. Tough gig
     
  4. Codie

    Codie Well-Known Member

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    Great info from all. Definitely food for thought for someone like me starting out (27 & just bought 3rd at 1.4m) I have almost convinced myself from listening to Michael yardney & Ben Kingsley that growth is the way to go long term. But after these points made I’m not so sure. It’s one thing I always question, after the cycles through the 80s/90s property sometimes doubled in only a couple years or 10 fold within 25yrs, of course it’s near impossible to see one of my 600k properties being worth $6m when I’m 50 it’s just not going to happen. I’m concerned that some of these stratigies are based around living of credit once the asset base is big enough but I mean it’s just all speculation & sounds very dangerous to me. No doubt I’m going to Run into difficulty borrowing in the next 2 more properties so I think I’ll take some of this advice on and reduce debt & look for some higher yield properties for the next 2.
     
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  5. iloveqld

    iloveqld Well-Known Member

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    How is the yield in general in Perth? Thanks
     
  6. MTR

    MTR Material Girl Premium Member

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    Not good - Read threads on Perth
     
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  7. MTR

    MTR Material Girl Premium Member

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    Now for me .... its cash flow first...... the worm has turned.... meaning some of the larger markets have softened.

    So my strategy was to buy in the booming markets in Perth (yes it did boom 2013-14), Sydney and Melb.... I am cashed out now and the funds have been recycled to increase cash flow.

    Did I cash out too early.... me thinks yes... but 40% profits is fine, I am chicken don't want to get stuck at peak with my pants down.

    I am not saying you wont see any further growth in other markets, but perhaps it wont be double digit figures, which is a long term hold type strategy....

    MTR:)
     
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  8. MTR

    MTR Material Girl Premium Member

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    So how do you grow capital today in current environment?

    Is cash flow more important today?
     
  9. Beano

    Beano Well-Known Member

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    Cashflow is No1
     
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  10. Archaon

    Archaon Well-Known Member

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    Subdivide would be my guess.
     
  11. MTR

    MTR Material Girl Premium Member

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    Bump
    How times have changed... where do you grow capital? Do the same rules apply today?

    Considering the lending environment has changed significantly

    Is cash flow now far more important? ?????
     
  12. datto

    datto Well-Known Member

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    Hold onto your horses.

    Capital will grow again. Just needs the right conditions. For growth, some things need the right conditions eg light and fertiliser.

    Lending conditions will change. They have to .

    Cash flow is good but capital growth is king.
     
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  13. Archaon

    Archaon Well-Known Member

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    And if capital growth doesn't outpace inflation due to stagnant wage growth?
     
  14. datto

    datto Well-Known Member

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    Don't worry about stagnant wage growth. Workers are fed up with it. There will be a big catch up.
     
  15. Omnidragon

    Omnidragon Well-Known Member

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    Absolutely nothing beats growing capital.

    At my early 30s, most of my wealth has come from capital appreciation. Rent is good but you don’t get rich from it.

    I remember some of my most dismal properties (ie mediocre capital gains over long period) all had higher yield. But didn’t make me real wealth. There’s been 5-6 properties that have made me $300-500k here and there. But my real wealth has come from 3 very good buys. A $3.3m one where I turned down $8.5m a year ago. Probably worth $10m+ now. Another $2.2m probably worth $4m+. And another $2m probably worth $5-6m now. I’ve had numerous tenant turnovers at these 3 and often vacant periods but I barely care any more.

    0 interest in yield these days. If property doesn’t grow, I might as well park a few m into a stock I have in mind. I’ll probably triple around the corner, minimum, if not do a 10-20 bagger in 3 years.
     
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  16. Archaon

    Archaon Well-Known Member

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    and how do you propose your successes for someone who earns 80k per year?
     
  17. MTR

    MTR Material Girl Premium Member

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    Baby steps, dont compete or compare... it wont help and who cares

    Chip away

    Leveraging is powerful in rising markets, its investing on steroids and you dont need a degree to work it out. Just sit and watch volume shrink.

    Make re agents your friend, networking with successful investors and piggy back
     
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  18. Leeroy93

    Leeroy93 Member

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    Interested to understand why you expect your stock investments to grow so rapidly? Assuming without the advantage of information not broadly available to the market, do you expect your fund to continue to outperform consistently or are you willing to lose all you invest given this risk profile?
     
  19. Archaon

    Archaon Well-Known Member

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    Hi MTR,
    Doing just this atm, through subdivision I am manufacturing capital as I go.

    I just don't see people on average income able to leverage as much as they once have, and somehow double bag on property like we have seen from this perfect storm of low interest rates and un-precedented investor appetite.

    APRA has changed all that.

    Regards
     
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  20. MTR

    MTR Material Girl Premium Member

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    Just chip away, networking is amazing tool
     
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