It's the portfolio $$$ that counts not the number of properties

Discussion in 'Investment Strategy' started by Property Twins, 13th Sep, 2015.

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  1. devank

    devank Well-Known Member

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    That is additional hassle. Multiple trusts.. Accounting... Borrowing... Land tax.... No immediate negative gearing. I guess that is for another thread.
    If Terry needs to be called in then it is already complicated :)

    Yes exactly. Also you can sell the one in 'peak' at that moment.
     
  2. Coota9

    Coota9 Well-Known Member

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    In the same boat here also @skuzy :(
     
  3. neK

    neK Well-Known Member

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    Yes, if you have the ability to service the debt and the bank will lend to you, why play in a space that is heavily populated. I'm after something sustainable, not something that's being pushed up artificially which then comes down.

    As for deep pockets, this is why i suggest "why not both" and start humming La Bamba. Buy in areas with potential for capital growth then look at ways to increase cash flow without breaking any rules (by that I mean don't cram 10 people per bedroom, renting out illegal dwellings, not firerating walls etc). For me this was achieved through granny flats. Granted I could have used that money to buy another property which may have given me more CG (given the crazy sydney market), but that would have been uncomfortable financially.

    As for timing, for someone who hasn't bought property, its not exactly something that's easy to do. Even the seasoned investors can't get it spot on. Maybe close, but not spot on.

    My first IP was in late 2003, and i experienced no growth until 2008. But as a first time property purchase, how I was suppose to know that was bottom. My second IP was in 2013, but I actually thought that was the peak (based on the growth between 2008 to 2012), I was completely wrong. I probably bought closer to the start of this crazy boom and I benefited very well from it by accident.

    I don't believe in attempting to time the market, for me its about buying right - just got to make sure the numbers stack up based on what I want.

    I don't know where I got the saying from (I'm sure it was Somersoft), but its along the lines of "Capital Growth is achieved at purchase".

    Anyway, I'm following the advice of people like Sash, I'm getting cashed up and I'm waiting. That said, if something comes up now for a good price, I'm jumping into it. I'm not necessarily waiting until 2018/2019 until I buy. Never know when the market changes and it picks up earlier than expected (or continues to drop).
     
    Last edited: 14th Sep, 2015
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  4. neK

    neK Well-Known Member

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    I'm not sure I fully agree with that. I would have said it started in the inner area of Sydney (15km) and moved outwards as people found it getting more expensive.

    I daresay most people start off with wanting to get as close to Sydney CBD as possible and when realise they've priced out, move along to the next suburb (further out West)
     
  5. FireDragon

    FireDragon Well-Known Member

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    Personally I believe both timing and time in market are important. I agree with neK that it's hard to pick the bottom but buying at peak will slow down the wealth creation journey. Let say Sydney's bottom was mid 2012, it's probably good enough to buy properties at end of 2012 or early 2013.

    Tine in market is also important as each buy and sell will have transaction costs and taxes. That's why my parents and myself tend to buy something with long term growth potential and it works well for them.
     
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  6. skater

    skater Well-Known Member

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    That is traditionally what happens, but not how it was this time around. Being in Western Sydney, I saw it first hand. Prices started moving before everywhere else this time around, but then they got a bit of a G-up as the rest of the boom headed outward. It was crazy stupid out this way. Prices more than doubled on the three we sold. The best was the last one that we bought for $186,250 & sold for $490k. :D
     
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  7. 2927

    2927 Well-Known Member

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    Now that the proposed Airport is about to be built out that way, how is that going to affect prices. Or do you think they may go up from an investment point of view.
     
  8. skater

    skater Well-Known Member

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    I only see it as a positive. Add to that there's a heap more employment out this way, which will keep demand higher than previous levels.
     
  9. 2927

    2927 Well-Known Member

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    True. Do you think there will be a housing shortage, or are there new dev's in the pipeine to counter this. A few people I've talked too, mention some of the established suburb's being revamped.
     
  10. Catalyst

    Catalyst Well-Known Member

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    I'm not even on a boat! :eek:

    :D:D:D
     
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  11. D.T.

    D.T. Specialist Property Manager Business Member

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    Time to set sail , let this be the catalyst ;)
     
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  12. Redwing

    Redwing Well-Known Member

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    What Does Portfolio $$$ represent (Value, Yield, Equity)?
     
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  13. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Gross Value inclusive of equity gains (or no gains if just acquired)
     
  14. MTR

    MTR Well-Known Member

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    It's not complicated my accountant manages this. Tax benefits and asset protection is important to me, but many don't buy in trust for whatever reason..?

    mtr
     
    Last edited: 14th Sep, 2015
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  15. MTR

    MTR Well-Known Member

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    Incorrect, as per Skaters comments


    MTR
     
  16. MTR

    MTR Well-Known Member

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    don't pick the bottom, that is hard. Buy when it begins rising, if you capture 1 year of growth you should do very well. Most growth happens closer to peak

    You can also take a bet each way, buy some, sell some, reduce debt and move onto another market which is moving.

    As I mentioned most will buy and hold and service debt during a bust cycle for perhaps 7-10 years, all good, but it will take much longer to achieve end goal.
    Would you prefer to retire in 10 years or 20 years?

    If you believe it is difficult to jump into early stages of rising markets then you are right it won't happen

    mtr
     
    Last edited: 14th Sep, 2015
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  17. mcarthur

    mcarthur Well-Known Member

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    That's a good point regarding timing!

    I think the serviceability changes make timing a little less important though - does it matter you've just had a 20% gain in 2 years and could possibly now get $200k ready for a new IP when your income hasn't changed much and the bank won't loan you anything more (and, in fact, you don't even meet their serviceability with the existng portfolio).
     
  18. MTR

    MTR Well-Known Member

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    Not sure why ?

    APRA is going to effect everyone and managing the debt monster will be key moving forward, reducing debt and increasing servicability. Accessing equity has also become more difficult, buy and hold forever strategy may need to be tweaked. There are some lo doc lenders ie RAMs but you need to meet their criteria

    Timing the market has worked for me so I guess I will keep doing it.

    MTR:)
     
  19. Sackie

    Sackie Well-Known Member

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    For me there is no debate - Capital Growth accumulated builds wealth. Cg vs cashflow is really a redundant theme imo. Depending on one's own situation they will have to choose how positive, negative or neutral the next property needs to be.

    But the goal should always be choosing the best asset that fits your situation at the time that has the best chance for quickest CG. That may be a neutral, positive or negative purchase.

    But the whole 'positive cashflow Vs CG' debate is completely redundant.

    Just my 2 cents.
     
    Last edited: 14th Sep, 2015
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  20. Random Username

    Random Username Well-Known Member

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    "It's the portfolio $$$ that counts not the number of properties"

    Counts for what?