making money from property now

My strategy has never relied on capital growth. All about creating high yeilding rental properties and holding them forever.

 

Congratulation on a realistic and wholistic approach to wealth building for the whole family. If it is not revealing too much could you outline the basis of your appraisal that your wife's superannuation will be guaranteeing 18% return. I am looking for any return suitable for super that will provide 6% and 18% seems to me more than satisfactory!

 

I'm continuing to research other markets outside of areas that have already boomed or are rising. But being a little cautious and very mindful of keeping a decent buffer for each property. Definitely not rushing into anything at the moment.

 

Thanks, approach matches my personality, conservative.

Since my wife is 100% stay at home mum the government gives me a rebate (old term), tax credit of 18% for each dollar invested in spouse's super up to $3,000 invest on her behalf pa. The total maximum credit pa is $540.00. Of course, the earnings on these funds are taxed and capped at 15% (the super tax rate).

Her fund is invested 50% International Shares and 50% Australian Shares with a fairly low cost fund.

regards

 

I'm looking into areas of New Zealand that have a strong rental market and good capital gains prospects. No stamp duty is a big plus so the initial challenge will be coming up with a 20% deposit.

I don't have any ip's yet, just my PPOR which we are going to renovate to manufacture some equity.

 

I believe that when you do your viability studies before purchase, work your cash flow calculations over a slightly higher rate of interest at around 7ish %. If you are neutrally geared or pos geared at a higher percentage then these changes to rates are nothing to worry about.

 

Nice spott

Everyone who retires says that they are finished.......only to get bored. Sometimes it's not the money. In her case I'm sure it's not the money. It's the point of 'doing something'. I'd buy her book if she wrote another one. I'm sure she has much knowledge to offer yet. You never know...

 

As others have said, there's always money to be made.

My next major move is to start developing.

 

I don't think the interest rate changed are going to make any real impact on pricing at this stage. For me, it's the APRA changes in general in reducing borrowing capacity. My original plan for my brisbane developments was to keep them for CG but I will now have to sell the first one to develop the second, which I'll likely need to sell in order to invest again.

 

The actual opposite has happened in Perth. When the market was rising investors were the largest % of buyers, due to this the market got swamped with rentals.

We have now seen rentals drop significantly in Perth because there is way too much rental stock and renters have choices.

I know my g/friend started at $500 pw, when her tenant broke the lease the villa 2 doors same produce was renting at $410 pw, so at the mercy of the market unfortunately.

Hope this wont happen in Sydney, but I really think it will come down to how much rental stock is on the market.

MTR

 

At least you have options, and so be it, just do what you have to do, that's the way I look at it.
I think if we sit and ignore biggest mistake anyone can make.

MTR

 

Yep I hope so too. I was looking at rentals in some suburbs I own in the other day... a few months ago at the peak of the investor freezing frenzy there were pages and pages of newly settled places for rent at reduced prices and free weeks rent. Now theres only a few rentals listed and prices have crept back up.

Interesting to see how it goes

 

Seeing a similar thing in some parts of Brisbane too.

 

One idea is to target the market which is the strongest. In Perth that has tended to be the $400-500k market due to FHO but being careful not to delve into too crap an area.
Whilst this may be a big generalisation, they tend to keep on buying with less care about risk. They haven't lived through 18% interest rates or worry as much about losing their job in 6mths - many under 30 think they are invincible.
Potentially focus on projects which may have less return but are quicker so that you are less open to market fluctuations.

 

It makes sense, suddenly you have an oversupply because investors went nuts but at the same time FHB were in the market and they were buying properties because it was cheaper than renting at the beginning of the boom.

 

Check out the small apartment blocks in the City of Belmont. Belmont/Rivervale/Cloverdale. Oversupply and prices are down!

 

Apartments, apartments, apartments, they are everywhere.

I guess some areas will be far more effected than others. The areas you mentioned above, every man and his was developing, how low will they go is the big question??

MTR

 

@MTR My plan is to sell Melbourne and put the funds into my Perth development (2 townhouses). Cloverdale will have an existing, older, renovated house at the front and 2 townhouses at the back. These will all be kept as a long term hold.

After that, depending on the market, I want to buy a decent block to build a PPoR. Hopefully around the Bayswater area. My investment partner wants to buy a house to renovate and flip. We will do either of those depending on the market.

 

Market is still strong in Melbourne fortunately. You want to be selling soon though.

MTR

 

Auction booked in for the 21st of November