Negative Gearing Can Be Like Treading Water

Discussion in 'Investment Strategy' started by MTR, 15th Jun, 2017.

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  1. dragon

    dragon Well-Known Member

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    Is there any chance government will put some limit for NG? saying maximum tax claim is xx$ only. specially for property investment..
     
    dragon, 11th Jul, 2017
    #81
  2. MTR

    MTR Well-Known Member

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    Yes, crazy good time in Melb in 2007.

    Wonder how much that double fronted Californian Bungalow I purchased in Coburg worth today. I paid $500K, sold it for $700K, I reckon perhaps $1M today, was in a desirable location..... At this time overnight my financial position changed and this one needed to go, as I was TREADING WATER...LOL

    This is also the same time I realised how important cash flow is, and why I started this thread:)
     
    MTR, 11th Jul, 2017
    #82
  3. Alex Straker

    Alex Straker Financial Life Coach Business Member

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    Your guess is as good as mine on that one :) I don't believe the Libs would do it however.
     
    Alex Straker, 12th Jul, 2017
    #83
  4. MTR

    MTR Well-Known Member

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    I must be silly, but this is something I would never do.


    MTR:)
     
    MTR, 12th Jul, 2017
    #84
  5. MTR

    MTR Well-Known Member

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    I must be silly, but this is something I would never do regardless of the strategy.


    MTR:)
     
    MTR, 12th Jul, 2017
    #85
  6. 380

    380 Well-Known Member

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    Hi MTR

    My criteria when I started investing was to purchase properties where rent covered the interest payments. Not necessarily easy to do, however lower interest rate environment has helped me.

    I started low balling and sourcing deals under market value. I then progressed to finding deals where I could add value, developing property. I also needed to be able to hold the development sites and cover costs while building.

    I knew the Buy and hold strategy was going to be tough, if I continued to increase debt and ignored income. At the same time I was not interested in low entry properties in regional Australia, as they were older properties and I expected ongoing maintenance issues, from what I have seen and read by other posters on PC.

    I have now created income streams, buying property in US with good yields and my business is also helping with a cash flow stream.

    BD
     
    380, 26th Aug, 2017
    #86
  7. Perthguy

    Perthguy Well-Known Member

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    They already have. The recent changes to travel claims and depreciation are exactly that. Without saying so, they are are reforms to negative gearing.
     
    Perthguy, 26th Aug, 2017
    #87
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  8. MTR

    MTR Well-Known Member

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    Anyone sinking under the weight of debt????

    Current yields are pretty woeful at the moment.... my focus in 2018 is cash flow......bring it on...:)
     
    MTR, 2nd Jan, 2018
    #88
  9. MTR

    MTR Well-Known Member

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    Exactly Ross..... that is the issue that many investors don't comprehend, life happens... this is why I changed my strategy after my partner's business went pear shape. We could no longer sustain the debt, it was a hard lesson but turned my investment strategy around 180 degrees.

    Its not too late, but relying on growth and paying debt is not a real plan IMHO
     
    MTR, 2nd Jan, 2018
    #89
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  10. wylie

    wylie Moderator Staff Member

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    This is the plan I've always worked towards. My dad used to say "five houses debt free to retire on".

    We don't want or need more than that.

    We don't have five houses, but we have a DA to work through. So, having bought houses that could be further developed, and blocks that can be subdivided, even though at the time of purchase we had no funds to do anything other than hold them and wait, we will do that and "create" an income stream for our retirement.

    If I was starting out now, I'd buy blocks that can be developed. We've sold blocks without splitting them in the past, even though we knew it was possible. At times, it just wasn't something we were capable of doing, or had the time (or the guts) to do.

    So someone looking at our balance sheet would say we are debt heavy, but there is more to the story than that simple assumption.
     
    wylie, 2nd Jan, 2018
    #90
  11. sash

    sash Well-Known Member

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    Nah.its fun.......I luv treading water with concrete shoes....

    As for CF.....selling some to increase my CF significantly for the proverbial R-word...
     
    sash, 2nd Jan, 2018
    #91
  12. MTR

    MTR Well-Known Member

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    you are a sucker for punishment:p
     
    MTR, 2nd Jan, 2018
    #92
  13. Perthguy

    Perthguy Well-Known Member

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    I'm not sinking under the weight of debt but the banks say I have enough. A few years ago the whole portfolio was negatively geared because it was all development sites. That wasn't working for me, so I strategically sold down, renovated to cashflow positive or developed to add rental income. By March the whole portfolio will be cashflow generating.

    Then I have to save up to do my next project because the banks say I have enough debt. Rude! ;) :D
     
    Perthguy, 2nd Jan, 2018
    #93
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  14. MTR

    MTR Well-Known Member

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    RAMS lo doc, no need to jump hoops, dodge the servicing issue, however you will need an ABN. I buy in my Trust
     
    MTR, 2nd Jan, 2018
    #94
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  15. Perthguy

    Perthguy Well-Known Member

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    This is a good option. I don't want any more projects this year, so I have time to save up. I could use RAMS lo doc to make up a shortfall (if any), buy at a low LVR, or save more cash. Lot's of options! :)
     
    Perthguy, 2nd Jan, 2018
    #95
  16. MTR

    MTR Well-Known Member

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    80%
     
    MTR, 2nd Jan, 2018
    #96
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  17. kierank

    kierank Well-Known Member

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    If one is only investing in property and relying on cashflow from high growth properties, I always felt one’s options were limited. No matter the economic environment, no matter the interest rates, no matter who was in Government, ...

    From as far back as I can remember (30+ years), our strategy always had 3 pillars - high growth property for equity generation, “good” shares for retirement funding and businesses for cashflow generation (owned four in my working life).

    I love NG and wouldn’t be where we are today without it. The above strategy allowed us to utilise NG to generate Net Worth and NG has never restricted/stopped us from doing what we wanted to do.

    We are retired now and have so for 7 years. We are probably more NG now than we have ever been.

    I can’t give a definite answer as the level of NG is not something I tracked.

    But I can say that, for the 2017 calendar year, our Total Assets have increased (bought another IP last month), our Total Debt has increased (took out another IP loan last month), our Net Worth has increased (thanks to NG) and our SMSF balance has increased (even though it funds our living expenses and IP cashflow shortfall).

    And we don’t WORK!!!
     
    kierank, 3rd Jan, 2018
    #97
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  18. MTR

    MTR Well-Known Member

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    Anyone treading water, or have you found a way to rise above

    MTR:)
     
    MTR, 29th Jan, 2018
    #98
  19. MTR

    MTR Well-Known Member

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    .... and now that markets have turned this thread becomes relevant.

    Don't want to be holding too many negatively geared properties.....
     
    MTR, 25th Apr, 2018
    #99
  20. kierank

    kierank Well-Known Member

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    Why not?

    What do you mean by too many negatively geared properties?
     
    kierank, 25th Apr, 2018
    #100
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