Strategy: Consider multiple cheaper Properties

Yes,

 

No maybe $50m ...higher net yields results in higher tax

 

No issues if you have a lower LVR.

 

There is LVR (actual) and LVR (banks use based on 1; security they have 2; LVR based on dated valuation [some 20+ years old]...they only use registered panel valuers)
Very different numbers

 

5. Easier to use a Recycle Debt Strategy with Cheaper properties



It is generally easier to use cheaper properties in a recycling debt strategy. Buy, wait for growth, sell and use the proceeds to pay down the non-deductible debt and then repeat. Explained more in depth here:

Debt Recycling Strategy: Buy and Sell Property after some Growth Debt Recycling Strategy: Buy and Sell Property after some Growth



And how to do it without being taxed here:

Strategy: Buy a second PPOR and Later Sell it Strategy: Buy a second PPOR and Later Sell it

 

Its about 2 and a half years since I wrote this thread. I should point out that many of the lenders are now asking for property expenses per property for serviceability purposes and as a percentage 2 cheaper properties may have larger expenses compared to one property double in value of the 2 cheapies. So this could potentially adversely effect serviceability

Check with your broker

 

I think I was asked for this for last 3 or more years, alas, I avoid larger lenders, so the smaller ones may be on top of the game years ago.

Many councils now do bleed you quicker, I wish my income kept up with council and water charges....

 

Since this thread I have sold my cheapest property. It wasn't worth the hassle of holding it, even though it was positively geared!

 

The cheapest property that I ever owned was the one with the most hassles so beware all of you cheapie chasers

 

I wonder if many people have run a strategy of selling multiple cheapies to buy one expensive one.

Associated with this, as a rentvestor I sometimes wonder about missing out on the cgt exemption. Currently have it on an IP but due to expire soon.
Not that I would sell down to buy a ppor, I would decrease my overall exposure significantly due to BC

 

Yes I can think of 2 separate clients of mine who have done it. They each sold about 5 IPs to buy a big main residence. One of them was a rent vestor and the other just wanted a big expensive main residence upgrade.

 

Anecdotal evidence though.

For me, there seems to be no correlation between how much work my IPs are and how much work they are.
It's obviously true that per dollar the cheapies are more work though.

Having said that, if I had my time again, I'd do it all over again and still buy ten cheap IPs instead of three more expensive IPs (I wouldn't buy two specific IPs, but hindsight is always clearer). I think the capital gains I've experienced are significant higher than they would have been if I'd bought expensive IPs, due to the higher levels of debt I was able to take on due to the significantly higher yield.

 

The trouble with cheap ones is that you get the scum bags. A few of mine have had domestic abuse issues, damage, losing jobs and going on centrelink etc.
Some can be good though.

 

Okay Marie Antoinette!

 

Just need to find the right balance. Don`t go too "cheapie"

 

yeah can't be over supplied or in regional areas with social issues.. when supply is low and in the best suburbs, next to entertainment but not too close to those urban slums in the sticks then you can get good tenants..

i can think of one or two examples where i did the numbers on really cheap places in the burbs with social issues, the returns were huge (in WA), would be even better now, but they are a long drive 1hr or more for me, so cant drive past.

Plus you are at the mercy of local PM and local tradies who will price gouge you given the chance. If you go cheap need to stay on it oherwise it risks getting out of hand

was diversification another reason? can increase your chance of re-zoning and dev prospects if you buy in different future hubs!

 

Is this too cheap?

All 10 between $143k and $325k, but obviously all purchased quite some time ago.

 

And you need to consider the level of aggravation associated with the payoff too. I haven’t touched them in over a decade.

 

With hindsight I reckon multiple cheap houses like in Logan and Western Sydney (and Central Coast) would have been the go. But, I can't change the past!

 

Then you go and post on the forum about $5000 you have to fork out of pocket for not having insurance. Just for kicks.