Whats your prefered strategy?

Discussion in 'Investment Strategy' started by Sackie, 3rd Aug, 2015.

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Whats your main investment strategy/style?

Poll closed 3rd Mar, 2016.
  1. 1. Buy and Hold

    76 vote(s)
    77.6%
  2. 2. Adding value eg reno/development

    38 vote(s)
    38.8%
  3. 3. Off the PLan

    1 vote(s)
    1.0%
  4. 4. cash flow positve

    25 vote(s)
    25.5%
  5. 5. commerical real estate

    3 vote(s)
    3.1%
  6. 6. flips/wraps

    0 vote(s)
    0.0%
  7. 7. Defence Housing / NRAS

    1 vote(s)
    1.0%
  8. 8. Holiday Property

    0 vote(s)
    0.0%
  9. 9. Negative Gearing 'high growth areas'

    10 vote(s)
    10.2%
  10. 10. Regional properties

    10 vote(s)
    10.2%
Multiple votes are allowed.
  1. Rixter

    Rixter Well-Known Member

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    Yes, have always borrowed 80% LVR max since I started actively investing 16 years ago.. allows plenty of SANF fat in the deal in line with my personal risk profile.
     
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  2. Fargo

    Fargo Well-Known Member

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    Rixter you cant access capital gain without high cash flow. Banks have a cap on how much how much rent they will accept. Mine will only count a yield of 7%. There is a limit to how much yields will enable you to access equity. I still cant see how capital growth can enable purchases. There must outside funding which is actually enabling purchases. Also I can only get an LVR of 50%. How do you get 80% unless you have outside funding?
     
  3. Sackie

    Sackie Well-Known Member

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    . I still cant see how capital growth can enable purchases. @Fargo What do you mean? Unless im not understanding, you just refinance and use equity as deposit (servicibility pending). A lot of people have servicibility for a few more ips but cash deposit is the problem.


    . Also I can only get an LVR of 50%. How do you get 80% unless you have outside funding?

    If your saying you can get a 50% loan, and assuming your in a 'normal' job and average pay, then it doesn't make sense. Or you have a terribly incompetent finance broker. But I sense I must be missing a part of the puzzle here..
     
  4. Fargo

    Fargo Well-Known Member

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  5. larrylarry

    larrylarry Well-Known Member

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    Buy and hold for me. Possibly add value to boost rental. Outside Sydney metropolitan. Not quite ready to venture outside NSW.
     
  6. Rixter

    Rixter Well-Known Member

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    Im with you Leo....I dont understand what Fargo is stating or coming from?

    Fargo can you rephrase what you're saying/asking?

    In order to access equity one must sufficiently address the lenders modules of LVR & DSR so as to attain loan funding.

     
  7. Fargo

    Fargo Well-Known Member

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    Yes I use equity to purchase, I have bought properties for 10k less than other offers by making unconditional offers. I occassionly sell if I think I have became overweight in area and think it has nearly peaked so reducing yields. My broker puts my loans out for tender its up to the banks to make their offers. I don't have a job. I engaged Metropole who advised me to buy a crappy yielding negative cash flow unit which stuffed things up and meant many lost opportunities. I prefer to engage a builder to build my own houses and do the landscaping myself, by a couple of blocks put them on the market sometimes sell one for 10k more before settlement, build on the other. I have looked at trying to buy one for reno, but by the time you pay the costs, stamp duty and the lower depreciation. It was less expensive just to build new, and get better higher paying tenants as a bonus.
     
  8. Catalyst

    Catalyst Well-Known Member

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    What order do you recommend, Leo?
     
  9. Fargo

    Fargo Well-Known Member

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    40% of my properties are commercial so I could only get 60% LVRs, I sold some to get higher LVRs , depreciation, and to take advantage of increaseing RIP yields, but the LVRs didn't change.
     
  10. Sackie

    Sackie Well-Known Member

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    Sorry mate i'm totally lost. I don't get most of what your saying. Also I noticed you said you don't have a job?? I'm not a finance expert by any account, but unless you have significant other income from somewhere else that the banks are considering, I don't see how you can get any loans...

    edit: Ok I see you got 40% commercial properties so im assuming that's where your positive income comes from that the banks are assessing?
     
  11. Fargo

    Fargo Well-Known Member

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    I suppose what the bank manager is telling me is that for every 100k debt any income produced by that debt over $7000 is not included in their debt servicing assessment, and they will only count that on 70% of the value of the property. So on a 300k property only about $14,000 of income is counted for servicing ability. Increasing yields over this doesn't improve your servicing assesment. May be he is making excuses for promises he couldn't keep. Other bankers hadn't been able to work out were I got my income from but he was able to work out that some of my income derived from a property sold 3 years ago, so he said that income doesn't count. I also asked him if reducing my credit card limits would make any difference he said it wouldn't.
     
  12. Sackie

    Sackie Well-Known Member

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    Hi @Catalyst,

    Just from my own perspective. If someone's goal is to build wealth they will need CG, there's no doubt about that. When they purchase neutral or positive cash flow/geared property imo will depend on their income/s, servicibility and state of their overall portfolio.

    It just doesn't make sense at all to me for a couple who are earning 250k combined income, no to low debt, have a medium risk profile and then are totally fixated on buying a positive cash flow $20 a week property in woop woop, especially if there are no to minimal growth drivers in that area.

    At the same time, someone or a couple who have say 90k combined gross income with some debt and not much disposable income left over would need to probably focus first on property that is eigher neutral, positive or ever so slightly NG so it doesn't affect their cash flow too much. They just need to make sure where they buy has good fundamentals medium term CG, otherwise they wont be able to piggyback off the property to extract equity for ip2 until they are old and wrinkly. :D

    Just my 2 cents.
     
    Last edited: 7th Aug, 2015
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  13. Sackie

    Sackie Well-Known Member

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    Mate you need 2 things imo:

    1. a great finance broker
    2. A job.


    Also reducing credit card limits DOES increase/improve your overall position. 20k credit card limit (even if you don't owe a single cent on it ) the banks will count it as around 40k+ debt. I'm sure the finance experts can chip in on this one.
     
    Last edited: 7th Aug, 2015
  14. Fargo

    Fargo Well-Known Member

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    Yes I get positive income from my RIP too some net 10%+. Thanks Leo exactly the point I am trying to prove . What I am saying is LOE is BS, Capital gain is no use if you cant access it and if you have to keep working to do that. I used to believe in buy and hold, but it does seem at some point you will have to sell to access equity. Strategies by Spruickers like Micheal Yardney, where you just access growth don't work , but are good for makng money from book sales.
     
  15. Sackie

    Sackie Well-Known Member

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    Hi Fargo,

    Cant really comment mate - I know very little about purely living off LOE cos its not my thing at all. I do have my doubts as to its practical application like you do, but really I don't know much about it. Some other LOE people on here could add a lot more I think.
     
  16. Fargo

    Fargo Well-Known Member

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    What makes you think I need a job?
    I have seen plenty of finance brokers the brokers I use have awards are well regarded and have gotten deals put through when. 2 self proclaimed hot shot brokers from SS who made big claims couldn't deliver The broker from Metropole got a bad deal from Bank West and I wouldnt sign the pappers. A well regarded Loan Market broker wouldn't even try. WHAT MAKES YOU THINK I NEED A JOB ? or are even able to work. What is the point of mindlessly building wealth? I will continue doing what I want when I want. I can sell a property every 3 years, and have more than enough to live on have extra to invest a and maintain or even increase my asset base. What I can earn in wages is insignificant to what I can earn from investments especially after paying tax on it.
     
  17. Sackie

    Sackie Well-Known Member

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    If your current situation is getting you closer to your own goals and your happy with it then great. Nothing else to say.
     
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