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this is the problem I see.. holding property with capital growth means it will be negative geared for a long time. I think you need to come to a point when you start selling to lower your LVR, or clear the debt all together so you can live off the rent.

They were not losing so much to start with, but with raising rates the loss went up each year. Whats the min yield you look for in IP?

Rixter, So Your relying on capital growth to fund your shortfalls. ok I can see what your doing. So in my situation had I kept the 3 properties I had in 2005, I worked out I would have another $90,000 in capital growth over the last two years. (5% PA growth assuming). I was losing $35k PA so...

I'm not saying it can't be done.. I'm just saying you need enough rent to cover your interest, and if your not getting enough, you need to wait till you are. But if rent is 4%, interest i 8%, then LVR must be 50% for this to happen. Unless you can increase rent abnormally somehow.

Rixter, it may not be a servacibility issue from the banks point of view, but your going to run out of cash soon enough.. you can't continue to service a unlimited amount of IP's at 80% LVR

no you can't, so whilst its economical to use higher leverage, use property, but when servacilibity becomes a problem, use shares/margin lending.

yes, this is what I suggested, so I think you can start out with IP, but then move to shares when higher leverage isn't possible. Income from IP isn't tax free, rent it taxable like like dividends with shares. if your reffering to LOE, LOE from shares would also not be taxable.

only 1 IP purchased recently.. I did have 3 IP's a few years ago which I sold in 2005.

this is my exact point. I personally think your first one or two investments should be IP, due to 90% gearing, but then your better off redrawing equity to invest into higher yielding shares.. this will give you better diversification, yet achieve the same result, prehaps quick as you don't...

If this is the case, then why now use shares to achieve the same result? You can gear shares allot easier than property, cheaper to purchase and maintain, and gets the same result. Property I can see would only have a benefit due to its higher leverage, and if you can't achieve this, then you...

so how many IP's do you have? Whats your over all LVR?

Evand, I can only see LOE been sustainable when you have a LVR of 50%. Then your rental yield of 4.5% gives you 9% return covering your 8.5% PA interest.

L.AAussie, There was a stage I had 3 IP's worth almost 1 mil in melbourne. The holding cost for the 3 IP's was about $30-$35k PA, this was late 2005 when I sold them. Now how many people can keep holding IP's with such a annual loss each year? And keep adding each year or two? I purchased the...

These stratergies fall apart due to servicing. Firstly how are you going to fund such a large debt? Your LVR on property would need to be about 50% to have it cash flow neutral/+'ive. You need large amounts of cash to start with, or a large $100k+ income.