Reply: 1.2
From: Always Learning
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If you read any of Jan's books the message is to purchase properties, ( if rated on a scale of 1 to 10 1 being a fibro shack under a railway bridge and 10 being a water front home ) in the 3 to 4 range. Two lower median price properties in general can be expected to give you better returns than one higher end property. And also protects you against loss of tenancy. Having 2 IP lessens the chance of a cashflow crisis since it would be very small chance than both would be vacant simultaneously.
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I believe, that the areas that you could expect the highest capital gains in the long long term, are already quite expensive, Sydney North Shore, Bayside Melbourne. So in some respects you may consider buying a lower than median priced IP for that area (at the extreme end Mosman or Toorak for example I think the median priced house is over AUD$1M)
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Since you have 400K you could potentially purchase much more than 2 median priced properties, even with 80% loan to valuation you can hold about AUD$1.6 ~ 2.0M of IP. It just depends on the risk level you are comfortable with and the ongoing holding costs.
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I also live in Japan. I can say to you there are some excellent tax advantages here. Basically negative gearing exists in Japan very similar tax law to Australia, except the interest portion of the land content is not negatively deductible from income tax. If you purchase wooden framed homes then you have a 20 year deprecation schedule for the house. Other chattels (carpets, HWS, aircon, curtains, kitchens cupboards etc) seem to have higher deprecation schedules in Japan than Australia. If you hold AUD$1M of
buildings there is some great potential for some very good tax savings from you Japanese income, just from the deprecation schedules alone.
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I am a newbie myself, just trying to soak up the knowledge and as a lonely IP investor in Tokyo Japan, I would be happy to meet and talk with you anytime.
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I agree with Rolf the "margin call" in the event of falls in property prices or exchange rate fluctuations from NAB make larger investment loans to my mind a little risky. Smaller loans when you have huge equity (70% equity) could make good sense if you understand the risks/rewards. Also understand when you leave Japan, NAB will also make you move your loan (plus losing 1.5% due to there commission on money transfer) to your new country or back to AUD$ with premium interest rates (6.4%).
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Investment Laws</td>
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1st Law:</td>
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"What ever you don't invest you forfeit."</td>
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2nd Law:</td>
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"What ever you reap is what you've sown"</td>
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<td><p align="right">Jim Rohn;</td>
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