Another 25 basis pt drop! Gear up baby!

From: Nigel W


At the risk of sounding short sighted - I think its a good time to gear to the hilt and get as much exposure as you can. Money is incredibly cheap! Cashflow positive should be achieveable on many properties.

Naturally you should implement some risk management (ie fix the rates on a proportion of your debt) to keep your interest rate risk to an acceptable level.

The danger of course is that every man and his dog are out there thinking that now is the time to get into property cause they can afford so much more now...and of course the papers will talk of an extended boom so it must be true...right?

Remember the fundamentals but I say, make hay while the sun shines!
 
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Reply: 1
From: See Change


Nigel , your enthusiasm reminds me of many of the posts floating around on share sites in relation to internet stocks prior to april 2000.

Just a thought

see change

it's better to be guide by your dreams than your fears
 
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Reply: 1.1
From: Nigel W


See Change

I appreciate the wisdom of your experience! My message was deliberately crafted to try to spark some debate. Let's just call it the exuberance and impatience of youth!

Seriously though, I think leverage levels are just another risk factor to be managed. If your rental cashflow is strong and your personal income is strong and you lock in a proportion of your interest rates with staggered roll-overs then the risk is mitigated somewhat.

I think it is a personal comfort factor too. Some people can't sleep at night thinking they've got too much debt...if so then P&I with big deposits is the way to go.

To my mind that's just too slow a process and unduly conservative. Remember who dares, wins!
 
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Reply: 1.1.1
From: Michael G


Nigel,

One thought, you gear up on a high yield property at a fixed rate over x years, then pour the +ve cashflow back into the property as a buffer when the fix period expires.

Just a thought

Michael G.
Dark Thoughts P/L
 
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