Depends on your available cashflow for servicing shortfall between rent and outgoings.Hi guys,
I am new to this so please bare with me. Im 25 years old and bought my first IP in sydney at the end of last yr. I bought my property for just on 500k but my rental return weekly is 400. I would like to purchase my next IP within the next year. I need advise on which state to purchase in next and also is it better to buy a property with more rental return or more capital growth? Any feedback will be extremely appreciated. Cheers
I've tried to buy our IP's based on good rental yields first, but with hopefully the right criteria behind the purchase for future capital growth.
Reason being; could never really afford to buy any of them, so the rental yield was important.
But looking back; the wealth we have achieved has been through the cap growth - not the cashflow..
I think the best strategy (for those on limited incomes) is to do the above as I've explained; but with the plan to convert the cap growth into other vehicles or IP strategies down the track, which will deliver premium cashflows - such as;
1. buy/subdiv/sell part or all, or
2. a business (I have done that and stuffed it up, so not the best option possibly), or
3. buy/reno/sell, or
4. even just straight selling down of some of the good cap growth IP's in your portfolio, and use the proceeds to buy more with large inputs of cash to make the cashflows much higher from day 1. Obviously this strategy will require a fair chunk of time in the market to achieve enough growth to then sell and reinvest.
5. franked dividend shares