Help me reach my goal!!

Hi all,

I'm in a quandry and I hope some of you clever money-makers can help me see the light.

In the last 14 months I've bought IP's 2,3,4 (had others previously but cashed them in over the years.) I'm now pre-approved to go for IP 5. We still have a few hundred thousand $ of equity and I think servicability is pretty good moving forward so I think our ability to borrow for more IPs is quiet strong.

The problem is that everything is so bloody expensive! So far IPs are in Canberra, Wagga, Bathurst, and the Shoalhaven and they're all cash-flow neutral. I'm looking for something else that will reno then rent CF neutral with room for CG (aren't we all :D)

For years I've been working to get myself into the position that I can go flat out investing, and now that I have the means to do it, the market has taken off and I feel like Im being left behind. My old strategy of making low ball offers obviously wont work now and I'm worried that if I pick up a few more IPs this year I'll be buying at the peak. But then if I wait i'll be missing some good opportunities.

Do I just resign myself to the fact that new purchases will be CF-. Or do I buy in areas that will be CF+ but have little growth prospects. Yes I know people will say you can have both, but you know what I mean.

Traditionally I've thought of places like Tamworth, Goulburn, Nowra, Southern Illawarra as a good balance between cash flow and long term growth, but I feel that buying in most of those now would be too late and Negative geared, which I'm trying to avoid... or do I just get over myself and get on with it!?

The aim is to have 10 or more reasonalbe quality IPs which are CF neutral then pay down debt, sell some to realise Capital gains and live off rents in retirement. I'm 35 now so it's a 20 year goal.

Any thoughts (or motivation) would be greatly appreciated!

Ta.
 
Any thoughts (or motivation) would be greatly appreciated! Ta.

You need to understand something I was told a long time ago: "The market does what the market does, and it does not do it to you!"

So you need to develop a strategy for when you will be in different parts of the cycle when you are buying or ready to buy. If you don't like the part of the cycle we are in right now to buy in, then move your search to another part of the country where they are in a different part of the cycle that suits your strategy.
 
You need to understand something I was told a long time ago: "The market does what the market does, and it does not do it to you!"

So you need to develop a strategy for when you will be in different parts of the cycle when you are buying or ready to buy. If you don't like the part of the cycle we are in right now to buy in, then move your search to another part of the country where they are in a different part of the cycle that suits your strategy.

What Propertunity said above^^^.. Spot on the Mark.

The cycle is where it is.. you need to change to an area where your strategy has worked up until now... either that or change strategy which IMO would be counter productive..

You obviously have found a system that's been successful for you. So why try reinvent the wheel.... simply duplicate what works for you, else where.

I hope this provides some food for thought.
 
I would have thought that if you are purchasing and doing a reno in regional areas that the yield might have been better than CF neutral.

There would be a couple of capital cities where you could have achieved the same result and they would give you better prospects for CG.

How much do you invest in each property ?

I've never considered any of the areas you mention - so maybe not the best one to comment - but your strategy might work better in one of the larger population areas.
 
Hi

Hello,

I totally understand what you are going through and what you are thinking.

The property market has changed and the two above me hit the nail in the head.

The market in most states apart from Perth is going crazy!!

You can do a couple of things...
1) Bite the bullet and outlay more to do what you used to do.
2) Come up with a new concept to ensure you keep growing.

For me personally the last 12 months my strategy has changed, I now develop properties rather then just buy and hold.
 
Thanks guys,

I don't disagree with anything you've written.

Tonibell, just to clarify, the regionals are around 7-7.5% after reno so they are more than cash-flow neutral with rates as low as they are, but I hate making statements about CF+ because everyone chimes in and says 'I'm getting 17% in Kickatinalong.' ;)

The values vary.. Around 400k in Canberra, 300 in Wagga (value after reno), 310 Bathurst and around 500 in Shoalhaven. For Bathurst and Wagga I've tried to buy in the better parts of town where it's more desirable and that's worked well, but I agree that for similar money I could be looking more metro. Maybe I'll shift my focus that way and see what I find, even if it does cost a bit each week.

Thanks for the advice.
 
Thanks guys,

I don't disagree with anything you've written.

Tonibell, just to clarify, the regionals are around 7-7.5% after reno so they are more than cash-flow neutral with rates as low as they are, but I hate making statements about CF+ because everyone chimes in and says 'I'm getting 17% in Kickatinalong.' ;)

The values vary.. Around 400k in Canberra, 300 in Wagga (value after reno), 310 Bathurst and around 500 in Shoalhaven. For Bathurst and Wagga I've tried to buy in the better parts of town where it's more desirable and that's worked well, but I agree that for similar money I could be looking more metro. Maybe I'll shift my focus that way and see what I find, even if it does cost a bit each week.

Thanks for the advice.
Our strategy was to buy whenever we could afford, especially in the accumulation phase, as markets will do what they want to do and nobody has a crystal ball into the future, right?
As to the strategy, well, if it worked for you whey change?
I have found out that at current times even the unrenovated properties, closer to CBD though, are at a premium.
It's tough choice but if you have a plan you will follow through....
 
Sounds like you're doing great! Keep going and broaden the search! Start targeting other areas and look into BA's, we have just moved to WA and looking online and reading here it's not an ideal time unless you know the area. To fly back to the east coast, hire car, accom etc it's going to be more than 1500 so i see that a BA will cost more but do all the work for me to get the best place for my situation and hopefully I'll just have to pick one with a nice letterbox and away we go. i plan to do a reno over the phone with some good tradies. I'd prefer to do the work myself too but you can't have the perfect ip in your back yard each time your ready to buy!;)
 
You are doing well Allgood. There are still a few +cf in Shoalhaven in good spots, or you could move down the coast where no growth has yet occurred, or across the country, or you could focus on a new strategy like dual occ or small development. Plenty of options, keep thinking thats the hard work.
 
In the last 14 months I've bought IP's 2,3,4 (had others previously but cashed them in over the years.) I'm now pre-approved to go for IP 5. We still have a few hundred thousand $ of equity and I think servicability is pretty good moving forward so I think our ability to borrow for more IPs is quiet strong.
You're in the top 1% of investors.

Just keep doing what you already did.
 
It is good that you are acknowledging that Properties are expensive.

Keep looking till you fin right one..

If you are doing buy n hold...make sure chosen property has few unique features.. Like close to school, transportation..bigger land component.


If you are looking for development.. Make sure you carry out due diligence .. Deal need to stack up.

I paid 920k for site in march (hasn't settle yet) and few properties in same street selling 1.5k...

Falling Interest rate will take down any property investor down who doesn't buy well!!
 
Take a view on the market but hedge your bets.

In some markets, it may be a good time to sell and pay down debt and see what happens. If it rises, you still make money, just less. If it falls, you have equity to come back in.

In some markets it may be a time to gear up.

Perhaps you can execute both at the same time.

Don't forget NYC, London, HK, Tokyo and the rest of the world in the meantime.
 
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