Investment Strategies

[Joh]

Hello.

I am looking at two strategies for property investment and finding it difficult to know which one would be best for me. One is the Margaret Lomas (Destiny) Strategy which is buying cheaper properties with good rental yields. The other is using the services of Metropole Property Investing whereby paying a buyers agent 2.5 % to search for investment properties and buy for me. These properties would be better quality and more expensive in a high growth area, therefore lower rental yields and I pay the shortfall from a buffer account which is money from my equity of my PPOR and I repay this money at the end of tax time... Do these buffer accounts really work? Either way, I can't afford to pay the shortfall out of my income and I would like to build a portfolio of 10 properties.

Any advice on the above would be greatly appreciated.

Cheers

 

[skater]

I can't afford to pay the shortfall out of my income and I would like to build a portfolio of 10 properties.

I think you may have answered your own question with this statement.

If you cannot afford the shortfall, you are basically gambling that your PPOR is going to continue growing. What happens if it doesn't?

 

[Propertunity]

Yes, I'd have to agree with skater.

If you cannot fund the Metropole strategy out of income and are relying instead on funding it out of PPOR equity, then you may end up cannibalising all of your PPOR equity (a capitalising interest strategy) if the market where you are buying flatlines on rental growth, or your PPOR CG flatlines, or both, for a period of years (which can & does happen).

Again if you cannot fund the Metropole strategy out of income, then perhaps you should not be forking out for BA fees; either theirs or Ms Lomas's?

 

[mary&mat]

I looked into Metropole & I seem to remember there being a $2K (or thereabouts) fee for signing them on before they charge the 2.5% on a property you purchase.

 

[CuttingHorseFan]

I'm a Destiny client. They're teriffic and got me started. I can't recommend them highly enough.
Metropole - hmmm and I'll leave it there.

Hope this helps - and this is my first post. Yay!

 

[Lofty]

Hi Joh & CuttingHorseFan

CuttingHorseFan, welcome to the forum.

Joh, another strategy you may like to consider is, portfolio building with the assistnce of vendor finance. We believe our long term wealth is measured by the amout of equity we have in property. To accomplish this we use both positive and negative cash flow properties.

Our +cf properties are properties we buy and on-sell with vendor finance and our -cf properties are the properties we plan to hold forever ;-) Our +cf properties maintain our lifestyle and support the -cf on our long term buy and holds.

We've bought and sold lots of our +cf properties but not sold any of our buy and holds. They're our long term wealth. The +cf properties, for us, are just a cash flow business, just like any other business you might own.

Using vendor finance to help our portfolio building works for us.

Cheers, Paul

 

[Joh]

Thankyou all for your invaluable help. That was my first post (question) and wow how helpful it is to have a community like this one!

Cheers
Joh.