From: Sam Vannutini
After previously posting an opportunity on Caveat Emptor, I was surprised by respondent's comments that they are only looking for positive cash flow properties. Am I a dinosaur in still believing that good buy and hold properties are essential for wealth creation? It is extremely difficult to buy at a price in Melbourne that would make it positive. My view is that equity growth allows you to duplicate you assets.
I also believe that quality properties will become cash flow positive after about 3 years as the rent increases.
There is also the issue about taxable income. If you have a capital gain and do not sell, you are not realising this gain by using the equity to buy more assets, or using the loan to fund lifestyle. Naturally, this part of the interest cannot be claimed as a tax deduction.
Lease options and wraps all seem to the flavour of the month. Whilst I believe that they have apart to play in my strategy, I worry for those who believe that they are the holy grail. I use them to pay the holding costs on my buy and hold.
On the logic of only buying positively geared, you would have to target regional ares, or do nothing until prices come down.
Am I alone in this school of thought?
I would be most interested in your views.
Cheers, Sam.
After previously posting an opportunity on Caveat Emptor, I was surprised by respondent's comments that they are only looking for positive cash flow properties. Am I a dinosaur in still believing that good buy and hold properties are essential for wealth creation? It is extremely difficult to buy at a price in Melbourne that would make it positive. My view is that equity growth allows you to duplicate you assets.
I also believe that quality properties will become cash flow positive after about 3 years as the rent increases.
There is also the issue about taxable income. If you have a capital gain and do not sell, you are not realising this gain by using the equity to buy more assets, or using the loan to fund lifestyle. Naturally, this part of the interest cannot be claimed as a tax deduction.
Lease options and wraps all seem to the flavour of the month. Whilst I believe that they have apart to play in my strategy, I worry for those who believe that they are the holy grail. I use them to pay the holding costs on my buy and hold.
On the logic of only buying positively geared, you would have to target regional ares, or do nothing until prices come down.
Am I alone in this school of thought?
I would be most interested in your views.
Cheers, Sam.
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