negative or positive

W

WebBoard

Guest
From: Wayne Scholes


What is better negative or positive.

I read all of Jan's books, watched the video,played with PIA and attended many seminars. I also had all the experts come to my home with their laptops and everyone said to negatively gear.

So I used as much equity as I had in my own home and bought a property in a bayside suburb of Melbourne.

I then started reading Robert Kiyasaki and listening to his tapes, playing cashflow etc. and he says go positive.

Recently I went to the bank to see how we were going and they told me that the property I bought 12 months ago was now probably worth 50000 more.

I want to use this to purchase another property (not as lavish as the first) but I am wondering which way to go.

As I see it, if I go - the only profit I will make will be in growth when I sell the properties and this will be after CGT

If I go + I can use the income on another investment eg blue chip shares or regular payments into a managed fund and obtain the growth as I go.

As Kiyasaki says why spend a dollar in order to get .30 cents from the government in tax concessions.

What does everyone else think on this subject.
 
Last edited by a moderator:
Reply: 1
From: Michael G


Wayne,

Neither strategy is bad. As you said yourself, negatively geared, you made $50k in 12mths.

Mt recommendation... play cashflow. You will see that to begin with you want capital growth which you then roll over into cashflow (with which to get out the rat race).

I negatively gear, and it helps me. I also positively gear. Both strategies work and both have different end goals in mind.

The reason why I'm not giving you a straight answer and filling this post with a heap of mind rah-rahing is because your question has so many answers. I mean your question will produce a different answer from every person that answers your post.

Put it this way. If you found a really REALLY REALLY good undervalued property that would be negatively geared (for a period of time), that you could resell later for a great profit would you buy it, or leave it alone because its negatively geared?

Michael
 
Last edited by a moderator:
Reply: 2
From: Dale Gatherum-Goss


Hi

I believe that the most important thing that you should do is to establish your own rules and strategies by which you play. This way, you will not be buffered from pillar to post when a new idea is presented to you.

Both strategies work and both have a place.

What's important is for you to find what works best for you in terms of what you're looking for from your investments.

Good luck and enjoy the journey.

Cheers

Dale
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 2.1
From: Sergey Golovin


Wayne,

May be to expand slightly on that would be -

What is negative gearing? Negative gearing term is when you have to top it up with your own money (hard ... cash).
Simply put it means you are loosing your own money at this particular time.

You have to pull that money every week out of your own pocket and pay the balance. Put it simply you have to pay back to the bank weekly/monthly repayments in full.
Well, you do know all that anyway (as you said you have negatively geared IP).

This is why you do get so many tax deductions (including offset against you salary, etc...etc.).

What about the positive? You probably will get not as many (you still get hips of them) tax deductions, because you not losing your own money, but you will get positive cash flow from day one. You do not have to top it up all the time.

It just historically happened that we do have negatively geared thing going on for quiet sometime in this country and looks like this where you will get the most out of system right now as an investor. It might change in the future but it did not happened yet.

More sophisticated investors are looking for other options and positively geared is one of those options out of many.

In current climate in Australia you do need either lots of equites (either paying off as soon as you can or buy lower market value), big deposit or different investment strategy (wraps, flips, lease options, etc.). Wealth of information out there, in the archives.

I understand what you are saying - would be nice to have positive cash flow and good capital growth and hips of tax deductions and...and ...

Well, I am one of those people my self. Keep thinking about it all the time…

May be getting your self one of the positively geared properties you can compare few different options. And will give you the answer you are looking for.

Serge.
 
Last edited by a moderator:
Top