Some Questions ???



From: Tennille Chambers

My husband and I are very new to property investing, but are very keen to get started. I'm hoping to get some feedback from some experts out there.
We bought our first home last October thanks to the FHOG. We took out a Home loan with ANZ which is an offset account (you know, the one where all your pay goes into an account that offset's your interest in your homeloan). So far we have been very strict with this loan, and have saved a fair bit of dosh.
Anyway, we are thinking of moving out and having our existing home as a rental property, or wrapping or giving tenants the "Option to buy" using Options, and then paying rent ourselves in another home. Some questions are:
1. Wraps or Options or just straight tenants. Which is better in our situation? (we have a fair bit of info on Wraps and Options)
2. Do we need to tell our bank that we will have tenants in there if that's what we choose?
3. Should we change the loan from offset to IO or P&I? We were thinking that we could still keep our loan as is, have all our income and also the rental income go into it to help reduce our loan sooner.

We would like this to be Cash Flow positive somehow and believe we may be able to do it, there are just so many options out there that we're not sure which to go for. We'd really appreciate some feedback.
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Reply: 1
From: Mike .

Hi Tennille,

You said: "We would like this to be Cash Flow positive somehow.."

Remember, cash flow positive properties will add to your taxable income. Almost half of your gross income will be lost to the ATO. I will eventually go positive when I'm ready to leave the workforce and need an alternative income. Until then I'm happy for the ATO to assist my wealth creation with those huge tax returns. Why do you want positive cashflow now? Do you intend leaving the workforce? If so, then Wrapping seems the preferred strategy since it provides passive income.

I doubt that you can Wrap your current property since there has to be a prior agreement between you and the bank that your loan is for that purpose. Since you haven't had the property very long you can't sell it because there probably hasn't been enough capital gain to offset the purchase and selling costs incurred.

You also said: "2. Do we need to tell our bank that we will have tenants in there if that's what we choose?"

As a courtesy you can but the bank won't object since the loan will remain the same. I'm intending to relocate to London soon. My residence will become a rental while I'm OS. My bank (ANZ) says I don't have to restructure the loan at all since the interest rate for P&I is the same for home loans and IP loans. The interest paid appears in the half-yearly statements of the Home loan so I know the amount to add to the other deductions in the tax return. I will keep the Offset account so the rent and some of my OS income will go into this.

You said: "3. Should we change the loan from offset to IO or P&I? We were thinking that we could still keep our loan as is, have all our income and also the rental income go into it to help reduce our loan sooner."

My advice is to keep that Offset account growing. If it has redraw facilities, you may be able to redraw cash for deposits on further IP's or Wraps depending on the redraw limit. Check the terms and conditions booklet of your Offset account.

Incidentally, you can call ANZ on 131314 or contact them via their website for most banking enquiries. Beats waiting in long queues at the branch.

Regards, Mike
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Reply: 1.1
From: Terry Avery

Hi Mike,

I would like to address one of the comments you made in your reply to
Tennille and I must admit is one that I get on my soapbox on. If you check
the archives you will find my comments on this topic as well. What is the
thing that gets up my nose? It is the comment cashflow properties add to
your cashflow. That is the whole idea!!!

Firstly, extra cashflow allows you to buy more properties and build wealth
quicker. Plus it acts as a buffer if you have any vacancies.

Secondly, being negatively geared means you are making a loss. If you treat
IP investing as a business you want to make a profit. The earlier the
better. You don't want to postpone the wealth coming your way. How many of
you would like your employer to work on the basis of making a loss every
year? Eventually they would go broke and you would be out of a job. The hot
tech stocks did that and look where they ended up. If you own shares you
want the company to grow in value and pay dividends in ever increasing
amounts. You would scream if the directors tried to lose money to obtain a
tax benefit so why do it to yourself.

Look at it this way. You pay out $1 in expenses (your loss) the tax man
gives you back a maximum of 47 cents ( or 30, or 17 depending on your tax
bracket and the higher your losses the lower the tax bracket you move into).
Lets say you get the maximum 47 cents refund so you are down 53 cents in
losses. That still comes out of your pocket!!!

Now say you make a profit of $1 you pay the taxman 48.5 cents (including
Medicare) and you are left with 51.5 cents in your pocket. OK so we have
51.5 cents in the pocket compared to a 53 cent loss. Which would you rather
have? From your comments you want the loss as long as possible. Sorry, wrong
answer. Don't get so wrapped up in not paying the taxman that you gradually
strangle your profitability.

You say "... almost half of your gross income will be lost to the ATO..."

Yes, but you get to keep over half!!!!

You say "I will eventually go positive when I'm ready to leave the workforce
and need an alternative income..."

I would suggest you are delaying the day you leave by your mindset of not
maximising your profitability NOW.

You say ".. I'm happy for the ATO to assist my wealth creation with those
huge tax returns..."

Huge tax returns equates to huge losses, which means money is flowing out of
your pocket instead of into it.

You say "Why do you want positive cashflow now?"

To pay the expenses, invest in more opportunities, grow my wealth quicker.
Without the cashflow I am delaying leaving the workforce.

Personally I try to reduce my expenses to maximise my cashflow. I have
achieved a sort of balance where my tax rate is 30% so I get to keep 70% of
my positive cashflow. I am working on increasing that to 83% and give the
taxman his 17%. Eventually I will reduce it to 100% for me.

Anyway that is enough for now. That is just my opinion.


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Reply: 1.1.1
From: Paul Zagoridis


Thanks for that classic post.

Losing money while awaiting capital gain is a higher risk strategy than making money every month. In Australia we have a fancy name -- "Negative Gearing" to lend it credence and legitimacy.

I just wanted to say "well done"

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You took the words right out of my mouth!!! (nm)

Reply: 1.1.2
From: Owen .
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Reply: 1.1.3
From: Mike .

Hi Terry,

You've opened up a can of worms with that post but why stop there? Let's open a few more and start a worm farm. cashflow positive, of course.

I take it that you are not altogether unhappy with the current negative gearing rules especially IRT deductibility of property expenses. I think you are recommending to buy property that is cashflow positive after tax from day 1.

If so, please explain how that is achieved given the following example:

Using Ian Somers' PIA software, I calculated 2 ways of turning a negatively geared property into positive after tax cashflow.

1. Purchase the property below fair market value so the interest repayments are reduced. By how much? I calculated that for every 0.5% difference between the gross rental yield and the interest rate on the loan, you would need to discount the purchase price of the property by 10%. Common gross rental yields in the major capital cities are less than 6%. If we compare a gross rental yield of 6% with an average interest rate figure of 8%, you would need to discount the purchase price by 40% to achieve positive cashflow on the highest marginal rate of tax.

2. Purchase a property with a gross rental yield that is greater than the loan interest rate. By how much? I calculated that to be cashflow neutral after tax the gross rental yield should be at least 1% higher than the interest rate. Anything above that produces positive cashflow. So, if the prevailing interest rate is 8%, the gross rental yield should be at least 9%.

Now Terry, I have a simple request: statistics show that maximum capital growth occurs within a 10km radius of our major cities. Since capital growth is central to wealth creation, I want to purchase in the inner city. Can you tell me how to purchase at a discount of approx 30% on a regular basis or find properties within that 10km radius with a gross rental return of approx 10%.

If you say that you can't find those deals regularly within 10km but can do so further out, then you haven't convinced me that those properties with reduced long term capital growth prospects will speed up the wealth creation process.

I'm sure Bruce and Helen Cairns who recently posted the following query would also be interested in what you have to say:

Hi Again!
Have read a lot about the fact that all the profit is made when you purchase a property and importance of buying property under market value BUT... How do you do this? Does someone out there have the clues on how to do this?
Would appreciate any advice.

PS: I would hope that your supporters Paul and Owen will add something to this discussion, as well. Will Negative Gearing be dead and buried after this thread?

Regards, Mike
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From: Glenn M


What do you mean by buying or building multiple income streams in the one property? (Forgive my ignorance....)


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From: Owen .

Hi Mike,

I'm happy to keep contributing to this one.

Your first point is correct; the rent must cover the costs. If you divide 100 by the current interest rate you get a number. Multiply this by the current annual rent of a property and you get a starting point for an offer price. The first thing I do when I look at an IP is find out the current rent from the lease or from comps in the area. I then do my calculation.

100 / 7 (percentage) = 14.28
250 (rent) x 52 = 13000 (per annum)
13000 x 14.28 = $185,000

In my area most 2br apartments are asking $200-$220k but the rent will only cover $185k. Negotiations will begin a bit lower than this. This obviously means that 99.999999999% of offers are rejected, which is why you need to farm your target area, not pick and choose. Make an offer on everything, look at lots, get to know the agents, prove your knowledge of the area and that you are serious. When someone bites, act on it.

You also forgot one major thing - adding value. Once you get that bite and you have bought well you can then improve the property simply and cheaply with paint, carpet, light fittings, door handles, all the tricks every guru says to do on every website on the 'net. Then maximise your rent and manage your tenants.

Then you should be earning a profit and your rental return percentage should be nice and high.

Example - I recently offered just over 60% of asking (too much) price on a duplex and got a bite. The offer wasn't accepted but interest was shown and the door has been left open for another offer. It's 8km from Sydney Central, fully tenanted in an area that's one of the top growth areas in the Inner West with loads of easy potential.

Looks like I found my motivated vendor. I'll let you know how I go. If it doesn't work, I'm sure there will be one next week.

Don't let people say it can't be done. I believe the people (especially those on this forum) who are doing it.

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Re: Some Questions ??? Free the Worms!

From: Terry Avery

Hi Mike,

You are correct that I am not unhappy with the tax laws on negative gearing
and I use them myself. However, do not be mistaken that I recommend you buy
property that is cashflow +ve IP from day one, although I have done that

The point I was making is about the mindset that people have, and perhaps
perpetuated by certain seminars, that negative gearing is the goal in IP
investing. This leads people to be complacent about costs because "it's a
tax deduction". My argument explained that a cost is a cost and if you are
behaving in a business like manner you want to reduce your costs as much as
possible. The aim is not to maximise your expenses to get a bigger tax
refund but to minimise your costs to improve your profit.

I am sure that there are those who are proud to announce they had $10,000 in
losses and the tax man gave them back $4,700. Yet they still lost $5,300 in
pursuit of tax deductions. HOWEVER, non cash deductions for building and
furniture depreciation is wonderful as they improve your profit. I would
rather make $10,000 profit and pay the tax man and be left with $5,150 in my
pocket. You will notice that the difference is $10,450 between the two
attitudes. So someone who follows a totally negatively geared strategy and
wants to perpetuate it will be over $10,000 worse off than someone who makes
a profit and pays the tax man his due.

People, get out of the mindset of beating the tax man and into maximising
your profitability. If you have to pay tax then grin and bear it (and think
of the roads you drive on, the hospitals and schools we have).

My point was on the mindset people have towards negative gearing not that
negative gearing is a bad thing if used with thought and understanding. So I
am at a bit of a loss over the tangent you have gone off on about buying 40%
below market or on yields of 10%. I will answer that separately in another
post as this is getting long winded.


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From: Glenn M

Thanks Michael,

Understand now.

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From: Paul Zagoridis

Hi Mike

Terry and Owen have added good points that I won't go over.

Negative gearing will never be dead. It is a great tool for those who understand the risks. Bet that capital appreciation will outstrip your holding costs.

I currently contract in IT. At every contract over the last 4 years there is at least 1 person who has bought a negative geared property that has not performed well. Best case they are break even, worst case of QLD two-tier marketing they are $50K down.

Negative gearing is sold with slogans like "Let the tenant and the taxman make you rich." My slogan (equally over-simplified) is "Never negative gear".

I'd negative gear a deal that gave me significant instant equity.

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Re: Some Questions ??? Free the Worms Part 2

From: Terry Avery

Hi Mike,

Now to the other issue you raised. Yes you can buy within 10 km of the city
provided you buy well but I wouldn't limit myself only to that area as other
areas may be just as attractive. It will all depend on your research.

I don't think it is as easy as some make out to buy below fair market value
because who determines what is fair value? From what I see of a lot of
developments they are overpriced so they can lead people to believe they
have received a significant discount. My lowest yield is over 7% and I won't
look at a property below that unless I am very confident of cap gains and in
the current market I think we are reaching the peak and I don't believe it
is sustainable at these levels.

I don't believe a 40% discount to fair market value is achievable. If you
can do that then I would say that the original price was way over the market

An interesting point about the marginal rate of tax. You say 40% discount if
you are in the top tax bracket which means that if you are negatively geared
and bring your tax bracket lower you get less of a refund from the tax man
and would therefore need a bigger discount in the order of 60-80%. Does
anyone realistically expect to get that (without bordering on criminal or
unethical behaviour)? So no I cannot tell you where to buy at a 30% discount
and my comments were not suggesting that in any way.

You said: If you say that you can't find those deals regularly within 10km
but can do so further out, then you haven't convinced me that those
properties with reduced long term capital growth prospects will speed up the
wealth creation process.

Me: I didn't say anything about this but it is a matter of balance. You can
have a property with great cap growth but low yield which costs you heaps to
own in terms of the money coming out of your pocket. Without cash to service
the loan and expenses how do you think you will go at the bank when you want
to access your increased equity to buy your next IP. Cash is important
unless you have a $100k+ salary. Some people prefer to have a lower cap
growth property with a high yield which provides them with the cash to pay
the interest, rates and other expenses without dipping into the paycheck
each fortnight.

I would like you to ask you a question Mike. What are your bona fides? How
many IPs do you own now? I settle on my sixth next week. So I have shown you
mine you show me yours.

Thanks to Paul and Owen for their support. I know Owen has been around on
this forum for a while and I realised recently that I have been here for
over a year already. For you newbies, I read every post in the old forum
before contributing my 2 cents worth. I recommend you do the same for the
wealth of information that it contains.


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Re: Some Questions ??? Free the Worms Part 2

From: Mike .

Hi Terry,

This is just a quick reply to say that I have read all the responses today and will reply with my thoughts, shortly.

Thanks to Michael, Owen and Paul for wonderful contributions and to yourself, Terry, for getting the ball rolling. I think this is a very insightful thread.

I'd like to hear back from Tennille to get her thoughts on this discussion, or any other newbie investor who is contemplating their first purchase. I'd also like to hear from people who have bought negatively geared property and would they continue to do so despite the strong arguement against NG property put forth in this thread.

Terry, you said: "I would like to ask you a question Mike. What are your bona fides? How many IPs do you own now? I settle on my sixth next week. So I have shown you mine you show me yours."

Mike: Terry I have previously posted my IP details at:,30

In that post, I have indicated not only how many IP's I have, but also their total value. I have said it before and I'll say it again, the number of IP's is irrelevant. What can you conclude about an investor who owns one $200K property versus someone who owns 4 X $50K properties?

So, Terry, tell us the FULL much is your total portfolio worth?

I'll be back, soon.

Regards, Mike
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Re: Some Questions ??? Free the Worms Part 2

From: Terry Avery

Hi Mike,

Yes you have the bona fides, three IPs total $725k, pretty good and we are
even stevens.

What can I conclude about an investor who owns one $200k property versus
someone who owns 4 x $50k property. Each is investing in an area he has
researched and is comfortable with.


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Re: Some Questions ??? Free the Worms Part 2

From: Paul H

financial advice.

My Newbies basic understanding of property investing in response to mike
looking to hear from newbies!!!!!!!!

I think this thread has many great advantages to help understand negative Vs
positive gearing and options available to invest. I'll try and summarise
what I have read and what I understand and those more experienced can point
out any variations and/or errors.

The one statement that appears most; is that The Most Money made on property
is made at PURCHASE time. Buying wholesale is the way to go.

Ideas on how to buy Wholesale.

1/ Local Expert......Pick an area and understand it nearly
COMPLETELY...This means knowing what values a 2/3 bed house/Unit in nearly
EVERY street is worth. Once you know this; you will see when an asking price
is lower than market value; and as such; you have FOUND your 80% wholesale
purchase. This can be time consuming; but requires little cash or expertise
to start and can be practiced easy by using paper with ads (but no prices)
and to pick what the FMV is and seeing what it. sells for. You can also do
this as a group to help bounce ideas and gain more understanding. This
investigative process is MANDATORY.

2/ Shotgun offers.....On the area that you have researched above; make
a 75% of Fair Market Value (FMR) on ALL properties offered(make 100-200
offers!!). Motivated Vendors will respond to your offers; and maybe 1 in 100
(1 in 10 if your lucky) will settle and you have achieved 80% wholesale
purchase this way. Novices can do this; and also helps to get used to
dealing with agents and the black-art of property negotiating. MOTIVATED
vendors appear to be the main way to get 80% FMV properties.

3/ Buy & Expand.....This way is for the more experienced. This requires
you to evaluate the potential of the site and determine its potential. I.E.
House for sale for $200K; can be subdivided and extra house added for $120K.
Total new valuation on whole lot is $400K. On these figures; $200K is a
good buy for the house. Not generally good for novices as the risk is higher
and needs understanding of planning and building processes; but can be quite

4/ Buy & Renovate....This way is towards the Peter Spaan/ Geoff Doige
way...Buy a property which needs cosmetic improvements; make the
improvements and then re-value. The trick to this is initially to stick to
simple improvements that are low-risk/low work. The last 10 years of
renovators has reduced the number of these available but here are still a
few left; however; for those with a handyperson attitude; there can be good
rewards in this. Tip...look for the long grass and messy yards.

5/ Buy direct from the developer and haggle....This leans toward the
Henry Kaye style. If a development is good enough to invest in; it should
stand on it's own merits. The haggle works when developers need pre-approval
and will sometimes discount to get the deal across the line to start.
Sometimes the prices asked are inflated so that the discount you think you
get; really only brings it back to FMV.

6/ Become a developer.......This is hard to do individually; definitely
not for the inexperienced. However; an option which appears to be gaining
merit is a mini-developer. This is where a group form a syndicate to fund a
development in conjunction with a developer. This appears to work well for
both investor and developer. The developer takes a lower margin whilst being
able to do more developments. The investor gets a larger return for
investing; or buys one or more of the properties themselves. This option
depends on the skills of the developer to locate a good site and having a
design which maximises the site.

Yield Vs Growth

Capitol growth is primarily achieved within 5K's of GPO (8%-10% roughly PA);
and that as you go out from there; growth drops off. Not gospel; but roughly
0.5% less PA per KM further out.

Rental yield is higher further out from GPO; apparently as compensation for
lower capitol growth.

The return a property will give you is a combination of both Yield(Rent) and
Growth. Yield is cash now. Growth is cash later (but access can be had now
via equity loans).

Growth gives you the better long term return than Yield; but you need yield
to pay for things (gotta have cash!!!)

Cash is KING and it is what you need to buy the groceries when you retire;
so make sure you

Negative Vs Positive Gearing.

1/ A Positive geared property today; maybe tomorrows negative geared
property. Look at ALL parts of your proposed deal; and determine what would
happen at an interest rate of 7%, 8%, 9% and 10%. Alternatively; 5 year
fixed rates of 6.75% are around; so fix if you want to know your cashflow
and minimise your risks; try the numbers.

2/ If a property is negatively geared and costs $100 per week ($10,000
loss 49% tax rate, $5,100 out of pocket); and the growth of the property is
$50,000; then you have made a real profit of $32,000 ($50,000-50% CGT
discount = $25,000......taxed at 49% costs you $12,500.....take away also
the $5,100 paid to service loan and you have $32K left)..........But
remember; growth is NOT guaranteed...but can be estimated....and always
allow for a rainy day. Your forced sale is another investors bargain.

3/ Note: It has been suggested that we are near the top of the property
cycle; and unless we are buying at 80% FMR as per above; negative gearing
would be a medium to high risk strategy in the short term. Always get an
independant valuation.

4/ Some people are totally against negative gearing; some on the fence;
plenty of marketers in favour. always consider the big picture; and work ALL
the numbers. Positve gearing and neutral growth isn't a very good deal
compared to Large growth and small negative gearing. Always be careful.

Buy & Hold Vs Flips Vs Wraps

The long term hold strategy is targeted at properties with high growth
potential; with the general consensus being that the property should be no
worse then revenue neutral. Rent guarantees should be viewed with caution as
each property should stand in it's own right and not need guarantees. Buying
properly will allow you to follow the principles in Jan's books and will
progressively grow your portfolio of properties. At the end of the day; a
mix of high-growth; high-yield properties (preferably both at once!!) will
give positive dollars in the pocket to pay bills; as well as positive growth
to protect the value of the portfolio.

Flips are quick buy-and-sells; and unless you know your market VERY well;
can be quite dangerous. The current trend of buying off the plan on long
lead-times till settlement (12-24 months) and then selling before settlement
are versions of this. Some people have done quite well out of this; and some
not so well. Experience and knowledge and also risk management are required.
Other ways to flip are to buy at 80% FMR and resell at 95% FMV. Stamp-Duty
and other expenses can make this prohibitive. Not recommended for those new
to property investing; and lots of research needed and probably lots of time
to implement. Success does have good rewards though.

Wraps. A straight out cash-flow only process; which gives roughly $50 Per
Week per property. No opportunity to increase return; so in 10 years time
when $50 = $20; process reduces in value over time. The positive to this is
if you can do 20 of these; it will give you $1000 per week which you can
then use to support other ventures.
Plenty of people doing this; but no long term history (No one has been doing
it more than 5 years in Australia). The Burley method(or slight variations)
are the most used method in Australia. Research this before you try it.

Financing the investment.

Many options are available...Interest only, Principal and Interest,
Line-of-Credit, Offset; Redraw. The list is endless. The themes that appear
most popular are as follows (each should be evaluated as to each persons
position as different strategies will use different options):

1/ Use the least amount of cash as possible. Deposit Bonds may be able
to be used instead of actual deposits and can be quite effective in
preserving cash.

2/ Revalue your property every 12 months to redraw any extra equity for
further investments.

3/ Mortgage insurance can be used to reduce your cash investment; and
speed up the acquisition of more properties. Find a lender that has an
option that allows you to add it onto the outstanding loan.

4/ Speak to a Mortgage Broker who knows their stuff. Best to do first;
as they can help work out from your position which options can or cannot be
supported. Finance is the key to the whole process; so make sure you get the
best finance broker you can.

This is just a start of my investor guide; and is what I have picked up from
recent threads. Hope it generates more good information.


Paul H.

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Re: Some Questions ??? Free the Worms Part 2

From: Ian Findlay

Excellent Post Paul, Thanks
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Re: Some Questions ??? Free the Worms Part 2

From: Paul Zagoridis

So we can now shut down the PI forum and retire to the bar (meeting point) or the market (caveat emptor).

Paul has just covered it all in 30 zillion screensful of succinct information. He's also earned himself the instant notoriety of creating a classic on his first post.

Newbies, gurus and all in between should print and put it on the shelf with their encyclopedia of Property Investment books.

Wouldn't hurt to review it every Saturday morning before sallying forth against the hordes of agents.

Paul Zagoridis
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Re: Some Questions ??? Free the Worms Part 2

From: Apprentice Millionaire

What amazes me is that he classifies himself as a newbie!

Apprentice Millionaire
(aka Jacques)
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Re: Some Questions ??? Free the Worms Part 2

From: Mike .

Hi Terry,

Back again, with some observations re this thread.

First and foremost the lack of input to the discussion by the newbie investors. If you don't have an opinion about what strategy is right for you (negative gearing or positive cashflow), how can you confidently purchase any IP? Anybody who has purchased without confidence must surely fit the "hold and pray" method of investing.

Speaking of confidence, the new conference "Caveat Emptor" will showcase people who have this in abundance. Observing the entrepreneurial investors pitching their deals will give us a different insight into how they evaluate properties. Should be a good learning experience for us all. Will be interesting to see how many deals are cashflow positive from day one.

This thread started with a query about positive cashflow and the replies highlighted the fact that Negative Gearing is a riskier and more passive type of investment than Positive Gearing. Passive in the sense that the investor is content to reduce the losses rather than take an active role to make the investment self-supporting.

Michael Croft showed us that with some clever renovations you can build multiple rentals to get the rental yield up to positive territory.

Dave has shown us with the recent Melbourne Apartments deal that buying multiple properties as a group you can achieve a discount on the purchase price. May not be enough to get out of negative territory but it follows Terry's advice to maximize the profitability of the investment.

Michael Yardney has shown us that purchasing wholesale is possible as an armchair developer.

Gee Cee has shown us that discounted properties can be found when countercyclical buying at auction.

Owen and Paul look for motivated sellers.

Robert and The Wife do Flips and Wraps.

Most of these people would structure their investment activity as a business to minimize tax.

So, as Michael says, their is more than one way to skin a cat.
I've got the message now, Terry - maximize profitability of the asset.

Speaking of which I have a newspaper article which shows the average growth of 213 suburbs in Sydney from 1987 to 1997. The median of those averages is close to 9%. The best suburb, Menai, at 14% and the worst, St Ives, at 5.75%. Look at the difference. The rental yields are about the same. So Total Yield favours Menai which makes it a better investment proposition.

Based on that, I won't consider any deal that comes up in the Caveat Emptor conference unless the projected 8 year capital growth forecast is at least 9% or the Total Yield is better than 14%.

Regards, Mike

PS: I composed this post before Paul H submitted his "monster" post. Thanks, Paul for taking the time to create that. All future enquiries regarding cashflow positive strategies will be directed to your post. By the way, have you personally tried any of those strategies?
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Re: Some Questions ??? Free the Worms Part 2

From: Tennille Chambers

"What's going on here?!" WOW! It was great to read all the replies and other posts in relation to my question. Although some were a little over my head. I am a "Newbie" after all.
I really appreciate all the comments and I have learnt a fair bit.
FYI - 1. We've decided to lease out our property, and manage it ourselves (and we have done our due diligence with the figures).
2. We have told the bank what we wanted to do, but they said that we didn't have to.
3. And we're keeping our good old offset account 'cause it's working great for us at the moment and will continue to do so in the future.
Also,we still believe Positive Gearing is the way to go. It just makes more sense to us and we're sticking to it.
We are fortunate enough to be able to rent out a friend's property (which is negatively geared) for alot less than we will receive for our home. We have our first bubby due next Saturday, so the extra bedroom and living area in our friend's home will be a big bonus.
Sorry for not replying earlier, but I felt that this thread became a little too advanced. "Not that there's anything wrong with that."
Anyway, just wanted to let you know of our decisions.
My name's Tennille by the way (aka Newbie.)
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