What percentage of your income does it cost you to hold onto property?

D

DanielG

Hi All,

Was just doing some fun things with numbers (I've been away 4 awhile) and realized I am paying 20% of income to hold 3 properties. To me, thats a little to high, and so I am in the process of finding ways of suring up that gap with other investment opportunities.

Just wanted to get the opinions of SS members on what the guidelines are in terms of being safe in terms of % that should contribute towards holding negative cashflow investments.

Regards
 
Seems like alot of variables here, may not be relevant.
At 20% of income, that could be 200k for a 1 mil income.
Still leaves a lot left over and would be very safe.
And, there could be a very good reason to take a 200k loss for future planned gains.

I think the major factor here is income level, not percentage of income.
 
No, they make me money, they must bring in money/income for me...that's the deal. Not cost $$$.

Just the way we invest, that's the way we want it to be. And it is.
 
our obsession said:
No, they make me money, they must bring in money/income for me...that's the deal. Not cost $$$.

Just the way we invest, that's the way we want it to be. And it is.
Click to expand...

Did you lose money in the beginning and turn over a profit over time or do you only buy deals that make money cashflow wise from the time of purchase?
 
I have to go to work for about an hour and a half per week to cover the shortfall. (wifes wage not included). That's another way to look at it.
 
Generally when you're first starting you have higher losses but it gets better over time as rents increase.

I'm doing ok these days.
Even the ones I bought in 2008/9 are costing me nothing to hold but I take into account depreciation.
 
yeah my holding costs before depreciation/tax benefits is around 20% of my gross income
and this is 3x neg geared properties

Regards,

RH
 
Zero at the moment....positively geared to the tune of about $38k per year.

Had a lot more Cash Flow positive when rates were lower!:p
 
DanielG said:
What percentage of your income does it cost you to hold onto property?
Click to expand...

Currently, 0%.... my strategy is cash flow neutral as I am in growth phase. This will convert progressively to +ve from 5-8yrs out.

I don't count tax benefits diverted from ATO to property as a % as I never saw a cent of it in the first place.... so really I am in front by my tax offset ;)

Remember, -ve geared does not have to be -ve cashflow....
 
6 hours of work (Landscaping) each week and I'm done....;) The rest we live quite well off and Wifes wages....cream...!


Holding 4 IP's now and just acquired PPOR on small acreage near town...:)

Getting there... and it seems the longer we go on the easier it gets...we are prolly ready for another couple IP's....

More work for Rolf...:D
 
All of you that don't have to contribute any percentage or low percentage of wages to holding costs...is this mainly due time of holding where growth covers the gap or do you only buy at well-below intrinsic value? Or is there another way?
 
DanielG said:
All of you that don't have to contribute any percentage or low percentage of wages to holding costs...is this mainly due time of holding where growth covers the gap or do you only buy at well-below intrinsic value? Or is there another way?
Click to expand...

Good questions Daniel !
 
0% as both properties are CF neutral. Both were bought earlier this year so they can only get CF positive from here in the long run. They're not in a metro city though - usually have to look elsewhere for higher (7%+ ) yields.
 
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