Your main strategy?

Which stratgy best describes your MO?

  • Resi buy+hold +ve gear

    Votes: 23 21.3%
  • Resi buy+hold -ve gear

    Votes: 51 47.2%
  • Off plan + flip

    Votes: 0 0.0%
  • Off plan and hold

    Votes: 4 3.7%
  • Reno's

    Votes: 4 3.7%
  • Subdivide + sell/develop

    Votes: 2 1.9%
  • Developments

    Votes: 5 4.6%
  • Change land use

    Votes: 0 0.0%
  • Options

    Votes: 0 0.0%
  • Trading

    Votes: 0 0.0%
  • Commercial

    Votes: 0 0.0%
  • No stand out preference, bit of a combo

    Votes: 16 14.8%
  • Other (please specify)

    Votes: 3 2.8%

  • Total voters
    108
  • Poll closed .
As close to neutral as possible from the start, although usually negative, then moving to positive in a few years.
 
Apparently reno and hold is now ours - and not a poll option. The original plan was to sell and not rent the things out though, but financially it is working better this way.
 
We are a mixed bag. We are selling/sold 2-3 IP's that have no development potential. Proceeds from these sales will form cash reserves to fund other development/renovation projects on the remaining IP's in our portfolio to increase portfolio value, rent return and equity.

We have jumped off the work treadmill and allowing the properties to work for us instead of the other way round. A giant leap of faith, but very possible.

Martin
 
Acquire resi property, +ve cashflow and hold. Also in that is value add/minorish reno, (hold), acquire parcels of land at good value, stock up on them and build, (houses and units)... and build and....so, buying well when we can stash em away, and repeat....then it will get even more interesting, possibly commercial and businesses, (which require little input from us).

All the above is plan A, B and C, but does not necessarily include or exclude plans sub (iv) x, y or y2.

I am thinking, plotting and planning as we speak.:)
 
As close to neutral as possible from the start, although usually negative, then moving to positive in a few years.

Me too. Some are still negative but most now positive. Net is now positive, while interest rates remain low for the moment.
 
The capital growth averaging (CGA) strategy I employ utilises a regular purchasing cycle similar to what Dollar Cost Averaging is to the sharemarket. The major underlying principle to its success is it relies on your "time in" the market, NOT "timing" the market, and never never sell. So in other words it does not matter whether you buy at the top of a boom or at the bottom, just so long as you purchase good quality, well located property in high density areas ( metro area capital cities), at or below fair market value, on a regular basis.

I've basically been purchasing an IP per year. Currently we're into year 9 of this 10 year plan and to date we've built a multi $million property portfolio spread across Australia.

We've been purchasing new or near new property over older style property for several reasons, the main ones being (in no particular order) -

1/ To maximise my Non-Cash deductions
2/ To minimise my maintenance & repair costs
3/ More modern & Attractive to tenants - thereby minimising potential vacancy rates
4/ Ask a higher rent - thereby Maximising yields

Without getting into the "which is better debate, houses or Units??", I preferr to purchase Townhouses & Villas with a 30% or greater land component thereby eliminating multi story units or high rise apartments, for several reasons. The mains ones being (in no particular order) -

1/ lower maintenance & upkeep for the tenant
2/ lower purchase or entry level into a Higher capital growth suburb area
3/ rapidly growing marketplace (starting both now & into the future) wanting these type properties. This is due the largest group of people to ever be born (being the Babyboomers and Empty nesters) starting to come into their retirement years. They will be wanting to downsize for the following main reasons - lifestyle & economic.
4/ greater tax advantages & effectiveness thus maximises cashflow.
5/ able to hold more individual properties spread across your portfolio - thereby minimising area over exposure risks by not holding all your eggs in only a few baskets, so to speak

I look to buy in areas with a historic Cap growth of 7%pa and/or are under gentrification. I look to where the Govt, Commercial, Retail, private sectors are injecting money. This ultimately beautifies the area and people like the looks so move in creating demand.

I have found this works well if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.

Getting back to CGA, as the name suggests it averages out the capital growth achieved on individual properties with your portfolio throughout an entire property cycle, taking into account that property doubles in value every 7 - 10 years. Thats 7%pa compounding.

The easiest way to explain what Im meaning by this is to provide a basic example taking into account that all your portfolio cashflow will be serviced via Wages in the acquisition stage, Rental income, the Tax man, an LOC and/or Cashbond structure, and any other forms of income you have available.

For ease of calculation lets say we buy a property for $250k, so in 10 years its now worth $500k. Now lets say we do that each year for the next 7-10 years. Now you can quit the rat race.

So in year 11 ( 10 years since your 1st Ip) you have 250K equity in IP1 you can draw out (up to 80%) Tax free to fund your lifestyle or invest with. In year 12 you do exactly the same but instead of drawing it from IP1 you draw it from IP2. In year 13 you do the same to IP3, in year 14 to IP4, etc etc etc. You systmatically go right through your portfolio year by year until you have redrawn from each property up to year 20.

So what do you do after you get year 20 I hear you say ?? hmmm..well thats where it all falls into a deep hole - You have to go get a JOB - nope only joking!

You simply go back to that first IP you purchased as its been 10 years since you drew upon it first time around and its now doubled in value ($1M) yet again - so you complete the entire cycle once again. Infact chances are you never drew each property up 80% lvr max , so not only have you got entire property cycle of growth to spend you still have what you left in it first time round that compounded big time. Now you wealth is compounding faster than you can spend it! What a problem to have

Getting back to what I said in my opening paragraph about it does not matter where you buy within a property cycle just so long as you do buy, This is because you will not be wanting to draw upon it until 10 years later after its achieved a complete cycle of growth.

Well that’s the Basic Big Picture of CGA. Once set up & structured correctly it’s a self perpetuating source of tax free income indexed for life!

Btw I picked 'other'. :)
 
Some text book stuff there. I would have thought that is resi buy + hold -ve gear. A good plan nevertheless.

Each year when you are buying a new IP, are you using equity in one of your IPs to fund deposits and borrowing 100%?

100% lends.... Didn't know that they still did these in this market....

I pulled out equity to buy my last two IPs and still don't have a 100% LVR... It can be done...
 
100% lends.... Didn't know that they still did these in this market....
Not sure we're on the same page here? I'm sure I'm not telling you anything you don't already know but what I mean by 100% lending is using equity from another IP for the 20% deposit and then borrowing the 80% on the new IP.

I pulled out equity to buy my last two IPs and still don't have a 100% LVR... It can be done...
I know. I've been doing it for some years. Essentially I'm asking you if you are doing it the same way I'm doing it.
 
Some text book stuff there. I would have thought that is resi buy + hold -ve gear. A good plan nevertheless.

Each year when you are buying a new IP, are you using equity in one of your IPs to fund deposits and borrowing 100%?

I ticked 'other' because my strategy is a mix and not one alone. It consists of various -ve, +ve, cash flow positive, cashbond and LOE strategies.

In the early years I borrowed a full 106% xcolled against my PPOR. the 106% consisted of 100% purchase price + 5% purchase costs + 1% surplus funds to cover any vacancy between settlement and first tenant or any unexpected repairs/costs. Then when as values increased I released the xcoll to stand alone.

These days as my portfolio has now substantially grown I still borrow 105% however I used LOC's to fund 20% deposits + 5% costs and borrow the remaining 80% to complete settlement secured against the IP.

I hope this helps.
 
I just want to get an idea of the strategy demographics of this forum
I think you may well find everyone is different,myself 60-70% is in unencumbered property,that will happen if the invesment span is long enough and you stick to your investment plan,does not matter 1% over the longterm,just as long as you invest in what you understand,1 year is nothing,5 years -10 years -15 years then you can make a opinion.. btw i voted no standout..
willair..
 
I've done -ve gear buy and holds up until now but am very serious about doing a development this year (hehe, it sems a pity to waste all those town planning and architecture skills)
 
well I choose buy and hold -geared. BUT, so far we have only ever signed for 2 properties (PPOR and IP1) and both have been H&L & OTP. We are likely to continue to build as long as it makes sense for us, but would happily buy an already established house too. Also It just happens that our IP will be neg geared, but I would be thrilled to have some pos geared ones as well. Really the only part of our strategy that is consistant is the Buy and hold part - the rest is up for negotiation.
 
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