for the novice

[BYC]

Hi Guys

my question to you that have 10 properties +, starting out is always a challenge, but it gets easier later..

Normally when one begins , the properties are usually negative geared, so to advance and keep the banks happy , do you
- purchase postive geared properties even if they 2 bedrm flats on cross leases in say less desrable part of town, and maybe have 2-3 of these .
or, buy to sell to increase cash flow...

Guess part of our problem perhaps is that we have been purchasing properties on good parts of town , full size sections, ie a house that we would live in.

Our goal is to have 10 + properties and then build on that, so , again the question for those of you that own 10+ properties are they a mixture, units, flats, residential etc.

Cheers
Nigel

[Re@der]

Mixture of flats and houses. But yield (cashflow that the bank requires) is much easier to get on flats.

[essence]

Renos

You could always try complete a couple of renos. This should give you cash flow and allow you to buy and repeat again, or buy/hold etc.

Good luck

[BYC]

thanks guys

[toby]

Whilst looking at the outside in it may appear that cash flow positive properties are less desirable this is not the case.
A perfect example is a friend of mine who bought a property at Christmas and reconfigured it creating about 20% equity and a 10% yield. This property is situated in an excellent area of Wellington. He made more in equity in that one deal than he does in an entire year working a job.
Try to avoid negative cash flow or at least get close to even or you'll end before you begin.
Also I might ad it depends on what you are trying to achieve - a nest egg or early financial freedom.

[BYC]

it is becoming more difficult to avoid negative geared properties, even in less desirable locations.
In CHCH the average 3 bedrm home is $330k, average rental is $300-$320 pw based upon 9% fixed rate, the property will be negatively geared @ $13k, even if you were lucky and picked up a 3 bedrm doer upper @ $250k spent $20k on repairs, got a good tenant @ $330pw you will still be negatively geared @ $7kpa
What is your opinion ? wait until the market drops dramatically, this may or may not occur.

[cheekychops]

well Chris Ashendon, who seems to be an expert in what you are wanting to do, made several hundred (cheeky) offers in a month, and a few of them stuck. Can't recall the actual figures, but I think he said he bought the properties from 65-85% of RV (not CV presumeably) So he ended up with positive equity from the purchases alone. Read his story (third down form the top today) "The Journey - Chris Ashendon". It's a great read.

The market has obviously changed since then, but I think even he was buying in the "frenzy" a few years ago.

[Halfway To Paradise]

Hi Guys

my question to you that have 10 properties +, starting out is always a challenge, but it gets easier later..

Normally when one begins , the properties are usually negative geared, so to advance and keep the banks happy , do you
- purchase postive geared properties even if they 2 bedrm flats on cross leases in say less desrable part of town, and maybe have 2-3 of these .
or, buy to sell to increase cash flow...

Guess part of our problem perhaps is that we have been purchasing properties on good parts of town , full size sections, ie a house that we would live in.

Our goal is to have 10 + properties and then build on that, so , again the question for those of you that own 10+ properties are they a mixture, units, flats, residential etc.

Cheers
Nigel

We have just purchased our 4th unit, we purchased all 4 within the last year so we are negatively geared. We have made a point of purchasing 2 bedroom units close to town. Our thinking is we will get decent rents because they are close to town, they have not cost us a fortune and our risk is spread as far as keeping them tenented. I would hate to be in a position of having one property that was quite expensive and have no tenent in it. Our other thought is that with units you are limited to how many people will live in it, our fear is that large families are the ones that stand more chance of damaging a property. So far our strategy appears to be working and we have the continued support of our bank.

Rob