invest for cashflows or capital gains

[auckland investor]

In RichDad PoorDad books it says invest in real estate for cashflows and hold onto property.

Do not do property flipping cause you will lose money. It also much more risky and you make your money when you sell your real estate, not buy your real estate.

What do you think is better?

I want to invest for cashflows but it quite hard to find. Should I wait to real estate bubble pop until I buy cashflows real estate?

[freezinhot]

Do not do property flipping cause you will lose money. It also much more risky and you make your money when you sell your real estate, not buy your real estate.

Subjective, general statement and totally untrue. You can make money from trading but need to be very good at it not to lose your shirt. (especially now)

I have lost money trading but not nearly as much as I made, and made mistakes that were invaluable to my growth. I now know what not to do!

Not sure what he meant about making profit on selling, many suggest you make it on purchase. Makes perfect sense if you buy well you have created instant equity.

FH

[ENP]

Not sure what he meant about making profit on selling, many suggest you make it on purchase. Makes perfect sense if you buy well you have created instant equity.

I think it means, because you buy for cashflow it pays you rent as soon as you buy it (providing it's positively geared) whilst if you buy to flick it off as a do up then you need to sell it for more than purchase + expenses to make money.

So if you invest for cashflow, the price of the property doesn't matter as much as if you invested to sell it off in a few weeks/months time.

[AMR]

Come to APIA, network, and learn about cashflow investing!

There is cashflow positive real estate out there at the moment - you can find it quite easily even in Auckland Central suburbs and definitely in apartments.

[ENP]

Come to APIA, network, and learn about cashflow investing!

There is cashflow positive real estate out there at the moment - you can find it quite easily even in Auckland Central suburbs and definitely in apartments.

Is that Mt Wellington AMR ?

[drelly]

I don't think that one is better than the other. They're different animals and it's more about what works for you.

[AMR]

Is that Mt Wellington AMR ?

All over...I am tracking places in Onehunga, Kingsland, Mt Albert, etc

[spurner]

There is no real estate bubble in NZ, so you'll be waiting a very long time for it to "pop"!

Invest for cashflow; capital gains doesn't pay the bills.

If you buy a property and create cashflow then you have almost certainly created capital gains also. The two are certainly not mutually exclusive.

[Perry]

It's certainly a horses-for-courses matter.

The 'make your money when you buy' is
one cruel and glib confabulation. There
may well be the potential to make
money when one buys well, but that's
all. Future potential is not the same as
making money / cashflow now.

The trail of PI disasters is well be-sprinkled
with B&H PIs who decided to try other
options like developments, flipping, rent-
to-buy and such like. That said, there are
certainly a few spectacular successes
around, too.

Buy one as a B&H, see how it goes,
learn from the experience and decide
on that basis, where to from there.

While skill & knowledge are invaluable,
some experience is edifying, too. And
the best of luck to you. That sometimes
helps, even if it really shouldn't!
.

[eri]

i see the difference between when to B+H

and when to flip

as timing

right now, it's B+H time for beginners, those who have a few successful flips under their belt can continue as they know their areas and costs

the next Q is when does it change from being a time for B+H to a time for flipping

it's going to take some time but if you are interested in the possibility you should use that time to research the market

i can see flippers still operating in the ak apart market, buying very cheap at auction and then putting back on the market cheap

[Steve Netwriter]

Sorry to go back to basics, but what is your aim?
I assume you want to "make money", or more accurately "increase your wealth".
But what is wealth? Isn't it the ability to buy things?

So the question has to be, what is it you want to be able to buy, in the future?

Does that sound like a stupid question? Probably to most people it does, but let me illustrate.

Suppose your intention is to buy a house. So you buy a house, and wait, its price may go up, or down, and you still have a house. You've not gained wealth relative to what you want to end up with, a house.

On the other hand, if you want to finally buy food, and electricity, and clothes, then what matters is how much of that stuff your house will be able to buy you.

What you call money, that plastic stuff, that's not wealth, that's a medium of exchange, and a damn poor store of wealth. So that can't be your aim can it?!

So I would say, stop measuring your wealth in terms of plastic "money", and instead think in terms of what you want to end up buying.

I expect this will go .....phew...right over most people's heads.
Oh well. Or maybe not, one can but hope.

[Perry]

Money - paper or plastic.

Sure, Steve - it's crap as a store of wealth,
but it's hard to beat as a means of exchange.
Tried bartering a house for some groceries?
.

[Steve Netwriter]

Hi Perry,
Sure, at the moment, but then if you look at where this system came from, the creation of counterfeit gold receipts, you've gotta ask whether you like a system built on a fraud.
I don't, and I'd prefer an honest system.

[muppet]

Who is going to change it?

[Perry]

Is it perhaps more cogent to ask:
what other system are you using,
at the moment? If the answer's
the same as the rest of us, then:
when are you going to change
and to what?

Even though I agree that the
present system is flawed, I can't
see a viable alternative. Or, as
I can't beat 'em, I'm forced to
join 'em.

And, it's timely to again point out
that what's being described as
a capital gain is really not that,
at all. Rather it's no more than
a hedge against inflation, one of
the core flaws of the present
system we seem stuck with.
.