Posted by HR on March 11, 2000 at 21:37:48:
nt
There’s a guy across the street at NGII that thinks negative is good! - Posted by David
Posted by David on March 11, 2000 at 19:35:06:
Negative cash flow stinks. DON’T do it. Particularily on property that you’re keeping for whatever, “income”? The inevitable broken water heater will hurt you more when you have negative cash flow. Just bought a place and within 3 weeks the hot water heater sprung a leak and needed replaced. Forget negative cash flow, go for the positive and leave the rest for the unimformed, the naive, and challenged.
David
Must be an Aussie!! (nt) - Posted by Lisa in Oz
Posted by Lisa in Oz on March 12, 2000 at 12:55:07:
nt
Does he? - Posted by HR
Posted by HR on March 11, 2000 at 20:45:47:
David,
I think you have misrepresented his position. He has a more sophisticated plan than just eat negative cash flow for thirty years. While I agree with your ideas, I’m not enthusiastic about your approach. Shame is not a helpful learning tool, especially for a guy who is new and has the courage to share his deal.
In the future, hammer 'em less; help 'em more.
HR
I was just talking to someone about Aust. and the whole Negitive Gearing thing that has left Queensland in such sorry shape. - Posted by Dirk Roach
Posted by Dirk Roach on March 13, 2000 at 23:22:22:
You would be surprised at the number of folks here in the States that have no idea about that whole thing.
Dirk
Point well taken… - Posted by David
Posted by David on March 11, 2000 at 21:30:48:
I think that sometimes we, me included forget, overlook, etc, that negative cash flow is not a good thing. the deal can be great, but unless it generates cash, its not a great deal. obviously quick turn properties generate a return that is not measured in monthly positive cash flow. Many properties are rent bargains, meaning that the rent is cheap in comparision to the value. This only makes it harder to have psoitive cash flow. Hammering was not the intention, the intention is to remind that the positive cash flow path is the one to be on. I know from going down the wrong path myself. Thanks
David
Australian Real Estate 101 - Posted by Lisa in Oz
Posted by Lisa in Oz on March 14, 2000 at 11:22:21:
Well, negative gearing is the most popular method of acquiring investment property in Australia. Up until the 1986 Tax Reform Act, it was much the same in the States. For the moment, it is a relatively safe thing to do (smart is another question). However, we are changing to a 10% flat tax on July 1 and the government is making rumblings that it may do away with the tax benefits of negative gearing. So many people are going to lose their shirts. I believe that the govt. will eventually take the opportunity to close that tax loophole.
Queensland (where I live), is a different story. What was happening there was supposedly brought over by the dastardly Yanks from Florida. Developers would fly people (for free) from the various Australian states and New Zealand and show them around these beautiful condos at one of Queensland’s most popular beach resorts. Of course, these “lambs” would purchase the condos (for negative gearing purposes) at inflated prices. The locals, however, were buying well below those prices. Anyway, when these out of towners couldn’t fill the vacancies and lost their units, the developers would just fly more people in and start over. Needless to say, the law has got involved in this scheme.
Other than that, the Australian real estate market is very traditional–sale by agent. For sale by auction is THE way homes are sold in most major cities.
Not much creative stuff going on. That’s why I do renovators. Real estate is much more expensive and getting a bargain is difficult. Of course with the doing away with negative gearing, I believe a fire sale will eventuate.
That’s Australian RE in a nutshell.
Good to see someone interested.
Lisa