Investing in investment properties, do you have one, or two or more??

[Mumma2threecherubs]

My husband and I bought our first home at 20 and 21 we sold that and made $40 000 which helped us get into our next much bigger home. We have now decided we want to try and get our first investment property in the next few years.

I Would love some outlooks from those who have investment properties . Do you have more then one, how do you make money in the end if the renters money goes to paying off the mortgage? Do you only make money if you sell the property. I'm just doing research now on negative gearing and all that.

Would love any insights/advice.

[GM01]

Hi there,
DH and I acquired an investment property when we moved in together - we both owned and moved into his house, so mine became our investment property (it was a apartment, hence the reason we chose his house!).
Mortgage repayments were $1350 per month on my apartment, rental income was just over $1000 per month. Doesn't seem like a big gap, but then you have water and rates, maintenance (which can get pricey - plumbing call outs etc), strata fees if its an apartment, bank fees etc. So it was more like $1700 per month outgoing once you took all that into consideration! Yes, negative gearing allows the difference to be tax deductible, however that is only a saving of whatever percentage tax bracket you are in.
So, we then said ok, we're paying $700 per month out of our own pocket, maybe $475 per month tax adjusted. That's almost $6,000 per year. Is out propertly increasing by that much? (And if you have to pay capital gains tax because it is purely an investment and you never live in it, it would need to go up by more like $10,000 per yer to recover your $6000 costs). In the current property market, nope, it wasn't. So we sold it 6 months before our wedding and the extra cash was much better off in our pockets and going towards extra repayments on our mortgage.
So there's a lot to take into consideration. And that;s not even mentioning months where you may have no tenant so have zero rental income etc.
If you don't have a big deposit for an investment chances are your rental repayments won't cover the mortgage and you'll end up in this scenario - which if you buy in an 'about to boom' suburb might be worth the long term investment for the property value increase. But it wouldn't be a quick buy-sell turn around, that's for sure.

Hope that story helps!

[Mumma2threecherubs]

Sure does, great insight!!! :)

[KatiesMum]

The most important things to remember if you are thinking about investing in property is

a) - it is a LONG term investment. You are unlikely to make a short term profit
b) - you will usually only be successful if you have spare cash flow.

There are many investment groups that will tell you that you need no deposit and no cash flow to put into it ... but that kind of proposal is seriously high risk.

If you have some spare cash, and equity in your own home to use as collateral, then sometimes property investment can be beneficial .... but in the current market it still has risks.

Do your sums carefully, research the area you are looking at buying in, and make sure you dont overpay or overstretch yourself.

[TripleTime]

Ours are long term investments, we bought the houses for next to nothing, slight reno's & will hold onto them for years & years.

We won't make any money till we sell.

[lovelymum]

hi, I used to work for an investment property company and with the right tools and sound advice you can do nicely for yourself. Key elements to investing are:

Property price compared to rental income
Rental demond in the area you are looking at
You will need to retain the property for 7 - 10 years to make a good profitable turnover.

If you currently have your own home and have a good amount of equity in the property you can use that to fund your investment, what you will need is a really good tax acountant to maxamise the tax benefits of investing. I am not sure if I am allowed to post this info but check out this site: www.signaturepropertysales.com.au (http://www.signaturepropertysales.com.au) thats who I used to work for and I stand by what they do and they are not dodgy brothers they offer really good sound advice and for their investors are a one stop shop they pretty much take care of everything from start to finish but take the time to educate you along the way :)