Saturday, August 13, 2011

The real world of a property investor

Before you read this post, checkout this link:

What is your Cash Flow Position of your IPs?

Somehow I missed this thread on Somersoft until today, but I'm glad it was resurrected, because it's an important poll. If you do the quick math, you'll find that only approximately 23% of investors on the forum have a positively geared portfolio, with the balance made up of those on neutral terms and at the other pointy end of the data, 7% who are way into the negative territory. This comes as somewhat of a surprise to me, I would have thought there'd be a much higher percentage who have 'successfully' achieved the CF+ stage, but alas no, a lot are still paying out more than they are getting back. Of course looking at this data in its singularity is flawed and, as I have here, it's easy to jump to conclusions without seeing the whole picture. For example, those on negative geared portfolios may have properties performing extremely high in terms of capital gain. Those with CF+ portfolios could have one small unit returning $10/week profit. Perhaps there could be a better way to calculate a number to indicate with greater depth the true worth of their portfolios.
Something for me to think about and perhaps come back to in the future.


Darren said...

If only buying cashflow positive properties was easy! I know there are opportunities out there, but often you have to go out of capital cities to find them. Maybe if interest rates come down (as some are predicting) we might find some more opportunities emerging.

Andrew K said...

Totally agree Darren. Interest rates coming down would be excellent; it's a shame they are only there to buffer sentiment and there is always a down side to low interest rates. But yes, opportunities a plenty in regional hot spots.