I use interest only . It frees up cashflow so that you can leverage yourself further .
Depending on your particular investing philosphy , leverage is the key . The more you have , the greater the potential gain . Of course this also increases your risk and you need to be aware of and allow for that .
In terms of average capital gain , aim low and hopefully be surprised on the upside . In other words , do your numbers on the lower figure and if you can still make that work , then go with it . Anything above that is a bonus . Remember , especially when you're highly leveraged , the bottom line has to work . Factor in higher interest rates , extended vacancy periods , maintenance etc . The goal is to stay in the game for the long term . That's where the greatest returns are . If you are in and out of the market you will burn profits and miss opportunities .
Apartments . Not a fan for a few reasons .
The land is the valuable bit , not the building . Also , you're at the mercy of your neighbours . Body corporate tells you what to do , not the other way around .
You could end up with time share or hotel apartments next to you . Another thing out of your control .
Oversupply . E.g. In Melbourne at the moment there are thousands of new apartments planned and approved for the city area . So in a couple of years it looks like there will be massive competition for tenants which will undermine the capital value in my opinion .
That said , there is a definite swing toward apartment living . Partly driven by cost but also driven by lifestyle . Along with that , there are new smaller apartment developments right beside train/tramlines that aren't in the central city . I don't mind the look of these as they have limited competition , have excellent transport links ( don't need a car ) and usually have a few shops or a little supermarket very close .
Housing crash . History helps you here . Look at previous housing crashes and analyse what happened . Excess supply/low demand , high unemployment , dodgy loans , recession , overborrowing etc . Also , check the location of some of these crashes . The recent US crash 07-08 is well documented . Whole suburbs in Vegas were bulldozed as they were worthless . And yet , quality property in places like New York and San Francisco hardly missed a beat . Generally speaking , the better the quality , the safer it is .
Also , don't confuse a recession with a crash . There will be times where good property is slow to sell ( recession ) but it will still hold it's value . That's vastly different to a crash .
There are many posters on this thread that like to use shock terms when discussion property . Terms like ' crash , destroy , armageddon ' and so on . Obviously these people don't own a dictionary so don't get caught up in the rhetoric .
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