Hi, I really dont know where to start? I have looked at a lot of postings on this site and nothing has made me want to go out and get involved in a cash positive property. This 11 second rule seems to be a hot topic! lets do the sums on say a 250k unit 20 minutes from a capital city. $500/2*1000= 250,000. So to purchase a $250000 Perth outer suburb unit you would need to be getting $500 per week rental income (26k p/a). Now i dont believe their is to many people out their who would be prepaired to spend 26k p/a for a unit 10 minutes from the perth CBD. So lets go further out, 15km you could pick up a 2 bedroom unit for $130k, lets do the sums. 260/2*1000=130k. So you need to get $260pw to be cash positive with this one. So it looks like a capital city is out of the question! Ok so we need to find a property that is going to be cash positive and also be afordable for tennants. Lets get in the car and go for a drive and find a country town to invest in. Find a unit worth $75k, lets use the 11 sec rule again 150/2*1000=$150, Ok we have finally found a unit that a tenant can afford, but the only problem is that you now live 250km away from you investment, it is old and in need of constant repair, the capital growth in the small hamlet is bearly keeping up with CPI. So to be cash positive you need to be returning over 10% p/a, good luck. My second point is this. You have been investing since 1985 which means that you should have 7 or 8 properties ( buying 1 every 2 to 3 years). Now when i retire the last thing i want to be doing is having to repaint,repair,worry about the idiot who hasnt paid rent for two months and could be causing thousands of dollars damage because its not his property and if you havent had any trouble yet like this, you are very lucky. I would like to here from people who have cash positve investments to put their case forward on how we can rent a 250k,130k and a 75 property using the 11 sec rule
TAILS
Have you considered “lease-optioning” or “Wrapping” the property to the “idiot” in the property or maybe a new tenant?!
Never heard of “wraps” and “lease-options” – do a search on this forum using the words “wrap” and “lease option”.
Remember “buy and hold’ is not the only strategy you can use. Get creative and the profits will flow. Nobody is going to hand you deals on a plate otherwise everybody would be in property (there’s enough people in here already!!).
As Steve says “Success comes from doing things differently”.
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Hi,
I think that you have missed the wider picture of how to create positive cashflow returns and I certainly feel that you have misapplied the ’11 Second Solution’.
From my experience finding a deal that would be wildly cashflow positive based on ring real estate agents and applying the 11 sec solution is a gross under-exageration of what’s needed to be truly successful.
The purpose of the 11 sec solution is to find an area to invest in… the next job is to find properties that lend themselves to falling within a parameter of problems that you are able to solve.
The buy and hold technique is just one of many ways you can use to get +ve cashflow… it is certainly not the only way.
Be very careful not to adopt an attitude of “I can’t do it, so the whole idea must be flawed.” This is not true at all. I continue to attract and invest in +ve cashflow properties, and I know that many other people do too.
quote:
Ok we have finally found a unit that a tenant can afford, but the only problem is that you now live 250km away from you investment, it is old and in need of constant repair, the capital growth in the small hamlet is bearly keeping up with CPI.Saying this suggests that the outcome you want is confused. Do you want cashflow or capital gains? If it is old and in need of constant repair then you need to factor that into the deal. if the numbers and the risk:reward ratio don’t work out… don’t buy the deal.
For example, yesterday I told a friend about a house for sale in his area for $30,000. Only problem was that it was pretty much in the middle of nowhere… but it was a potential opportunity.
quote:
You have been investing since 1985 which means that you should have 7 or 8 properties ( buying 1 every 2 to 3 years).To whom is this directed? I began investing in May 1999.
quote:
Now when i retire the last thing i want to be doing is having to repaint,repair,worry about the idiot who hasnt paid rent for two months and could be causing thousands of dollars damage because its not his property and if you havent had any trouble yet like this, you are very lucky.Hmmm… this is scarcity talk as you seem to be focusing on fear and the worst case scenario. If this is your paradigm then you could get tenant insurance for potential damage. I have not had any such trouble and I don’t regard it as luck.
quote:
I would like to here from people who have cash positve investments to put their case forward on how we can rent a 250k,130k and a 75 property using the 11 sec ruleWell, I have properties at, above and below these values that are all +ve cashflow and exceed the 11 sec solution.
I think that Stuart O’Neil has great advice… he says Tenants don’t rent houses people do! If you do not like dealing with people…buy shares! Property is a peoples game.
Finally, I’d like to finish on a positive… despite your bias that you don’t seem to think it can be done, you at least remain open to the possibility that you might stand corrected. To this end you should be encouraged for having the conviction to write down your concerns.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Tails277,
everyting in life has a risk – even walking across the road to get to my bustop to go to work in the morning has risk. So to talk about not wanting to invest because you have to put in some effort, in my opinion is more risky than the risk itself.
I live in Perth like you and have bought in Bassendean (11km from city). It is cashflow positive 3×1 and i bought it for $88k.
Yes the property market is overheating and its harder, but focus on getting the purchase price down rather than getting higher rents.
Its good to be sceptical but not negative. Sceptical is better than blindly following.
I am 25 and i am more scared of retiring without enough money to survive on rather than worrying about the hassle of having to arrange to get someone to fix my tennants broken door or do some repainting.
I hope that you have an alternative plan to provide money in retirement because the government isnt going to support you.
(no disrespect intended.)
DanSteve thanks for your post, I beleive that most people on this forum are people with 9 to 5 jobs who have been romanced into the property boom of the last 2 years. Interest rates at all time lows banks pleading for us to use their money and the government stimulating a false economy. What happens in 6 months time when we are still at war, bussines stops spending, employment ceases oil prices increase, goverment spending large amounts on defence? I will tell you what happens interest rates will go up. Now if you have 3 or 4 properties then a 2% rise will be hard felt. Believe me this is the end of the cycle, smart people are getting out of the houseing market and are cashed up ready to transfer back into the stockmarket when things settle down. People will be burnt. Steve you said in your post that you have a property that is cash positive that is valued over 250k! So your trying to tell me that using the 11 second rule you have a tenant paying you more than $500 per week! Now i have been on the net all night looking for a place with rental income of 500 per week and the cheapest i could find is 445k i would need $900 pw to make this deal work. And to you dan i do have a retirment plan, which wont include driving across the country side fixing kicked in doors of properties being rented by undisirables. I am following my fathers lead who retired at age 39 with before cost income of 132k (one property) that is never vacant.
Hey tails,
Hope you don’t feel like people are having a shot at you as everybody seems to be trying to share their opinion (which is only their opinion). Yes it is their opinion and may not be right for you. Your dad sounds like a very smart cookie and I wish I had a role model like that. You have such a great example to follow and I’m guessing years of experience and wealth to boot. You are fortunate and I am sure you are capitalising on that knowledge.
I’d suggest that Steve’s deal with $500 income would be a multiple dwelling such as units. There have been and still are some awesome buys out there for people to get into and if it works for them …great.
For me I believe that if I have bought well and the properties are cashflow positive then I will sit out the waves. I know that I am only young to this game but I have spoken to many older property investors who have over 20 years experience and sought their advice on what is going on.I bought a month ago a property for $54K that rented on Friday for $140/week. This is in a city of 150000 people. The deals are there just a little hard to find at times. This vendor had to sell for various reasons so I got a good deal. I figure if I get 6 of those kind of good deals every year I will be pretty right by age 39 much like your dad.
These are just my thought Tails and I hope they do not offend in any way but i am happy on my path and confident it will lead me to where I want to go. It sounds like your path will be equally prosperous and for that I am thankful.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkI can see where Tails is coming from and I admit to being sceptical too.
What bothers me about “cash positive” property is that it is so reliant on being tenanted. I mean, if the economy goes bad and you struggle to get tenants you are “knackered”, you have no capital growth to fall back on.
Please tell me if I am wrong.
I can see where Tails is coming from and I admit to being sceptical too.
What bothers me about “cash positive” property is that it is so reliant on being tenanted. I mean, if the economy goes bad and you struggle to get tenants you are “knackered”, you have no capital growth to fall back on.
Please tell me if I am wrong.I disagree – IMHO, I think the first thing to go when the economy goes bad is capital gains. People start selling their homes and investments in desperation and lower property values. Many then become tenants.
As for what happens to rental prices – many of the positive cashflow rentals I’ve seen have been lower cost rentals. When the economy goes bust, the first place fat is trimmed is on the upper end of the scale, so most positive cashflow properties are fairly safe. But in a big crash, few properties are unaffected.
But that’s just my 2c
Brent
Hi,
The great thing about this forum is that people are welcome to have and express alternative opinions.
If you can’t find any +ve cashflow propertiers then no problems… no one is forcing you to invest that way.
For me though, I can continue to find and buy a range of properties and to date my strategy has worked well.
As the market changes I expect that my strategy will need to change too. I am mindful of what mught happen in the future and I agree that the boom capital gains periods are coming to an end, but my I invest for cashflow not capital gains.
This is my strategy, which is right for me. You need your own strategy for you conditions and circumstance.
Bye
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi there,
I think what I enjoy and gain encouragement from is the positive attitude ( no pun intended! ) and enthusiasm from the participants of this forum.
Mind you, there is nothing like the subjects of politics, religion or money to start up a lively discussion.
Tails277 and Kirby319 have raised some issues that are obviously of concern to them. And fair enough. Roofarmer, Steve, Dan260 and AD have tried to suggest ways to make null and void those concerns. Also fair enough.
I am a firm believer in the power of the investment vehicle known as property. Other people I know are into shares, or managed funds, or fixed interest, or superannuation, and some others I know still believe that the government will provide for them so they don’t feel they need to invest at all……
The point that I’m trying to make is – each to their own. As with politics, religion and money, people in each camp will have a million reasons why they are right and everyone else is wrong.
Tails277 has mentioned several reasons against investing in property – war, increasing interest rates, tenants from hell, etc. Personally, I think that while George W Bush is president of USA, Australian residential property is about the safest investment there is in the world ( although probably residential property in New Zealand as well ), for exactly the same reasons Tails227 thinks it may not be.
What I find interesting is on another post is the story to Tails227’s Uncle, and on this post the brief mention of Tails227’s father. I am also in the fortunate position where both my father and my uncle retired in their mid-late 40’s with similar incomes/investment portfolios to Tails227’s family, and thus I, like Tails227, have got two excellent role models in my immediate family.
My only suggestion at this point to Tails227 and Kirby319, is that there is much more to property investment than the 11 second rule, which seems to be the subject of much discussion across this entire forum. The 11 second rule is a great place to start, but it is not the only thing to consider when potentially purchasing a property.
Once again, each to their own. Dan260 says it best with his comments about life being risky. However, with risk comes reward. No-one is going to hand big piles of cash to us on a silver platter, so therefore if we want the reward we have to work for it and take some risk. The trick is to minimise the risk, and maximise the reward. That is also what I enjoy about this forun – sharing hints and tips on minimising the risk and maximising the reward. I too, like Dan260, have realised that if I don’t do something now, then the future looks scary.
Tails227 – if you get the chance, I’d love to hear the story of your father. Your uncles story has certainly inspired me !
BDM
One of the things I’ve learnt over the last few years is that there are a multitude of ways to get rich with property.
In the end, you have to find a method that suits you both mentally and financially, and then pursue it with a passion.
In some ways, I find the hardest thing is choosing which way to make money and sticking with it!!! [
]Keep smiling
FelicityTails277, it’s the old question of a glass half full or half empty. this site is definitely on the half full side. So, if your assumptions are correct, and there are people who will be badly affected by an increase in rates, then there will be some great buys to be had in that time as people look to get out of their debt. We’ll be waiting!!!!![8D]
Isn’t the unknown what causes Fear? [?]I am relatively new to this game, however have done tons and tons of research, yet there is still tons and tons to be done. In my opinion property is the safer option to invest in during any times of uncertainty. For me the current uncertainty of war is the best arena to be starting in because it may turn out to be the hardest time to invest. So when things do become stable again, I will have “confidently” sailed through the storm and everything else will be a piece of cake. I agree each to his own, but you do need to know your arena well in order to do well in it.
Thanks again to everyone for being so helpfull with information and encouragement!
Ursh[]Tails..
Have a look at this and tell me your thoughts..
In the paper to day I can get 5 houses for less than 400k..with the shortage of rentel propertys I will get 140/150 per week if not more Would you do this or not???All can see the tactics by which I concur,none can see the strategies out of which victory has evolved…
Davlyn
I find it a bit of a worry when you ask others “Would you do this or not?”
Your invesment strategy may be different to other investors. So what YOU want to achieve may be COMPLETELY different to what others want to achieve. Do you intend to wrap these? Or b&h, reno’s etc…
While this forum does facilitate open discussion (in terms of helping one another), you really should address the problem of what YOU want out of these 5 properties. In other words, only you can really answer your question at the end of the day.Happy Investing
Oscar
I Think FW raises a very good point. What works for one person doesn’t neccesarily work for another.
What is important is to have a goal in mind, a strategy to reach that goal, and a system for choosing your desired properties (whether it be residential, commercial, positive cash flow, or capital gain, or a combination of all).
If you have a goal in mind then everything else seems to fall in place. It’s not about being right or wrong, it’s about achieving the desired outcome you want.
As Steve quotes regularly: “Would you rather be right than rich, or rich than right?” ie. would you rather have the last word but die poor or be open to new possibilities and die financially free?
Just my 2c worth![}
]“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Oscar..
You have hit the nail on the head..that is the point everybody is diferent..to me this good income and i wouled do this but you and all the others on the forum have difrent thoughts..even steve has some ways that i dont like the souned of
but thay work for him..
just trying to get his thoughts on a very basic rental cash flowAll can see the tactics by which I concur,none can see the strategies out of which victory has evolved…
These replies are great and I mean that. [
]My scepticism isnt in regard to propert investment (which I think is the way to go) but in the risks/benefits of positive geared housing. This is because my fear that a low capital growth property will be left un-tenanted i.e disaster!.
I really appreciate the replies because I’m very prepared to listen and be persuaded otherwise. I’m just trying to learn.
Again, many thanks. [8D]
Hi all,
Well once again no one has been able to give a specific scenario on positive cash flow propities. If someone could reply to the following questions it would be great.
1/How would a 2% increase in interest rates efect a property.
2/ A tenent can not be found for a property for say 3 months.
3/ The banks want more security when times get tough (investment doesnt come up to valuation).
What is the point of cash positive properties? are they used for extra weekly income or will they be used to retire, if it is the latter how is this possible! Lets say you buy a 70k property at the age of thirty, that means you have to hold that property to the age of 60 or so (now i dont know of many 70k properties that are in a condition to last 10 years let alone 30 years.
Please fellow postees give me answers, you havent as yetTails old boy,After reading all the posts,including yours,I really don’t think that anything you read on here is going to convince you. Your mind is obviously made up.That’s fine,but I suggest that you look elsewhere(maybe a share forum).I on the other hand am one of those investors that relishes the cheapies(I like to call them penny dreadfuls).My houses rarely cost more than $30000 and rarely rent for less than $100/week.My vacancy rate is a bees dick under 100%.I really don’t care if they all fall down in 30 years.Cheers to you all,Mick.[
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