G’day to all Forum Folk…
This is intended for us all, to be a “Brainstorming Session”
(1) Tell your story of a Great/Bad deal, as a Buyer or Seller. It will motivate, educate or warn others. Funny, Sad, Good or Bad… all welcome. New to the Forum? Here’s your chance.
Oldies… add your bit… no holds barred.(2) Suggest an idea for anything related to People, Property, Investment or Finance.
(3) Ask the Question you most want answered.
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^^^^^^^^^^^^^^^^^^^^Rules^^^^^^^^^^^^^^^^^^^^^^^^^*There is no Limit as to your contribution. It can be as long as is necessary. Or you can keep posting ideas as you think of them.
*There is no such thing as being Right or Wrong.
*No Negative comments on any Post are permitted.
* This is our chance to try and pull together and maybe something you say will give someone else an idea for something else. I have conducted “Brainstorming Sessions” in the past and I will mention a few results/ideas that came as a result, during the course of this thread.
* Please Focus on your OWN contribution and NOT others. If you get ideas from anothers Post… say so. This will only work if we all get behind it and Add Value to this great forum.
>>>>>>>>>>>>>>>>>>>>>Go For It<<<<<<<<<<<<<<<<<<<<
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]G’day you Timid Bunch…
I’ll be the Bunny and go first!
November 1993, four of us attended a “Brainstorming Session” in an office in Canberra. I had the makings of what we all now refer to as ” Mortgage Reduction”. It looked a goer… except .. if you pay all your salary into your mortgage ” How do you live for that First month?
Eventually, someone wrote on the whiteboard “Bankcard”. That proved to be the Missing Link. So simple, so easy… “Why didn’t I think of that earlier”?
The rest, of course is history. The Advance Bank wrote to their customers to introduce the concept and invited them to call my mobile number. The phone melted. One Appt. every night with a success rate of 1:1.6…that’s not 16, but 1.6.
Every Bank in Aussie now has a variation of my original program. An associate has taken it to London and Ireland… working like a charm… All because someone said “What about Bankcard”?
What is your…. What about or What if?
Get the Idea?
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]Hi Bill,
Thought I’d wait, but seems we are the only ones here on a Sunday arvo.
Not specific, but worthy I think of a cryptic start to your topic. I have experienced “brainstorming” as par for the course when I attended the year long Enterprise Workshop. What I found is, creativity never comes from lineal thinking. No matter the starting point, we always branched off to a topic so remote from the original topic, that we began to grow a whole new concept.
It can come from simple “lateral” thinking as in drinking upstream and doing your washing downstream.
For whatever that was worth, catchya soon. Phil
Hey Bill
Hope this is what you are looking for.
Please note that this is not my own deal but one of a close friend of mine and as a result the numbers are a bit rough.
Here goes
This person already owned a block of classrooms in a built up area close to Sydney but nolonger had a use for them. Considered selling them off and had them valued at $300000. Decided instead to renovate and turned them into offices for $50000. These are now pulling in $110000 in rent per year with all tenants signed up for 15 years.
I dont know what was paid for with debt and what the closing costs were but I have tried to work out how an outsider could have done this deal to be as profitable as possible. I have very little knowedge about commercial property so please bear with me. I thought that $30000 or 10% of the initial cost of the property would be ok for closing costs. So with a total cost of $380000 I could take out a loan for 50%(I heard that the banks are much tougher on commercial. Is that right?).So i put in $190000 and have interest payments of $15000pa.As for the new equity I have heard that for commercial property the price is much more directly related to the rent than with residential so I thought 8% would be ok. With $110000 rent the price could then be $1375000. I also thought $10000 could be ok for costs per year whatever they may be. With 8% interest I could afford to draw out about another $550000 or $600000 for later investments and still get a 20% cash on cash return on the initial investment of $190000.
Sorry for the generalness of this post but I thought that somebody could get something out of it or at least tear apart my assumptions so I could learn something. Good luck
Davidmy two things that i do in order to get a good deal is make cash offers, i,e, have finance ready to go. i heard that up to 50 percent of deals fall over due to finance not working out for the buyers. cash offers don’t fall over. although you can still get out in other clauses, like if the building report doesn’t come up to scratch.
second thing i always do which as far as i know my dad and i
‘invented’ because i’ve never heard of anyone else doing it –
is ask the RE agent for a print out of recent sales in the area.
then do the numbers on them – actual purchase price divided by the GV. I know people say that GVs mean nothing but they are so wrong. You will be able to find a clear ratio for an area.
i.e. if properties are selling over GV the ratio might be 1.4. if under then .8.
Now you get the GV for your property you want to put an offer in on and apply the ratio. that will give you the actual fair market price of what you should get the property for so you can offer under that and you know how much you can come up to. you also know when you’re getting a good deal.when you go through 200 properties in an area and do the numbers like this, sure in an area where the average ratio is say 1.4 you might see the odd 1.9 or .80. you can either think the people got a good/bad deal, or there was something else about the property that you don’t know just on the numbers. but you’ll still be able to see a pattern.
every time i go into a RE agent in a new area, i ask for this data. they always say no the first time, then you say ‘XYZ office gave me this info about another area but i also need it for this area, if I am going to feel confident about investing here.’ then they give it to you.
then they tell you ‘gv has nothing to do with the purchase price’ and you don’t say anything. Just go away, work out your ratio, and come back and floor them with your knowledge of what any property will probably fetch in today’s market, accurately. they will for sure take you seriously. i don’t necessarily let them in on what i am actually going to do with the numbers. I can glance at the numbers and quickly work out in my head a rough idea anyway. Also it’s good because you can get the addresses of the houses and drive by and know how much they sold for and for how much and on what date.
In NZ I believe that private individuals can’t actually access this information, you have to be RE agent so it’s really the only way to get this data is off an agent. they get it off the net and print it for you, and you can filter it by date and price-range if it’s a big area and there’s too much data.they will also tell you ‘we’re not supposed to give this out’ or ‘we have to be very careful who we give this out to’ and you can thank them and stuff. just try to get the numbers, trust me, it’s a *really* good trick.
the ratio obviously changes if there’s movement in the market, because the GV only gets done every few years and the market is right now. So for example one area i was watching since january, the ratio used to be about .93 (so if the GV was 55 you’d get it for 51. i virtually ignore the list price, other than it letting me know if the vendor is realistic/motivated or not.
Anyway this same area 11 months later has a ratio of 1.4.
the RE agents can tell you that prices have been going nuts, but the ratio thing can tell you by how much.the other thing i could tell from this area by comparing the data from january till now is tha capital gain in that time within my price range (which i got the real estate agent to filter).
in this area for properties up to 100K, and comparing the ratios of january to now, i figured out there had been a 50 percent capital gain in that time. (it was a hot area.)
The 55 k property which in jan sold for 51K (.93) would now sell for 77 (1.4) –
77 minus 51 = 26, divided by 55 equals 50 odd percent.cheers-
miniHi mini…..great post.One question…what does GV stand for? thanks in advance.Tools
what does GV stand for?Government Valuation.
G’day..
Mini’s yarn reminds me of my similar approach in the Canberra Market. For years I have had access to Historical Data in that Market. It is so easy now to access http://www.alhomes.com.au to get just about anything you want for the past 10 years.
With each Sold Property you get the land values for the past 10 years and any other times it’s ben sold within that period and of course the Selling Price.
I even ran stats on Individual Agents Listing Price to Eventual Sale Price. On average the Sale Price is 94% of the initial Listed Price, this is the case Australia wide.Maybe not as reliable in recent times though. They form a pattern for most agents. One in particular is listed at Selling Price + 12% consistantly.
If you live in Canberra…pick a suburb and print off the “Past Sales” and “For Sales” from Allhomes, and within 4-6 weeks you will be able to drive past a house and be within a few % of it’s true value.
Anywhere else in Aussie just buy the info by Post Code for the previous 12 months. If you’re serious about it update the records yourself from new adverts and find a friendly agent to share info with.
Don’t be surprised to find “Sold Prices” different to what you have been told. Even disappointed Vendors will often tell you that they “got their price” after several obvious price reductions. Agents will also price a sold property Up or Down depending if they are talking to a Buyer or Seller.
Check out Allhomes.com
David.. You did well with your figures on that Commercial Deal with the classrooms. Find one like that for me please….Bill
Cheers
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]G’day again…
I arrived at my Real Estate Office one Saturday morning. The Property Manager was her usual busy self for a Saturday. I got talking with one of the prospective tenants. I asked her “What can we do to improve our Service”?
She said “I don’t understand why you agents don’t put the address in the paper”. I think I said something stupid like “thats how we have always done it”.
We did the occaisional “open house” for 30 minutes and that always worked. But in Rental Adverts.. never the address. We were just like all the other agents. Except, I had asked “that” question of a tenant.It got me thinking! I rang a few competitors and got the usual… “that’s the way we do it”… or “security reasons”.
Stopping to think about it…. security? No different to a vacant house with a For Sale sign out front. So I changed our adverts, font changed,
Headline on Advert and with address in bold. We rented 12 properties the first weekend, giving us an almost zero vacancy factor, that was in the mid 90’s. A few competitors copied for a while, but eventually went back to their old ways.Have a look at Rental Adverts, even today, and you’ll find the majority still don’t have an address.
That one question gave me another idea that should be used in all businesses, not now….
another time!Cheers
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]Bill and Mini- a “wealth” of information as usual!
Bill tried your link- was misspelled its http://www.allhomes.com.au , nothing for free in WA like that, you have to pay to get sales history.
No story to add “sorry”
Mini- i’m enjoying the 1 min millionaire, gave up reading both stories at once-too hard, reading the parable now and enjoying the read- thanks
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Hi Bill and Mini
I would like to add to mini,s we also get the recent sales for areas we are looking at. In fact some agency will send them to you monthly. I have a map of the area I am looking at up on a wall and I put the recent sales figures on the map so when a property comes up I can just look at the map and see what has sold around it and for how much.
erikaHi Mini – just one question – what is GV?
Regards, Peter
‘Hi Mini – just one question – what is GV?’
Duh – just read the answer a few messages up.
So easy to skip the little posts!Peter
Folks
Better late than never, here goes.
(1) Tell your story of a Great/Bad deal, as a Buyer or Seller. It will motivate, educate or warn others. Funny, Sad, Good or Bad… all welcome. New to the Forum? Here’s your chance.
Oldies… add your bit… no holds barred.Gosh mine is pretty bland but it is the very first time I bought any real estate our PPOR, it was at auction and the agent said at the begining the house will be sold today as this is a non referal auction. I said to my husband “whats a non referal auction” he said “don’t know”. At this point you would expect we would have asked the uestion of the agent – but we didn’t, we just assumed it ment he wouldn’t be going inside to see the vendor. So we get to the end of the auction $3k under our budget we were wrapped, just as he was suposed to say sold he said “I’ll jsut wait for my instructions” – so we figure it mustn’t have ment that. He came back out and restarted the auction which got a further $4k out of us (oh well). Years later we found out it does mean that and we should have called him on it.
You live and learn.
(2) Suggest an idea for anything related to People, Property, Investment or Finance.
We should have access on teh forum to legal and finance experts.
(3) Ask the Question you most want answered.
What colour nickers have you got today?Cheers
Leigh K[]Carve your own path and lead the way …
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