Hi All,
This is my first note so excuse the novice in me, but I would dearly appreciate your insights.
Ive just read the book and am passionately excited about the 10.4% return rule…..problem is I’m not sure where to find them in residential property…..have they all gone….do I have to look at negative gearing or some other property class.
My budget is below say $150,000 for houses preferably, and I will consider anywhere as I can travel a bit, but eastern states of australia would be prefered.
I am Sydney based, so nothing remotely near sydney seems to show that return in residential from my internet searching and enquiries.
Do I have to go to tiny unheard of rural towns to find the right deals and then s there a real risk of negative capital growth.
Kalgoorlie popped up as possibly comming close…the agents say about 9% is common which suggests I could get 10%+ when pushing and searching harder…but so far west and at risk of the resources boom and bust cycle I would prefer a sounder choice for the first property is it exists. (it seems rent and more recently sales prices have trended downwards over recent years from a research paper I stumbled across.
Have all the deals been hunted out and is it now a matter of pursing the negative gearing route which I dont like?
If you respond with ideas of locations that are still showing up with opportunities, I would appreciate knowing how many properties you have acquired so that I can put the reponses in perspective.
Many thanks
Woody88
So I guess from the nil response it means the 10.4% gross return no longer exisits on residential property ???
They exist. I would suggest you read Steve’s 2nd book ($1,000,000 in property in one year) to understand that you will have to do creative things to make it positively geared (such as storage units, etc).
As for locations, you have to reasearch them.
Rgds.
Lucifer_auThx Lucifer,
That is what I am trying to do, but everyone I email or talk to says its not possible anymore in their particlar town….how small a town in population terms do you think I need to look at…if wanting to find the houses to buy. <150K
rgds Woody88
Hi Woody88
I think Steve suggests a town with a population of not less than 20,000. And preferably not relying on one form of employment (e.g. a mining town).Other creative suggestions might be to find a place in need of renovation – add a new bathroom, kitchen, add an extra bedroom – divide a large bedroom into 2, paint, fencing etc (But be careful how much you spend) Maybe you could D.I.Y. to save labour costs.
This will increase:
1. the equity in the property, (then you might be able to buy another one [biggrin]
2. the rent that you can ask,
3. the appeal for tenants.You should also get a Quantity Surveyors report on the new stuff you have done to maximise tax depreciation.
Also it would be good if the place you find has the house planted either at the front or back of the block and the block could be sub-divided (ask the local council) and you could sell off the newly created block, thereby reducing your overall costs of acquiring the property.
Having done that [smash]you might have yourself a +CF property.[biggrin]
I haven’t done this myself, only read about it as a way of creating +CF.
Hope it helps [biggrin]
Regards,Sharon
Thanks Sharon,
Given my location in Sydney and nothing of +CF nearby I am resigned to buying something more remote…..which then means rennovting is all too geographically difficult.
The block size and house positioning is a good idea as subdivion can be done from a distance.
I need to keep searching for the plain vanilla 10.4% returns without much capex required……its just a question of what areas might I start in…..your comment on single industry reliance is good as that is why I am a little concerned with Kalgoorlie.
Can anyone point to more likely regions in NSW?
Houses – $150,000 or less, with 10.4% return, and not a rennovation job?
Regards
Woody[suave2]Yeah, me too. I would like to know the same thing.
Where can you get 10.4% gross with no capex and low risk of capital loss?
I have seen at least 2 people get returns close to that in Sydney within the last 12 months. It is not the area, but the property you should be looking at.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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Woody88,
As per Lucifer’s comment, get ‘$1m in Property in One Year’ and turn to p.160 – “The opportunities of today are not related to location, they are related to circumstance.’ Also, take on the idea that +CF deals are MADE not BOUGHT and you’ll move past where you are now.
Cheers,
Hi Woody , for your comfort i own probably australia’s largest property investment company (in turn over of sales ). i have in excess of 60 properties (val in excess of $20M),95% of those are bluechip propreties. in my experience do not invest in low demographic areas( i learnt the hard way). i never use wraps , the key is to own , who wants $20/wk that is not life changing and can easily be lost by damages , maintenance and non paying tenants.just negotiate a great deal, a fantastic area is richmond in victoria , its surrounding suburbs are substantially higher values most $100K+ and it is currently going through a lot of transformation, it has transport, infrastructure , etc. i have recently negotiated 10%+ rebates, plus an on going annuity. that is you get paid an income on this deal for the next 4 years at $100wk plus the rent and these are not inflated prices. the deals are there just ask , the developers and builders will negotiate if you ask the question . i am new to this forum as well, it is a great way for you to learn, but don’t let negative opinions stop you just use that info. to move forward good luck
Tony please tell me more.
I am interested in what you are stating here and how you do a deal like that.
As for the largest Australian property Investment Company, is that over all or Privately owned? Cause if it is publicly owned I am surprised the value is kind of low, or I am just misinformed.
Can i also ask, are you currently selling in Richmond or buying yourself?
Byronent
Adelaide SAI have recently purchased in Richmond myself , it is a private company and the properties are only my personal portfolio, not my companies. I negotiate everything in bulk and ocassionally we are offered projects to clear to assist with construction finance needs or pre mortgagee or the developer wants to sell quick because sales are holding up there next project . I prefer to use rebates (personal preference) as it maintains the vals in the project , it is favourable for depreciation purposes and for tax reasons. I currently have offices in Hong Kong , China (both new) , Singapore , Melbourne and hope to open in Perth in the next 2months.I also have staff at the world property expo in Dubai (just finished) All i do is package deals for investors and benefit as a company of course
and buy in the projects myself, it becomes addictive. Eg. Richmond original sales price $540K ( i believe to be too much ) my clients pay $415K ($125K rebate plus receive $100/wk for 4yrs ) or take the annuity as a discount i do not care. the rent will be approx $440/wk + $100/wk ($540wk) . we then finance the purchase price at 80% of $540K to give $416K and the only cost is stamps ,(still under constuction so they are quite low) and you have just purchased a $540K property which you owe $416K giving $540wk for the first 4 years in a bluechip suburb , that $150K property will create $253K equity in 10yrs at 10.4% this would create $912K , i love capital growth:)
PS sorry for the long winded speel but i thought it appropriate to explain in some detail and explain i am talking from actual dealsNO NO NO, i appreciate your speel, how do I get more info.
Do you advertise these deals or all private?
We are currently looking in China as an alternative however their method of business has made it somewhat complicated to pull any serious deals off
Byronent
Adelaide SATony,
Just explain the last part? – “that $150k property will create $253k equity”?China is very difficult to create good contacts and there property is only just opening up to the world, many areas foreigners can not buy , unless you set up a company in Hong Kong and transfer the money that way . At this stage we are not negotiating in China for clients at has not yet 100% stabilised (the government can easily change laws retrospectively, meaning you lose your property). If you are interested in deals in the great land of Oz , ping me an email and i will ensure you are sent some sample deals , currently available
Hello Bryonent & Tony
Interesting to read that you’re looking at China. I’m based in Beijing, have been here for about 7 years doing business. Got some real good “can-do” contacts in Beijing and Shanghai. Everything is possible here, for example the domestic house market in Beijing is fully open to foreign buyers without restictions.
If you have trouble doing business as a foreigner, then register as a wholely Chinese owned business. (even though you are not Chinese) there is a way around everything.
Perhaps there is some avenues of cooperation.
email me [email protected]cheers
BJOriginally posted by tony wpb:
i own probably australia’s largest property investment company (in turn over of sales ). i have in excess of 60 properties (val in excess of $20M),95% of those are bluechip propreties. in my experience do not invest in low demographic areas( i learnt the hard way). i never use wraps , the key is to own , who wants $20/wk that is not life changing and can easily be lost by damages , maintenance and non paying tenants.just negotiate a great deal, a fantastic area is richmond in victoria , its surrounding suburbs are substantially higher values most $100K+ and it is currently going through a lot of transformation, it has transport, infrastructure , etc. i have recently negotiated 10%+ rebates, plus an on going annuity. that is you get paid an income on this deal for the next 4 years at $100wk plus the rent and these are not inflated prices. the deals are there just ask , the developers and builders will negotiate if you ask the question . i am new to this forum as well, it is a great way for you to learn, but don’t let negative opinions stop you just use that info. to move forward good luckHi Tony,
I am curious to know how the properties that your company has on its books can achieve as much as 10% returns. I initially thought these to be businesses, however upon checking your website realised you deal with residential as well as commercial investments.
I know Richmond very well. I grew up in North Fitzroy, bought and sold properties in most sectors of the City of Yarra and as such was astounded to read that you could achieve such returns in areas which are amongst some the more exxy parts of Melbourne. As for your reference re low demographics, I think you are downplaying some of the perceived negatives of Richmond, albeit a viable CG area, it does have pockets which contain (a) high levels of unemployment, (b) high crime rate, and finally (c) high levels of asian communities.
Again, I am bewildered as to how can you achieve 10% returns when the average yield is 3.98% on a median price of $450K residential property?? [blink]
Please explain……[biggrin]
Bryonent,
Here are a couple of links that you may find informative re Richond (council = City of Yarra). Please note 50% of householders in Richmond are renting, many are singles, childless couples or single parent families, hence as an investor in makes good sense to purchase there.
http://www.aussiehome.com/trendCharts/vic/
You will need to select RICHMOND here and plot it on the graph. You have the option of plotting either by price or percentage. Please note, the data is only to June 2004 and as yet has not been updated.http://www.domain.com.au/Public/SuburbReport.aspx?mode=buy&searchTerm=3121
=http://www.yarracity.vic.gov.au/
http://www.yarracity.vic.gov.au/publications/council%5Fplan/pdf/council-plan-04-08.pdf
Please let me know if you need any further info. Having grown up, attended school and worked in the suburbs within the City of Yarra, I know it like the back of my hand. [biggrin]
Cheers,
Jo
I also concur with the below view. I know there are lots of deals out there waiting TO BE MADE!
As per Lucifer’s comment, get ‘$1m in Property in One Year’ and turn to p.160 – “The opportunities of today are not related to location, they are related to circumstance.’ Also, take on the idea that +CF deals are MADE not BOUGHT and you’ll move past where you are now.
and buy in the projects myself, it becomes addictive. Eg. Richmond original sales price $540K ( i believe to be too much ) my clients pay $415K ($125K rebate plus receive $100/wk for 4yrs ) or take the annuity as a discount i do not care. the rent will be approx $440/wk + $100/wk ($540wk) . we then finance the purchase price at 80% of $540K to give $416K and the only cost is stamps ,(still under constuction so they are quite low) and you have just purchased a $540K property which you owe $416K giving $540wk for the first 4 years in a bluechip suburb , that $150K property will create $253K equity in 10yrs at 10.4% this would create $912K , i love capital growth:)
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