Forum Replies Created
Hi Lionheart,
First of all – welcome to the forum! I’m sure you will find this a fantastic resource.
I would start by reading Steve’s books – “0-130 Properties” and “$1,000,000 in Property in One Year”. Here you will find the very simple calculation which you can do in your head as an initial qualifier before you go on to do your full financial analysis. Steve calls it the “11 Second Solution”. What you do is take the rent (eg. $100/wk), multiply by 2 (=$200) then multiply by 1,000 (=$200,000). If the purchase price of the property is less than or equal to this figure, then there is a good chance it will be +CF.
11 Second Solution therefore is
Rent/wk x 2 x 1,000 = >Purchase Price of Property
or
Purchase Price / 1,000 / 2 = <Rent/wk
It’s a very simple way to pre-qualify properties, rather than having to wade through lots only to find you’re wasting your time.
Two words of caution:
1. This is only a pre-qualifier. It does not take into account any of the “due diligence” you need to conduct before purchasing. It just suggests to you that the raw numbers would work in theory.
2. You may be hard pressed in the current market finding deals like this, especially if you’re just relying on the internet for your searching. But don’t lose heart! Maybe start by doing a search on this forum for “11 Second Solution” and reading the posts that come up – they will give you a good idea of what the current situation is. The key at the moment (as suggested in “$1,000,000 in Property”) is to find “problem properties” and solve the problem to make a profit. This could mean doing a reno and onselling, finding a small subdividing opportunity, finding other forms of income in the property, etc etc. You are limited only by your experience, knowledge and imagination (and the law!).
Okay – hope that’s helped!
Best of luck!
Adam
Don’t let life get in the way of living.
Steve,
I’ve been in the Army for a few yrs (and then a few more…) and at various times I’ve considered buying with DHA myself.
There are certainly benefits of doing this – guaranteed rental income, (generally) good quality tenant, in depth property inspections on tenant departure, etc etc.
However, the downside for me is that they charge a phenominal PM fee, and there is little or no flexibility (read “CONTROL”) for you. In my books, if I’m going to own an investment, I want control over it. I want to be able to change PMs if I’m not happy with the service they are providing me. And what happens in 9yrs time?
As far as a recommendation – I would say go for it as long as you know what you’re getting into. I don’t think they will try and do anything dodgy, but I think their terms may be quite draconian.
Please keep us informed of how you go, and if my observations are incorrect (I’m happy to be wrong if I can learn from it!).
Also – if you believe what you read, Ipswich may be a really good place to buy a house with DHA in the next few yrs! Possibility of some kind of “super base” at Amberley would have to be good for your investment I’d think!
All the best,
Adam
Don’t let life get in the way of living.
Hi Vojinv,
Welcome to the forum! I’m sure you will find this forum to be of great assistance to you as you continue your PI journey.
As for Vendor Finance – a lot of people do it and there are many different methods of conducting vendor finance deals. “Vendor finance” in itself simply means that the party selling the property receives some or all of the purchase price from the buyer later on down the track after the settlement date. (Please forgive the overly simplified definition – but it gives you an idea!). The method of doing this is limited only by your imagination (and the relevant laws of your state/country).
If you have a look at the top of this website – go into “Investor HQ” and you will find descriptions of some of the different ways of making money from property. Two of the methods – Lease Options and Wraps – involve vendor financing.
Hope that helps?
Cheers,
Adam
Don’t let life get in the way of living.
Hi everyone,
The following links are good ones to refer to whenever you want to check the validity of something on the internet (though I have to agree with Dr X on this African one – it’s pretty obvious!).
http://hoaxbusters.org/
http://hoaxbusters.ciac.org/Cheers,
Adam
Don’t let life get in the way of living.
Shake-the-disease,
I’m not sure which option you were angling towards, but I would always choose the CF+ option. If you do your homework then profits are guaranteed, whereas relying on CG involves taking a chance that the market will behave as you have forecast. And in the meantime you have money going out of your pocket every week.
What do others think?
Good food for thought though – thanks!
Cheers,
Adam
Don’t let life get in the way of living.
Damien,
The simple truth is that you only pay tax on your income, and the max marginal rate of tax is 48%, so even without using any other structure (ie. investing as an individual) you will never be taxed more than 48% of your income (plus medicare levy = 49.5%).
The reason I say this is because (from what I understand of what you’ve said) your mum seems to believe that as your income increases over the yrs (as the loan is paid off), so your tax will – and it will eventually overtake your income. This is physically impossible.
On the other hand, if you are relying on depreciation to make the investment CF+, then eventually that will run out. You just need to do the sums for the individual deal.
My advice (and you will see the same advice from many on this forum) is to just go with your beliefs and try to ignore the doubters out there. As you will read if and when you go on to Steve’s second book (1,000,000 in Property in One Year), his students (the Mappers) had to overcome a lot of doubt from their friends and family. But once they had proved it was possible, people were bashing down their doors to get in on a good thing!
Unfortunately, human nature is to shy away from the unknown and to stay in our comfort zones. To steal the signature of one of the members (sorry I can’t remember who it is – but I like the expression!) “by getting out of our comfort zones we often find that we get more comfortable”! Apologies for the mis-quote, but you get the drift!
So I say – go for it! Your mum will stop doubting when you start bringing in the cash!
All the best!
Adam
Don’t let life get in the way of living.
Dr X,
Happy birthday to your daughter! How cool it must be to have such huge birthday parties every year!
Where in Canada did you live? My lovely wife is from Nova Scotia, and we’re moving back there at the end of the yr. We’re pretty lucky to come from the two best countries on Earth!
Cheers,
Adam
Don’t let life get in the way of living.
Markus,
Exciting stuff! Just a thought – you could probably actually include this stuff as terms in your offer to purchase – ie. 6mth settlement, purchase dependent upon subdivision approval from council??? Clearly with these terms you will perhaps need to be generous on price, but if the numbers work out it would give you some kind of protection, and hold the property for you while you go through the process of seeking council approval.
Now a disclaimer – I haven’t done this myself, so perhaps some of the experienced people on the forum can confirm or deny what I’ve just suggested???
Good luck!
Adam
Don’t let life get in the way of living.
Rexilla99,
No ideas of my own, but have you asked the PM of the complex? Perhaps if other owners in the complex have furnished their places, the PM might know how they did it and have some tips for you???
Best of luck!
Adam
Don’t let life get in the way of living.
Kriscot,
Interesting post – thanks. Gives us all some food for thought.
My opinion on PI is that if you purchase a good enough investment, and you’re buying for the +CF rather than the CG, then it really doesn’t matter too much where the market is or what it’s doing. Clearly if prices go up significantly you would consider your options regarding whether to sell and lock in profits, but if prices are stagnant it really doesn’t matter as long as the numbers work for the cashflow. And I guess you have to hope that you’ve done your homework enough such that the price of your property won’t drop too much even in a significant slump.
My view is that CGs are a bonus and often based on things in the market that you have no influence on, but +CF comes down to your own homework. Find a good deal and you don’t have to worry too much about market movements.
Thoughts?
Regards,
Adam
Don’t let life get in the way of living.
Hi
I worked in Saudi Arabia for a year a while back and was priviledged to learn a bit of the language. I thought it must have been stressful for the patients when Dr Alam introduced himslef…His name translated to Dr Pain!
Enjoy!
Mapleleaf
Don’t let life get in the way of living.
Well done Dazzling (and Redwing)!
It’s inspiring for us newbies to hear these success stories from the more experienced investors out there! Please keep these type of posts coming for our benefit!
Cheers,
Adam
Don’t let life get in the way of living.
I also have to admit that every time I use an ATM after hours (ie when banks aren’t open) I do always wonder what I would do if the money just didn’t come out! I have no idea! Any suggestions? Fortunately this has never yet happened to me!
Adam
Don’t let life get in the way of living.
Onemind,
Yep I’ve also bought stuff from the online shop – no problems. “Friendly self service” as they say!
Tom – what you say is certainly true – interesting way of putting it. I do agree with jjaaus though – try to be patient and gentle with us! As the internet becomes more and more widespread, more and more people will be using it and they will all have the same initial concerns that we all have had.
I don’t understand how secure payments work, but I guess I’ve just put my faith in the system – so far so good! If someone is able to explain how it all works, and what the risks are of compromise, I’d certainly be interested…
Regards,
Adam
Don’t let life get in the way of living.
Dr X,
The link below might answer your query – I haven’t had a good look at all this myself, but I know that Jenman really loves this guy!?!
http://www.jenman.com.au/find/index.php?query=henry+kaye&type=simple
Cheers,
Adam
Don’t let life get in the way of living.
Mark,
Well done! You guys must have been thrilled when all your hard work paid off.
Is there any further news on progress? Have you subdivided and sold yet? What’s the latest?
Best of luck, and congratulations again!
Adam
Don’t let life get in the way of living.
Well – no luck looking him up. So AlmostBob – if you’re out there, please drop me a line! I would really appreciate hearing from you![exhappy]
Cheers,
Adam
Don’t let life get in the way of living.
Thanks Skippygirl. We’ll try looking him up and send him a PM.
When we go back to Canada at the end of this yr, we will certainly stay tuned to this forum, so we’ll keep you informed of how we go over there!
Regards,
Adam
Don’t let life get in the way of living.
Thanks AUSPROP – That is a good one to remember!
Adam
Don’t let life get in the way of living.
Hi vabo and welcome to the forum.
Not sure exactly what you’re after but there are lots of software options out there. But maybe you’re just after something like Quicken? Not sure. Here are links to some websites that may have what you’re after:
http://www.mrlandlord.com/
http://www.themortgageadviser.com.au/index_files/essential_links.htm
http://moneymanager.smh.com.au/planning/index.htmlHope this helps!
Adam
PS. Also look at this website’s links page – https://www.propertyinvesting.com/links.html
Don’t let life get in the way of living.
