Forum Replies Created
I’m presently completing my third property reno. I agree with Steve’s statement: “it will take twice as long and cost three times as much as you budget”… or something like that.
I’d enter into a Reno, re-sale strategy with great caution. It is easy to say “polish this, know down that, paint that” though when it comes to the hard work, it can soon lose it’s lustre. I’ll complete this third one then alter my strategy. Go for it if you have the time, and the zeal, though honestly approach with caution.
Some questions:
1) Can you spend all your time on the reno, or do you have to work in a regular job also?
2) Do you possess tools and skills to do the work yourself?
3)Have you got quotes on each of the tasks required, by professional tradespeople, PRIOR to Purchase?Not trying to put you off, just advising you to proceed with caution. Consider, I have the time, tools, tradespeople and tools, though it’s still taken me three goes to make a decent profit.
Furthermore, consider your back up strategy and your worst case scenario, if things don’t go exactly as planned. What will it cost you to hold the property for a year longer than expected with a high vacancy rate? etc..
If you want to discuss it personally, email me at
[email protected]Regards, Adrian.
Greetings.
I’ve got a couple around the 60K mark. You can have one of those if you like. I’ll even do the homework for you.
Consider:
20% deposit = $12 000
Stamp duty = $1 775
Legal fees = $1 000 approx.
Build & Pest Inspection
= $500 approx.
Mortgage application fees and Valuation
= $1000
My fee = $3000 approx. (Or we do a joint venture)Total = $19275.00
I’ll even qualify for the loan if you like and organise all management and maintenance.
You would be a silent partner.
This offer is open to anyone.
Regards, Adrian.
for further info: [email protected]
Greetings,
A few questions?
Do you want to buy real estate?
What kind of strategy interests you?
Would you consider a joint venture, or act as a money partner if a second party could qualify for a loan?
What kind of property do you want to buy?There is a way to do most things. It may involve some creative thinking on your part.
Regards, Adrian.
I was reccommende one via my Conveyancer, though I’d advise you ring around and ask a few questions. See how they respond over the phone..
Their ability to communicate is as important as anything.Also, some seem to view you as a low priority customer until you’ve actually spent some cash. I can understand this from a pragmatic perspective, though it’s not good business.
Adrian.
I’m curious about this too:
I talked to my conveyancer about it. She reccommended the use of an “And or Nominee” contract rather than an “Assignment of Contract”..
Apparently they can “back date” the letter of consent from whom ever you put on the contract, though I “didn’t hear this from her”.
As for an Option, I’m not sure.
Legal Advice:
I rang around a number of lawyers in my city, to conduct a basic enquiry, phone interview. The ones I liked the sound of (e.g. phone manner, clarity of explanation etc.) I called again.
Now the lawyer I settled upon to set up my Company Trust structure has been willing to create a Draft joint venture agreement for me. Free.
I figure there must be others out there who will do the same.
On another note;
I like signing off with my real name nowadays, since it gives me a sense of accountability regarding my comments and demeanour.
Regards, Adrian.
I’m happy to flip the details of some properties I’ve found onto other interested parties.
Now when I say “flip” I mean I’d be happy to pass on the details for FREE. This helps me in that I gain more experience analysing both individual properties and towns.
I figure that if I’m able to convice some better educated fellow investors of the worth of a deal, then I’m improving myself.
If they ARE as good as I say, I can use an “And or Nominee contract” here in SA to secure my interest then put someone elses name on the contract…
Now that would be for a fee of course.[
]Regards, Adrian.
I concede your points willingly Elves..[
]To be honest, when I posted that reply I was a little hung over and snippy..
I do like the idea of the town analysis and info sharing programme.
I’ll lead by demonstration and do a couple of my own which I’ll post here.
Regards, Adrian.
People do love to digress…
Honestly guys, I was hoping people would read my post and give me some positive feedback. Have I left anything out by your appraisal etc?
I have read a lot on this forum the past couple of days about people discussing ethics related to Bird Dogging/ providing a service for a fee.
Now I made this post with an aim to help others help themselves.
The net is the greatest tool of leverage of our time..Honestly, if a potential investor is unwilling to sit down and commit an hour to analysing a town for themselves, then they shouldn’t bother.For me this comes back to personal ACCOUNTABILITY.
It’s lucky that so many people spend so much time on this forum rather than actually out there buying positive cash flow property, otherwise there would be none left.
Regards, Adrian.
I’m keen to hear about any property you have on offer.
As for the sceptics:
I feel there are two main threads here
1) Forum members appear to Fear being screwed by an unscrupulous Bird Dogger, by buying into an area that may experience -ve growth, or by buying into a property that may (after one has done their due diligence prove not to be worth the bother.) Of course rural localities in NZ may experience declining populations in the future, however making such basic generalizations in a seemingly antagonistic way helps no-one.
For anyone considering using a Bird Dogger to buy property in NZ, I would advise you take the time to familiarise yourself with the country and it’s internal immigration/ emigration patterns.
We need to question our assumptions about what exactly the Bird Dogger offers. Differing assumptions result in differing expectations.
As a potential consumer, we should write a list:
“What do I expect from the Bird Dogger”
“Where does their responsiblity end?”
“What would I want in a property analysis?”Generalisations help no one in particular.
Arguing emotionally doesn’t help identify the key aspects of the discussion.
We don’t need to look for a “baddie” and a “Hero”(saving the hapless Mums and Dads, middle class RE Investors from potentially unscrupulous deal sharks).
2) You can successfully invest in ANY area, depending upon the price you pay…
Why not make 100 offers 20% below market value and buy one? This may suit your strategy and comfortable risk level..Anyways, I digress.
Consider the following when analysing a town:
South Australian rural locality analysis.
What information do I require to make an informed decision about a particular rural locality as a potential residential real estate investment location?
· Town Name
· Population
· Immigration/ emigration; within last five years, ten years, and also forecast for next ten years.
· City council strategic planning report.
· Economic base industries
o Is the area reliant on one base industry? E.g. farming, mining, a factory?
· Facilities
o Hospital
o High-schools
o TAFE
o Shopping centres
o Banks (how many?) have banks come to the are or left the area?
o Fast food restaurants.
· Nearest major centre.
· Is town on the way to somewhere else more desirable? E.g. highway, railway.
· Airport? Flights to where? How often?Real Estate Specific:
Real Estate agents.
· How many?
· List their contact details.
· Are they rental managers also?
o How many properties do they manage?
· Therefore, how many properties are managed in the area total?Rental Demand
· Obtain a copy of each agent’s present rental sheet.
· What are different kinds of properties renting for?Recent Sales History
Many agents seem to like to display a list of their recent sales successes. Once these have been closed, not just put under contract, the sales data goes onto public records. The agent can then release the final sale price achieved.
I agree that I disclosed too much in my example, though my reason for doing so was more to show myself that I knew how it works. I have since changed the example to something more simple and posted out the letter to those who asked for it.
Adrian.
No one can be bothered reading this much text?[
]
Here’s my initial Tenant Information Letter…It’s not quite finished, though I’d appreciate any feedback.Skip this question if it bores you, though please scroll down to the Tenant Information Letter…
Questions:
1) If I link all Interest Rates to both prevaling rates, as well as the CPI, how does the latter affect repayments? I understand the impact of changing I/R’s, though am not so sure about the CPI. Say the CPI increases at approximately 3% p.a.this means that the cost of pretty much everything; goods, services etc. goes up in price though stays approximately even relative to each other. This increase in costs should be matched by a similar increase in wages, correct? Does this mean that since my income should increase in line with inflation, then I should pay more for my accommodation also?(In this case, my tenant paying for the Lease Option..)
Greetings Mr ……,
Thank you for you inquiry. This is our initial information brochure, which outlines our “Rent-to-Buy” offer. Hopefully you will find it informative and easy to understand. Obviously, each individual’s circumstances are unique, so questions may arise that aren’t addressed here. We will make a follow up phone call to discuss what you have read, though we welcome your call at any time to clarify any points of which you are uncertain.
Our Offer
Simply, we purchase a property, then lease it to you, the tenant, with an option to purchase the property at an agreed price some time in the future.
If you decide to take up the option to purchase, a portion of your weekly rent is amortised, or deducted from the total amount. In this way, the tenant builds up equity in the property, however, this equity can only be realised upon your purchase of the property.
Our service typically helps people who can’t obtain bank finance, and or do not have enough saved for a usual deposit.
Benefits for the Tenant
So what’s in it for you?
Certainty. You can not be moved out as with a regular tenancy agreement. The only way you can lose the property is if you fail to pay your rent and break our agreement.
You begin to build up equity in the home from day one. As soon as you make your first rental payment, you have taken a step towards owning the property.
Capital gains. It is typical for property prices to appreciate over time. We fully expect your property to be worth far more in five years than it is today.
Refinance. You, the tenant may decide to refinance the property through a different lender and thus take up your option to purchase the property. If you have been renting the property for five or ten years, then you will have paid off a certain amount of the loan. This can be shown to a lender as proof of your good character and commitment to owning the property. Capital appreciation may have resulted in the value of the property rising by some 20% to 30%, and as such your option to purchase price is much lower than the property’s real value. A lender may then decide that you have much greater equity in the property than simply the amount you have been paying off on a weekly basis. This will make refinancing that much easier.
You, the tenant have the right to improve the property as you see fit. We are more than happy for you to spend money upgrading the property, if we are informed of what you plan to do.
Benefits for Us.
Certainty. We have a long-term tenant whom we know values the property. Indeed we don’t want tenants as such, we want homeowners. This is an important distinction. In a regular rental situation, tenants come and go. Tenants will also sometimes cause damage to the property, all of which costs us money. We much prefer win-win outcomes.
We make money from the agreement in two ways. The first is through rental income. The second is through the difference between the price we pay for the property and the price we charge you the tenant for the property. This is an important point. We don’t like paying full price for a property. We employ all of our negotiating skills to achieve the cheapest price possible. We then split any discount between the tenant and us.
Let me explain further. If for example the property we are interested in is valued at $150K. After much negotiation on our part, we purchase the property at $130K. We have made a saving of $20K, which we would divide between the tenant and us, meaning that we would take out a mortgage on the sum of $130K, though would sell it to the tenant for $140K.
We consider this a win-win outcome. We have saved money, and so has the tenant. Just how much we make depends upon our negotiating skills.
Example
Andrew and Sally see our advertisement and decide that they want to “Rent-to-Buy”. They don’t have the usual 20% deposit saved for the home they want. Sally hasn’t been working long enough in her new job to demonstrate to the bank that she is a regular income earner. Andrew on the other hand has a steady source of income, though had defaulted on a car loan five years earlier, when he had bought his “dream-car”, only to find that he couldn’t afford the repayments. Unfortunately the car was repossessed and he has had trouble getting finance ever since.
The couple has a dog, which previous landlords have looked at unfavorably. They are sick of renting and want to be able to make changes to their home as it suits them.
After contacting us, reading and understanding the offer and successfully completing the application process, Andrew and Sally have decided to go ahead.
They want to find a house, with two to three bedrooms, a back yard and a safe place to park the car. Access to public transport is important, since they only have one car between them. A close proximity to shops and other services is also important.
Rent-To-Buy
Advertised House Price $120,000.00
Our Negotiated Price $100,000.00
Lease-Option Price $110,000.00
Our 1st Mortgage (80%) $80,000.00
Deposit (20%) $20,000.00
Our Interest Rate (I/R) 5%
Tenant’s Interest Rate 7%Our Expenses
Conveyancing & Legal Fees
Insurance
Building & Pest Inspection
Stamp DutyTenant’s Expenses
Option Fee (Non-Refundable)
2-3% of Total Property Price $2265.38 to $3765.38
Two weeks rent up front $465.38Us
25 yr. Loan Principle Repayment $80,000/ 25
Per Annum (p.a.) $3,200.00
Interest Repayment at 5%p.a. $4,000.00
Total Annual Repayment $7,200.00
Total Repayment per week $138.46Tenant
25 yr Loan Principle Repayment $110,000/ 25
Per Annum (p.a.) $4,400.00
Interest Repayment at 7%p.a. $7,700.00
Total Annual Repayment $12,100.00
Total Repayment per week $232.69Important Points
Initial costs for Tenant.
Option fee. 2% to 3% of total property price. This fee contributes to our purchasing costs. It also constitutes a commitment by the tenant towards the property. The option fee is payable upon signing of the contract and is non-refundable.
Two weeks rent up front.
All Interest Rates are fixed against both prevailing national Interest Rates and against the Consumer Price Index (CPI). This means that if interest rates rise, as they periodically do, and our loan Interest Rate increases, then this increase will be passed onto the tenant to maintain our 2% spread. It is important that you understand this. We typically fix our interest rate with our lender for as long a period as possible so as to avoid an increase for either the tenant or us.
Our interest rates are also fixed in line with the CPI. This is the national measure of inflation.
If we are unable to negotiate a discounted price for the property, then we will implement the Lease-Option at the agreed purchase price, providing this is still affordable for the tenant. This simply means that the deal is a little more expensive for each of us.
All running costs for the property are the responsibility of the tenant. These include; Council rates, land tax, utilities such as electricity, gas and water, strata fees if applicable and any repairs.
The smaller our negotiated discount, the smaller our “spread”. If we pay the same for the house as the tenant, we earn money only on the 2% interest spread.
In the example where we buy the house for $110,000 and lease-option it for the same amount, we make $4000 positive cash flow per annum, which equates to $100,000 over 25 years. If the tenant takes up the option to purchase at any stage prior to 25yrs, we earn less.
Hey, I live in Adelaide, SA and would be keen to chat. Am busy with work this week, though can always find time.
Hey all, I know the property sucks, and my sums need to improve…
I just wanted to actually do something and thought a property I was never going to buy anyway would be good as a homework assignment..I’ve since been looking at a promising 60K 3br place…more realistic and fitting with my strategy.
Will offer up the sums on this one when I actually get going.
Hey all..
I went to Steve’s Property Masters whilst a good mate of mine attended Hery Kaye’s 4 day seminar only a week prior.
Staying at his place, I had an opportunity to look over some of the info included in the extensive pack, with DVD’s!!![
]If you are Newbie, like me I would advise against this seminar. I found everything I need to get started at Steve’s seminar.
Even in the “round table” question time, I was unable to think of anythig I wanted to ask. Reason being that my head was so full of info that I hadn’t worked out what I didn’t know!
Aquire enough info from books and here on the forum I say, but then TAKE ACTION so you have something to compare all this info to.So you can re-evaluate it in a different light. Once you have experience.
I’m not saying that HK’s strategies wouldn’t work, just that they may require too steep a learning curve to be applied successfully and Safely.
Education, Action, Re-education, Evaluation, More Action…
Ado
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