Forum Replies Created
“An hour with a wise man is worth 100 books”
No wonder these property investment seminars are so expensive.[
]Battz
Leonid,
The internet is a great source of information, where you can obtain population trends, capital growth, rental averages, vacancy rates, percentage owner occupied v rental, unemployment rate, employment split industry by industry, current projects, proposed projects etc etc.
But in my opinion you just can beat going to the towns and forming relationships with those whom can help you.
I bought a property this week that I would never have been able to get via the internet.
Cheers,
Battz
Cheap advice? You know what they say about paying peanuts……[
]Great, thanks for the reply!
Cheers,
Battz
Too true slatzagain, in relation to prices moving up in spurts, thats why a mentioned a 20 years period, there will be a boom somewhere in a 20yr cycle.
My uncle built in Paradise point in 1980 (a good 1km from the water) Cost about $100k all up. Valued at around $400k now.
Battz
Good points Polar,
I agree that you should not be contrained by your own “rules” of investment. I look at them more as guidelines. And yes Steve’s book is a great read, and the information contained within it is worth significantly more than $30 you pay for it. I took the book with me recently on a 3 day trip to buy property so I could refer to it. But I also took one of Margaret Lomas books and Dolf De Roos “Real Estate Riches”
If you stick to any “rules” then you most certainly exclude yourself from opportunities.
For example if you found a property for $90k and it was returning $165 p/w, that does not fit the 11 sec rule. But what if you had bought the property WELL below market value and it was actually worth $110k and simply by adding air conditioning you could achieve $220p/w, would you still turn down the opportunity to make $20k on the deal and turn it into a positive cashflow property?
Battz,
P.S. Mind you I dont think Steve means use the 11 sec rule as a “hard and fast rule”, but i can imagine some people would.
Brett,
You will find positive cashflow properties in Adelaide. They may not be in Norwood, Skye or Glenelg, but they are there.
Cheers,
Battz
MiniMogul,
Very well said. How many times do we here people tell us how cheap houses were 20 years ago, and “if only we had of bought 2 or 3”. But they forget that at the time (20 years ago) the houses seemed expensive, that is why they didnt buy 2 or 3.
Again, in 20 years time we will look back at a house, say Paradise Point or Runaway Bay on the Gold Coast and say, “So bloody expensive at 2 – 3 million, I can remember the days when you could buy one for $400k to $500k, if only I’d bought 2 or 3″……
Thats life..
Battz
My Father-in-law bought one about 1 yr ago. Has only had it rented/hired during the holiday periods and has cost him over $20k in repairs & improvements in just one year.
In saying that I sat down and did the sums with him, and if he had bought right (ie No repair costs) and he ACTIVELY marketed the houseboat to maximise the letting, then yes, it would produce a good return.
Would I buy one….not a chance…
My Father-in-law bought one about 1 yr ago. Has only had it rented/hired during the holiday periods and has cost him over $20k in repairs & improvements in just one year.
In saying that I sat down and did the sums with him, and if he had bought right (ie No repair costs) and he ACTIVELY marketed the houseboat to maximise the letting, then yes, it would produce a good return.
Would I buy one….not a chance…
Interesting Thread.
However I disagree that postive cashflow investors are the ones whom are pushing prices up. By definition positve cashflow investors want to ensure that the purchase price is low enough that they are able to make a profit. If prices are inflated they will walk away.
For example if a house is in a regional area
is returning $160 p/w and the purchase price is say $120k then it is likely the positive cashflow investor will not be interested.However the negative gearing investor, may be talked into “the great loss he can make and reduce his taxable income” so he is willing to pay more for the property, hence pushing the price up.
But even WORSE, its the Owner Occupied couple whom are having the greatest impact on spiralling prices and making property unaffordable for 1st time home buyers and investors. We see it every night on those property shows on TV. With silly prices being paid at Auction. ($500k – $800k) These are not investors, they are familys on good incomes whom have decided “to keep up with the Jones’s” and have located a lender that will lend them the MAX amount on their incomes.
So before we burn the small time investor (many of us are just starting out and have maybe only 1 or 2 properties), lets have a look at which buyers are fueling the house prices…
Cheres,
Battz
Brett,
Christies has had a poor name in the past, and is known as a high crime rate area, hence it is affordable coastal property.
In saying that it has the potential for solid capital growth as Adelaide has been hit by the “sea change” trend. It depends if you are prepared to accept a negative cashflow position for the sake of long term capital growth.
Just insure that you are not paying too much much for the property (have it independantly valued) as there has been some “silly prices” paid for very average homes.
Cheers,
Battz
I was lucky enough to get to the Expo early on Friday, and Margarets stand was quiet and I actually got to spend approx 15mins talking to her one-on-one. Very friendly and very helpful.
After that a crowd started to form around her, and I decided to stay and listen to questions that other investors had. One question related to her views on Steve’s book and “11 sec rule” Basically she thought it was a bit ambitious to achieve that sort of rental yield, but by no means did she bag Steve or pass any negative comments about him.
I was not present at the Lomas/Whittaker “debate” so I cannot confirm/deny the other comments.
Cheers,
Battz
Thanks for the revised figures. On a subjective note, are they “good” figures?
I intend heading off to do some negotiating tomorrow, any last minute tips?
Unfortunately its not local, so I have a few kms to do to view the property/negotiate.
Cheers,
Battz
Thanks for the time in crunching those figures for me. Initially I had just used Steves “11 sec rule”, however as this will be my first IP, I was unsure of the approx amount of the “other costs” such as insurance/rates.
I was actually looking at a 90% lend, which I suppose I should have mentioned. SO it is about $9000 deposit + costs. I will only be putting in about $13000. Does this improve my “cash on cash” returns?
Cheers,
Battz
Simon,
Thanks very much for that. I have read Steve’s book, but i just thought I’d throw the figures at the forum to see if I had missed something, or in case I had miscalculated.
Cheers,
Battz
thanks Westan,
Property price is $94,000, rent is estimated $200 p/w.
Low vacany rate for long term lease
Population growth low, but around 2%
Capital Growth for area last 1/4 was 10.5%
House built prior to 1985Any suggestions/advice re further investigation required?
Cheers,
Battz
Thanks Terry,
I too have heard of it used with commercial, but didnt know if it was common in residential. I suppose its just one of those things, just ask the question to the vendor, you never know!
Battz
I suppose that is why the banks have the properties independantly valued. I can see the “for” agruement, that if the bank believes that the property is worth say $280k, yet the buyer has managed to purchase it for $250k, he buyer has simply negotiated a good deal.
I do accept that it does seem to border on fraud by telling the bank you paid $280k for it when you actually paid $250.
Battz
picja1,
Re the 100% finance loan at 7.9%, is that one through Liberty that was in the latest Money magazine?
There always seems to be a catch with these 100% loans, either higher interest rate or requiring minimum asset.
Can anyone tell if there is one out there with no catches?
Cheers,
Battz
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