Hi Steven,
The most common answer to many questions re investing is “It depends!” :p

I spend 50K to do a complete make over of that property,

There are a hundred questions around that – depending on just what was spent on what, (as CIC mentioned in the last post) some may be immediately claimable (in that Fiscal Year) while the larger part may be a Capital Cost, thus it would be written off at 2.5%pa over 40 years – so maybe $1000 a year as a deduction?

Not huge, but then, only investors get to claim that – the poor old homeowner doesn’t !!

Benny

Hi Steven,

Now if your question is which strategy is the best for me to reach that goal? I currently don’t have an answer because I am still fairly new to this and thus do not have the experience to determine the best.

And right there, is where I put a whole raft of quetions to you – I was endeavouring to guide you to arrive at your goal. If you spend some time having a go at answering those questions (but not the “what is your strategy” one) then the strategy will reveal itself bit by bit.

Until this post, I had no idea at all of your financial capacity – now I know a little more, that can begin to define “What is your best move?” But really, a Mortgage Broker can do a whole lot more. Right off though, you don’t seem too restricted, so you can maybe move quite quickly – but we need to know “In which direction?” ;)

I caught a reply from Jaxon in another post (on Morayfield?) – he makes a great offer to you after outlining what he is doing. How does his way sound to you? Is it something that can work for you? It sounds to me like he spends quite a bit of time at lining up the ducks – but then, I haven’t spoken to him. Would you have that time? Are you planning on taking Jaxon up on his offer? You could learn heaps about “his way” to see if it holds any possibilities for you.

To make the matter worse, I have been to different seminars, webinars, talked to different investors, etc… and the amount of information I am getting is making me more confused rather than making a clear picture for me.

Steven, it is little wonder you are confused, as both of the scenarios you followed that with are CORRECT, and yet they say the opposite of each other. Here’s the deal:-

Growth is the way that builds wealth more quickly – but of course, you need to buy into something where that growth will happen (supply vs demand) or where you can CREATE growth by spending a bit more. BUT many such properties are negative geared, thus they detract from your current lifestyle as you grow your wealth, AND you run the risk of limiting your borrowing ability if they are all negative geared. So, you need to perhaps “do some other deals to counter the bad side of negative gearing”. That can be by positive gearing some other properties to offset the negative ones.

Often, positive geared properties are providing Income, but not much Growth – and if you aren’t getting Growth, then you aren’t growing Wealth. But look at what Jaxon is doing, or Westnblue in that “big picture” link I sent you. THEIR positive geared properties all GAINED Equity (i.e. grew wealth) because they were bought at a price point that helped that to happen, AND they reno’ed the properties too.

Now, re-read those two financially free investors, knowing that they are both right – so what can work is to “do a bit of each”. Me, I like the sound of the first investor as he seems less dogmatic, and more “rounded”. He said “Don’t always buy negatively geared…” – he inferred it might be OK to buy Positive geared, didn’t he? The second one said “even if you get positive cash flow, how could you expand your portfolio if your property has no capital growth? Don’t listen to those positive cash flow advises!”.

I think that second one is a bit short-sighted – he is also right though as you DO need Capital Growth to build wealth. Perhaps he was blessed with a HUGE income that had huge amounts of spare cash to throw at Growth properties, so he didn’t need to offset them with any cash-making ventures – or maybe he also had a business that was heavily with cashflow, and he used the negative-geared IP’s to help reduce his taxes while growing his wealth.

So, they are both right, yet both wrong too. Work out what makes sense to you. See, if you were on the average wage, and only one wage, your choices would be far fewer. With more choice, you can tend to become more confused – seminars can be very useful, but the idea is to “take from them what makes sense to you”. If they don’t fit with you, go to another one, or find a different way that IS “you” !!

Your earlier comment about newspapers no longer being the place to find deals is probably quite correct. I can’t help further, as I am not looking for deals right now, and haven’t been for some time. Again, Jaxon may be able to help, as his words indicated he is finding deals – ask him where and how.

Keep on swinging, Steven – we are getting there !!

;)

Benny

PS Have you read RDPD? (Rich Dad, Poor Dad – by Robert Kiyosaki)

• This reply was modified 7 years, 5 months ago by  Benny.

Hi Steven,

Old properties would require a lot of reno work, but new properties generally speaking are sold at premium price, so I kind of feel like I am stuck in a go-no situation.

Let’s look at that sentence of yours :-
“Old properties would require a lot of reno work….” Often true
“new properties generally speaking are sold at premium price…” Also often true.
“I kind of feel like I am stuck in a go-no situation….” You are only stuck if you choose to be !!

Don’t you think, somewhere between “Old” and “New” might be an age of house that is still in good shape, and yet can be bought for a good price? Guess where I was buying? About 15 – 25 years old properties, but hey, I didn’t have to see a date and count it “In or Out” – some 30 year-old properties can be in as good a shape as some 15 year-old ones.

I bought from deceased estates, from divorcees, from folks who had “already bought another place and now wanted to move on”. Then there were those who were leaving town and their place hasn’t sold yet – guess what? They wanted a quick sale !!

Steven, have a re-read of some of those other posts. Then take off that “Too hard” hat you are wearing, and put on the “Can do” hat, then go get a paper, sit down with a coffee and a pen, and look for bargains. Let me know what you saw !!

;)

Benny

Hi again, Steven,

I recall too that Steve wrote an article recently where he suggests we check the demographics of an area – that is one very important Article as it talks of how a largely Owner Occupied area has a far more stable price for properties than an area that is heavily owned by investors.

There is a wealth of other information in there too – enjoy !!
https://www.propertyinvesting.com/watch-out-for-this-simple-stat/

Benny

Hi Steven,
I can’t help you with any comments re Morayfield, but what I wanted to share was to suggest you look at things from a different angle. It starts with measuring yourself re your skills, risk tolerance, knowledge, and financial capacity. Find out what your borrowing limits are early on – no use researching an area that you flat can’t afford.

Next, consider what STYLE of investing you are looking for – growth or income, straight rental, buy/reno/rent or buy/reno/sell, buy/develop/rent or sell, homes or units, etc. Depending on which answers you favour, then you look at the demographics of the different areas.

My own situation called for (initially) buy/rent with a possibility to reno down the track, on good-sized blocks, in older suburbs. As the suburbs had existed for years, I KNEW their backgrounds – and I picked those that were desirable for families. It didn’t matter in my case if it were negative geared, so long as there was to be huge positive growth – but in fact, my first few were well positive (then Brisbane boomed from 2001 on to 2004). The reno’s helped extra with growth a few years later.

So, that was me when starting out – now what about you? Are you looking for straight buy/hold and growth, or are you wanting income? What demographic do you want in your properties? DINKs, YUPPIEs, young families, single person units, etc. Can you handle a long-distance reno if needed or desirable?

As you would have read in my earlier reply – I don’t have a lot of faith in brand new greenfield estates. I think you will likely have no growth in most of them for at least 5 years, and maybe even more (if the developers are “over-doing” the building).

Some developments move along quite slowly and are completed in a very pleasing fashion – Ormeau was one such development that I watched over many years. That is an area that I think will remain desirable (larger blocks and homes) but the facilities remain rather lacking – to me, the one bad part of Ormeau. Still, Beenleigh is not too far away.

Other developments in that area today are being thrown up at an alarming rate – Pimpama, Park Ridge, Yarrabilba…. Awful !! There is said to be a lot of o’seas money yet to be thrown at Pimpama and Coomera – I’ll believe it when I see it. If I were buying and it had to be there, I would be wanting to buy an OLDER property – at least you might then have a hope of a decent price, and a good-sized block.

Benny

Hi Investor,

To achieve that don’t you need your properties paid off?

No need for that at all. If you meet your current obligations to the lender, then any remainder is yours to do with as you see fit – and that COULD be used to pay down debt, or take a world trip.

Re HOW it can be done, I would think Nathan’s videos should give some clues. Where one is paying bank loans for around 4% and receiving a 10% return, you are making money hand over fist. e.g. If you have a property costing $200k and getting $400/week rent, you are pretty much there. HOW that can be done is a whole ‘nother story – suffice to say it can be.

Take another detailed look at Westnblue‘s effort – in just a couple of years, he created a portfolio worth close to $2m, with $200k gross per year, and after paying mortgages, and other costs (rates, insurance, etc) he still has a chunk of change to live on.

How well did he go in the next 4 years or so? Well, I haven’t seen it itemised, but from the sound of his recent update, he is doing pretty nicely. Have a read (and yes, it is the same thread I would have included in my welcome message to you):-

https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697977

Check out the various posts in that thread of Darryl’s – some of them show where and how you can buy a copy of that 2013 magazine so you can put Darryl’s words from his post together with the words in the magazine and draw a pretty finely detailed picture of HOW he did it.

And, if his way suits you, why couldn’t you be the next “up-and-coming property investor?” If his way doesn’t suit, there will be other ways that are “you” – you just need to read up and find what suits.

Benny

Hi Cameron,
I have never done a Commercial deal either, but a seminar I atteneded a few weeks ago certainly piqued my interest. In essence, the presenter was describing how she was buying small Commercial spaces (e.g. coffee bar, or restaurant sizes) and getting enormous returns. I heard that she was pulling like 9% return, with the tenant picking up most of the expenses that would be on a landlord’s plate when doing residential investing. So, she was clearing as much as she was paying on the mortgage. In essence, she was bringing in cash like a bank.

Imagine paying $30k a year on a mortgage, and receiving $60k a year for you to pay it. Awesome eh?

Now hey, these seminars all have a “sign-up” thing at the end – but it is worth going along to check them out anyway, ‘cos here’s the thing. Let’s say this presenter is offering you her assistance in finding deals that you can buy, and she will assist – and all it costs you is $5k upfront? Is that a good deal?

If it led to just ONE such deal as above, hasn’t that $5k led you to putting $25k a year in your pocket? Now, there could be lots more such seminars out there – I don’t know. But I do know that this lady is still doing these seminars right now. Her name is Helen Tarrant.

I was impressed by the numbers mentioned by her – other than that, I make no recommendation at all, as I didn’t sign up with her – but I did enjoy the evening taking a look at an unfamiliar subject through her eyes.

Perhaps something like that will give you a bit of an idea of HOW these deals are put together. Oh, and also, you are likely to meet up with other people who are not watching TV that night, but (like you) are endeavouring to learn a little more to help their wallets. Some might even already be successful Commercial property investors. She will likely ask “Who owns Commercial Property already?” Approach those people afterward and say Hi !! Networking can lead to heaven knows where. Enjoy,

Benny

Hi Jo,
Wow, that is a huge change in just a short time. You seem to have had an epiphany of some kind in the last year or so. Awesome. I wish you much luck with your venture. And yes, DO stay on here to keep us updated from time to time, won’t you?

Prior to replying, I was searching the Internet for an article I had read about 15 years back. I wanted to link it as an “idea” for you regarding this comment of yours:-

And that’s what kept interrupting me Benny. Things I care about. I’m not passionate about money. Or property. I just see it’s value.

My thought was to prompt you in a direction that made so much sense to me once I had read Kiyosaki’s bestseller, “Rich Dad, Poor Dad”. And that particular story I was seeking was an example Kiyosaki used to show us HOW to buy a yacht !! He always maintained we should never say “No, I can’t afford <whatever>. Instead we should ask ourselves “HOW can I afford <whatever>?”

I didn’t find that link – but the nub of the story wnet something like this:-
He wanted to buy a yacht and it would have cost $50,000 in cash, or on terms something like $200 a week. He wanted the yacht, so had to come up with a way to have it. His answer was to use the $50k as a deposit on a positive geared investment property (a small block of flats?) and have it returning better than $200 a week in positive cashflow after all expenses.

I think that story fits quite nicely with your comment about “I’m not passionate about property – I just see its value!” There is a lot of value in having your good financial decisions PAY for your next passionate enterprise, eh? And those same thoughts can be tweaked and expanded in so many ways too.

Steve’s books are also full of such worthwhile examples of “How things can work when we think differently”. Change your mindset and your world will change – actually Jo, it seems like this might have already happened in a major way for you. :)

Well done, and good luck with your venture.

Regards,
Benny

Hi Inv101,

Most of this comes down to common sense. Learning about the areas you want to invest in is so you can spot a bargain from the moment you see it. Back when my wife did Real Estate Sales, they told her that she should learn to “value” a house within $5k in her first 3 months. Now, that was 20 years ago, when properties sold for $100k or so. So $5k is like “judge the value within 5%”. In today’s market, I would think being able to judge value to within 5% is also a good aim – but that might mean to judge its value to within $25k (if a house value is around $500k).

Reading books is good, and so too is meeting people who are “in the game” to learn from each other, swap stories, network, etc.

Learn “the numbers” too, and I would think finding a Broker or Finance person should be one of your earlier team members to find. Why? Well simply that you need to know what financial possibilities you have (or could have by year end). That might help to steer you to particular areas where the prices match your financial ability. Then go learn THAT area by going to open houses, auctions, etc and talk with RE agents, tell them where you are wanting to be, and what you are looking for. Though you might not be a buyer straight off, if you are sincere with your goals, your attitude may well help them to warm to sharing knowledge with you, and to have you go to them when you are ready to go.

Nothing wrong in becoming more aware of your suburb, even if you may not be wanting to invest there. Why? Well, it is good to know the local market values with respect to your own home, isn’t it? Like, maybe the values scream up in your area, and your income allows you to borrow earlier than expected. In that case, you can maybe get a deposit from the Equity in your own home rather than having to save it up !! Equity Growth is the big kahuna when it comes to property investing. Learn its ways, and turn your steps in that direction (if your financial situation allows it – ask your Broker).

Re the rest of your team – sure, build them up over time, but I don’t see a huge need to get a list of good tradies if you don’t yet have an IP – so they can come down the list somewhat. Along with your finance man, maybe find a good accountant so you can get into their head re investing (make sure they are well versed in property investing before you “add them to your team”). There are accountants and accountants – get the right one.

Forum posts? Hell yeah – there are some beauties out there, and so much can be learned – use “Search” to pick your subjects. And/or check out the Articles in the Training Centre (see the Home page) that Steve and a bunch of other good people put together.

Re “streets and sub-streets” in a neighbourhood, it is often that a suburb might be “good” and yet one tiny area of that suburb is “not good”. Start by asking a local RE agent about this. Or check out houses for sale in the area – why do some not command as high an asking price, even though the house may LOOK the same as others in the area. There can be a myriad answers. Find a puzzle, then endeavour to find the answer for yourself. You will learn so much just by doing that.

e.g. Ask yourself a heap of questions re WHY the area is different. What is the median AGE of residents in that area? What does that answer tell you? e.g. Are young couples buying there only because it is cheaper than elsewhere? Is the whole area made up of young couples? If so, is there transport for wives with children to shops, schools, etc? Or not? Visit this “down” area at different times of the day. What is the neighbourhood like after sundown? Are there gangs evident? Evidence of street crime? Or is the area hard to access – and hard to negotiate once in it?

So many answers can come from simply thinking through the situation. If you get stuck, come and ask, or check with others with whom you network.

You sound keen, Inv – go get it !! ;)

Benny

but are they easy statistics to source yourself or can that level of research only be done using things like DSR and RP data.

Sorry Jcam, but I can’t answer that. Maybe others can though – let’s see eh?

Also, now and then I read of some offering to “share” a subscription with others – cuts the cost to all, and is probably more economically sensible if you are not using such data in your day-to-day business. Keep an eye out for those offering a share….

Benny