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In his “Guide to investing ” he covers all the basics and his principles are sound. Its a good first read but certainly not enough to trade or buy and hold from.
Just google value investing. You will get heaps of good sites
like
http://www.moneymanager.com.au/investing/index.htmland many others. Then use this knowledge plus a knowledge of where we are in current cylces to trade good fundamental shares.
Robert only skims the surface.
As far as land content it has 300 rooms and is located on over 19000m2 of absolute prime water front land in the CBD of a capital city. So technically it has approx 60m2 land content of CBD land at approx $2500 -$3000 per m2 = $147,500 to $177,000
It comes out at 10% gross yield, 7.6% net yield with great rental growth.
Im not after an active property at this stage as im too busy woorking and trading shares. I want a passive solution. And as far as passive solutions go this seems pretty good.
The hotel has it in a leasing pool they pay all outgoings except rates and insurance.
I own would own the unit and its contents. But they have an ongoing agreement that they will refurbish it while ever it remains in the pool.
The Hotel is the tennant for me.
It has a 10 year history of strong sustainale increasing returns.
BNB yields 1.2% and only has 38% franking credits ie little tax advantage. Its trading at a PE of over 100. Its only a matter of time till youget burnt my friend. The share market is rediculously over priced at present largely due to compulsory super contributions.
It has a nasty habit of regression to the mean. And when it corrects its stocks trading on high PE without sound fundamentals that get hit first, hit hardest and remain depressed for the longest. Youve sure have picked a winner for this category. Not only that when your stuck in it cause it raced past your stop loss without trading at that price you will have a great yield of 1.2% till your price regains.Its for this reason I trade the higher yielders (in terms of dps or eps)with sound fundamentals. Look for stocks with high eps and dps growth high ROE, 100 franking and low debt. They are still easily volatile enough to trade and make great money.
And yes I do have to agree its way faster to make money on the sharemarket than in property. But it requires considerably more work and could hardly be called passive.
I hear what your saying about land component, but thats only a one of amny strategies. And I know land appreciates while building depreciate. If land component was the only way to get Rich than why does Robert Kiyosaki own almost 90%+ units rather than houses and twnhouses.
So given this bulding was built in 1996 and 9 out of 10 years rent has increased by between 4% and 14%. Im banking on the fact that the property will rise based on its rental increases. It has an international Brand hotel in a one of a kind location that they arent going to walk away from. The Hotel has already refurbished the property once at their expenses so i gues you could say the building hasnt even depreciated.If the rent is currently $13500 and purchase price is $135000 thats approx 10% return so if rent appreciates between 4 and 14% say take an average of 7% then in 10 years rent will be $26500pa or at 5% growth rent would be $21990pa. So if 10% yield was enough to attract me then it should be enough to attract someone else.
On that basis in 10 yrs the property would be worth $219,000 to $265000 and by then would have netted me $60000 plus CF+ based on no cash down. If i put cash down then even better.Sounds defensive but im telling you my justification for it to be critically examined. So go for it if you reckon thats rubbish. Id like to hear it, doesnt mean i will follow it, but i wnat it critically evalluated.
Ta once again.I hear what your saying about land component, but thats only a one of amny strategies. And I know land appreciates while building depreciate. If land component was the only way to get Rich than why does Robert Kiyosaki own almost 90%+ units rather than houses and twnhouses.
So given this bulding was built in 1996 and 9 out of 10 years rent has increased by between 4% and 14%. Im banking on the fact that the property will rise based on its rental increases. It has an international Brand hotel in a one of a kind location that they arent going to walk away from. The Hotel has already refurbished the property once at their expenses so i gues you could say the building hasnt even depreciated.If the rent is currently $13500 and purchase price is $135000 thats approx 10% return so if rent appreciates between 4 and 14% say take an average of 7% then in 10 years rent will be $26500pa or at 5% growth rent would be $21990pa. So if 10% yield was enough to attract me then it should be enough to attract someone else.
On that basis in 10 yrs the property would be worth $219,000 to $265000 and by then would have netted me $60000 plus CF+ based on no cash down. If i put cash down then even better.Sounds defensive but im telling you my justification for it to be critically examined. So go for it if you reckon thats rubbish. Id like to hear it, doesnt mean i will follow it, but i wnat it critically evalluated.
Ta once again.Marc where and what type of properties are you buying for $150K with $200+pw rent. Ive found one but want to know your thoughts.
Your marginal tax rate if youve owned it for less than 12 months.
Half your marginal tax rate if youve owned it over 12 months.
Be careful if your cutting it fine its not 365 days. Check the latest ruling at ATO.
Wide bay have advised me that they:
would consider an 80% lend on apartments in Brisbane 50m2 – given that the units have a separate bedroom, kitchen, lounge room and bathroom.
If the units are more along the lines of self contained units similar to student style accommodation or units where there is no bedroom or the bed comes from the wall we will not lend for these style apartments sorry!Very True. You will lose in NSW. All residentual tennats are covered under the tribunal and act. Landlors must set a rent and cannot pass on anything above the rent except water.
You watch how quick people come on here and bag serviced apartments. But i take an entirley different opinion.
They are cheap, low maintanance in most cases and generally easy to find CF++++++
The down side is limited capital growth and if the leasee or mgmnt of the building goes belly up or moves out there are so many parties involved that reaching a quick and economically sound outcome can be difficult as many people get caught up in the emotions of revenge and anger.
The other downside is its hard to find financers that like them with a reasonable LVR. Thus they chew up your equity.
So its a trade off between equity and cash flow. My limited experience leads me to believe its easier to find one serviced apartment in a cap city that is as cf++ as 2 or 3 houses or units in dodgey little low pop towns that are less likely to experience cap growth due to low average wage levels.
Remember serviced apartments are subject to economic cyles so when its hot they will have high returns and when its not they will be low. Far more so than houses. At the moment the serviced apartment market returns are about as hot as it gets after years of economic prosperity. 2001 they took a big hit with sep 11 and then SARS. But youd have to think we are close to 12 oclock or so on the serviced aprtment clock.
I love them but im going in to them patiently as they will be more likely to have lower relative returns than higher in the short term.
As far as the equity. Dual keys are now the rage as the title is over 50m2 so that banks will lend on them. But most of these are pretty new and thus still high priced. They will start becoming avail via as original owners start selling them in the near future.
In the meantime aim for ones that are >40m2 or 50m2 to gain easier and cheaper finance.
If + cF is your aim then apartments can be a good option. If CG is the aim then they are no good.[smiling]
I also need to know who finances serviced apartments at 60%+ LVR as i have found a couple to purchase but because they are <40m2 i cant find a lender to finance them at a decent interest rate, even despite an excellent credit record and position statement.
Virgin offer 70% for serviced apartments over 40m2 but i need to find soeone who will lend at > or =70% on a 34m2 .
