Forum Replies Created
Hi Feddo,
I don’t know anything about Mcleod property servcies and they might be legitimate but I am very skeptical about any service that offers to do everything for you.
The danger is that everyone can work together and conspire to rip you off. No-one is independant in this scenario so it can be very risky. This sort of thing was happening a lot in QLD about 3 years ago. If you enter into this sort of deal, your due diligence has to be 100%.
Todd Burns
http://www.freepropertyhelp.com.auHi Brahm,
Yes, I am a dreamer and many of my dreams come true. Think about this… Competition is fierce in the mortgage market now…If the bank is going to lose a mortgage from a valued customer over a $150 valuation, don’t you think there is some leverage there? It’s all about negotiation and being bold enough to ask. Just try not to burn bridges and always have something else to fall back on as a back up plan.
The customer may have to always pay in your world but not in mine.
Todd Burns
http://www.freepropertyhelp.com.auHi Bobby,
This is typically known as a ‘drive by’ valuation. In my experience ‘drive bys’ aren’t usually out by a huge amount. Valuers should do research on recent similar sales of similar properties in your area. Physically looking at, or in, your property is only a part of the research they would normally do.
Some valuers do undervalue to protect themselves from being sued by banks for an over valuation. I found out after getting a low valuation that it is acceptable in most cases to prepare your own evidence to present to the valuer. I have even seen services that you can pay for and they say that they will prepare evidence that will ensure that you get a higher valuation than normal or they give you your money back.
One thing you could try is to contact the bank and say that you are not happy with the fact that the valuer didn’t even come in to see your property and ask if they have another valuer that could do a thorough valuation (most have access to more than one valuation company). They will probaly want to charge you again but the bank has plenty of money so I think they should pay for it. Next time a valuer comes be prepared with a list of major features that your house has and as much reliable similar sales information that you can muster. If you are friendly with the valuer, make his job easier and prove that he is fairly safe to give you a true market valuation, then you might do OK.
Otherwise just go to a good mortgage broker and get a better deal with another lender.
Todd Burns
http://www.freepropertyhelp.com.auHi Nsellar,
DEPRECIATION SCHEDULES
Simply put, a Depreciation Schedule is a report that is done on your property by a Quanity Surveyor. They go to your property and work out the cost of each item that can be claimed as a tax deduction and prepare it as a written report. You give the schedule to your accountant at tax return assessment time. This is especially beneficial for newer properties and it usually means that you get a lot more of your tax back each year.
Because we have depreciation schedules on our properties we will pay little or no tax this year. I think Deppro charges about $550 to do a schedule but it’s only a one off payment that gives you great tax advantages for years and years (depending on your financial situation of course). It roughly means we get $50 to $70pw more return on each property investment. However, there is usually a limit to the effectivenss of Dep Sch when you have multiple properties because you can’t get any more tax back than you pay out.
CASHFLOW+
Everyone can have a different idea on what CF+ means. I think to be truly CF+ a property needs to give you money in your pocket after ALL expenditure, income and tax deductions are taken into account. You just need to get back more than you put in on average for each year.
P & I LOANS
I don’t use Principal and Interest loans because I would be effectively paying down my tax deduction advantage. Because interest on a IP is tax deductible, if I reduce the principle, I automatically begin to reduce the amount of interest I am paying and I reduce the tax deduction benefit.
The other thing is that paying P & I reduces my cashflow. I only want to pay the minimum and make money (equity) by just holding the property with minimum payments (sustaining the mortgage at the level I bought the property for) and I just wait for the property to rise in value. This of course assumes that I am buying property that will rise in value.
Thanks to the others that have given some great ideas in their posts to this thread
Todd Burns
http://www.freepropertyhelp.com.auHi All,
I have researched Realestate agency techniques (including the Jenman System) extensively because at one stage I was interested in becoming an agent.
This is what I think Neil is saying and this is what I agree with-
Most people genuinely looking for a property will use newspaper advertising and open houses for research purposes as a priority over buying purposes. If a house value is reduced in the paper, the masses get to know straight away and so the perceived value begins to decline.
Properties that stay advertised on the market too long go cold very quickly and buyers generally think there is something wrong with it and the perceived begins to decline.
Investors will often sit back and watch their RE agent provided and vendor paid for, research tool (newspaper advertising) until they find a property that has been stripped of it’s value and then go in to negotiate a bargain.
Some RE agents can make mega bucks from advertising commissions, so would they care if your house gets over advertised and suffers a decline in perceived value?
Under the Non-Jenman system RE agents often will go in with a price quote that the Vendor likes and then the vendor is conditioned down to accept a much lower price so that the property reaches a easy to sell range and the agent gets a speedy commission turnover.
Many serious owner occupying buyers (the ones who are willing to pay more if they see a house they really want to live in) will be looking in a specific area and will drive around and look for for sale signs in places they want to live.
The Jenman system (when done properly) is basically a tender system targeted towards attracting only serious pre-qualified buyers that want to buy a house for more emotional reasons. It is meant to weed out the tyre kickers and bargain hunters. Investors are not on the priority list of buyers to target because they/ we mainly want bargains. In Neils system every interested buyer puts in a secret bid and they get told to make it their highest offer if they really want the property because it will end up going to the highest bidder (only if they vendor agrees). Unlike a conventional auction, they do not know what the other people have bid.
A conventional auction works a bit like ebay- The buyer goes in with a maximum amount in mind to pay but only ends up having to pay slightly above the price that the bidder behind them stops at. The winning bidder is often prepared to pay more but why would they if the bidder behind them has run out of money.
Neil gets a bit weird for me sometimes but I think there is a lot of truth to what he says.
By the way, I did not become an RE agent!! [biggrin]
Todd Burns
http://www.freepropertyhelp.com.auHi Giovanni,
I am not sure of the cost for a Deposit bond on that amount but I think they are a great idea. You just have too make sure you get more from investing the $56K for the deposit term than you would for paying the deposit bond.
Of course there is that comforting feeling of your $56K being in your bank account rather than someone elses, so the cost of the deposit bond could be well worth it for that reason alone.
Todd Burns
http://www.freepropertyhelp.com.auHi Nsellar,
So many people have hopped on board the Cashflow+ property bandwagon now that there is so much demand and so little supply. It is difficult for the novice because the experienced and savvy investors are using clever strategies to get the deals first. You could get what looks like a good deal but if you’re picking from left overs you’ve got to wonder why so many other investors have left it untouched (Unless it’s pure luck).
I was talking to a couple recently who aquired 71 properties since 2001so it shows there are more people than Steve that have achieved that sort of investing success. Don’t be too daunted, even you have managed to get a property portfolio which the majority of Aussies haven’t got. I think you should be proud of yourself having one IP
Cashflow+ isn’t the be all and end all of investing. I have made some great gains with little outlay from slightly negative and neutral properties.
Just wondering if your IP property has had a depreciation schedule done on it because that could be a way of getting a better return on it (depending on its age and a few other issues).
Todd Burns
http://www.freepropertyhelp.com.auHi All,
Love him or hate him, I think we need people like Neil Jenman. He has fought hard to expose many fraudulant operators that have tried to mercilessly rip off property investors. Although I don’t think Neil knows where to stop sometimes I know he is a fierce fighter for the underdog and vulnerable in this world. I am not not 100% sure of his motives but I bet the people who have been saved from scammers send him a birthday card.
I think there are too many people in this world who try and make money at all costs, regardless of the effects on others. Neil with all his faults and with his sometimes extreme views helps to bring balance back towards the centre.
I have studied the Jenman System in detail and I believe that most of what Neil says is credbile and makes good sense. The problem is (and Neil admits it) he does try to get each of his agents to follow his system but he cannot be 100% successful in making them follow it (although he does offer to pay money out of his own pocket if any of his agents rip you off).
Anyway, I was so impressed with his philosphy in selling that I sold a house through a Jenman agent. Because I know the system well and I made sure the agent followed it, the sale ended up being very successful and we ended up getting way above what other agents were selling similar properties for at the time. These agents were clearly conditioning the seller to lower their price so they could get a quick sale and speedy commission. The win win was that the buyer was happy to pay that price to secure the property.
If anyone wants to know what the system is about just go to Neils website and you’ll find a fair bit of inforamtion there. Please don’t bag it out with out knowing indepth what it is about.
By the way, I applaude Steve in asking for the personal attacks on Neil to stop, I think that shows a lot of maturity and wisdom.
Todd Burns
http://www.freepropertyhelp.com.auHi Basil,
I understand your situation. I cannot help you with a Brisbane accountant contact because mine is in Sydney. But somewhere on a recent forum post I saw someone else asking for the same thing so maybe you could search for the response that they received.
All the best…
Todd Burns
http://www.freepropertyhelp.com.auHi Sean,
Yes, I have recently successfully purchased sight unseen 3 times. I would not recommend doing it on your first investment purchase and if you want to do it on your second then you need to be extremely thorough. Research is my thing because I use to be a Crime Intelligence Analyst but if you do not have a research background please understand that there are lot of T’s to cross an I’s to dot before you can come close to being as confident as you would by seeing a property first hand.
Having said that, sight unseen is a heck of a lot easier now with the advantages of the internet and I am setting up my new website to provide as many internet research tools as possible but there’s still a lot more to go on there yet so don’t think that there’s all the information there to do it.
There are are a lot of things you have to get others to do. You have to get lots of photos, check, cross check , check again and make sure you use reliable professionals to do the relevant work for you. Obviously some people will see a sight unseen purchase as an opportunity to rip you off so the due diligence has to be as thorough as possible. My wife keeps telling me to write a book on it but I am too busy sitting here writing forum posts.
Todd Burns
http://www.freepropertyhelp.com.auHi Basil,
Property investing can be lucrative but it is very complex (if you want to be successful). There is never a formula that perfectly suits everyone because everyones’ situations and mindsets are different. I suggest you talk to an accountant that is a multi-investment property specialist because it is very important to build on the right foundations. Starting up a company or trust is not always the best thing to do when your starting out, it really depends on your situation and goals. If you do set up a company or trust you need to know the reasons why and be able to implement all of the other strategies that go along with it.
You seem to focus heavily on avoiding paying a decent amount of money for a good accountant but this to me is an important foundation and critical investment. My accountant is a property specialist and has made sure I set things up right according to what I want to achieve. He has saved me tens of thousands of dollars. His charge is minimal compared to that… but please don’t tell him because might put the price up [biggrin]
Anyway, I am almost certain that there is a way you could get started but please do not underestimate the amount of traps there are and the amount of knowledge you need to acquire, before you can be successful with property investing.
Todd Burns
http://www.freepropertyhelp.com.auWARNING, WARNING, WARNING….
I just found this information about Fox Symes
http://www.accc.gov.au/content/index.phtml/itemId/585988/fromItemId/684968
Todd Burns
http://www.freepropertyhelp.com.auHi Myjam,
I am heartbroken when I hear about people with children having to move out of a family home. I hope this information is useful to you…..
There are few finance companies talking about offering a shared equity mortgage product. This is where a component of the mortgage (up to 50% with some) is given a very low or even 0% interest rate. This can significantly reduce the monthly repayments, hopefully to the affordable level. The catch is that you have to pay the lender a % of the capital growth of your property upon sale (but who cares if you were going to lose the property anyway). Plus in the product I have seen it’s only a percentage of capital growth from when you take up the deal (not the whole capital growth). I am currently working out ways I can use it as part of my investment strategy.
You could give these guys a call but I know there are others out there as well at least thinking about offering this type of deal. http://www.affiance.com.au/
I think Sydney is the main place they are looking at offering this because it is very reliable as far as capital gains go (especially in the Hills District)
Todd Burns
http://www.freepropertyhelp.com.auHi Matt,
I use a comprehensive Excel spreadsheet that I made myself. It details EVERYTHING that my wife and I spend money on. I worked through the spreadsheet focussing on one item and a time. These are the questions that I asked myself-
1. Do I need this thing
2. Can I get rid of it
3. Can I get it cheaper
4. Can I make money on it (eg: reward points etc)
5. Is there another solutionI also signed up to http://www.simplesavings.com.au to get lots of tips and solutions from other people.
I was blown away by the money I saved by going through this process.
I hope this helps.
Todd Burns
http://www.freepropertyhelp.com.auHi Hellofawedge,
I hope you don’t mind me commenting on your questions about equity that you were asking Colin.
I can see what Colin is saying about the fear involved in using equity, especially if it’s from your own home. However my wife and I would have missed out on profiting from the last property boom if we did not use equity in our own home to invest. I think that the key is minimising the risk and having a plan B if something goes wrong so you can sort things out financially without the need for the bank to get your owner occ. home.
We approached it by buying a new property (house) for our first investment and we put a lot of research in to making sure it would be easily tenanted and we also got the right insurances etc.
Now, from what I understand if you can’t pay the mortgage the bank will go through a number of steps to get their money back. The first obvious place for the bank to get their money back if you cannot pay is through the IP, so as long as you haven’t paid an ‘over the market ‘ price or had a massive drop in capital value, you should be able to just sell the IP and pay the bank back .There are also all sorts of reduced payment plan options and other strategies that could be used and the money doesn’t necessarily have to come out of your owner occupied house unless there is no other way.
There are also lots of insurance types that can cover you in situations such as disability ,losing your job etc. I doubt whether house repossession is as likely and common as most people think it is.
The thing I like about using equity is that it can allow you to keep money in savings (as a backup). Money that you would usually have to fork out as a deposit. This to me provides a level of safety and risk management in itself because the savings could be used to support an unexpected time of vacancy or at least keep the banks at bay until you find a solution to whatever has put your IP in danger.
That’s my two bobs worth. It really comes down to your risk v’s return profile. My view is that you have to take some sort of risk or you won’t get any return at all. It’s just a matter of educating yourself on how to put risk minimisation strategies in place so that there is very little chance of getting to the repossession stage.
I would also like to know what idea Colin has for helping to fund a property purchase.
Todd Burns
http://www.freepropertyhelp.com.auHi All,
Brisbane 04- ‘Fuddruckers’ is near the Marriott River Centre. It’s in the same street as the Alamo (across the other side of the
street).The breakfasts at the Diner behind the River Centre were unbelievable. You won’t like them if your into health food though. I ate waaaay too much.
Bardon- Ft Worth deals sounds excellent. I have seen the Dallas area but didn’t get in to Fort Worth. Was it a foreclosure deal?
Todd Burns
http://www.freepropertyhelp.com.au“Always let your conscious be your guide” – Jiminy Cricket
(Philospher and trustworthy insect)[exhappy]Todd Burns
http://www.freepropertyhelp.com.auHi Andy,
I have to have a bit of a laugh at the suggestions of you and your wife going out to do extra jobs[biggrin]. Unless I am seriously mistaken you are having a baby [ohno2].
This wonderful event happened unexpectedly to my wife and I right in the middle of starting property investment portfolio a couple of years ago and I know, like us, that your focus will need to be on your child at this time and obviously your wife will need heaps of support too.
One of the things that we did was look at our budget closely. We picked it to bits and found creative ways of saving money and making money that ended up being quite easy to implement. One of the websites that we subscribed to was http://www.simplesavings.com.au (at the moment they’re offering 3 months free if you refer some friends). I was blown away how much money could be saved when we focused on the task.
I customised a spreadsheet which had every expense I could think of and worked my way through the list and assessed what I could delete or reduce in some way. We pulled money out of thin air without making a big change in our lifestyle. I can send you a copy of the spreadsheet if you would like. Just email me through the forum or my website and I’ll attach and return. About 18 months later my wife went back to work and we could relax a bit financially. By this time our properties had risen in value and we could redraw on some equity if we needed to.
It may be worthwhile exploring the option that these people are offering. It is a shared equity loan that is supposed to massively reduce your payments. You just have to commit to giving them a % of capital growth when you sell. I am not sure if it would work in your situation or whether they would lend to your area but I think it would be worth an ask. Here’s the link http://www.affiance.com.au/
By the way, did you say that you were relying on a
real estate agent for an accuarate valuation of your property? Before you make any big decisions please get an independant professional property valuer do give you a valuation on your property. Many RE agents are not qualified valuers and do not have the degree of accountablility that a Pro valuer does. At least ask to see the RE agents Property Valuation qualifications.I know there is a good solution out there for you and there are some smart people on this forum so suck their brains dry. I am sure they are all willing to help.
Best Wishes
Todd Burns
http://www.freepropertyhelp.com.auHi Bom,
For a start, why don’t you ring the RE agents and ask how many properties there are for rent on their rental lists.
Todd Burns
http://www.freepropertyhelp.com.auHi Simon,
Why don’t you check out this site to see what else is available (if you haven’t already).
http://www.cannex.com.au[biggrin]Todd Burns
http://www.freepropertyhelp.com.au
