Hi, Neilvs, Cattleya

I do not think you can buy a cashflow positive property just off the street, even with some hard searching. The market is such that when Steve wrote his book, it was possible while looking around in the regional areas. If you want to invest in those areas and that is your strategy, that's fine. Also, when he and his business partner, Dave, were buying back in 1999, it was possible to buy cashflow positive almost off the street.

In the current economic conditions, cashflow positive properties have to be manufactured via renos, targeting different tenant markets, or using different investment approaches (Often a combination of these methods and others), and you also have to factor in the current bank lending criteria.

For example:

1 – Cashflow positive thru Renos: Buy a well-placed property at a good price, do a reno on it to increase rental to cover the purchase cost of the property;

2 – Targeting different markets: Say you bought a high-end property, instead of renting to the residential tenants, maybe you rent out to corporate tenants who are willing to pay more; hence turning your property into cashflow positive;

3 – Different investment approach: Instead of renting out an entire property, you could rent it out per room to increase the rental returns and turn the property into cashflow positive.

May I suggest that you spend more time reading the tens of other PI books available in your local public library first, and surf this forum and other similar ones like Somersoft.com often, so that you can structure your questions better. I see that there are very few replies relative to the number of viewings.

I suspect that it would because while you want to seek out answers to your questions, it comes across you are just looking for the answers to be given to you and that you are not willing to put in the hard work to find them out yourself. Read up one PI book or magazine per week for the next 6 months; that will really accelerate your understanding.

Saying that this or that PI method does not work is how a reflection of the method, but a reflection of how you are seeing the issue.

All the best.

Daniel Lee

All we need is for the Fed Govt to decide not to extend the FHOG Boost; then the party will be on for Property Investors.

I read on The Age today that the FHOG Boost cost the Feds $1B so far, money which can be used more effectively in other areas than propping up the weak housing market, which has already been helped by the interest rate cuts anyhow.

I really that the FHOG Boost is creating a bubble on the lower-end of the market.

Regards
Daniel

Combined this with not recognising the FHOG Boost as geninue savings, this will really tighten the rope around the typical FHB's neck. A requirement of 5% geninue savings takes the FHOG Boost out of the equation.

Is this the continuation of a credit tightening trend from the banks, as a defensive strategy in their forecast that property price will fall accordingly?

Would this not lead to a slow down in the number of FHBs in the market, if the rest of the Big Banks proceed down that path? In return, more FHBs being forced to save more also means more renters in the market, so good for landlords.

Interesting to hear other comments.

Regards
Daniel Lee

Hi

I was just thinking about the FHOG boost the other day, while checking out some property prices that hace gone through the roof in a couple of suburbs that I am keeping an eye on.

The lower-end of the market is kept buoyant with the FHBs and the FHOG boost, yet the number of properties available on the market has fallen to one-third its peak here in Melbourne.

The FHOG boost has simply brought forward demand from FHBs who already had the money to buy, or were almost ready with the money to buy. That was the first rush back when the FHOG Boost was introduced in Oct/Nov 08, setting the market to bubble nicely. If a whole lump of FHBs have already gone through, that could leave fewer FHBs available to prop up the market.

1 – So, there could be a FHBs rush to buy property should the FHOG Boost end by 30 June;
3 – or if the FHOG Boost is extended, the market will normalise as the urgency to buy goes away, which also means an opportunity for investors;
3 – the Boost ends and coupled with tightening credit such as the rapidly disappearance of low docs and 95-100% LVR loans, will see the weaker FHBs exit the market. Less demand means vendors will have to adjust their expectations and could lead to lowering asking prices. More buying opportunity for those who are cashed up.

Lets see what happens.

Regards
Daniel Lee

Hi, Seddar

Yes. it does sound easy; just find a property to invest in, rent it out and get someone else to pay the rent. 

Expanding on this would be: 

Where to invest in (Capital city or regional area) 
What type of property (apartment, units, houses or specialised areas like retiree homes)
How much to invest?
How to get maximum rent to minimise the cost of holding to you, since most properties are not positively geared

Expanding this further

Why are you investing? What is your purpose / aim / goals?
What aspects of PI do I not know?
Do you want to go into PI, or do other areas like Shares intrigue me?

As WJ Hooker mentioned, spend some time reading up in this forum and read through plenty of property books for the next 6 months. Investing is often more than just buying something; it often is a mindset and lifestyle change.

All the best. This is a good start.
Daniel

I attended a couple of auctions a few wks back in a inner northern Melbourne suburb. After the auctions had ended, the properties was withdrawn and then put back onto the market for much higher prices.

Example 1 – A 3 bedrm unit. Original price range of $340K – $380K. Highest bid was $393.5K. Put back onto the market asking for $420K.

Example 2 – 3 Bedrom Edwardian house. Original price range of $420K – $450K. Highest bid of $487K. Put back onto the market asking for $515K.

Clearly, there are many vendors with unrealistic expectations of what their property can attract, considering the current economic conditions.

Regards
Daniel

Hi, Anon

Just my personal thought on this. In practice, if you apply for a property and the subsequent loan in only your own name, it should not be a problem to get the FHOG. Even if you need a guarantor to increase your loan amount, I think you can still use your boyfriend. After all, he only has to be a guarantor.

I applied for my Aust residency with my partner 2.6 yrs back and the amount of paperwork needed to prove that you are in a relationship is quite substantial, as we were not married at that time. So, that means to prove that you are not in a relationship is very easy indeed, for the purpose of buying a property and obtaining a loan.

So, in this aspect, I agree with Richard in that the actual application process for the FHOG is quite different in practice.

Regards
Daniel Lee

W4L, I found the link to the article I believe you were talking about.

http://www.news.com.au/business/money/story/0,28323,25223797-5013951,00.html

Australian housing market holds sub-prime danger

Regards
Daniel

In the suburbs that we are looking at, the lower-end of the market is supposedly running pretty hot. Yet there are contradictory signs happening at the same time. With many FHBs out there, you would think that there would be more properties for sale; yet REAs are scouting around looking for property to sell, as people are not offering them up for sale.

The low interest rates, coupled with a market that is only buoyant due to the FHBs, generally mean that people can afford to hold onto their IPs and probably rent them out instead, which could explain why rental rates have gone up in some suburbs.

We have not found anything suitable for us to 'reno' on at the moment, and am still looking. With the increased FHBG ending its end in 3 months time, will the rush of FHBs encourage more people to attempt to cash-in and sell their IPs?

Regards
Daniel Lee

Hi, Rellie

We had a similar experience as yours as well. Recently put in an written offer for a 'renovator's delight' around 6% below the lowest asking price range directly to the Vendor. The agent contact me a few days later, and in an angry tone, informed that the Vendor was only interested in an auction. The property got sold at the auction for way above what we would be expected to be reasonable to emotional buyers.

The point is that even though an agent is 'obliged' to forward all offers, many do not forward offers that are below the expectation of the Vendor. Most agents are happy to sugar coat ther dealing with vendors, put in minimal work and hope a generous buyer offers something above expectation (There are plenty of generous FHBs at the moment). One agent has even told me in an email that to submit our offer would be an embarassment for them.

I think keep on putting in offers and when you meet a good agent, you stand a really good chance of securing a deal. That was how we got our PPOR back in Aug 07.

Regards
Daniel Lee