Good on you Simon for not playing the game.

Yep, I suppose we could. That thread however, has been one of the most popular on the forum. I think there was 10 or so responses in the lot that said it was one of the most interesting threads on the forum – for it’s insights into people’s spending habits and general attitude toward money handling issues….which this forum addresses.

Dr Thomas Stanley also extensively covered the subject for his millions of readers, who I presume also found the subject interesting.

I guess BRU you’re in the minority. Oh, and no prizes for guessing your nationality with terms like “bollocks” and “cobblers”.

Couldn’t resist…..being a number crunching type of guy.

17 million tonnes every year sounds such alot, very headline grabbing, until you have a bit of a think about it.

Area of Oz is 7.7 million square kilometres.

On average then 2.2 tonnes is dumped p.a. in every square kilometre. Not bad for 20 million people.

Or, to bring it back to something we all understand, 2.2 grams is dumped in every year in every square metre.

That’s right, a massive amount of about half of one tiny pin in every square metre. What are these people trying to achieve ???

Geez, in about 600 years, I might start to get worried.

Until then, I’m happy to purchase my, and my family’s food hygenically instead of out of an industrial bin.

P.S. : If anyone has worked any length of time during night shifts, you’ll know exactly what all of those cute little domestic cats get up to in industrial bins at night. The thought of eating out of those after the cats have been in there doing their thing is quite average indeed. [puke]

G’day aquila,

Well, you asked for any flaws in your logic….OK.

It’s good that you’ve popped on your accounting / scientist hat and crunched the numbers.

Managing to squeeze out 5 cents a day is better than a loss – right.

The flaw I see is that maintenance figure you’ve taken at 5%. If you have estimated incorrectly, by even a smidge, and I’m talking about 5.01%, there goes your profit.

If you’ve been grossly inaccurate with your estimate and the true maintenance expense turns out to be 5.02%, you’re heading out the back door. Not much room for error you’d agree.

On the other hand, to be positive, if the maintenance comes in at 4.99%, you’ve just doubled your profit to 10c per day !!!!!!

First thing I’d do is take my accountant’s / scientists hat off, and pop on my managers hat. What are the ways to increase value / rents / reduce costs / improve the title etc to extract more value from the prop.

At 5c per day, you’re gonna be at this game for a while.

Can you find something a little more cashflow positive ??

Good luck aquila.

G’day mk,

We self manage all of our props and like you, wouldn’t have it any other way.

We simply write them a letter 14 days prior to the inspection advising them that the Landlord, or a representative of the Landlord shall be at the property at xx:xx hrs on such a such date and please have the property ready for an inspection.

Let them know it won’t take any more than 20 minutes. We certainly don’t offer to go around and turn the session into a big moaning session that the tenants can say “Oh, by the way this doesn’t work, this is broken, this leaks, this blah blah blah like they have a want to do”. You could easily end up spending 5 or 6 weeks of rent tending to completely minor tasks.

Happy for other people to do it, if they feel it makes them happy, but we are in a business, and this type of session destroys you cashflows big time. We don’t play their “pick up the phone and have agent and LL on a leash games”.

You end up getting good, robust, self sufficient tenants in the end, rather than wet nursed whingers.

Good luck. Don’t be scared of tenants ot lie to them. Bad negotiating karma when you need to go toe to toe with them.

I may be reading this one all wrong, but if the Seller would let it go for 270, and the buyer wants to pick it up for ~ 180 or 200 or whatever, and isn’t prepared to meet the seller at 270…..and no other buyers are around sniffing, then there is absolutely no way in a month of Sunday’s it’s worth 310.

Market value is clearly defined by where a keen but not desparate vendor meets a keen but not desparate buyer. You and the vendor are a mile apart…..I believe the market value by what you have described is as broad as 180 to 270.

I’m probably wrong though.

Hi rumin, thanks for the PM. Well, are you going to share with us some of the numbers, after all, this game we play is a numbers game. If not, at least a nett yield figure ??

Onto the due diligence and whether you are a worrywart ??

First thing I’d be comparing is the land value vs the asking price. What is the percentage ?? How much are you paying for the building and how much are you paying for the Lease being offered and maybe even some of his profit ?? Get that Land value% up as high as possible I reckon. That covers your butt if everythig hits the fan.

Next, I’d get onto a cracking hot Lease writer and tie this guy up into about 7 different knots. Terms like “the Lessee shall etc”. Make him pay for all of your outgoings – especially the insurance side of things, not just the utilities. If he baulks, he’s playing it cool and having a lend of you.

Take everything you’ve learnt being a ressy landlord and throw it out the window…..you’re playing on a different oval with this one.

I’d get an option period negotiated in the main Lease, so you don’t have to do it all again in 3 yrs time….especially if everything goes well. Don’t just look on the downside, some of my best deals have come about after everyone said the property / buildings and inherited tenants were rubbish. Who cares right ?? They were comparing the deal with their little 4×2 brick house hat on, and it doesn’t compute.

Find out about those other boarding houses he has…..”he seems to” doesn’t cut it. get rid of the rumours and act on fact. Go for a drive and have a squizz how he really runs them.

The whole boarding house / fire risk thing scares the beejesus out of me….wouldn’t touch it with a barge pole personally but it may suit your profile. I have enough trouble dealing with on eor two whinging residential tenants, I couldn’t even imagine dealing with 8 or 9….I’d go nuts.

What’s the immediate surroundings buildings like ?? Are they ressy or have you got good infrastructure / public transport for his clients ?? If you are in Japan, who’s doing the on ground legwork for you ?? Are you planning on crawling through it before you buy, or sight unseen and rely on 3rd party inspections ??

Finally don’t believe a word the REA or his opposing mate tells you casually off to the side. Legally, everything they say and incredibly everything they write down means absolutely nothing and won’t stand up in a court of law, so don’t place too much emphasis on what they say.

Final word – tackling your first non-ressy thing, I’d go for something a little easier with less people involved and then work your way up from there. If you think it’s still the very best deal on offer to you, taking in your remoteness to the IP, and you reckon you can handle the argy bargy you are no doubt going to have to endure – best of luck.

Cheers.

G’day G7…. ;

Not everyone is hurting because of the high petrol prices. I absolutely love this “territory” as you put it. Can’t wait for the pump price to get over $ 2 / litre where it should be. Bring it on. Life will be very sweet indeed when that happens.

Petrol is dirt cheap. People in the western world have had the luxury of cheap fuel for too long. The people who really control the supply have strong intentions to change that, despite the US sabre rattling.

When China and India start demanding what the western world take for granted now, then it’ll get really interesting. What you are witnessing now is just the entree. Mains and dessert are yet to come.

As for the inflation link, it is pretty clear to me. Just imagine the typical shopaholic western woman. She has $ 100 in her purse. She is forced to increase her spend on the daily mortgage from $ 35 to $ 40. She fills up her snazzy Mazda 121, which rises from $ 20 to $ 25 for a tank. She drives to the sterile banal nirvana of the shopping mall to eat cake and coffee and shop for shoes and pretty sparkly things.

Instead of $ 45 in her purse (100-35-20) she’s only got $ 35 (100-40-25). So what’s her course of action ??

Well, the economists would have us believe she’d restrict her spending to only $ 35. Credit card providers would confirm however this has little bearing on her spending habits and hence both interest rates and petrol prices keep going up until one of two things happens…..either (a) the message gets through and the spending is curtailed, or more likely (b) the person at the end of the line eventually footing the bill gives up in hopelessness.

All shop owners and their victims – the “retail therapy” crowd, would violently disagree but that’s what my observations in a nutshell have been.

I have no idea what the value of the place was, but the wife and I when we were students rented a nice 1 bedroom apartment on the top floor of a 3 storey block in Waratah Ave Randwick. We paid $ 170 p.w. the first yr and $ 175 p.w. the second year. That was back in ’92 and ’93.

We paid our rent on time and kept the place looking nice, never even saw or heard from the agent or the Landlord once in 2 years.

I can vividly remember standing at the counter just around the corner on Belmore Ave at the REA’s office applying for the unit, some 3 minutes after viewing the unit. A man came bursting through the door with a great wad of cash in his sweaty paws claiming that he instantly wanted to take that 1 bed unit around the corner. The girl filling in the application form looked up at me and said “are you sure you want it ?”. I had to slap the full cash amount of the bond and 2 weeks in advance down on the table to make him back off. He was not a happy camper. I wasn’t happy either as I was just about to start the heavy negotiating spiel to try and get the rent down….absolutely no chance of that !!!!

Roll the clock forward two years, when we were packing up to leave after our last exams, the agent called to say she would need access for 1 hour on a Sat. morning from 9 to 10am. A nice couple came up first, walked in through the front door, saw how we had the unit laid out – looked at each other and instantly headed off down the stairs and around the corner to the REA office. The second couple, about 90 seconds later, having passed each other down at the bottom of the stairs, were a mother and son. They had exactly the same reaction. The Mum turned to the son and yelled “Quick – run”.

The wife and I took great pleasure standing on the balcony, eventually joined by a sullen looking mother, watching history repeat itself – the son took off down the stairs frantically sprinting after the first couple. He missed out by about 20 strides or 3 seconds. The mother was not happy.

We were nowhere near into buying property at that stage (23 and virtually penniless after buying the engagement ring), but have never been able to replicate the demand generated by that little 1 bedroom unit.

I can only surmise the Owner is still happy with it.

Redwing,

I agree with the old saying “a picture says a thousand words”.

If I was explaining leverage to a novice of property financing, I’d remove both the property side and the finance side and just stick to the leveraging bit and show them a picture of a big guy trying to lift up a big rock….can’t do it without a hernia.

Next show a little baby sitting on a long fulcrum, moving the large object without even knowing it.

Explain the following ;

1. Big rock is the property.
2. Fulcrum or stick is the bank loan.
3. Baby’s weight is the newbies deposit funds.
4. Big guy having the hernia is the guy working 24/7 trying to pay cash.

Once that is understood, they’ll have a good grasp of the basics.

I used to get completely bamboozled by all of the terminology….another language in fact. New guys brains simply switch off to the concepts and stress that they are being left behind as the terms baffle them.

Of course, some clowns use the terminology to deliberately confuse and confound the newbies, mostly in the hope of getting them to sign up to whatever it is they are flogging at the time.

Absolutely 100% agree with you on that. Getting a refund at tax time obviously means you’ve paid too much during the year or you’ve made a whopping great loss somewhere along the line.

Give the refund the flick – I’d much prefer to have investments flinging off so much income every day you’d be forced to, and quite happy to pay the tax owing.

As for paying someone $ 200 to fill out a measly form so you can claim back your losses trickled over time – goodness me….let me guess, that cost is also is tax deductable ????

To my mind, anyone getting a tax refund isn’t playing “the game” too well. [blush2]