Forum Replies Created
G’day Grossy,
Keep going mate – I’m extremely interested.
Most of the stuff our group deals with, when I discuss it also, most people fall asleep or ignore it also as it outside their small remit of 3 bed houses and/or flats, or region of confidence and knowledge.
Even with our differing experiences, I’m hanging on by the tip of my fingernails trying to grasp the magnitude and complexity of your deals (soups indeed !!!).
I’ve learnt to read through your writing style and can now understand 99% of what you are getting at.
For me, with W4L above comments, it’s a bit like a 2 year old infant criticising a Law professor on some critical point of some obscure law.
You are miles in front of us !!
Your negotiating tactics alone, if employed by our group, could save us literally many millions over the next few months.
Can’t wait for you to come over to Perth. Living here permanantly now, I’ll definitely buy you that long awaited Scotch.
Good on you. Can’t wait for the next installment. Cheers.
Many businesses make such good returns on their cash that a property investment would seem like a poor investment to them! They stay in their core competency.Exactly.
I asked my tenant this exact same question, as to why he didn’t purchase the place for himself. He answered me very honestly about his business.
He said ;
1. I pay you 11% rent, and you are probably getting 11 or 12% growth, which is 23% passive return. I’d rather get my usual 40 or 45% active return on my trucks and plant. They are depreciating of course, but I’m simply not in the RE game.
2. The other thing is size of funds. The purchase price of one property for them would get them maybe 6 trucks, 2 FEL’s and maybe an extra 100 bins, which would literally double the size of his business. The returns to him doing this would swamp the potential savings he might get by not having to pay me rent.
believe it or not, there are good businesses out there, actively making far larger profits than by simply owning property. Higher risk for sure…..but then that is natural.
Good luck in your investing everyone.
Hi Daniel and roodog,
To further elaborate….the tenant has spent 140K since moving in, renovating our property, and has transformed our sheds, and built 2 extra, over the past few months into a vibrant recycling station, where they bring 10,000 cubic metres per month of other people’s rubbish onto our property (in big skip bins, not the putrid household stuff) and sort and segregate it into re-saleable products…..concrete / wood / sand / mulch / paper / carboard etc. The volume should eventually crank up to 22,000 cum per month. Bring it on.
They pay alot for the vacant dirt (which they’ve now re-bitumenised…looks great too) as they need to store all of their bins and trucks and front end loaders. The sheds themselves are the minor part of the property where they service the equipment and store the product. It’s all about turning circles with large trucks and having enough “elbow room” to manouver large vehicles efficiently.
We get 105% LVR on the comm. deals by injecting residential equity into the deals. We absolutely LOVE cross collateralising all of our loans, tying ourselves in enormous great knots, to the absolute horror of the mortgage broking advisors. Apparently there are very large pitfalls doing this, but it hasn’t tripped us up yet….maybe we are in for the shock of our lives soon, but at this stage everything is okey dokey. [biggrin]
G’day QL,
Bought a crappy bunch of old rusty sheds on a decent block of land, and these are the figures for the deal.
Capital
Purchased for 780K
Total Acquisition Costs were 40K
Borrowed from the bank 820K (105.1%)Income
Loan Costs 59K p.a. (fixed for 5 years)
Total Outgoings 11K p.a. (paid by tenants)
Rent first year is 80K p.a. nett
Rent in the fifth year is 93K p.a. nett (escalates at 4% p.a.)On a 105% loan, (nothing in), the prop produces 21K p.a. cashflow in year one, escalating to 34K p.a. in year 5…..for a grand total cashflow of 137K in the first 5 years.
Tenant has signed up for 15 years. We get the property back in 2021. By then, the free cashflow would have completely paid off the property. Job sorted, moving onto the next one.
Trick is to find the right sort fo tenant, and then cling to them like glue.
Delboy,
Seriously, if 30% of 215K (amounting to 64K) is too much money for you to tie up in a commercial property deal, then I believe you are playing the wrong game. I’d suggest finding another hobby.
Elkam,
A going concern is when you buy premises that have a sitting tenant and are operating it as a going concern. NO GST is payable by the purchaser in this case. You are not purchasing the tenant’s business. You still need to know quite a bit about what they do, and how robust they are, but you are buying the dirt and the building only, just like with a house.
Being a former accountant……….It is part of the game I suppose just be aware and accept this is a cost.Part of the game hey ?? Just accept it hey ??
I’d hazard a guess that mspartal has posted their question because something doesn’t quite sit right and they don’t want to accept it. That internal feeling mspartal is talking to you strongly, I’d listen to it…..and definitely not “just accept it”.
Keep searching for an accountant that you feel is doing the right thing by you, you obviously aren’t in that position now.
Six minute blocks indeed. I wonder which clever little sausage originally came up with that wondrous concept…..no doubt some American lawyer….sorry, Managing Partner….way back when in the 30’s……how inventive and prestigous. Where do I sign up for that type of treatment ??
Mspartal, if you don’t have an extremely complex financial arrangement, I’d be taking your return to the local H&R Block rep if you don’t wish to do it yourself. If you have a normal PAYE Ozzy job and one or two houses, you should be competent enough to get 99.5% of all that you are lawfully entitled to, without having to subject yourself to these clowns.
Just accept it……NEVER !!!!!
Thankfully I’m not a financial adviser, but I reckon a qualified FA might answer your varied questions like this :
1. How old is your father ??
2. What are his overall plans / intentions for the property ??
3. When was the property purchased ??
4. How old are you and your brother – any other siblings and ages thereof ??
5. Tell me about the relationship he is entering into ??
6. When you say “we” would like to change the name on the title….who exactly is we ??
7. What financial expereince do you, your father and your brother have ??…..and a whole raft of other questions and queries before they would even begin to venture a qualified opinion.
I presume your future “quasi-mum” is all fine with this behind the scenes manouvering….they have a tendency to find these types of things out….especially when they are allegedly the root cause of the “worst that could happen”.
Perth naturally lags the East Coast.OK Simon, I’ll take the bait on that one.
I’m not convinced about all this cycle waffle, but if it is true, then by it’s very nature, how does one tell that we over here in Perth are following the East Coast, that is Sydney….the centre of the Universe, and the ripple effect from action central outwards.
Maybe, just maybe, Perth is 2 years ahead of Sydney et al and whilst we are just ramping up and heading into our boom, you guys over the other side of the paddock are very slowly catching up….but it might take 2 or 3 years for our ripple effect to reach you.
Our depressed years back in 01 and 02, you guys are having now in 04 – 06. One could easily argue that the East Coast is at least 3 years behind the West Coast.
Why does everyone assume that everything needs to originate over there ??
Hey…. what’s the go Chief ??
I ask one simple question and get put on the backburner….Yeah yeah, I “will” get back to you later he says.
Then, much later, Mr Coconuts asks 4 or 5 questions and he gets 5 or 6 quick detailed replies….with a free one thrown in for good measure. [eh]
Oh well….sitting here twiddling those thumbs….I’m sure there is a point to all of this !!!!
[baaa]
Only buy properties where the tenant is legally forced to do it all for you.
I suppose it comes down to the person doing the job.Agreed terryw, unfortunately, when you walk into the offices of these people, ……and the same goes for PM’s, mechanics, lawyers, doctors, plumbers etc etc etc, unfortunately they don’t have a sign plastered across their forehead saying ;
“Yes indeed, I’m one of those bad practitioners that everyone warns you about…..avoid me like the plague. If you do business with me, it’s gonna get nasty and you’ll get ripped off and frustrated the entire time.”
Conversely, the really good ones also don’t have a sign plastered across their forehead saying ;
“Yes indeed, I’m one of those gems that you sometimes come across, you’ll form a lifelong association with me for all of your (insert service provided) needs.”
Usually you need to wade through the first pile of dross, at great expense and time and frustration to eventually arrive at someone from the second pile.
Originally posted by foundation:A fair question Dazzling. Perhaps I should have given more thought to that question before I posted, but that was never my aim. You see, I’m the kind of kid who would rather pull apart the toy and find out how it works… then once satisfied, leave it in pieces.
OK, so what exactly is the aim ??
You are trying to prove that a “smoking gun” exists to shoot down the ‘theory’ of the houses double every 10 years….
OK, no problems, but what are you going to do with the smoking gun when you do find it ??
Surely this isn’t a highly technical “I told you so” session. Even if it is, I cannot for the life of me figure out where the end of the line is with this ??
Footnote : Both you and I have been members of this forum now for about 18 months now F, and you have consistently maintained this line. 100% for consistently. In that time, we’ve seen substantial growth, well above the “median” figures presented above. In that time, have you also managed to capture large capital profits from your obviously profound house market knowledge.
P.S. How much would you want to be a full time property researcher for our group ??
Cheers matey.
Hey F,
You know I am a pretty big fan of yours when it comes to analysing “stuff” and getting hold of all sorts of quirky data.
But I gotta say, some of your high level macro economic theory is really interesting and all, but I simply cannot possibly see a way where I can personally benefit from reading it ?? It reminds me of listening to Paul Keating when he was in full flight back in the late 80’s. He could bang on all week about that high level stuff, and I wouldn’t be able to profit from any of it.
It’s akin to the poor, dishevelled economics lecturer at University. Knew all of this high level stuff backwards, but couldn’t actually see how to invest himself and ended up poor as a church mouse.
We have houses that have doubled over the past 3 years, and some that have quadrupled in the past 8 years, so when you talk about houses not being able to double in 10 years, it just doesn’t make any sense to me….maybe that’s your whole point ??
Warren Buffett has been diligently grinding out about 22.8% compounded over the past 41 years, so I know it (investing) is sustainable if you have something special going on.
So, now that you have written all of that, what is your personal economic plan for taking advantage of that knowledge ?? Or do I take it, that you are saying investing in houses is a mug’s game and there is something better out there. You won’t get any argument from me on that score.
The problem is, I’m not sure such a creature exists in WA any longer. Perth seems certainly out of the question.Hiya K C Miller,
I suppose it depends by what you exactly define as a “creature”. Steve’s stock that he describes in his book were a while back now and not quite relevant today.
If you mean like a 36K house renting for say $ 100 p.w., well then yes, in Perth I imagine you shall struggle.
If you mean some 20 MM office block renting for $ 35,000 nett per week after all property costs, then no, they are available if you have that sort of chunk of change.
In summary, +CF properties are quite numerous if you know where to look, but the majority of investors simply cannot buy them.
How many people jump on Re.com and type in for their selection criteria only props over 20 MM ?? [blush2]
a flutter of the eylids and a sweep of the hair often does wonders when negotiating with male tradespeople/real estate agents/bank manager etc etc – and sometimes also doing the “dumb blonde” thing at the same timeAgreed. I am extremely concious of this when dealing / negotiating with women, and make it a particular point to be extra tough on the women, for this very reason. They absolutely do not like it when they realise I am unwilling to play their game.
Why does this work? Because the majority of men are motivated by sex that’s why – it seems to be men’s most powerful stimuli and most intense emotionOnce again – agreed. It does take an extra special effort to ignore the subtle “non-verbal and non written” stuff that goes on during a negotiation. As mentioned above, it regularly turns ugly quickly during a negotiation when I purposely negotiate harder with women….and not cut them any slack whatsoever, than say a man standing there in a pair of coveralls. Just my way of ensuring I don’t get rolled by that particular and common tactic.
Thanks for freely offering my personal time Amanda….I’m sure the wife and kids who I hardly ever see would be impressed to know more time was taken from them…..[hmmm]
Unfortunately I am a “Minty” myself to a grumpy old bugger who avails his time begrudgingly, but worth every minute.
It would seem strange to be a minty and a mentor all at once.
As has been said on the forum many times before, this forum and others are probably the best form of mentor going. I’d agree with this.
Gives a whole new meaning to the phrase “Coming into money” ??? [eh]
Last thing you want is having to much money for a pension but having to rely on the govt for health care.Exactly right. I am sure that the vast majority of people at retirement age right now find themselves in this predicament. A titch wealthier than people struggling on the pension only, but unable to break away entirely from the DSS, hence having to continually report their entire financial standing to some cumbersome dept, with the threat of having to reduce or lose the measly bit they get if they go over some pre-determined (usually very low) thresh-hold.
I sat down with my parents over this issue. It’s staggering what they are prepared to sacrifice to qualify for a part pension such that that medical card for cheap pills / DR’s bills etc is available.
As an exercise we sat down and worked out what that card was worth, about 9 to 11K p.a. That’s it….
The self limiting beliefs create dby that card, combined with an entrenched 60 yr ‘normal thought’ that they deserve the pension…..has hindered them enormously.
But, they sit around the caravan club, the golf club, and over the fence with the neighbours and collectively come to some “best course”, because everyone else is doing it.
I’m staggered at how most people don’t allow themselves to be outstanding, for fear of upsetting the majority or appearing abnormal. I normally don’t give a toss what people think of me or my strategies, and that has made all the difference.
Sorry – just kicked the soapbox away….
It’s a pretty relaxed atmosphere and good value.
No strict agenda / format but pleasant atmosphere conducive to chatting.
I’ve been to one or two, and enjoyed myself. Far better than what’s on the idiot box on a Wednesday night.
Plus, it’s just around the corner from one of my IP’s, so I always take the opportunity to zip on by and have a squizz.
You simply meet the nicest of people there…..except when I turn up. Why not give it a go….be daring….get out from behind those computer screens and meet some nice real people.
Good onya Tracey for donating the venue once again.
Speaking of cycles, there is also those little world events that have periodically happened that have a smidge of influence.
I think they were in ;
1914-1918
1939-1945
1965-1973 ??
1990-1991Obviously no-one in their right mind would want to see it ever eventuate, but if your cycle theory is right I reckon it’s just about time for another big one, not one of these piddly 174 nations vs one recalcitrant….but a whopper.
