Forum Replies Created
Definitely the residential stock if just starting out.
The biggest thing to concentrate on IMO is securing good capital gain to increase your equity ASAP.
You really need to be looking at something bog standard, that will rent easily, to give you only a few hassles so that you can get on your feet – so to speak.
The two biggest advantages of starting with RIP’s are ;
1. The bank will lend you a tad more and therefore you can get into a slightly better area….leading towards that CG increase.
2. Given your domestic upbringing, you’ll probably be more aware of what is going on with RIP’s.
3. The equity thing in point 1. snowballs as you can lend say 90 or 95% to start off with and then 80% LVR avoiding LMI later on.You probably can’t afford to purchase something decent to attract good CIP tenants, and you probably can’t afford to have bad CIP tenants.
Early in your IP history, I’d be going for CG and sacrifice the cashflow side of things. Work on that side later on down the track when your increased equity allows you to purchase some of the good stuff CF wise.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya Leo,
Not sure if we fit your classification of a ‘normal little investor’, but I suppose our latest acquisition could be classified as landbanking.
We managed to pick up about 2 acres in the middle of Perth with structures on it that make it nie on nuetral cashflow…dunno if that then throws it out as Landbanking or not ??
What’s the definition of Landbanking ?? Anything that is horribly negative cashflow ?? If so, we are definitely land bankers…
Anyway, we’ll sit on this corner parcel of dirt for a while and see where life takes us. The previous vendor has an adjoining 1 acre property that we are also looking at picking up…that one’ll be +CF however.
We reckon holding 3 acres on a corner site in the middle of Perth at no cost to us might come in handy later on down the track.
Just gotta convince those pesky money lenders.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
We’ve had two instances of termites.
One was our second IP that we bought based on the lovely presentation. The Vendor had done a marvellous job in covering up all of the damage with masking tape and repainting, such that it looked like nice new wood. Our trusty “Mr White Ant Guy” missed the lot.
Re-reading the very fine (like 1/2 font) print, the certificate was valid only for the 24 hour period in which the inspection was carried out. Inspection was simply carrying around a screwdriver and a torch and saying things like “Nah mate, she’s good, this looks fine to me”
It cost about 2 months of hard work and about 12K to repair and renovate the damage and eradicate the active termites. Came up looking trumps. We then sold it to the next door neighbours for a song. We weren’t that smart but we could lift heavy things back then. [blink]
After that incident, we’ve never had a white ant inspection done – except for one near a river. Once again the trusty screwdriver came out, which confirmed my view that I can hold a screwdriver as good as the next man. That one was free of white ants.
Our latest acquisition (no inspection done – due to the massive amount of ‘stuff’ in the warehouse) also has active white ant damage. If we had of got an inspector in, he would of simply ticked the box on the form saying access not adequate.
After spending 3 weeks clearing out the tenants garbage (I love tenants when they do that…) we were able to see the little critters and the damage they have caused. Pretty extensive. We are talking maybe 2K to get rid of them. No biggy.
Termites don’t bother us much any more as the land content of our places are now pretty high (latest one was 92.5%), so there isn’t alot of ‘value’ to damage really.
If you are buying a really spiffy house, where the land is worth say only 30% of the purchase price, then yeah, I could see why you’d want to be sure…there is alot of value to eat there. If they aren’t active any more, easy to assess damage.
If I was you, I’d be looking mainly at the strategic capital advantage you can extract from the land. If it’s good – great. If not spectacular, move on.
The termites and/or termite damage in the long run don’t really factor into the equation IMO.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
No one knows everything but I would take there advice over some dropkick real estate agent any day.Technically, that’s where you go wrong Kerwyn. I seem to recall at Craig’s seminar a great big page slapped up right at the very front of his presentation. He called it his “Get out of jail free card” and meticulously went through every line with all 600 or so people….to emphasise very clearly to everyone sitting in the audience that ;
a) None of what he said was advice.
b) He stood behind nothing of what he said.
c) No-one was to act or take anything what he said as the truth.You could clearly see that his legal advisers had really done a number on the presentation.
When push really comes to shove….he doesn’t and absolutely will not stand by anything he says. It was under the general guise of “education and entertainment”. He freely admitted he was not an adviser and could not provide advice.
However, I agree that Craig has some very reasonable things to say, once you cut through all of the salesmanship and bluff of the presenter. What you do with the “education and entertainment” is purely up to you…don’t be officially leaning on him though…there ain’t nothing there.
Have a squiz at my “advice” thread….pretty much sums it all up.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
We’ve made 3 claims on our policies re: our IP’s over the past 11 years.
All 3 have been rejected.
Many people are blissfully under the impression “Oh, it’s OK, we’ve got insurance”.
Now we jack the excess right up, to get the premiums lower…knowing full well that it really needs to hit the fan before you make a claim. Even then, I have very little confidence of a claim ever being approved in full. That’s your hope / aim, but their intent is very much 180° diametrically opposed. I can’t see too many win/wins in this lot.
Insurance companies have some very clever and sneaky little nitpickers working for them. Their job is very much not to automatically approve your claim, despite the fluffy smiling little faces on their ads.
There is a very good reason why Warren Buffett has enjoyed owning insurance companies as his # 1 preference for a vehicle. That massive pot of premiums just sitting there ready to be invested (holding cost of funds is free !!) and best of all he is absolute control of how much trickles back out to hapless policyholders.
Nowhere in their charter will you read that they intend on looking after their customers and promptly pay all claims. What you will read is something like….get the premiums up as high as possible, and limit the outflow of cash via claims to the absolute minimum. That way we can shovel gob loads of dividends to our shareholders and receive nice big fat personal bonus’.
Meanwhile, people who have their PPoR’s damaged by floodwaters sit in the mud while very smartly dressed suits argue the toss over whether it was a storm, a flood, water damage, precipitous downpour or simply an usually wet event…[blink] Either way you cut it, you’re still sitting in the mud and they most certainly aren’t about to pick up a broom or bucket to help.
I liken ins. co’s to casinos. If you’re not with the house…you are definitely on the losing team. Trouble is – how do you get onto the winning team ??
Sorry Donna, I realise that didn’t help you much, but I like a good venting every now and again.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya MM,
In your search for a mentor, I’d suggest linking up with someone who is about 2 or 3 steps further along the path you are travelling down.
Obtaining a mentor that is 10 or 12 steps further along will most likely be involved with things that you simply cannot participate in, or apply the same techniques due to scale etc.
Also, try and get one that is into the same things as you want to do. No point getting a high rise CBD developer as a mentor if you want to do rural sub-divisions. Be wary of moulding your ‘path’ to the path of your mentor also…s/he might drag you down a path you don’t want to go down.
Check out some of the forum members here…everyone has something to add to your plight.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Thanks everyone for their kind words of encouragement – especially you Simon !! [biggrin]
Not intending to change one iota. [whistle] You can expect many more blunt suggestions (no advice…oops there’s that word again)….from this little black duck. I am getting more mellow as the years roll by though. Lucky I didn’t join this forum a couple of years back….would of got run off long ago [whip]
In the words of Dave Gilmour, still “Learning to Fly”. [dunce]
To tell you the truth…this thread is pretty embarrassing…wish a Moderator would do something about it !!! [biggrin]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
The chap across the road from us has just gone through this process. I had a quiet chat with him one Sunday morning and gleaned the following ;
1. Cost to demolish and remove rubble from a 4×2 brick and tile 50 yr old house was $ 12K.
2. It took 2 days to go from house to bare block raked clean.
3. The bobcat got in there and dug a big hole for a future pool…which sent the price up a bit.
4. From sitting down with the wife and initially chatting about it to having it demolished has been 12 months.
5. He’s renting a place for 18 months around the corner, so the new house isn’t going up in a hurry.
6. Four months ago he came around to us and all the other neighbours and let us all know what was going on and what we could expect (trucks / noise / dust etc etc…They were very mature about it and have had no problems from any neighbours.
7. The day after the trucks took away the last of the rubble off the block, he was out there sweeping the verge and road where the trucks had been so other people in the street weren’t getting nails, bits of bricks, cement etc in their tyres. Everyone in the street appreciated that.
8. Immediate neighbours had concerns about security with rickety 60 yr old picket fences being exposed to their props. He put green shadecloth type stuff all the way around the 3 fences and everything has been apples ever since.That’s about all I got from the 5 minute conversation.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I wouldn’t engage in any of the huffing and puffing and sabre rattling. I certainly wouldn’t engage a solicitor or do anything to subterfuge the property or the Landlord.
IMO all of these agents / PM representatives and lawyers sprouting off laws simply get in the way of what boils down to two parties sitting down together and having a civil chat.
I’d take my ‘happy pill’ and wander down for a casual chat and explain the situation. The PM or the landlord doesn’t want, or indeed need, the hassle of turning a reasonable tenant into a law quoting renegade.
Suggesting changing locks or setting the dogs of war onto other parties is quite beyond the pale over such a trivial matter. Quite rightly you shy away from these suggestions if indeed these tactics were used on yourself by your tenants. Suggesting other tenants do it to fellow Landlord’s is not quite cricket.
There are many easy win / win solutions to this ‘problem’. All of them involve mature rational adults talking face to face.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Heya Richard,
Having just read crashy’s “Evicted” post, it reminded me of your generous offer last week to contribute to the forum.
Do you have any suggestions to the forum about his predicament – or indeed any of the queries posted above ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Tony and welcome,
I think you’ll find there is quite a few people on the forums here from Perth.
In terms of finding +CF props in Perth, they are there, but they won’t be jumping up and down on the shelf ready for you to simply pluck them off.
You haven’t indicated your scale / risk profile / circumstances / experiences etc…so you’ve made it pretty tough to answer.
What have you looked at so far ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi WB,
You’ve picked a shocker of an example of the ‘property market’. Buying a bag of lollies down the corner shop would be a better investment than what you have proferred. Whatever supports your argument hey ??
What about this with your 85K cash;
Purchase a small shop for 283K
Your 85K is the 30% deposit
Borrow the other 198K (70%)Tenant signed up for 5 yrs on 10% nett yield.
Borrow funds at 7.2%
Income is 28K p.a. Only expense is interest at 14K p.a.
Cap growth of 10% p.a. = 28K p.a.
Your 85K p.a. has now earnt 42K p.a. = 49%.
None of these numbers are hard to achieve where I’m scratching around, but if you are trying to achieve them with some average smo house in Qld, well then I would tend to agree with you.
We pulled the plug on our share investments last year. Happy to miss out on the 20% plus that they’ve done this year.
Plugged the equity into props and wound up the scale – that’s the key right there if you missed it – and given recent figures, making far more dosh in the prop market. More headaches I agree in the prop side of things, but hey – we don’t mind putting up with headaches to be in control of our assets.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Am I missing something???? [blink]Yep – it’s called 100% control of your investment and being master of your own destiny.
It’s a bit tough trying to get you voice heard when you are a small fish in a really big pond. Do fish have voices ??[biggrin]
Also, if you have the scale (size – not the fish type) yourself, you can attract quite decent tenants.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hey Kendo,
We’ve done this three times in the past – “internal shuffling” I call it.
We’ve paid stamp duty on the title transfer three times. It’s always been between the wife and I, so if you live in a state that allows free transfer between spouses count yourself as one lucky sausage.
On the Transfer of Land document you shall need to state the consideration. The titles office in your state will check to see that this is 20% of the fair market value of the prop. Don’t try and diddle them….they are pretty cluey and like their duty payable for the State coffers.
Your bog standard conveyancer can handle this. It cost us $ 250 each time. Right, that’s the title issues sorted.
The loan docs will probably need unravelling. If you don’t have enough equity in the place or don’t have the demonstrable income to support it, your father may need to go guarantor for a wee while.
It’s part of estate planning – but watch for your father’s gifting rules…it may come back to bite him in the bum if he is intending to apply for the pension later on down the track. Check the amount of yrs between when the gift is made and when/if he intends to apply for the pension. Perhaps if your father has had the foresight to do this with you, he probably doesn’t need the pension.
One of Noel Whittakers books (the ‘Living Well in Retirement’ one) gives an excellent run down of the whole process if you are interested in further reading.
One last thing – you’d better give your old man a big hug and kiss for being so nice to you as well. You are very fortunate.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Karen,
So how did you go ??
Hey kp,
Couldn’t resist….
Assuming Geralton has 50,000 properties all up, karina would therefore own 25,000 of them.
With an absolutely ginormously massive 1 million dollars of NETT equity, that means she has about $ 40 in each property.
WOW !!! The LVR on her portfolio is about 99.9999 ?? At 80% LVR that means on average he median prices of Geraldton props is about $ 200 a pop.
I think maybe she doesn’t quite own that many at all…
If not, looks like I better go get me some real bargains.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
All I can say is all of you guys trying to help Beast are either really thick skinned, really really nice, really keen for Beast’s custom or a combination of all 3.
With his terse, smarmy attitude I’d let him stew in his own juices. Perhaps I’m just not cut out for a job in the service industry.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Excellent news…well done. [biggrin]
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
GR,
I read it – but didn’t understand a word of it.
Could you perhaps write it in plain English so we may have the opportunity of learning.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Geez Kerwyn,
I think you need to cheer up a bit mate before you start telling people they can’t have an opinion if it’s not all rosy and happy days. Within the bounds of the ‘rules’ on this site, surely people are allowed to express their opinions ?? I’m sitting in a country right now where opinions aren’t allowed, and I can tell you it ain’t much fun.
I seem to recall a recent thread in the “Help Needed” forum where someone criticised you for having an opinion that wasn’t ‘going with the flow’ of the thread. Good on you I say. You jumped all over him and insisted that you had a right to your opinion and didn’t want all “Yes men”. Howzabout you extend the same courtesy you were asking that chap to extend to you.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
