Forum Replies Created
Elodie,
Well done…chalk it up to experience. Dust yourself off, regroup your resources and get out there and carry on…you are much wiser from the experience – probably something that is extremely detailed in your mind now, and not able to be summarised or gleaned from books or seminars.
Oh, and on second thoughts, probably is best to talk to your solicitor. With advice like that after the event – I’d pick up the phone and run him off…what a plonker. To be a successful investor – you don’t want to be encumbered with clowns like that.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
[biggrin][biggrin][biggrin]Now there’s a challenge…but then the reward is so alluring and attractive how could any reasonable person refuse.
The only insurmountable problem is Rob, your opinion will be the sole judge…and therefore doomed before it starts.[biggrin][biggrin][biggrin]
Thanks but no thanks.
Rather than talk generalities though about risk / reward, I would however enjoy to hear your specific CIP experiences.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I’m constantly amazed and quietly encouraged by the number of investors who have no experience in, yet claim that commercial property investing is somehow riskier that RIP’s.
None are risk free…if you want that…bank accounts are your ticket…
I believe all props have different risks, you just need to slot them into your risk profile and knowledge / comfort base and see how they fit.
I first heard / read about the big bad nasty risk theories about CIP’s from a Jan Somers book back in the early 90’s, (and for the next 10 years foolishly swallowed it all) but then she qualified her statement by saying that she did know quite a few people who made money from them, but felt she was successful with her RIP fruit cake strategy and saw no need to change her recipe. I have no problem with that statement other than she has little to no practical investing basis on which to claim these risks eventuate – specifically relating to her owning CIP’s.
Hopefully everyone that reads her books also follows her advice, and leaves all of the great CIP’s for me.
For me it’s quite clear, choosing between Mr and Mrs Low Income, signed up for 6 months on a 3% gross yield vs Fed / State Govt / National tenant signed up for 10 yrs on a 9% nett yield…hmmm, I’ve already decided which one is riskier to my overall financial well being.
It was painful (time studying, planning / and educating myself – debunking 10 years of ingrained baseless beliefs) expanding my comfort zone to incorporate the different ‘ballgame’, but with sensible risk strategies in place, extremely thorough due diligence process on both the particular details of the lease and the tenant, I believe the pain was well worth it.
Releasing myself from the shackles of the RTA has been very refreshing, and eliminated alot of the general risks associated with RIP’s, which regularly appear on this forum as questions from the residential only forumites.
I’ll never go back to RIP’s. Each to his own though. CIP’s may not be your cup of tea…and that’s fine too.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Rob,
I think you’ve got your “30 yr old up to speed finance broker / advisor” hat on.
Try putting your “75 yr old – only had one mortgage in my life, taken out in the 50’s and paid off in the early 80’s” hat on.
Explaining to a 70 yr old that “There is nothing fancy about a reverse mortgage. It almost operates like a capitalising Line Of Credit and can be either fixed or variable.” [blink]
Do you honestly believe that explanation would give comfort and explain clearly to a 70 yr what they were getting in for ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Thanks Rob for tearing my post apart and setting me straight on the error of my ways. I agree, none of those points were remotely valid…even though it was highlighted they weren’t the main reason.[angry2]
One can write whatever one likes in a lease, in the real world there are two major obstacles between writing it down and it happening, that’s the tenant agreeing to do it on paper..and then the biggest one of all, them actually being true to their word and honouring their written commitment. Any experienced LL would agree these are not a given, by any stretch.
G7, I’ve now changed my mind…renting is definitely the way to go.
Just ask most housewives bringing up a family here in Australia…I’m sure they’d all agree renting is much preferable for stability of life (as was the thrust of my original post) to owning their own place.
My post also mentioned you owed outright your PPOR – thereby not losing any of the cashflow advantages as you can access the equity to invest and carry on.
G7, if you are talking about 5% equity with a 95% loan…that’s a different story. I’d agree in that case to rent until you can afford something very modest to pay off.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Having spoken to quite alot of people in their 70’s and older in the past couple of months gleaning as much info as possible off them, I’d suggest that applying for something like a reverse mortgage or accessing their equity in their home would freak them out completely. They were all brought up in the era of ‘work hard, pay off your house, retire on the pension’.
If they went down some path of a fancy financial structure all they would do is privately stress themselves witless, as most elderly people do when they owe money – especially if they have no conventional way of paying it back.
If they were my parents, I’d arrange finance myself (however that could be achieved – cash / loan / L.O.C whatever) and then let them go on the holiday of their lifetime…then they’d actually enjoy it, knowing full well they can return home with nothing owing.
You wouldn’t need to demand some later payback either…you’ll likely receive a share of the growing equity anyway if you are their son.
Think of the expense as payback for all of the years they fed / clothed / wiped your bum and nose when you were growing up and you were dependent on them.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Allan,
Good post but I don’t see how anyone could possibly answer such a general question as ;
“What do you think of the Australian property market at the moment.”
It’s such a broad and varied beast you couldn’t possibly give a specific answer.
I’d try and respond by saying the Sydney residential market is probably down or patchy after a massive run, the WA broadacre farming market is up and healthy, the Melbourne commercial market is so-so, the Perth CBD office market is warming up nicely, the Darwin hotel/motel market is bumping along and the Adelaide industrial market is pretty good at present.
I fail to see how any of the above actually relates to your specific concern ?? Indeed, I don’t believe anyone is large enough to actually be in a position to make use of asking how the “Australian property market” is fairing.
You’ve pinpointed smallish res/comm in Brisbane – why not concentrate on that small market and perform thorough DD research on that ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
G7,
“Apart from the freedom to do what you want in your own place etc.”….WOW…that’s a pretty big exclusion !!!
Many people have literally died for a chance at that freedom, I think it’s a bit non-sensical to exclude it.
That alone should be enough, but if you need more ;
1. CGT free environment
2. Opportunity to potter in the garden and add value that ends up in your pocket.
3. Stability in your local neighbourhood.Basically all of the non-cashflow reasons.
Having said that, if you have the resources to actually own your PPOR outright…it beats renting hands down, as you can immediately remortgage and carry on with your cashflow focussed investing…at the same time as enjoying all the freedom / control / stability that your PPOR provides.
Banks like nothing more than residential equity – if you own your PPOR outright…they are like putty in your hands.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Simon,
You’re absolutely right, and if it didn’t cost so much time and money (lost rent being the biggest, but also holding costs and legal fees and massages to relieve the stress of it all) that’s exactly what I would have written as a reply.
I suppose I was asking – other than legal means – what has worked for Landlords in the past.
Perhaps my situation is a little different, as I am mainly concerned with industrial tenants where the overall circumstances are quite a bit different….no such thing as a tribunal to the best of my knowledge…no such thing as the RTA..and of course it is less traumatic for the recalcitrant tenant as they can still crawl back to their house at night…you aren’t turfing them out of that – just their place of business.
The thrust behind my question was my mentor has had a court order issued against a non-paying tenant and the bailiffs just turfed him out. The process was started in mid December last year and has cost him over $4K in legal fees and applications, and the holding costs and lost rent is up around the $18K mark.
My suggestion was the ‘other’ route for about $1K when I heard about this event..and his reply was…in hindsight “You’re probably right..may try that next time”.
The trouble I find is that the glib expression “seek independent legal advice” sounds absolutely fantastic on a superficial level, but stooping down to the nitty gritty when you are forced to get down in the gutter with these illiterate animals, wearing your tuxedo and carrying a big set of Law encyclopedia’s doesn’t help you much.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Oops just playing!OK…having another crack at it…looks like it worked in the preview – yay…
I think multiple quotes and the links better be for another day…my brain hurts ??
Thanks TMA…
Cheers G7,
Yeah, I’ve heard of that – that’s what prompted me to ask the question…haven’t had to need that service yet, but may well do in the future if the situation calls for it. Some people simply do not respond to reason / phone calls / or legal letters, which negates the solicitors instantly…especially if the tenants are illiterate.
I don’t suppose there’s a hotline number for Landlords to call at the local Hells Angels chapter that anyone knows about ??
Any other Landlords had success with non conventional methods ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
G7,
I think depreciation does have quite a bit to do with the CGT. That’s why all of these investors claiming buku depreciation on brand spanking new apartments and the like are strongly advised never to sell by certain organisations.
When you sell, all of the ‘good’ from depreciating assets is literally taken away. That’s why lots of developers don’t ever claim depreciation on their new structures, as they know when they eventually sell them, they’ll have to give it all back.
This really is a subject for a person who does nothing but work in this area.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Nope….didn’t work…???
Very frustrating….I just quoted the ‘Try it out on this thread..but it took the whole thing for some reason ??
Originally posted by The Mortgage Adviser:There is a ‘QUOTE’ button at the bottom of every post. If you press it, a window will open up with the message contained in HTML code. You type your message below this and your signature is automatically attached when you submit your reply.
It gets very annoying if you press quote and reprint the whole message when you are replying so taking out the section you want to refer to is best. This is done by clicking the quote button in the message where the information you want is attached and delete all irrelevant information between the HTML code.
The code that must be at the start of a ‘quote’ is [ q u o t e ] and at the end you need to have [ / q u o t e ]. Notice that I left spaces between all characters so you could see the code. With no spaces, it will show a different coloured quote box.
For all the other stuff like bold print, etc, you need to use ‘ADD REPLY’ instead of ‘FAST REPLY’. You will see some tools at the top of the message entry box. You highlight the text with your mouse that you want to edit and select the tool to edit – eg: the ‘b’ button for bold print.
Try it out in this thread.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksCheers,
Dazzling
“No point having a cake if you can’t eat it.”
Cheers Simon,
I have no understanding as to the job you do or the challenges you face…I imagine it would be daunting with a 24 hour site and so many different forums.
As for posting links and quotes…we’ll I’m just not quite up to speed with all that “hi-teka-nojikal” whizz-bangery. No can do…[blink]
Could someone be so kind as to step me through all the ins and outs of doing that ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Depends entirely on the lease governing the relationship between Lessor and Lessee.
The best ones in terms of no outlay for the Lessor I’ve seen have the Lessee (tenant) paying the following – on top of the normal rent & applicable GST ;
Council rates
Water rates
Land Tax (usually limited to a single lot holding)
Comprehensive Insurance
All cleaning and maintenance of the prop.
Strata fees
Prop. Management fees
Renovations before expiry of lease (new carpets and paint, colours and level of tradesmanship to the Lessors satisfaction…you’ve just gotta love that expression !!)As I said, it depends totally on the exact wording of the Lease…but everything is negotiable.
This is where the power of CIP & IIP’s come in, trumping RIP’s hands down, as they are highly restricted by the RTA…OK ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
F,
Must be true if all of those very highly respected Economists say so…and if it’s in the newspaper then that’s the clincher.
Can I now drop my Due Diligence procedures and jump right in again ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
I’d use 30K of it to go and purchase a small 100K comm. prop that was +CF with a secure tenant.
I’d use 10K for acquisition costs and a small cash buffer left over…let it sit and gather interest – this is you safety buffer..
Then I’d zip off around the world with the remaining 10K, and have the time of my life.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Sorry folks,
The 4th and final hoof of the IFHL nag has just entered the glue factory…Game Over. [biggrin]
Happy to offer an opinion that may be useful to you, but I woud need to be provided with way more information.
Total outgoings ??
Length of current lease ??
Stability of tenants ??
Cap growth of prop over past 10 years ??
Your expectations of cap growth over next 10 years ??Just for starters…
If you are interested, post way more details.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
