R.O.F.L.M.A.O. [lmao]

Is that what’s known in the IT world as a “pre-mature communication” ???

Excellent question yidn, I’m sure people highly experienced in CIP’s like Pickworth and Simon can answer you.

From my perspective, I believe one of the most value adding exercises you can do is attract and sign up a quality tenant to a property, and sign them up for a decent term. Investors go nuts over the fully tenanted CIP’s and are willing to pay a premium to have all of the difficult negotiating already done for them.

R.O.F.L.M.A.O. [lmao]

Is that what’s known in the IT world as a “pre-mature communication” ???

Excellent question yidn, I’m sure people highly experienced in CIP’s like Pickworth and Simon can answer you.

From my perspective, I believe one of the most value adding exercises you can do is attract and sign up a quality tenant to a property, and sign them up for a decent term. Investors go nuts over the fully tenanted CIP’s and are willing to pay a premium to have all of the difficult negotiating already done for them.

I suppose it all comes down to your definition of “landbanking”.

Our technique could best be described as “+CF Landbanking”.

If you want 100% of the value tied up in the land…..that’ll send you quickly out the back door…..generally speaking. It may work for some, but cannot be sustained forever.

We instead, keep the land value down to about 85 to 90%, and that has the dual effect of having most of the money tied up in the land, but allows the rent from the infrastructure to pay off the 100% loan….sort of a win/win when it comes to both growth and yield.

That’s amazing…..how on Earth did you look at every property in the entire country for sale in only 6 months ?? You must be physically exhausted. I’m exhausted just thinking about even 1% of that massive task.

Which one came closest to your goal ?? Was it the ;

1. Small 3 bed 1 bath fibro tin shack just east of Quilpie ??
2. Hotel on the banks of the Derwent ??
3. The 5 bed 4 bath mansion in Vaucluse ??
4. The industrial shed complex on the wharves in Geraldton ??
5. The vineyard just outside Coonawarra ??
6. The restaurant in St Kilda leased out to the Fiamaglio brothers ??
7. Off the plan high rise units on the beachfront at North Glenelg ??
8. That GEHA house leased out to the nice couple of teachers up in Townsville ??
9. That macadamia nut plantation up in the hills at the back of Byron Bay with the extensive ocean views ??
10. That holiday house, leased out on short term rental with the amazing staircase, amongst the tall gum trees down in Dunsborough ??
11. Or maybe it was that 4×2 brick and tile house in Beaudesert that was going cheap because of the bad smell from next door with those neighbours that had the orange Cortina.
12. Or could it have been that 35 storey office tower in Collins Street going for a snip because the fire board didn’t pass inspection and the Owners didn’t want to fork out 200K to upgrade the internal sprinkler system…….

Once again, I’m absolutely staggered that you’ve been able to check out and analyse so many properties in such a small period of time.

Are you absolutely positive you haven’t just taken a 4 second internet fly-by from 50,000 ft and written off the entire market…..

From your 6 months due diligence, what percentage of properties did you find were not on the “net” ?? Were they better or worse deals than you found online ?? [eh]

No kidding Simon…….

I’ll be keeping my eye on this thread as well, and if it doesn’t get back on track to something remotely related to ASIC……instead of…..what’s currently on the boards…..we may need to have a closer look.

Nat – R, despite the lack of posting by some forumites, and the mild mannered responses, some of the posters in our PI.com community are absolutely loaded to the gunnels, and probably have been longer than you and I have been alive. I think you’d agree they deserve our respect.

Good luck to you in your investing endeavours.

<font color=”navy”><font size=2><b>Aussiecam and leewizza,

If you are looking for definitive proof that can be submitted in a court of law (is there any other kind ??) then logging onto an internet chat forum is simply not the medium for you.

What I can do for you is relate our latest deal (detailed on the forum for all to read previously)….which we called our “ugly duckling”. It doesn’t constitute definitive proof probably in your eyes, but it’ll have to do….

When we purchased the prop, it had been on the internet listing boards for 8 months. It was ugly and it was nasty. It also wasn’t cheap. The rental yield was 6.9% gross, and taking out all prop expenses liable to the owners, that brought the nett yield down to 4.5%. Compared to the cost of funds – 7.3%, it was a negative CF prop and obviously investors such as yourself were sailing over the top of it – dismissing it as a dud. Hell, we did too initially. Of course, none of that info was actually listed on the internet add – it simply said “wonderful development potential with some holding income” accompanied by a picture of a rusty ol’ truck leaning on one axle up against some very dated 60’s sheds…..hmmmm, real attractive !!!!

But after some DD, and some head scratching about how we could turn it all around, we took the plunge. Our Banker thought we were nuts. I remember him saying “you’re braver than what I am taking on something like this”….perhaps he was right. But then, he’s just a Banker on only 150K p.a. Risk vs return – right ??

After 11 full months of owning this ugly duckling, paying literally all of the holding costs and putting up with the following ;

1. Fighting with illiterate tenants.
2. Physically kicking out other dregs who refused to pay any rent whatsoever.
3. Having shed walls purposefully vandalised with trucks and forklifts.
4. Having 2 pallets of asbestos illegally dumped at the back of the block.
5. Cleaning up 83 tonnes – yes – 83 tonnes of other people’s garbage.
6. Spending lots of hours weeding and tidying the place up.
7. Advertising and negotiating our little sox off

We are happy to report that the “ugly duckling” property has now, together with our marketing and negotiating skills (developed over 11 years) attracted a “beautiful swan” Lessee who has committed in writing to a 15 year lease over the property, starting at a rental yield of 10.25% nett. At the end of the first 5 year term the rent will be 12.4% nett.

So, the property is now cashflow positive, on the same cap. rate it’s now worth about 400K more than when we bought it last year, and although we worked our butt off during our time off, it now should look after us for the next 15 years hassle free.

Of course, if we wanted to get rid of it now, the price would be so high….with everything now done a nice cruisy fat cheque nett of all property expenses lobbing into your bank account for the next 15 years…..you’d probably think it was a rip off. Maybe so, but then after all of the hard yards we’ve put in, and the likely growth on the large land component (89% of the value) over the next 15 years, the thought of selling it and handing a plum gift to some passive on-line investor over in the Eastern States just doesn’t appeal.

Bottom line is, the property is nothing like it was compared to when we bought it, the daggy tenants have been booted out, a professional outfit has moved in, and none of the above could ever have been “seen” trolling RE.com or any of the other internet sites.

There’s oodles of opportunities out there similar to our ugly duckling – ‘cos lots of people love living in and working in pigstys.

What I can guarantee is that none of these opportunites similar to our “beautiful swan” are sitting there on the internet shelf just waiting to be plucked off. They are all still there mind you, but it requires a bit of elbow grease and negotiation before you can actually “see” them.

Like I mentioned in my previous post above, the best thing for you guys to “see”, is to turn the computer off, get off that comfy chair and get out there and mix it with the real world. What’s not going to happen is you be handed something or you can ‘download’ the deal and email it to your financier.

They’re out there, but you have to put in the hard yards first. This is where most people (maybe 92%) become unglued….It appears you’ve tried the “easy” on-line option….and you’ve hit a brick wall. How about try the off-line option for a change ??

Good luck in your search. We currently have 18 +CF properties sitting on our desks that we are reviewing. None meet our other two stringent criteria (land component over 85% and must be less than 10km from Perth CBD) so we’ll keep looking as well, just like you guys.</b></font id=”size2″></font id=”navy”>

<font color=”navy”><font size=2><b>Good onya Adam for starting a thread like this….maybe if we ask one of the Mods nicely they might make it a sticky. [upsidedown]

To follow with your post, perhaps my best suggestion when you are starting out is to take 6 months to chat with people in the game. I take every opportunity I can to chat with elderly people (anyone who’s 40+) [biggrin]

They’ve got some amazing stories once you sift through the bluff and fading memories. The lessons are the same…..very little has changed over the years with the dirt and the boxes where you make the money.

Best thing you can do is turn that damn computer off, close the door and go out into the real world and see what deals are being done. It’s easy and comfy sitting at home staring into the laptop (or as my wife calls it the “haunted fishtank”), but easy and comfy is not where the money is at.

Personally, I’ve never logged onto realestate.com, but given the responses from everyone, I gather the cracking diamonds in the rough where you can add value and/or fix a problem to reap the benefits, are not listed there.

We’ve only ever bought 2 properties that were listed on the internet by an agency. Both props had been listed for around 6-8 months and had been passed over by a couple of hundred people surfing over the top…..high level internet screening mostly doesn’t work.

Get down into the “weeds” and sniff out the great deals that the majority of buyers simply fly over, give 5 seconds attention and then move on.

Also, after you’ve chatted with a whole bunch of people (brokers / agents / old folk / friends / strangers / tradespeople etc) over the 6 month period….pick out a specialty that suits your skills set. People are making good money doing any number of things ;

1. Renovating
2. Flipping
3. Wrapping
4. Packing
5. Buying old daggy flats and strataing
6. Buying LPT’s and sitting back drinking coffee
7. Buying acreage on the town’s edge and waiting [sleepyanim]
8. Buying daggy warehouses and leasing them out – our fave [thumbsup2]
9. Smashing down old 40’s houses and whacking up 4 brick boxes
10 The list goes on and on and on…..

Pick one that suits your strengths and have a crack at it. If you are a single girl and don’t own a screwdriver, maybe # 1 isn’t your thing. If you’re a brickie and married to an internal decorator – maybe # 6 isn’t the best use of your skills either.

All this research and book reading and studying only goes so far….it’s amazing how sharp your mind becomes and how motivated you can become when you have a couple of 100K on the line with a Bank Manager breathing down your neck……and it’s either down the chute if you gin around, or take a massive leap forward on the road to wealth if you work smart and hard.

Get that first deal under your belt, document all of the lessons learnt, (share them here with others !!), show the financiers that supported you that you know what the hell you are doing, and that you are prepared to put out to get ahead. They’ll see the successes you have and mostly approve the next little venture you’ve got on the boil. I’ve found it’s amazing all of these inflexible Bank policies and limits seem to just melt away when you have a good reputation and they are prepared to back you up.

Write up your ambition on a big sheet of paper with a concrete step by step plan to achieve it and shove it up on the bedroom wall, and on the back of the dunny door. Makes sure it’s constantly in your face. Last thing you see at night and first thing you see in the morning. Before you know it, you’ll be like the CEO’s of the world, able to survive on 3 or 4 hours quality sleep before you jump out of bed recharged and ready to tackle the next stepping stone on your way to wherever the hell you want to go in life.

Make sure the partner and kids are on board with the burning desire, otherwise it’ll for sure, die a slow and drawn out painful death. As this involves other human beings with differing priorities and skills, this is by the hardest step to overcome.

On an average salary, with a couple of mimicing American “retail therapy” shoppers in the family, with every modern whizz bang gadget and every member of the family with their head stuck to a mobile phone spending like the Watsons….I’d just give up and go home….don’t even start. This is squarely in your court and nothing will rectify those bad spending habits once they are entrenched…..you’re destined to look and act rich…but in reality be poor forever. Harder to run with a ball and chain around your feet, than a stiff tailwind at your back.

Lastly, don’t get stressed that everyone else is smarter than you, richer than you or more experienced than you. Hell, most investors are smarter / richer and more experienced than us as well, but that doesn’t stop us. Most of the extremely intelligent 80 and 90 yr old people I’ve spoken to as part of my research haven’t got two brass razoos to rub together….so I don’t consider those aspects as a strong factor.

Just paddle your own canoe and go at your own pace….take comfort in the fact that it’ll be a damn sight more than most of the population.

But most important of all….paddle – don’t drift.</b></font id=”size2″></font id=”navy”>

Not for me it doesn’t.

I muck in there, sniffing out good deals with my head amongst the specific details (called weeds), rather than flying up in the stratosphere, where all the expert commentators live, pontificating about markets, rates, trends.

It frustrates me how these young 25 yr old journalists writing these articles generalise and “quote” these experts, but never mention how many tens or hundreds of millions they or these experts actually personally own and manage. Being the Executive Director of some Property Group or REI organisation does not – in my book – make one an “expert”.

What you do with an individual title (in the buy / lease / sell cycle) is very much up to your own abilities. Buy right, lease it out right, and sell if you so wish…..and you’ll be miles in front of the identical ‘chap’ down the road whose simply sitting back wringing his hands thinking “Is this a good time to buy ?”

You’re both ‘in the market’, but the returns (both CG and nett yield) are vastly different.

You’re asking a big set of questions there. How brave and serious are you and your partner ?? This can be life changing stuff. How much are you prepared to sacrifice ?? Where do you both draw the limit ?? You’ll have different thresholds for sure, and if you are to get through the epic struggle together and come out the other end better off, you’d better sit down together and grit your teeth.

We were in this exact situation back a couple of years. Two IP’s under the belt, completely clueless how to get out of the mire we found ourselves in without flogging our heads against a job brickwall for the next 30 years. Cash continually leaking out of our after tax pay packet. Scheming ways of getting above the typical couple on the street. This is what we did.

Using our equity, paid cash for and bought a small 3 bed 1 bath on a decent block in a really really really average suburb for 96K with dross for neighbours (saggy tracky dacs, VB bottles, and ugg boots as far as the eye could see). Gritted our teeth, and with a steely resolve gave ourselves 3 years in the dross to ‘climb above our station in life’. Women in general will resist this tactic immensely, especially if they’ve grown up in a “good suburb”. You’ll also get massive resistance from her ‘friends’ and most of your relatives. It ain’t easy, but the rewards are worth it….IMHO.

Purchased an IP in a swisho suburb that we could only dream about before using the previous strategy. We used the paid off PPoR equity as a deposit.

2-1/2 years down the track, left drossville and shifted into the swisho suburb. Now relatives go from concerned belittling and “why do you live here ?” to moaning “How do you afford to live here ?”. Wife’s friends go from being not happy (concerned about their friend) to still being not happy, for differing reasons (concerned why they cannot live where you are now living).

Did a whole bunch of equity shuffling and everything is where it should be…..paid off PPoR every step of the way and fully loaded IP’s.

Tinkering around the edges might get you somewhere in the long run, but it’ll be a long run…..especially if the natural CG isn’t too strong.

If you want the short track to get out of the mire, my suggestion is to jump straight into the mire at drossville, boots and all.

Your choice.

Not always.

We settled on a property last April and the disgusting vendors dumped and refused to remove their busted up 20 ft demountable, leaving it in the front of one of the industrial units where they had “apparently cut a deal” with the inherited tenant….do a reno job on the demountable in exchange for not paying the rent for the previous 6 months etc when they owned the property.

We asked for the demountable to be removed ASAP and no later than two weeks after settlement as it is an eyesore and on laydown area that isn’t allocated to the tenant. Vendors wrote and signed a letter agreeing to remove the demountable within 2 weeks after settlement. My sett. agent said that was sufficient and we could proceed. Their sett. agent said they had fulfilled their side of the contract and if we didn’t settle they’d charge us penalties for delays !!!! Nice, I asked what my ‘stick’ was in this situation….that is, they don’t do what they say and I can do what ?? I asked for $ 1,500.00 to be withheld from settlement for the cost of a truck and hiab to remove said demountable if the 2 week promise fell over…..no can do apparently. Why not I asked ?? Cannot was the answer. @#$%^&&* was my reply…..as I knew what was going to happen.

Sett. agent, and their high powered solicitor were pathetic, and to this day (10 months later) it’s still there. When I was last in the country, I called her up to let her know…..she was shocked, concerned, horrified, “Oh that’s not right / fair”…….yeah, well wacko, that didn’t help at all. No big stick, no action.

Now the bin and truck guys are moving in, I see a pleasant ending to this quick smart.

If I have a choice between word waffling agents and solicitors sprouting about laws and regs, vs truck and bobcat operators, give me the latter any day.

We’ve found with ruthless adversaries, no stick…..no power.

Speak softly and carry a big stick.

Trick is, make sure the big stick is in the initial contract terms…..don’t go in pussy footing around with the Vendor.