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The overall impression that I received at the preview evening from Peter Flanagan was that he was going to present specific strategies for the acquisition of cashflow positive properties and at least one strategy on how to deal with the market when it inevitably slows, and/or reverses.
I, also, found the preview evening to be well presented, tight, focused, and interesting, (unlike the seminar itself).
The actual seminar was over 3 days: Saturday ran from 9.00am to 10.00pm, Sunday from 9.00am to 11.30pm, and Monday 9.00am to 10.00pm which was a bit of surprise to me when I received the confirmation letter – these are very long days. As it turns out they were VERY long days – by Monday afternoon I was certainly very tired, brain dead and uninspired (and I believe I wasn’t the only one).
The information itself during the seminar was disjointed, scattered and scanty. For example one session was about negotiation (and a dead rip off of Roger Dawson’s stuff), then after a break we went into another subject (from memory a group exercise of how we would each increase our annual income by an additional $50K – although my memory of the exact order of things is now confused BECAAUSE OF the confusion and non-agenda and changing agenda) and then after another break we went back to negotiation where we had left off before.
The notes handed out comprised of a fancy looking folder containing 4 exercise books (the type you buy in a newsagency) some (I felt) poorly presented notes which sometimes did and sometimes did not relate to what was presented, and fortunately copies of the guest presenters’ slides – the most coherent notes of the lot.
Peter’s idea of presenting a strategy seems to have been, for example, saying that you can increase equity in a property by adding value such as a carport, mowing the lawn, doing renos, change the zoning, or aplit a big house into strata titles to sell off, and scribbling that onto a flip chart. And really that was about the depth and extent of his explanation. So much for strategies.
I never did hear what the strategy for a down market was, or maybe I just missed it somehow.
I complained to the organisers about how poor I felt the information to be, and I believe others did as well, and bingo! Next session he got up and said all the people looking for “recipes” to follow were basically poor misguided things who should pull their finger out and get creative and think outside the box (my words but that was the essence of his putdown).
All in all I thought that he talked a lot about concepts and very minimal nuts and bolts stuff. The first day was spent on personal growth such as mindset and thinking outside the box, not what I had expected. I have studied this sort of stuff with the best of them and Flanagan was a poor second (or third) behind in terms of his presentation skills on this.
One strategy that he did manage to explain a bit was what he called Vendor Finance Flip. It is (I think because I found it somewhat confusing) where you buy a property, on-sell with a 25 to 30% markup to someone who wants to buy but has no deposit. You line up bank finance for 80% of the “real” value of the house (ie what you paid for it so the valuation comes in to the bank’s liking) for the buyer and then arrange mezzanine finance for the balance of the increased price. The theory is that the buyer gets the finance with no cash down, the vendor sells the property outright with a markup walking away with the cash and no further interest in the property. The concept is that you are providing the finance package (as in a normal wrap) but you pick up the profit immediately.
I question the ethics of this one, plus if the vendor can qualify for the finance anyway why would they pay you the extra for the privilege? Flanagan would say that I see the “glass half empty” and am “problem focused not solution focused”.
The guest speakers on the other hand were completely different and professional. Dymphna Boholts presented a great session on structuring ie trusts, and even though I am familiar with this I did find out a few new things. Bill Zheng presented Creative Finance and again I picked up a few things. Peter Comben presented Creative Property Development and area I knew nothing about and found interesting if not a little scary.
Although Flanagan said in a letter that this would be “unique” and a “life changing” event, I certainly did not find that to be the case. I learned nothing from him that I did not already know, however the novices at the seminar probably would have found it of much better value than me.
I could carry on but I think you get the idea. I have sent the organisers a letter outlining my dissatisfaction overall, let’s see if I get an answer!
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Steve,
I’ll answer your questions more fully tomorrow, just have time for a quick browse at the moment. Actually, I’d rather not be too specific on some items publically, so if you would like the unvarnished truth do you have a less public email address?
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Hi again Ms Elvis,
You’ll have to read the fine print on the loan document as to whether you can make extra payments or not – it should be clearly spelled out for you, it’s just a matter of finding it amongst the many clauses.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Hi Ms Elvis,
I have done one joint venture for an IP and it was pretty easy. Both partners signed a JV contract which had all the details about how it would be run, how the finances would be shared, and what would happen if things went south. It is a legal document and enforceable.
The good thing is that you can set it up to say exactly what you want it to; the partners just have to agree on what the parameters are and have a solicitor draw it up. You can, of course, just agree on a handshake but personally I wouldn’t recommend it as what you thought would happen may not be what the other person thought would happen when a situation arises (like splitting the profits or sharing the costs, or something going not to plan).
Probably the best place to start is to talk to a solicitor and find out what they will charge to draw up a contract.
Good luck! Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Check the clauses on your finance contract – you may well find that you are unable to repay any principle off during the IO period and any extra that you do pay is credited to the interest payments ie if your monthly IO payments are (say) $100 p/m and you pay a lump sum of $1,000 that just puts you ahead by 10 payments.
As I said, check the fine print on the contract before doing anything.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Thanks to everyone who replied.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
I actually went on the bus trip with these people late last year as I was interested in finding out his strategy.
Basically it’s a wrap variation where Vic’s company buys up cheap and rundown properties in regional areas, does them up (very cheaply and not too flash), wraps them to investors at around 30 to 50% markup with a 5 year leaseback and 4x5year options. He then puts in pensioners from Sydney and pays 10% of the purchase price to the investor as the lease payment, and also covers all maintenance costs during the term of the lease. The investor does have to pay for council and water rates.
I wish I’d thought of it first!
I didn’t buy anything although I did look carefully at a block of units built in the 70’s but the return when I crunched the figures was pretty woeful for the first few years and the COC return was not attractive. I would have had to put in 30% deposit as it was a block of units, and the council and water rates were very high, much higher than comparable properties in Sydney.
My other reservation was that Vic is probably in his 60’s and not a healthy man (very overweight). The question came up about what happens when he retires and he said that his two sons would take over the business and continue to run it as it is now. Sounds good in theory but the two sons are not in the business currently. Who knows what they will do when the crunch comes.
However, some friends who went with me did buy a block of units and are receiving the money regularly each month.
BTW it’s interesting that he is still offering a 10% return as he was saying late last year that because of the increased price of property in his areas he would only be able to offer 8% in the future so “you’d better buy now while the return is still so high”.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Sure, the property number is 1713859
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Me again, just remembered something that may be a good example of what’s in Dubbo at present. In surfing realestate.com for Dubbo I found a block of units up for auction on 19th (tomorrow!) with 4 x 1 bedroom units and 4 x 2 bedroom units. Rent income from these is $95 and $105 respectively. Buyer’s guide price is $380K to $430K so on paper it meets the 11 sec solution.
The block is situated close to the business and shopping area but the pic shows an old (historic style) building which has probably been converted from a house originally with a building tacked on the back. A building report would be ESSENTIAL.
If you are interested the agent is Raine & Horne but I don’t have the phone number unfortunately.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Dubbo is an interesting region at present. There are lots of positive cashflow properties there and prices are starting to rise pretty quickly.
Just be careful which area of Dubbo you look at – West Dubbo has LOTS of +ve properties but some areas are absolute rat holes. For example I looked at one for $50K and rent of $120which was in good condition but it was in the old housing commission area and the house over the road was burnt out, there were rusty old cars in the house next door and gangs of youths roaming the streets.
In the better areas prices are higher and rising, rents returns are lower. However you can find good properties.
If you are wrapping, the majority of people interested are on pensions or part-time work (my experience anyway).
Good luck, let us know how you go.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
So, old Wright Thurston (and I believe it’s Wright Thurston the third) is still doing the rounds.
I attended the same (free) one day “retreat” in Sydney a few years ago. If it’s the same there will be several speakers, all of whom are pushing a barrow to sell product of some sort.
Still, if you have the time it’s worth going along as you nearly always pick something interesting even if you don’t agree to buy the (expensive) tapes, books, etc.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
I loved this bit describing one of their properties.
“A mixture of 2 & 3 bedroom units in a nice complex. Situated in the lovely Hills area. En-suites available with single and double garages.”
I always wanted to be able to drive my car into my en-suite!?
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Hi Maximus, I’m experimenting in the Dubbo area at present. I bought a 3br fibro house for $78,250 which will rent for $145 p/w. I bought it as a first attempt at a wrap, but with the knowledge that if I stuffed everything up I could still rent it positively geared (not quite the 11 sec solution, but close enough for me) Yeah, I know I shouldn’t have bought it first and then try to find a buyer, but the risk seemed OK to me.
I have been advertising it for a few weeks (prior to settlement) and most enquiries are coming from people on pensions, gov assistance and they don’t quite make it over the income line. However I can afford to carry the property for around 3 months before I go to Plan B which is to rent it for (say) 12 months and then try wrapping it again.
Around the same time I bought a 3br brick veneer house in Orange to wrap and ended up with a cash buyer 3 weeks later for the (increased) asking wrap price. Took the money and ran – about 30% margin realised. This just demonstrates how fast property is increasing out west – the ripple from Sydney seems to have just hit out there and prices are going crazy. Agents reckon that they are selling on the same day as listing and if my experience is an example, that seems about right. Remains to be seen how long that lasts.
Keeping fingers crossed that Dubbo will also experience the ripple very soon.
Dianne
“Make a decision, take the risk, pay the price, or reap the rewards”
Personally I have a separate bank account set up specifically to handle all the incoming and outgoing dollars for our properties and it has “investment account” in the title which appears on the cheques and the statements. This way it keeps all the funds relating to the properties in one place and provides a CLEAN record and paper trail for the ATO.
I also have a credit card linked to the account for property expenditure, such as paying rates, insurance and so on. Again, this keeps everything tidy for the ATO and makes my accountant very happy.
Your bank shouldn’t have any problems doing this for you, and I really recommend it.
Dianne
My husband and I had a fabulous time at the weekend – we did the seminar last year in Sydney and wanted to review. I can recommend reviewing it as you get so much more info and understanding the second time around.
A huge thanks to all the guys involved in putting the weekend on, your commitment to helping all of us is awesome.
Just to reply to Jae who says the game is just a game and others who think that real life is going to be different: the way you play experiential games is the way you behave in real life. So, if you sat back and watched, think about how you approach things in real life; if you went into fear around the chaos, how can you overcome this in real life; if you rushed into doing something for the sake of doing something without planning, how do you normally handle things in real life?
I kid you not guys – think long and hard about how you played the game, I bet that you will see parallels with how you play the game of life.
The greatest thing about experiential games like the one played on Sunday is that you get to experiment with your own behaviour in a SAFE environment and learn from mistakes.
Dianne
Thanks Steve. Because we had played the game in Sydney we were aware of the reason for the chaos, and also aware that it would do our companions on our table no good to just take charge in order to win. So they would benefit from the game, we encouraged them to make the decisions (with some leading questions) about what needed to be done, but our table also ran out of time to actually buy a property by the time they had sorted out the plan, found the various tenants and so on.
Maybe the next time you could have a few more sellers so that the participants can get through at least two house purchases to enable them to experience the impact of their decisions?
Dianne
I use Property Manager Pro software whick records all the info on property purchases, including purchase/sale costs, income, expenses, graphs, capital growth projections, etc. I bought it through the API mag and cost me about $200. My accountant accapts the printouts for tax returns. Suggest you have a look at this.
I don’t have the mag’s website address handy but should be easy to find. Alternatively buy a copy at a newsagents.
Dianne
Re the Land Tax issue – I attended the Sydney Vendor Finance (Wraps) Association meeting last night and the question came up. Rick Otton has been speaking with “the proper authorities” and says that if you object within the timeframe allowed and advise that the property is not being used by you but by the purchaser who has all the usual rights to the property just not the title, you should not have to pay the tax.
Now, I can’t guarantee that I got all the above right, but the concept is there. Best to check with a solicitor(?) first.
The point is that you can apparently do something about it.
Dianne
Thanks guys, really appreciate the help. Dianne [
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