Forum Replies Created
- Originally posted by blueboys:
foundation, hello again. can you explain to me the sound financial advice that i gave to nads.
My point was that you didn’t![wink]
However, I can only take this:
Originally posted by blueboys:you are responsible for your actions and the team you build around you.get out of the rat race,seperate yourself from negative people(yes it can be hard) and surround y’self with positive like minded people who love to talk investment and who dont make you feel guilty for wanting to get ahead.
and this:
set your goals and dont lose site of them. every obstacle you meet is a challenge not a problem, treat them as such and you will prosper.and this:
i hope i have given you some insperation to go out and do it.as advice. Not very sound advice if you ask me!
Please don’t be offended, my ‘sound advice’ comment was directed at the other bad posts as much as yours.I don’t think anybody who has a clear understanding of investment fundamentals and the current economic risks would be answering this post with comments such as:
it is 80% attitude and 20% knowledgeIn an asset boom, this is true, but booms end…
just remember…people who say you cant dont want you to because they are scared you will be better than themOr perhaps they know better than you.
Fear of failure is the biggest casue of lack of success.Possibly, but recklessness, ignorance and bad advice are some of the primary causes of critical failure in investment
The benefits outweigh the risk so get going as soon as you can.Without a comprehensive personal risk assesment, this was in contention for one of the stupidest pieces of advice I had read on this forum…
Any one of us can do anything we want as long as we believe we can…until I read that![whistle]
I see your 2c and raise you 4c!
I think I agree with most everything you’ve said there Life X.However, one important thing you forgot to mention is the investment mechanism, and its impact on risk. Gearing / Leveraging for example. A prudent investor knows that the longer the bull run, the closer and bigger the bear, and therefore reduces leveraging over time in a rising market. To do the opposite is a folly, and always results in a loss. I challenge anyone to prove this point wrong.
I would also disagree with your view on past performance. I worry that far too many folk are prepared to give advice based their positive but very recent limited experience. I would urge them to remember that a paper profit is vastly different to a realised profit. Long term trends and averages are far more trustworthy than the advice of someone who has 6 years experience in a real estate boom.
When ‘yesterday’s capital gain’ is the only fundamental that matters, look out![cap]
Also, have a think about which kind of industries / businesses are likely to prosper in the economic conditions of the present and future. Stay away from leases where the company has an uncertain outlook and make sure the property is versatile.
Cheers,
F.[cap]I agree with g7, you’ll have a hell of a time selling that deal in the current market. I would apply Steve’s Problem, Solution whatsit.
Problem = 4% Yield (far to low!)
Solution = Lower your asking price.
Result = Sales & smiles all round.
[cap]Originally posted by blueboys:foundation, not sure what your getting at. are u saying that anyone and everyone should have cashed in over the last 6 years?
No but most people could have maximised their capital gains by selling mid to lat 2003. I was also inferring that somebody who had only ever ‘invested’ during Australia’s biggest ever housing bubble is not really in a position to give sound financial advice, particularly at this point in time…
It has hardly taken a genius to make a fast (paper) dollar recently. However, it would take a pretty savvy investor to make good money during the biggest downturn in Australian history.
Remember, if you’re in negative equity, the bank aint gonna let you buy in at the bottom![cap]
Oh come now Chipper! Surely you are not comparing the recent real estate boom with that of the late 80s? Things are SOOO different this time around![ohno2]
blueboys – Do you have any idea how exceptional the last 6 years have been in terms of property capital gains? Do you expect to continue to see CG of 20 to 30 percent this year? Next year? In 2007, 2008?
I sure don’t, but what would I know?[cap]
I share Monopolys’ disbelief in your returns, but will assume them to be accurate.
I’m still curious about this:i help people… …i only care about the results for investorsDo you give financial advice? What is your AFS number?
Now let’s dissect your example:
Originally posted by tony wpb:i have clients that have setteld properties in the past 9mths with a
purchase price of $375K
tenanted at $540/wk
revalued for a LOC at $510KAssuming a 20% deposit, these folks start with:
Deposit of $75k
Debt of $300k
Income of $540 pw GROSS
Repayments (at 7%):
$488 for PI repayment
$404 for IO payment.
So excluding management expenses and loan fees, this appears to be CF+.Assuming 0.5% of capital for annual repairs / expenses and 5% of rent for management, the annual CF is:
negative $575 for PI repayment
$5676 for IO paymentLet’s say they have the property revalued at $510k which enables them to buy one of your:
deals for $395K already tenanted at $680/wkThe situation is now:
Total Current Valuation $905k
Original deposit still $75k
Debt of $695k
Income of $1220 pw GROSS
Repayments (at 7%):
$1132 for PI repayment
$936 for IO payment.
So excluding management expenses and loan fees, this is still CF+.Assuming 0.5% of capital for annual repairs / expenses and 5% of rent for management, the annual CF is:
negative $2446 for PI repayment
$11596 for IO paymentThis raises some questions:
1) Are these folks in a good financial position?
2) How would you rate their current risk level and risk tolerance (out of 10 is fine)?
3) What would be their best strategy in the following scenarios:
. a) An additional 20% capital gain this year?
. b) A 20% capital loss this year?
. c) A rental vacancy of 4 weeks?
. d) An interest rate rise of .50%
. e) a and b?
. f) b and c?
. g) b and d?
. h) any alternate scenario?
I have not a mathemetical bone in my body, so please correct my calculations where appropriate.
Regards,
F.Originally posted by tony wpb:cutting part of a sentence to attempt to mock somebody is childish.
I don’t believe I changed the context of your statement.
i only care about the results for investors.Sorry, but this pushes my sceptical button. You are running a business, not a charity.
Do you use in-house and/or paid valuations? Why?
Who paid for the valuation figures you have been quoting here?
It has been almost impossible to lose money in RE over the last 5 years. What makes your company so special? The figures on the ‘immigration’ website you sponsor seem to show lower than average CG.“Michael and Andrea purchased their first investment property in February 2001 in Brunswick for $285,000. The property is now worth $350,000.
The pair purchased their second property in Elsternwick in March 2002 for $350,000 and it is worth $420,000 today.”
Why are you targetting New Australians in this way?
Are the $600+ pw rent deals being in any way subsidised for the guarantee period? If not, where do you source these tenants?
you do not see or hear of horror stories of dealing with ourselves.I have heard a few actually.
I’m also interested to hear more about the proceedings in the Supreme Court last year, as I have yet to read the transcripts…
Sorry to come across as sceptical, but I really am.[cap]
Originally posted by tony wpb:i hate to break it to you but there are no better results than property .
That is utter BS. There are plenty of places to get a better return in the long term than shares. Back to Investing 101 for you![rolleyesanim]
How many shares can you leverage? why is it the banks give a higher lvr against any piece of crap property than against their own shares?I hear this BS all the time too. I can take a line of credit against my PPOR and invest it in shares just as easily as I can invest it in property, and yes, I can get a pretty high (70%) ‘leverage’ on a margin loan too.
not because they like risk! scenario 1 invest $40K and receive a return on a $400K property just 5% growth is $20Kor scenario 2 buy $120K and to acheive the same
Where is your scenario 3? What happens to highly leveraged ‘investors’ in a capital loss situation?
Just as Gains are amplified, so are losses. What’s more, the property market is subject to fluctuations. If an ‘investor’ maximises their LVR every time they have a paper CG, they will eventually have a massive capital loss. Let me repeat with a twist – that strategy will MAXIMISE their CAPITAL LOSS in a FALLING MARKET.
Yes, this applies also to shares, but very few people are stupid enough to use their house as security for a share margin loan…and what about margin calls?How good is your Australian financial history? Do some research into the NAB’s response to negative equity issues in the 1990s…
bankrupt properties dont existGo back to 1992 or forward to 2007 and revisit that statement – sure it will still defy grammatical convention and logic, but the underlying meaning will also be proven false…
For what it’s worth, I think the ASX prospects are broadly rather poor at present and would advise against overweighting shares.
And Chipper, thanks for a more logical, eloquent and timely explanation than I could muster.
Hi Rick*,
Good luck with your career change, be sure to let us know how you go. I worry that it may be difficult to break into an industry that is experiencing a record slow down, but there are always opportunities for the right person.[cap]
F.Originally posted by APerry:My company has had some dealings with WPB. They come accross as very knowledgable and smart operators.
…as did a certain other property developer / guru…[whistle]
A 75 year old widower engages an electrician to repair a power outlet in her house, he falls thru the ceiling and dies.Ok, that’s sad…
She is the employer,No, he is most likely a self-employed contractor.
she has obviously provided an unsafe work place,I think you’ll find that the onus to provide a safe workplace falls on the contractor.
under OH&S legislation she is Guilty until she can prove innocence,I can’t find reference to this in the proposed legeslation.
virtually all prosecution cases are already being upheld, therefore she gets a 2 year Goal Sentence.This is a DRAFT BILL! It is not yet in use…
{If you own the residence as a Landlord then you’d also go to Goal!!!Why?
I would suggest that you come back with some accurate information and arguments against the proposed bill if you expect people to assist in your campaign of opposition.
Cheers, F.FWIW I think OH&S is damaging society by fostering a lack of responsibility for one’s actions and turning Darwinian theory on its head.[cap] That’ll be 2c thanks.
Originally posted by tony wpb:…i challenge anyone to give their clients better deals.There is not a fat chance in hell that anyone could provide better deals …
I accept your challenge. Post full details of your best ‘deals’ here and we’ll see how they stack up.[cap]
Yeah, count me in for that ‘fund’, it sounds [specool]… oh wait, no it doesn’t.
Have you tried putting up “For Let” signs? Some people don’t use the word rent.
Originally posted by MRK25T:He offers 15% interest on $20k so i’m ready to hand over my $40k for a year.
It sounds as though your mind is already made up. I hope you are prepared to kiss your 40k goodbye. No matter what guarantees anyone gives you, a 15% return is obviously going to involve a good deal of risk so you would want to have confidence in the individual you entrust with your cash and the investment strategies…
Mr Otton is pretty high risk, and wrappers are susceptible to falls in house price. When prices are going up, the wrapper keeps any capital gain if a wrappee defaults. If prices fall and the wrappee walks, the capital loss is handed back to the wrapper (unless the contract is particularly unfair enabling the wrapper chases the loss through court – hello ACA / Today Tonight!)Originally posted by Still in School:refinancing that investment property loan, and taking those cash proceeds and using the new cash that is available,
I don’t think you’re actually ‘taking those cash proceeds’ at all. I think you are using a percieved increase in value as security to take on additional loan liabilities – yes, yes?
Originally posted by Still in School:fastests ways i gain cash deposit, are definelty, cash being released from the properties equity
Please detail this process both for the education of styla2001 and for my own amusement…
[blink] Actually, that potential issue had gotten past me too. I was worried about Andy’s long term risks, when there is an immediate one.
So the first thing to do is to find out whether any lender is prepared to take on Andy’s mortgage?I would not trust the valuation of a real estate agent as far as I could poke it with a very long stick. If you can afford to repay half a million dollars over 25 years or so I imagine you can spare a couple of hundred dollars for advice that might save you a couple of hundred grand.
Woodsman,
While I am not overly familiar with Sydney either, I can’t imagine the situation would be fundamentally different to Melbourne where new build apartments are being valued (by qualified valuers) at 30%+ below purchase price.
