Hi again,

Have been frantically organising and renovating rooms. We had to make some beds available prematurely for the recent Lions Rugby game, the town was absolutely packed.

Anyway, managed to get about half the rooms (10)painted, carpeted, new bathroom fittings, lighting and beds etc all spruced up for about $25k prior to the game and are…[Read more]

Originally posted by The Mortgage Adviser:
I have done various calculated scenarios. It only works with large equity positions and low LVRs unless the funds are for investment. You won’t live long if you ‘live off equity’.

It works in times of high capital growth and rental growth as well. You still need a large portfolio but this can be…[Read more]

Originally posted by The Mortgage Adviser:
Jeff, how do you draw down 50% of negative growth?
Rob, the example we are discussing specified 10% growth and that is all I am explaining. In reality you would not draw down anything on negative growth, by the same token, when you have those peak years with say 50% growth you should only draw down what…[Read more]

Originally posted by foundation:
1. When $2.0m of capital compounds at 10% and an annual drawdown of $100k compounds at 7%, at what year is the “turning point”? (ie when your capital starts reducing)Jeff, surely you don’t think this is a normal situation (ie sustainable) do you?
I just checked my stats for median Melbourne house price (REIV)…[Read more]

Originally posted by The Mortgage Adviser:
Jeff, there is no healthy discussion when you use the demeaning “Can you see that?” comments even after asked not to. I think I have proven my point that this ‘strategy’ is extremely restrictive in it’s use. No more repetition is needed.

Firstly, not many people can accumulate a $2,000,000 net position…[Read more]

Hi Kay,

Lower sales numbers doesn’t necessarily mean lower supply, it could be lower demand. However the tightening of supply would have a positive effect on prices as you’ve pointed out.

I guess you need to “Watch this Space”, there could be some opportunities if the market has turned.

Cheers
Jeff

Your figures are wrong Rob

Formula is: Equity plus CGain -L/E -Ann Int =Closing Equity
Year 1 2.000m plus 200000 -100k -7000 =2093000
Year 2 2.093m plus 209300 -100k -14490 =2187810
Year 3 2.1878 plus 218781 -100k -22504 =2284087
Year 4 2.284m plus 228409 -100k -31080 =2381416

etc etc
Year 15 3247358 plus 324736-100k -175903…[Read more]

Yes you’re right. Year 2 should have been 114.49k (being 7% of $207k) leaving $2.18781m.

Sorry, but I am not trying to torment you. If you don’t agree with my figures perhaps you could prepare your own and post them so we all can see otherwise.

You asked someone to ANSWER some questions perhaps this is why you don’t get any answers – you…[Read more]

Year 2 $2.093m at 10% is $209.3k, less $100k less 7k funding less another 7k for previous year

So $2.093 plus 209.3k = $2.3023
Less $114k = $2.1883m

Can you see that?

Where you are going wrong with this example is the growth rate applied is 10% not 5%. The funding is 7% so you are actually capitalising just under 5% and living off just over…[Read more]

Originally posted by The Mortgage Adviser:
I just wish those supporting this ‘strategy’ actually took the time to ask the many questions put to them regarding this. They seem to ignore the questions they cannot answer.

While I am not fussed on the strategy I have applied it in order to free up my time so that I could concentrate specifically on…[Read more]

It is a balancing act SG, and sometimes you have to go backwards in order to go forwards.

Cheers
Jeff

Two things I’d like to add to this:

1. You need to know the market you are buying in before making hasty purchase decisions.

2. Valuations are based on “historical evidence” and will always be behind in a rising market. Comparative sales analysis is used as evidence to justify a recommended value, that is, actual sales in the area. Keep in mind…[Read more]

I agree completely regarding initial demand for rental accommodation and delayed demand for properties. I see potential opportunities in low priced homes and for wrappers in 2010.

I also see the intended objective for the Govt. being a waste of time and money. If someone saves $5k and qualifies for the FHOG they will have $10k towards a house.…[Read more]

Pretty simple really,

Don’t start living off equity until you have enough equity to live off. And if you don’t spend the equity in your lifetime, someone else will.

Michael Yardney has pointed out the tax advantages of living off equity

My reason for living off equity was to become full time in property investing until I established enough…[Read more]

Yeah

Buying a property investment – you’re mad

Borrowing all that money – you’ll go broke

Make any money – you were lucky or you’re a crook

Make any more money – you’re rich you can afford to pay more when you get contractors to do work for you.

Established – those who knocked you on your way up are now seeking advice, or a loan so they can…[Read more]

The other problem is you can’t join the scheme until 2007 so that means you won’t be able to draw on it until 2010 (3 years).

I think it’s a bit of an insult. While I agree with the encouragement to save to qualify for the entitlement, it is too restrictive.

Labour had a similar scheme about 20 years ago. You paid into a Post Office Home…[Read more]

You are entitled to $1000 for every year you have saved with Kiwi Savers upto a maximum of $5000.

Problem is, by the time you’re entitled to it the properties would have gone up $10,000

Cheers
Jeff

Ajax and Michael, thanks for your discussion.

Regarding the 4 P’s there are some aspects I am stuck with such as the physical position of the building. The rest of the marketing mix has to revolve around this. The place was originally called The Grand Hotel but today it would be difficult to compete with more modern complexes without major…[Read more]

Interesting.

Some years ago I visited a friend who had recently bought a large house in Auckland, NZ. There were 7 or 8 properties within a secured area with a video monitor at the gate. Extremely lavish and secure, each property was on approx 2000m2 of land and then there were some common facilities such as tennis courts and gardners shed.

I…[Read more]

How many units are there in your motel?
Is there any room for further expansion?
What other facilities are there – restaurant, swimming pool etc?
Can the occupancy rate and/or room rate be improved?

As a rough rule of thumb, Moteliers work on 1/3 of turnover for rent, 1/3 for operating expenses and 1/3 for profit. As you increase your turnover…[Read more]