Forum Replies Created
- Originally posted by brahms:
zippys, most commercial property can be purchased on a 30% deposit
This was my understanding also, without using cross collateralisation of other properties or creative financing.
In a previous thread however, Simon believes it is possible to get upto 95% on commercial property. You should possibly contact him (Mortgage Hunter)
Other forms of alternative financing are vendor finance, using a partner, mezzanine finance, unsecured credit (eg credit cards or overdraft), family loans and so on. Normally when you stray from the norm the interest costs are considerably higher.
If the deal is good and you are able to secure a contract on the property you may be able to flip the property prior to or shortly after settlement and get yourself a small quick profit.
Cheers
JeffHave you read a book by Martin Roth and Chris Lang titled “How Investing In Commercial Property Really Works”?
Another suggestion is to make contact with several commercial real estate agents and find out what they have listed. You will need to know the location, size of building, net rent, tenant, terms of lease etc. This way you’ll have some info to make comparisons. If a property appears to stack up then do some more homework on the tenant, and checkout the terms of the lease.
You could set yourself up a database and build from there. Add information gathered on buildings even if they are not for sale. Once you have a feel for the market you’ll know when you’ve come across a bargain.
Cheers
JeffOriginally posted by OSienna:I don’t think you were making much of a point in the first place.
Firstly if you cannot understand my point then there is not much more I can say.
The original post was asking for comments on Newland’s new book, “The Day The Bubble Bursts”. You responded by making a broad generalisation based on his previous book. How can you fairly judge something you have not read?Secondly, I didn’t judge the book “The Day the Bubble Bursts” but I have good reason not to agree with everything Olly Newland says (this however I will not share with you)
Thirdly, I have not read one response from you regarding the Olly’s “not so new” book “The Day the Bubble Bursts”, only criticism of my post. Have you read the book? Do you have an opinion on the book? Do you have something constructive to offer?
It appears I have offended you by not idolising and agreeing with anyone who writes such books, and for that I am sorry, but I am entitled to my opinion.
I also apologise Dave7 for this getting completely off the track. I will refrain from replying further and will continue with my latest read, “Rogue Trader” by Nick Leeson
Cheers
JeffOriginally posted by OSienna:Ibuycashflow, if that’s your criteria for judging an author then you’d probably not recommend any of Robert Kiyosaki’s material either. He was once a homeless bum and a bankrupt back in the 80’s. Try expressing the same sentiments towards Kiyosaki, but be prepared to for the wrath of his many supporters.
You really are missing the point. Learn and understand but don’t jump if you don’t know why.
Hindsight is one thing, foresight is another.Happy reading
Jeff
Originally posted by OSienna:Would Newland not argue that he has learnt from his past mistakes? Surely that can only add more credence to his advice.
I’ll reiterate the first half of the paragraph
As with any of these books and advice you have to learn to understand the pros and cons of property investment rather than take someone’s word as gospel.I will now wait until Rodney Adler writes a book on how to run an insurance company before I comment on that one.
Cheers
JeffI haven’t read Olly’s latest book “The Day the Bubble Bursts” but have read a previous book of his called “Lost Property”
It gave some very good examples of how people lost money on property through panic, over extending themselves, greed and bad judgement.
Olly himself lost a lot of his wealth after the 1987 sharemarket crash but has since re-established himself.
As with any of these books and advice you have to learn to understand the pros and cons of property investment rather than take someone’s word as gospel. Olly Newland may offer some good advice but he has already proven he can be wrong.
Cheers
JeffYou need to find out the going rent rate per square metre of space in order to make comparisons with your subject property.
Location is an important factor determining both rent rates and value. (eg backstreet strip shops have lower rents than high street shops or malls)
Retail rates are effected by the likes of pedestrian count, vehicle traffic (as with service stations) etc.
Different types of businesses have different requirements such as the size of the retail area, service entrances, off street parking and so on.
Often you can add value by changing the type of business occupying a property (retail to restaurant) and sometimes vice versa.
You should be able to get some indicative information from the local real estate agents, or even try quizzing a local registered valuer.
Chhers
JeffJust a point to remember, many mortgage repayments on IP’s include a principle content. This reduces the amount of the loan over time and also reduces the amount of deductible interest.
So why would you want to do that when you have a mortgage on your PPOR that is not deductible?
It’s best to apply all the principle content to your non deductible mortgage and that way it will be paid off considerably faster.
Cheers
JeffSo a relatively small number of people who previously couldn’t afford to buy a house can now afford to buy a house as housing affordability rises. Once these people have bought, the additional demand will abate unless interest rates continue to fall.I don’t know where you get your data on, “the relatively small number of people”, I would be more inclined to refer to the number of house sales in a given area and compare that with price rises or falls in that area – a bit like viewing the sales and price history of a particular share rather than that of the index.
Just remember, once the “relatively small number of people” have bought, the price history is recorded. So even if demand does abate the new bar has been set – this does not mean prices automatically come down, they tend to come down if people are forced to sell. More than likely there will be fewer sales and/or a longer time to sell.
Cheers
JeffA 10% increase in your property value with a 10% inflation rate means the ‘real’ increase in value of your property is 0%…If you put down a 10% deposit on a positive or neutral cash flow IP then a 10% increase in the property value would reflect a 100% increase in your deposit, 10 times that of inflation.
We are property investors for a reason, relying on broad general statistics (as foundation so conveniently provides) for our investment decisions would be synonymous to investing in share indices. To do better than the average our information needs to be more specific.
Jeff
Have you not heard of Price Elasticity of Demand (economics 101 again) Price is directly influenced by demand.
Lower interest rates will of course make it more affordable to buy a house, hence increased demand.
Your views on value, whether it be fair or rational only become relevant regarding supply. If supply can match the demand then prices should remain the same ie land value and building cost.
Unfortunately with property there are too many other variables such as location, ocean views, beachfront, city centre etc etc – that’s where the supply starts to run out.
Curious to know what your investment fundamentals are?
Jeff
To arrive at a Ten Year Average, we must look further than just the Last Ten Years.Correct Foundation, but then that’s averages.
Define average. Analyse the data and don’t generalise it, you will find that even when prices do not increase across the board there will be some who run below the average, some will match it and some will exceed it.Different geographical areas will perform differently from others – ie location, location, location.
And by the way, cashflow will not be reflected in your median house price figures, nor will the advantages of leverage.
Cheers
JeffIntroduce yourself Blondie “Hi, I’m the boogie monster”
When should you retire?
– when you can afford to
– when you reach the age you can recieve the pension
– when you’ve achieved all your goals
– when you find something better in your lifeWhile I won’t manage the conversion myself I will have active involvement – are you looking for a job?
By the way “Hot Rock” is taken and their associated bar is called The Lava Bar, which I think is pretty cool.
Just had a couple more to think about.
The Lamb and Gumboot
and Steam Rock
Originally posted by foundation: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.
All property in all geographic locations do not peak at the same time. There were still many bargains to be had in 2003 and still potential for further growth.
It’s also pretty naiive to assume paper profits and losses are the same as realised profits and losses.
Spoken like a UK property investor in 1988…
In both cases the evidence was freely available, yet the ‘investors’ continued to behave with the same ‘irrational exhuberance’ that enabled the bubbles to form. Remember, when the only fundamental that counts is yesterday’s capital gain, that is the very essence of a speculative bubble.This comment sounds like you’ve read some case history. There were still bargains to be had before, during and after this period.
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:“I don’t think” This is exactly an opinion and that of a contrarian. Economic risk can be minimised. If you make a mistake in property it tends to be more forgiving than most other investments. Time and inflation resolve this but then you wouldn’t have yet had the time to know would you?
Cheers
JeffThree questions to answer:
Where am I now? (write it down in terms of wealth)
Where do I want to go? (eg millionaire by 30)
How do I get there? You need a plan that you can constantly refer to and revise if necessary. Check periodically to ensure you are on the right track
Cheers
JeffI wanted to avoid using the location in the initial name because I have my eye on a property in another town which is also suitable for a conversion.
If it’s any help though, it’s Rotorua NZ.
Cheers
Answer: A ride on lawnmower
Question: How do you fix the brakes?
