Hi Ronnie,

There will be others more qualified in the specific area of finance but as a small business owner I understand your dilemma. The fact is most small businesses don’t succeed. The primary quoted reason is cash flow. Given these statistics I would say a longer term loan with lower repayments is likely to present as lower risk. Having said that business finance is an ENTIRELY different animal to real estate. The risks are higher, the returns generated much more variable etc.

Personally I run a cash business with no substantial debt other than a small cc for expenses (and frequent flyer points ;) and a car loan as it is quite tax effective. I pay for all my other business costs out of proceeds. I don’t want to be in a position where I am pressured to earn more in the business just to pay for more debt.

The ideal in my mind would be a long term loan (small repayments required) but freedom to accelerate the payout if profits improve. You don’t want to carry debt unless you need to. If the profit is there, pay it off. You can always take on more debt for expansion, marketing, etc etc, but it all comes at the cost of increased risk. At some point you want a business with minimal debt and maximum profit. Thats my rant done!

Great post Brazen! I saw a house a while back which was right at the back, two houses either side right at the front and thought “I bet I could do that….but I wasn’t sure it was technically possible” as you said very rare but possible.

Michelle wrote:

Aim of the game is to work for the investor and only offer them homes that suit their situation. There’s enough agents out there (IMO) who only care about their pockets. :)

Without sounding cheesy, but a personal recommendation approach teamed with networking and face-to-face stuff is a far more comprehensive way to build a business.

The challenge here is that you work for the person paying your bill. That is the builder. You can definitely help clients see the benefits of the houses, and you could (for example) help them run cash flow analysis of the investment to see their potential profits and losses. That would be more helpful than most agents. You can also use your people skills to communicate well with all parties. But at the end of the day you probably need to accept for yourself that you work for the other guy. You job is to sell well.

Maddy I just want to ask why the Hunter in the current market? It has been hard hit by coal prices dropping and mining activity reductions. Perhaps long term this will improve but Muswellbrook for example currently has a vacancy rate of 9.5%! Thats not an easy place to find a tenant (or fast capital growth for that matter). Maybe in a year or 2 if coal picks up it might be worth another look but surely there are lower risk locations currently?

Yes Jamie and Terry above have good points. Education will help you build a great set of advisers to help you move forward. You may or may not need to sell to build a portfolio – there are plenty of creative options with financing that might mean no need to sell. If you want to sell for lifestyle reasons then this is obviously different.

Brett,

Firstly well done for starting your research BEFORE you have signed on the dotted line. This forum and somersoft the other big property forum are two of the best places to get current info from a range of sources. Keep reading and your level of education will rise. This knowledge is what will help you avoid a dud decision.

I have no knowledge of Yale solutions so I am not trying to promote or disparage them, but you have to ask yourself whether a new H/L package is the best investment for you. Often they are in areas of oversupply and have lower than average capital growth for at least 3-5 years. It may or may not be an ok deal, but you need to understand why its good, or why not.

I posted the below paragraph previously….in the “property spruikers thread”

“The main thing everyone needs to ask themselves (and the person in front of them!) when taking advice about property:
How does this person get paid?

If you can answer that you will have a better understanding of whether they are a “spruiker” or not, or whether they are there working to help you or the vendor. Remember real estate transactions are 2 sided affairs.”

So what I am saying is that if you are an investor – and Yale gets paid by the developer (which if I was a betting man I would put $2 on) then they work for the developer. Their goal is to get rid of stock. Not to find you the best property FOR YOU.

Any indépendant Buyers Agent would be highly likely to get you a better result. If you don’t want a BA but are patient, then invest some time in your education and read like crazy for a few months, find some successful investors (with more than 3 properties) and buy them lunch. Ask them to tell you the secret to their success.

If its not a good deal then an overpriced H/L package as a first investment can ruin your progress and slow down your wealth building. Worse still it might be worth less than you paid in a year or 2.

What do you mean by “investment agent”?

Does this mean you have properties to sell?

Are you a general sales agent working with an agency or do you have a block of new development stock to sell?

The answers would depend on what you are selling.

On the face of it from your post it sounds like it should be. Check with someone wise in accounting and finance/law. The man above is one of the very best.

jasedc5r wrote:

Hi All,

I was wondering if I would be eligible for the CGT exemption 6 year rule?

My current situation is I’m selling one of my properties which I lived in for over a year when first purchased. I’m selling the property with tenants and the property is leased for 5 years.

During the period I bought another IP with my brother. I am currently living at home with parents and property 1 would be the only one classed as my PPOR.

Thanks

waydo77 wrote:

any other buyers agents people would recommend for buying through for positive cash flow properties under market value?

Waydo there are a few out there, it really depends more on your brief. I have grabbed a few for clients in my time (and 1 or 2 for myself ;) It really comes down to how you define +cf, what measures you are using, what locations you are prepared to consider, and how much work you are prepared to take on (ie reno). Finding cf+ in regional NSW for example is not that hard at all. The trick is finding something of good quality, in a growing area, with good cf and potential for some equity growth too. Just getting $5pw +cf out in the absolute sticks with population falling and no cg is pointless and won’t build wealth. Secondary locations are totally fine, as long as you time the cycle right, get in at the right price, and are ready to add some manufactured growth and repeat the process a few times. The balance of growth and cf across a portfolio is key.

Corey Batt wrote:

Factor in the lost value of time with a subdivision, I’ve seen a few deals where developers have locked away significant equity/cash for 12+ months which could have otherwise been used to leverage into greater returns over the same period.

Repeated purchase/reno/reval can be a profitable venture if you do this consistantly in a cookie cutter manner. You can always have your cake and eat it by buying corner blocks which can be subdivided and front house retained.

I agree with this post completely. Renos can be done in weeks, no council, then sell or reval, higher yield, win win. If you want to sit on something for 18 months anyway then no worries, work on a subdivision after the reno. So in my mind the optimum model here is old house, big block, buy well, reno, rent, reval, hold, subdivide, then hold or sell. 18 months and profit is maximised and you can leverage into the next deal from only 3 months in (after that reval) while you keep working on this one. If you are waiting on council approval and sale on a subdivision for your grocery money then you are in for stress.

• This reply was modified 10 years, 1 month ago by  BuyersAgent. Reason: reword