Why was his cashflow drying up?

Were the properties he owned tenanted?

Scamp wrote:

the bottom is hard to predict, but the start of it is quite easy.
All the fundamentals have been laid around Australia. Now, all is needed is a lighter to light up the fuel.
That is coming in September 2009. Yep.. only 1 month left

Mind you, it might take a while to light this incredible pile of crap. It could take 6 months before it's completely on fire. So you can safely say the start is September 2008 ( although January 2008 could also be named for putting down the basics in place ) but the real panic will occur later, when unemployment rises, and people start defaulting on their mortgages AND RENTS en masse. Then the fire will be lit. The bottom could be anywhere between 3 years from now, or 20 years from now, depending on how much the government will mess with the whole thing. If the government does things like USA, then Australia is in for a 10 year long depression at least.  At that point, the only thing that could potentially extinguish the fire is a massive world war.

Come on Scamp; even the most hopeless "end of the world" predictors can put a more accurate date on things than this. And they're always wrong, but I guess one of them will be right eventually.

Saying the bottom could be 3 to 20 years is like saying it's going to rain this year sometime.

Statements like that just make people not listen to you even more than we already don't.

Yeah, you may be right, but I can make money from property in a down market as well, so I'm not concerned by a "crash".

It's actually a good thing for us shoppers – bargains everywhere.

We pulled out a kitchen in one of our IP's.

Left only the floor and the walls.

Generally, everything is attached to the walls, so a small crow bar, grinder, screwdrivers saws etc.

Try not to put holes in the plaster if you can avoid it.

If you are a handyman, have the tools and more importantly; the time – then I'd consider it. Especially if you live close by.

Personally, we don't manage any of ours (even our own PPoR which is now an IP and only 1 mile away) as all our others are a fair distance away, but I also don't want the hassle.

I'd rather pay the 6 or 8% etc – it's tax deductible, so it's good value I reckon.

But, if cashflow is an issue (isn't it always??) then sure; go ahead. But get a copy of the Tenancy Act and learn it back the front.

You could do a Bunnings kitchen, or ring a few kitchen companies.

Either way, they will all have to come and measure.

My brother did his own flat pack (not Ikea though) and it looks great, but he is pretty handy and has good tools. It took him a while – w'ends only.

Have to agree with the above two posts.

If I was going to pick either one, it would be no.2 – no pool and higher depreciation.

But the cost of finance at the moment is around 9%, and your ESTIMATED rent on no.2 will be 5.3% – ASSUMING you can get it for $370k and purchase costs of 5% are factored in.

Even with the depreciation deductions, you will have a pretty decent neg cashflow.

Don't forget; around 20% of the rent will disappear in holding costs such as insurance, property management, etc.

We are on our 4th PPoR, which is now an IP.

After a while, it becomes just another property, and any superficial damage a tenant does can be repaired, repainted, recarpeted etc.

Once it becomes an IP, your PPoR is eligible for all the same tax breaks as any other IP.

If you believe that stat as a sign of the times, then you really are an idiot, Scamp.

It is very easy to have one person, with 3 or 5 different names on the one forum, continually sprout the same message in different posts.

As you have been doing, and like a few others have been doing over at Somersoft.

In any case, I never listen to anybody else's fears.

That is a herd mentality mindset, and is a lack of Due Diligence by an investor to listen to it without researching their own facts.

I only listen to facts, and the facts are the numbers of the investment, the population movements in the area, the rental yields, the size of the block of land, the zonings, the location and so on.

If I had listened to every person I know who has put forward a reason not to invest in property over the last 8 years I've been doing it, I would not be in the great position I am today.

I've been buying property since 1985 (PPoR's until 2001, then IP's since), and have seen 2 cycles of boom and busts, and those PPoR's I've owned are all worth a lot more now than when I owned them.

Not that I'm Bill Gates by any stretch, but I'll be retiring way before the accepted age with a cashflow for life, that'll keep on increasing unless they make renting a crime.

And now that I've got some experience, I have every confidence that I can keep investing with utmost safety and the ability to hedge against loss in any market.

In fact, if the market does drop as you say, then I will be in position to make the biggest killing of my life, because the market will eventually go up again, and I will have acquired more cheap property before the next boom.

So, I'm here to help others do the same through the benefit of my mistakes and wins.

What are you doing – buying more gold with un-leveraged funds and no rental income or tax benefits no doubt?

The mindset of a saver, which is fine, but it's very slow.

Or maybe you've got an investment loan for it, but it's all after tax dollars which will service that loan – you are hoping the cap growth will occur.

Meanwhile, I've created a cashflow investment that costs nothing to hold, and has every chance of going up (has gone up) in value at least as much as gold.

I'm not saying this to brag; just trying to point out to you that your fears are grounded in ignorance of what is possible in property, irrespective of the state of the market (which I firmly believe will not be as bad as you predict).

Rather than continuing to keep sprouting the D&G crap, start asking how you can make money out of property in any market and make yourself useful.

So, you "like" this apartment, do you?

What about the investment aspect of it? Before you start to look at ways to finance it, make sure it is a good investment.

If it is in the CBD, are you aware of the probable level of neg cashflow from it? Are you aware that 20% of the rent will be swallowed up in holding costs? Can you service the shortfall?

What size is it; anything under 50 sq/m will be very hard to get finance for, or will need a very large deposit – 40% or more in most cases.

Are there Council plans for more similar developments in the area in the next few years, which may cause an over-supply (happened in Melb earlier this decade). This will make it hard to get a tenant, or you may have to drop the rent significantly to get one (as happened in Melb).

What are the comparable values of similar sold properties in the immediate area? Be careful that YOUR cap gain is not already built into the purchase price (as is often the case).

Have they offered a rental guarantee? This is usually built into the purchase price, and is often above market rates, so when it runs out, your rent return drops.

What are the rental yields like in the area for similar properties, what are the vacancy rates for similar properties in the area?

How many apartments will be in the complex, what are the body corp costs going to be, what are the costs for such things as lifts, rates. These could be expensive if it is multi-level.

Is there a dedicated car park for each apartment?

Why do you think the development company has suggested a Bank guarantee for the deposit? It's to entice newbies to make the purchase without using any money – all sounds attractive as you use very little money of your own, so it's easy to buy.

Off -the-plan apartments are very dangerous "investments" – especially in a climate of uncertainty like there is now, where interest rates are going up and buyer sentiment is dropping off. You may find that at settlement there has been no cap growth, even worse – the value may have gone backwards, and you'll be stuck with a property you can't get finance for.

Sorry if I'm telling you to suck eggs, but it sounds as if you are new to this, and I don't want you to make a very big mistake.

Take a step back, and do a LOT more research on the area first. Be sure of everything.

There is no hurry; there will be another deal of the century tomorrow.

Politically correct way of saying don't lend money to family members – especially the ones who are hopeless with money.