Forum Replies Created
Hi guys,
I'm no expert in this area but there's a few things to keep in mind – these are based on what an expert renovated shared with me and he has done very well from renos.
1) You buy for 30% below your intended sell price, not 30% below average price for houses in the area – big diff.
2) Your sell price will most likely be well above the average in the area because it's "all new and shiny", rather than "average and/or tired".
3) You know what your intended sell price is going to be by doing your research, lots of research, in the area and know what it will take. ie find other great renos that are on the market or recently sold and use them as a guide.Here's a rough example using simple round figures;
a) Avg house in area $400k.
b) You plan to sell for $500k ( your research confirms the market will take this "top end" price for a "shiny and new" house.
c) You buy for $350k (30% below sell price, not avg price). This would be a fairly tired looking place that is below avg condition.So you are actually looking for a place that is just 12% – 13% below the avg price, and that's a bit easier.
Make sense?
Hope so and hope it helps.
Hi Timothy,
All successful investors have a system that they follow, so you are on the right track to be wanting a system.
But that system is not going be precise and exacting, like a McDonald’s formula… Step 1, 2,3,4 etc and then you are 99.999% guaranteed of getting X.
That’s because ALL investing involves risk and that comes from the fact there are variables and uncertainty. The less of these, the less risk and the more predictable the results.
Now there is nothing wrong with paying others to do the leg work for you and you simply sign-off on the “deal” you want to invest in.. it works extremely well for some and yes it is still investing.
So dont let ego get in the way of a good investment strategy (system).
But maybe you want to be more hands on than that.
If so, then you need to research all the various investing strategies and decide which one appeals to you most. This will mean reading more than a FEW books or attending a FEW seminars. It will mean reading LOTS of books ( but not necessairly attending lots of seminars as this could empty your investment fund quickly).
Then you can start focussing in on exactly what you want… the strategy you think will work for you.
Remember – good investors do develop a broad “skill-set” and this takes time to develop.
I’m always a bit skeptical about the “cooky-cutter” systems some people promote as often it involves the need for prior skills in some key areas to make it work as well as it does for the promoter.
So if you want to share more about exactly the type of property investing you want to get involved in, how much hands on you want to do etc then maybe some others might have some good book or course ideas for you.
Hope it helps.
John Blackburn
http://www.propertybooks.com.auCarmelian,
You will read a lot about “goin’ down to City Hall and looking up the defaults registers” in many books. But this is an Amercian thing that can’t be done in Australia because of strict privacy laws.
There was a time when a lender would sellup a property and was only interested in getting enough from the sale to clear their problem (the money owed to them) but these days, they tend to make more of an effort to get a “fair” price due to legal issues about conducting “fire sales”.
Now here’s the really funny thing… and this comes straight from a friend of mine who is a senior lending manager for a major bank…
Most lenders don’t promote the fact it is a mortgagee sale because they are mindful there is a perception this will be a “fire-sale” (a hang-over from days of old) and worried if the property doesn’t get a good price ( as can happen to any property ), they might get sued… so they often dont feature it in the advertising.
However, there is clear evidence that shows that put those words “Mortgagee Sale” / “Realisation Sale” etc up on the board and buyer interest goes through the roof… and when you combine lots of buyer interest with an auction, you usually get a much better price!
So,back to your original question…. How do you find them?
No lender is going to put you on their mailing list, so forget that one ( if they do, please put me on there as well!).
The most obvious way is to look for boards and ads with those words “Mortgagee Sales”, “Realisation Sale” etc..
The best tip however is to make an offer on the property BEFORE the lenders move in to sell it up.
To do this, you need to build a solid relationship with the RE Agents in your preferred area(s).
That’s because people who are going belly up financially typically get the property valued by RE Agents well before the lenders move in (or as a result of the lenders putting big time pressure on them).
So the RE Agents can often get a heads-up on what is about to happen and might be able to say to the vendor.. “Hey, I’ve got a buyer who pays good money and pays fast, might be a better than having the lender sell you up”.
Hope it helps.
John Blackburn
http://www.propertybooks.com.auKPI is on the money.
Frankston North (The Pines) is hard core housing comm area and during the 1970 had a reputation as a fairly rough and fairly tough area.
Today this is changing and the area is slowly ( read very slowly) being gentrified.
You’ll find the average house is a rock solid concreter that was built by the Housing Commission in a style only they knew how to perfect – modest size, basic layout/design and able to withstand a direct nuclear hit – only the house, the Valiant and a few cockroaches would remain.
I bought one there about 2.5 years ago for $115k and today it’s worth about $180k. But I dont think you’ll continue to get that sort of growth today… happy to be wrong.
Frankston itself is a real mixed bag, ranging from the lower end of the market through to luxury million dollar properties with superb views.
So the key to it is to learn your market, know your areas, know your prices.
A $35m marina would give the area a boost, but I dont think it’s the type of development that would appeal to the people of The Pines.. but you might get some sort of flow on.
John Blackburn
http://www.propertybooks.com.auCF101 used to be THE hot game and was a best seller for a long time.
These days, it seems to have lost it’s appeal despite it still being a great game to play and invaluable learning tool.
My guess is this has happened as part of the normal cycle of any game but also because of the very reasons we see in the posts here –
1) getting harder to find like minded people to play it with
2) people “too busy” to find the time to play a game – which is odd because when CF101 was “hot”, there was enough time to not only play the game but organise CF game days!Today the HOT game that has everyone buzzing is a game of poker using a contrived set of rules (ala TV poker) which teaches the virtues of gambling as opposed to the rewards of investing.
Such is life!
So….. If you have some like-minded- friends, the type who actually have time to learn about investing and want to “better them self”, then CF would be a great investment.
If you don’t, then it’s still worth considering but playing it by yourself aint half as much fun. [blush2]
Enjoy
PS Despite it being a great game, we dont stock it at present. This is purely based on economic principles as it has been a slow mover of recent times – still sells, but not a lot. Might come back into vogue again soon.
John Blackburn
http://www.propertybooks.com.auNathan,
The best person to advise you on this is your accountant… that’s what you pay them for, that’s their area of expertise.
If you dont have an accountant, then maybe it’s time. [exhappy]
Enjoy
John Blackburn
http://www.propertybooks.com.auHi Matt,
There are many books I would recommend – including most of the ones already mentioned – but it’s a bit hard unless we know a bit more about what you already know, what you hope to do etc.
If you want to drop me a line, more than happy to discuss this further with you. [biggrin]
Enjoy
John Blackburn
http://www.propertybooks.com.auOlliee,
if you do a search on the forum site (use the “forum” menu at the top) you’ll find a small number of posts on them.
enjoy
John Blackburn
http://www.propertybooks.com.auHi Mat,
Good that you have the courage to ask the question in the first place.
You see, many people make the basic mistake of thinking they are experts at everything simply because they can do somethings really well. It’s called false confidence… or sometimes “ego”.
The dilema you face is that you might have the foundations of being a master negotiator within you but either don’t know it yet or havent developed the skill.
Therefore, the property market might not be the best place to find out as mistakes can be costly ( but not necessarily catastrophic).
Remember, most of the people you will be negotiating with, the real estate agents, are seasoned professionals and can pick a green stick a mile away.
Having said that, it usually doesn’t take too much to effort to get the “average” agent working for you and actually helping you!
Anyway, by my way of thinking is there is absolutely nothing wrong with using a buyer’s advocate / agent and I know many property experts who use them for ALL their purchases because they know the agent is far better at the “negotiation” process than they are – so it is cost effective for them to pay somebody to do that task.
So don’t get too hung up about using them or not… whatever you decide, you are not locked in for ever so you might use them initially and then later give it a shot yourself. Then in the future you might use them sometimes and not others.
Just remember that if you do use one, then it MUST be cost effective – meaning they must more than pay for themself.
My feeling is we are going to see more people using them over time and in about 10 – 15 years it might even be a case of asking why you DONT use one!
All of this is something Napoleon Hill touched on in his book “Think and Grow Rich”… surrounding yourself with experts / master mind team and stick to what you do best.
As for what a good one will cost you…. change the thinking to what will a good one SAVE you.
Their fee might be, say 1%, but if they can get the property 10% cheaper than you can and with better T&Cs than you could ever imagine… plus save you hours of time… then that sounds like a dam good deal!
Enjoy
John Blackburn
http://www.propertybooks.com.auHi Glauco and Brineen,
Vendor finance is not something “you try”, it’s a commitment on many levels and there is ongoing work to be done ( which you may want to contract out like we do with property management).
So apart from the technical knowledge, there are other aspects of the transaction you need to be aware of.
I would therefore suggest you;
a) seek out the technical knowledge you need and be 100% clear on how it works and how to promote it
b) speak to a solicitor who has put together (and dismantled) a good number of vendor finance transactions
c) spend some one-on-one time with an experienced vendor financer, not necessarily a “wrapper”, and get up to speed on the good and the bad.
Then if you still think it’s something you want to do, go for it!
Enjoy
John Blackburn
http://www.propertybooks.com.auRave About It – sounds like a good concept.
Only concern is the accuracy of the content.
Easy to load up with good testimonials and there’s no verification those were from actual clients.
Similarly, has potential for flame mails to appear or be censored ( so you dont see the bad ‘uns)
The intent is good. Let’s see how it goes over time. [biggrin]
John Blackburn
http://www.propertybooks.com.auThanks Terry,
That is one option.
The prob is one guy would accept as he wants to take his money and run, the other wants to stay.
Still, it’s a good wrap, so it’s just a matter of time to see what happens.
Thank every one.
John Blackburn
http://www.propertybooks.com.auThanks guys,
I’ll go thru some of the responses;
Terry;
You could ‘buy them out’ by terminating their contract.As they are complying with all terms of the agreement, there is no reason to terminate.
Sue:
What is the main issue here? the fact that you want out or the fact that they are indecisive?.Yes, the indecision by one is creating some “static” but livable static.
Either you let them get on with it or you terminate the contract. If it is your wrap and my understanding of wraps is limited then surely you control the situation?See earlier comment above.
Elka;
Or maybe they are afraid that they can’t really afford the property on their own? After all, they need to refinance for at least $145K and probably more to cover stamp duty, conveyencing etc. plus then needing to be able to pay all the costs of the property instead of just half.The payout is a bit under $110k, plus a small amount for stamp duty.
Person A can afford the repts on his own… easily.
Don’t know why he is reluctant to move to where he wants, but obviously there is something he’s not sharing with us all.
Anyway, the main reason for wanting to see this one finalised is so that Person B can take his “profit” and move on with his life, whatever that be.
So whilst I am happy to let it run, I would like to see Person B get what he wants, Person A get what he wants, and of course it frees me up to do another investment elsewhere.
The prob remains that Person A is holding it all up unless we can come up with some lateral thinking.
John Blackburn
http://www.propertybooks.com.auZaman,
I’ve never done a development myself but through my business and personal connenctions, I know they are complex things to do. No doubt you are aware of this yourself.
Don’t let greed (or ego) cloud your decisions by wanting to “do it all”. Even the experts know what to farm out to other experts.
So you have three choices;
1) Start from scratch and learn and you go.
2) Get somebody experienced to join you in the project and share the spoils.
3) Contract out all major tasks to professionals. Your role is simply to manage them.
If it was me and my first venture into this territory, I would have no hestitation to use 3) and engage the professionals.
Whilst it would eat into my profit, it would enable me to “watch and learn” from their systems and greatly reduce my risks.
But that’s just me.
Here’s a question to ask yourself… “How much of the profit you don’t have are you prepared to give up?”
PS; It might be worth giving Michael Yardney a call at Metropole
John Blackburn
http://www.propertybooks.com.auDolf is a KIWI who has never had a “real job” in his life.
He is a professional property investor with residential and commercial holdings in numerous countries around the world that include NZ, USA, Australia and many, many more.
Robert Kiyosaki regards him as one of the smartest property investors he knows, so I guess some might see that as a pretty good wrap.
Dolf has written many titles on property investing and presents a range of different strategies including “buy and hold”, reno’s, value adding, etc.
He also has developed some property management software and yes, he does do the speaking/training circuit.
I feel his books are very good value and any investor, whether newbie or experienced, would do well to have a few of his titles in their library.
In summary – one helluva smart guy!
Hope that helps [exhappy]
John Blackburn
http://www.propertybooks.com.auIf your investing is a hobby, then treat it like one and forget all about accounting and keeping records.
Seriously, investing shouldn’t be a casual/ hobby thing, it is a “business” and therefore you need to keep accurate records etc.
Like many things, it’s easy to cut corners but when something goes wrong, then it becomes false economy and a nightmare.
A program like MYOB or Quickbooks will do the trick.
If you have one property, then it’s probably not too hard to keep track of your accounting, but as your portfolio expands, then it might be worth considering engaging a bookkeeper.
[biggrin]
John Blackburn
http://www.propertybooks.com.auRichest Man In Babylon should be compulsory reading before anybody ever recieves a pay cheque! [biggrin]
John Blackburn
http://www.propertybooks.com.auFor suggested reading on this I would recommend
“Tax Battles” by Dale Gatherum-Goss.Explains the process of very well.
John Blackburn
http://www.propertybooks.com.auQuick tip:
When you speak with your Solicitor, don’t do it like most people and ask them to work within their templates.
Rather, tell them what you are wanting to do and your desired outcome, then ask them to draft a doc to that specification.
As they do this, they should come back to you with some “what if” questions so they can cover them in the doc.
The result is you will work “outside the box” rather than in it.
enjoy
JB
John Blackburn
http://www.propertybooks.com.auinternet affiliate program.
find a product that has a good commission, buy a domain ($10), set up a single page web site (hosting about $10p/m max), write some long copy, insert the affiliate link and create an adwords campaign.
can be done in a few hours for under $100-.
make $100 per day if you know what you are doing.
then repeat with next product.
John Blackburn
http://www.propertybooks.com.au
