Forum Replies Created
I can understand why you are nervous renting out your home.
here are some questions you could ask. Just check out this link:
http://www.rentingmelbourne.com.au/html/s02_article/article_view.asp?art_id=109
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auI agree with Nigel. Property in Point Cook may offer a great lifestyle, but currently makes a poor investment.
I know of a number of investors who have bought proeprties there and are having real trouble leasing them.
They have sat vacant for months despite lowering the rents.
You could probably find a better area in which to invest.
For example we are currently buying established 2 bedroom units in Elwood for clients for $285K -$300K. They rent out quickly at $295 -$300 per week and Residex predicts 10% growth per annum in this area.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by marsden:Living off equity depends on continued and sustained capital growth. It assumes that while capital growth may decline and grow these factors will in the long run average out to a growth factor of about 5%. As proof, proponents refer to growth figures from around 1965 on. Again, this positive growth has to be sustained or you are just eating your property. There is no need for property to continue to grow in value forever. In fact there are many reasons to suggest that we may experience many years of decline.
You are correct that there is no need for property values to grow forever, but the best predictor of the future is the past.
I have a graph from Residex going back to 1860 showing how property prices have grown and grown and grown and grown.
Since then we have had 2 world wars, a great depression, Federation, all sorts of governments, September 11th etc etc
And property prices have grown and grown and grown and grown.
I know where I would bet my money. I know where I have bet my money for 30 years now.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auI know Bill very well so I am biased.
He’s a very smart guy and won’t talk so much about interest rates or fees. He will discuss sensible investment strategies.
We refer about half our clients to him and have had very few issues. He’s got a great team and should be able to help you.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auA license agreement is the normal way a delayed settlment is handled.
You are correct, it does not give your friend the normal rights of a tenancy agreement.
The reason is that if he fails to settle, he can be kicked out (I know he wants to settle, but things happen.)
Since the delay is due to the landlord not being able to settle, he should be offering a preferential rental not a punative one.
As for if he can get out of the contract, it is depends upon the settlemnt terms. It usually says something like 14 days after issueing of the new plan of subdivision, so he may not have an out.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auAre you allowed to biuld townhouses on the land?
What is the council zoning?
I agree with Ausprop’s ballpark costings but then there are all the other costs including consultants, council fees, holding costs interest.
These may add another %40-%50K per unit
Get a proficient development manager or someone with experience to do a feaibility for you
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auI’ve just come from Sydney presenting at the Reno King’s workshop (Steve McKnight was there also)
Paul and Geoff are great guys and in their seminars give all the warnings. They don’t expect people to renovate like this.
They wouldn’t or couldn’t do it normally either.
But if a TV station asked YOUto pull off a publicity stunt like that what would you do????
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by calm:Good morning
I’m a newbie and am looking for some advice on buyers agents. I haven’t heard much about them so think that maybe they are too expensive or not the done thing. What do you think?
Cheers
LeanneHI Leanne
Many investors use buyers agents and don’t find them expensive.
It’s not what they charge, it’s how much they save you.
Many members of this forum have taken the time to learn investment techniques and have time to do research. They may not benefit as much from a buyer’s agent as a beginning investor or a busy professional who hasn’t got the time to do the research.
I have known Nigel Kibel who was mentioned in the above post by Alistair for a number of years and he has a lot of industry experience and understands property investment better than most.
He’s got a good reputation.If you are interested in Melbourne I would also suggest you have a look at http://www.buyingmelbourne.com.auThey specialise in finding top performing investments for clients.
How do I know? My wife Pam is a director of the company.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auTo help you do your research into finding a good PM here is a report with some hints and 12 questions you should ask ….
http://www.rentingmelbourne.com.au/html/s02_article/article_view.asp?art_id=109
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auI’ve been in Sydney this weekend presenting at the Reno Kings seminar ( as was Steve McKnight and a host of others)
Lots of things were discussed from +ve geared properties to property development.
But 2 smart presenters (advanced investors themselves) explained the concept of living off equity. It was similar to my explanantion in this post.
Geoff Doidge (one of the Reno Kings) does it and has for years. He even showed his spreadsheets and how he calculates it.
I repeat my previous cooments. Its not for everybody – you need substantial equity (>$1million) and a strong portfolio of growth properties.
You also need the right mindset.
I will give a summary of the seminar in my July Newsletter
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auI have known Rick for a number of years and have goten to know him better recently.
In fact I am having dinner with him in Sydney tonight.
He’s a nice guy and very genuine. He’s very clever and learned many of his techniques in America in the 80’s when you couldn’t give properties away.
He teaches many creative techniques, but he is not a theorist. He is actually doing it and has done so for years.
Just as Steve McKinght has changed with the times and no longer recommends wraps, so has Rick.
He know taks about lease options and sandwich leases. These are creative techiques that seem to work today.
Having said that it alllseems hard work. I will stick to property development, but then again most people feel this is hard work.
All this shows is there is NO one correct way to invest. There are lots of ways and it depends what suits your circumstances.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by Ash75:Hi all
I require assistance in finding a good town planner for a mixed residential/commercial development in the City of Kingston, Victoria.
Your recommendations would be appreciated.
[worried]
Thanks
AshHi Ash
I can recommend one of 2 good planners we use in Kingston. We have obtained about 15 development approcals in Kingston in the last 2 years, so I understand their needs well.
My recomendation will depend upon the needs of your project. Send me an email or give me a call on 9532 8889
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by Luci:Forgive me if I’m wrong (I only deal in single residences), but I thought Town Planners were hired by the council, and you as an individual don’t have a choice as to which one you deal with?
Luci
As a developer you often engage a town planner to represent you with your development application with council.
There will an article about this in JUne Australian property investor where they interview me as well as a town planner about this exact topic.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by kay henry:Michael,
On your “real job”, I calculate (on a vanilla taxable income of 100k with NO deductions- this would be unlikely for RE investors, as all would have deductions unless pozz geared…) that the tax to be paid for 2004 earnings would be $33,807 plus 1500 for medicare allowance. The figure paid for tax would be even less for the 2005 year and less for future years if the Govt gets through the taxation cuts mooted in the budget. So basically, all up, tax paid would be about 35,300- and that’s with NO deductions. Superannuation on a “real job” would be paid by the employer- not oneself in a PAYE situation.
I’ve seen you use the 50k figure in another thread- but it’s not quite the case. It would be better if your example was based on the remaining 64,700 net actually received, rather than the figures you have used.
kay henry
Kay Henry
You are correct.
Leaving taht aside, living off equity is still an appropriate strategy.
What do you do when you eventually own a significant protfolio of proeprties. Whether they are cash flow positive or not one day you may want to slow down and use your properties for the reason you bought them.
One way is to live off the cashflow. How many cashflow +ve proeprties giving you say $35 per week before tax do you need to own so you can live off them
Or you could sell a few properties and retire some of you debt and live off the other properties.
Or you could use the strategy I outlined. Many wealthy peolpe are doing this, but I concede that most peole can’t “get their heads around this”and that’s fine.
There is not one way to live off property and there is no right way. Its what suits YOU.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auI have been living off the increasing equity of my properties for over 10 years now. The strategy definitely works for me and some of my friends.
Let me explain……
Imagine I went and got a real job and earned $100,000 After tax and medicare levy I would have $50,000 left to live on and even less after super.
If I have a property portfolio worth say $3million in good capital growth areas my properties go up by say $300,000 per annum (on average).
The bank will lend me against this extra equity and I borrow $100k at 7%. (I could borrow more)
This would cost me $7,000 interest and I would be left with $93,000 to live off or invest, or pay off other loans.
If I worked for the $100k and paid tax I would only have half that.
When you own enough equity; cashflow is not important.
Equity = cashflow.
Banks will lend against the equity of your properties ,and you don’t need income (lo or no doc)
Having debt is not risky, not being able to have it is
Living off your equity only works when you have large amounts of equity and you have a certain mindset.
So returning to my example you have $3million dollars in properties and $2million in loans.
That leaves you with $1million in net equity.
You borrow $100,000 against this equity to live off. You allocate $7,000 of this to pay interest, leaving you $93,000 to live off. (better than paying 50% tax on earned income).
At the end of the year you have eaten up your money and have to go and borrow more.
But on average your properties have gone up $300,000 over that year (10% per annum)
Lets say it was a bad year. They only went up $200K. At the end of the year you are still $100,000 ahead – in other words $100,000 more equity than you started the year with to invets again or do whatever you want.
So this strategy is definitely not for beginning investors. You need at least $1 million nett equity or more for it to work.
There tend to be 3 stages of investors.Income Stage – We work for our money
*Here we finance investment with our personal contribution.
*We are concerned with the efficiency of our physical body (we need it to earn income)
* We are concerned about cashflowSome investors progress to the next stage (most never do) …
Capital Stage – Money works for us
*We finance investment without our personal contribution because we use our equity to finance new aquisitions
*We are more concerned with the efficiency of our capital rather than with our physical excertionVery, very few invetsors move to the last stage…
Active Stage – Everything works for us
*We finance our investment the way we choose to
*We are more concerned with the efficiency of everything that we can influence
(Do you think Kerry Packer worries about his cashflow or even his equity. He sees the banks money or the money market’s money as his money. He does deals without putting in money or equity or cashflow)OK so back to living off equity….
You’can’t do this until you reach stage 2 – the capital stage of your investment career.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by tomtkb:Hi, I am new in PI, I have been looking for a good long term rental property. I stumbled on this piece of property, good starting features and benefits. Almost always tenanted.
It is a property url :
http://www.collegesquare.com.au/collegesquare/I would like to seek some of your views regarding this type of PI. Some banks do not like them as they does not see any capital gain and a higher risk.
Cheers
The nbanks are probably correct so you should stear clear of them.
College Square is one of teh better student accomodation investments. BUt overall this type of unit is small and has a narrow demographic market. Currently the number of overseas students is falling.You could find a better investment.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by gogo:Has anyone come across this problem?
ANZ bank aproved construction loan subject to strata title proof. Council aproved DA application but can not aprove strata tile until building is built. ANZ will not send letter of offer without strata tile proof Council will not issue strata title until building is built.No I haven’t come across this before and we have had tons of construction loans.
What are you building?
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by The Mortgage Adviser:
So when is the next $55 special in Sydney? I seriously want to check it out!Robert Bou-Hamdan
Mortgage AdviserRobert
Its a pity you missed my annual briefing which was held last month. Next one is next year.Despite all this talk about my seminars I really don’t do so many. My business is property not eductaion.
I hold one expensive workshop in Melbourne each year in June and a round of annual briefing sessions in March/April. We just had these and they were literally sold out in each state – over 1,100 attendees in 4 states.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auTry Rob Balanda of MBA lawyers in Surfers paradise on (07) 5539-9688
He trains esate agents and lawyers and really knows his stuff
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOne post to answer a few separate questions.
Do we provide ongoing follow up
Definately– ongoing lifetime follow up by phone and email plus two free seminars a year with private small group meetings afterwards.Attendees become part of the inner circle.
Do I make money out of presenting seminars?
Sure I do buts its sort of irrelevant to my overall position.
Remember I started these annual Real World workshops to counter the BS get rich quick seminars. To bring some facts and experience into to picture.
I don’t make $350,000 out of the seminars. There are huge costs and I provide experienced presenters I also pay interstate airfares and accomodation.
I still make lots of money but thes etake montsh and months of preparation.
The market has moved on so what I speak about this year is VERY different to last year.
But the money from seminars is not why I do it. I enjoy presenting and I love the positive feedback from attendees .
My property portfolio probably made me 20 times what my seminars did last year.Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au
