Forum Replies Created
hi there ghotib,
” might use our properties to rebuild social capital and/or to contribute to other common resources, such as clean air and water. Not just win/win for owner and tenant, but win/win/win for owner, tenant, and the general population. “
Well going in to a town of 3,500 people and spending about 60k there on houses and 20K on materials at the local shops and employing tradesmen to end up with a property that offers ‘more for less’ to a tenant – nicer than similar properties available at the same price – i.e. being competitive – it’s a win win, stimulationg the local economy. All the tradesmen and vendors now with money in their pockets can also spend it. And then there’s more income and more taxes for the gov’t and more money to put into roads and water and and and…
basically I see investors coming in to an area as creating employment. The average wage in that area is 13500 PA, and as i spent more than that there, I reckon I kinda created the equivalent of one job, even though it was spread over various people.
BTW i went back to the area and now there are two trendy cafes not just one. So there’s an effect of people spending money in the area, there’s more demand for nice things for people to spend their money on.
cheers-
MiniHi Charchie,
yeh that’s right, 3838.
OK re: would these deals be good if financed 100 percent?
Hmm. Good question. I would think so, because now that they are all set up and earning nicely with good stable tenants it would be a good time to offer them as collateral/serviceability income to buy more.
but for someone else? i don’t know..IMO the higher yields are in towns that many would consider higher risk. Especially if purchasing from o’seas. The areas i was investing in were the sort that people (my family!!!) said ‘ why do you want to buy THERE for?’
I guess not too different to Steve and West Wendouree!!! It was a small town, with a low average wage, but my research told me there was a high rental demand in the area for low-cost rental houses, and as long as they were decent (which mine became after renovation) they would get rented. with high yields.the other thing to bear in mind that even though the town was maybe higher risk than a major town, I was adding to that risk by buying at the bottom of the market type properties- basically, renovating dumps that were structurally sound ex-state house type places. But, because I didn’t have to borrow, my *personal* risk was less, because i didn’t have borrowing costs from day one, which have me precious weeks to get them fixed up and get tenants without too much worry or any hardship to my life.
As they are now, renovated and tenanted, i would say it wouldn’t be too risky to finance against them, but i happen to know that lenders will probably only be prepared to lend me 70 percent because of where they are.
if I had got a single property with the same money i could have got +ve CF in an area with capital gain, and would have actually made more money in the same amount of time. But it wouldn’t have got me further towards my goals, necessarily, because what I want (for my specific situation) is regular income on paper to *service* future borrowing, as i am self employed freelance yada yada.
So really i think it depends on what you want to achieve. but theoretically, yes, and that is what I am planning to do next year.
cheers-
Miniapparently finance is every investor’s hardest thing. If you have no cash and no income and debt then it might be hard to get finance. And if you did get finance, without an income not derived from the property, and even if the property is CF+ve, you expose yourself to a lot of risk if you are vacant, or the hot water cyliner bursts, or, or, or.
If you couldn’t afford to (say) repair the hot water cylinder in order for the tenants to remain there paying rent, i.e. your mortgage, and you didn’t have a job or some cash and to make it worse you had a student loan, you could be forced into a sale at the wrong time and it could be very bad.
I would make sure you have good balance sheets in your own life before you jump into it. Finding properties for a fee is a valid way to get some bucks but it is just a job. People I know that had houses when they were students were the type that worked their butts off doing three jobs and not partying, etc – saving a deposit, getting finance and perhaps parents to guarantee loans, or whatever. just be very careful-,! the first house is the hardest and if you can make that work then you’re away.
cheers-
minihi there OK
house number one 16 plus 9 = 25K
rent 95 p/w
95 times 52 = 4940 minus ten percent management fees = 4446 minus insurance 300 and rates 1200 =
2946 which equals more than a 10 percent return after holding costs. of course if you are borrowing add borrowing costs on, which will depend on how much you borrow etc and your rate. but as long as borrowing is less than 10 percent you could have 100 percent finance and still break even and then some. Also bear in mind that there should be minimal maintenance because it was all done in the 9K spent originally.so doing the 27,300 house, the rent is 110 times 52 weeks, 5720 minus 572 management equals 5148, less rates and insurance of 1300 equals 3438.
divide 3438 by the purchase price and you get 14 percent. The reality was a bit less than that because I had some plumbing, let’s say 1000, so the real figures for the first year was more like 3438 – 1000 equals 2438 divided by purchase price equals 8 percent.
But if you capitalised the plumbing or whatever your initial renovation and maintenance is into the purchase price (which I do) then you get 3438 divided by 28300 which is 12 percent.
the third one works the same way, 19k plus 10 k renovations in order to rent it for 115 p/w/, i call that a 29k house. 115 times 52 weeks equals
5980. minus 598 management minus rates and insurance (1600) equals 3782. divided by the purchase price (capitalised to 29K) equals 13 percent.I don’t have any mortgages on these ones. But this is an example of the kind of property you could 100 percent finance and it should still break even.
hope this helps. cheers-
miniPS I also didn’t do depreciation, basically as i bought all the properties after march this year I won’t do the NZ tax return until march next year, when i will do all that tax deductible jazz. I think you can depreciate the whole house at 4 percent p/a in NZ without having to get a chattels valuation etc.
I also forgot about purchasing costs which were $550 per conveyance and $330 per builders report, give or take a hundred
That makes it a little worse if you capitalised it all in but still not too bad at all, i am well pleased with them
PPS also I made heaps of mistakes when i typed the original thing, how embarassing, i must have mucked up with the copy and paste thing – but just to clarify, they rent for 95, 110, and 115.
all the insurance is 300 and the rates are from 1000 -1200 p/aHi, yeah, my parents have been on nzlongevity for a few months now. My mum’s hair which was grey is growing back with pigment.! My Dad’s arthritis seems a lot better. I bought about $90 worth of the liquid vitamins, colloidal minerals, and calcium an I’ve taken them and they definitely are really good. Unfortunately you can’t get the liquid ones in Australia because there are different laws. but i think the products are great. As far as MLM goes it only costs like $13 bucks or so to be able to buy the products yourself wholesale, and so as far as i am concerned that’s not a rip off at all.
i think it’s all good and i’m going to be buying another lot when I go back to NZ.
sorry to digress from property.
cheers-
Minihi Mr Charchie,
yeah I could, but why not ask them here and I will try to help? Then others can read it too
cheers-
Minihi bruce, I totally resonate with the first three paragraphs and I agree that it’s no fun to be the only one with one’s financial shiznit together, that’s why I have been telling all my friends who are interested what I have been learning as I am learning it!
“To me, Australia needs to stop investing in property and put money into smarts, like medical breakthroughs, …”
hmmmmm
I am disillusioned with medicine because of the ten-minute appointment where you get a drug prescribed to counteract the symptoms, butit won’t heal you.There are other things which actually heal, and it ain’t drugs!!!
“cheaper power production”
I read this amazing article in Esquire about the z-machine, in the US desert, where they are trying to work on fusion – basically, you take a handful of dirt and a handful of water, and if you can blast enough energy at it, fusion happens which could power the whole world cheaply and safely. they just can’t quite get the voltage up yet….
‘cheaper education’
how about this forum? it’s for free (apart from the hosting costs!) But to have time to help others as we do, you have to have an element of free time, which means to some extent have escaped the rat race. which brings it back to investing. i think if people learned to spend less than they earned and invest the surplus, the financial independence that would give them (a little at first, more over time) would actually give them the TIME to learn, think, read, care, and do stuff for the world. whatever that might be.
‘ethics’
ditto‘cheaper means of production, period.’
Yeah!!! My newest obsession is prefabricated houses, with incredible design.
http://www.fabprefab.com
” a web resource dedicated to tracking developments in the realm of ‘modernist prefab dwellings’.it’s a form of leverage where you get a high quality architecturally designed house for a fraction of the price.
“Only then does our standard of living increase.”
I think any business that succeeds does so because it offers more for less, if you like. And so businesses do make the world a better place.“I would love to see a culture of venture capital develop in Oz.”
I think it already does???? I mean a while back I had this ‘million dollar idea’ (!?!) which I went to see my lawyer about, and he was going to see his venture capital friends about it. (so they must exist????)
it was a great idea, but retail, and therefore couldn’t have been patented. Also it would have taken over my life for two years while I started it off. And I didn’t want to. Idea for sale, though, however…cheers-
Minihi simon,
so what are the yields like there?
are they ten percent or are they better?
because like bruce said I would like more than 10 percent if there was no CG. Then again the yield is usually the lowest in the first year and then it gets better, basically because rents slowly rise, especially if inflation kicks in (which is linked to interest rates rising isn’t it?) and the return should get better and better over time, because the original price paid stays the same and the mortgage goes down. and if there is a surplus of cashflow you can churn it back in to the mortgage making it even better over time.cheers-
miniHi Bruce,
“But my view is that I have come to this newsgroup wishing to share a high standard of IP experience that may benefit me as equally as others.”
Bruce I think it’s fantastic that you want to share info, that’s what’s drawing the crowd here.
If you have any interesting stuff on tassie why not start a thread about it and tell us. we’re all ears!re: “I assumed most members would be reasonably savvy. Maybe I am wrong.”
I think a lot of people have read a book or two, maybe Steve’s, so that they found this site, but lack the confidence to know if they are jumping in the deep end or it’s the right time, or if the deal they found is any good etc.
i think it’s mainly newbies that are drawn to a forum, like I was. i was a newbie without any property only about 9 months ago. And through ‘total immersion’ (i.e. obsession, reading, reading, discussing, debating) I’m pretty confident finding deals, doing due diligence, doing the numbers, i even have two renos under my belt, and now that i have three properties all working and earning me 20 percent yields I feel pretty good about the principle. Although i’m not a millionaire yet, I see that I *will* be one. not just ‘i want to be’ or ‘i hope it happens’ – but like I have had some kind of Eureka moment about how if you spend less than you earn and invest the surplus at 15 percent or so, in an income producing asset that itself holds or gains it’s value over time, and if you reinvest the returns to acquire more assets, then it’s just an absolute no-brainer given – factoring in time – and not gearing too much so you have to dump (i.e., ‘go back three spaces and miss a turn’ – that i *will* be a millionaire.
the speed in which that can happen depends on my earning, spending, and investing actions in the next few years, but i am guessing a few short years and i’ll have a million bucks worth of equity earning me 10 percent per annum clear.you start with the baby deals to learn the ropes and then you see that the bigger deals are just the same, but you add a few zeroes..hehe
blah blah
cheers-
mini“The notion of “mentoring” is a bit patronising, I reckon. “
I so agree!! Um, no I don’t actually, what do i mean? I just mean – unless you’re well qualified.
A mentor to me is someone like Steve. Someone with 100 times the experience I’ve got and then some.Sharing information and helping eachother is something different, people on the journey at roughly the same point can do a lot in the absence of a ‘real’ mentor.
kay, you are so on for coffee. i am going on holidays overseas for a month so how about in the new year? I am in Paddington so nice and close.
cheers-
minihi steve!!!
i would also like to offer my best and warmest congratulations to you and julie on your new baby, yay!
cheers-
miniI know Dolf de Roos raves about retirement accommodation as an investment, because we have a large bell curve in the population (globally as well as Australia) where the demand for this kind of housing is growing. Just like other factors which can show you predictable statistical probabilities of supply and demand, an ageing population is one of ’em.
now old people’s accom at a beach suburb, i reckon would be the bees’ knees.
Another variation is the in-between version of the 3 bedroom house with fruit trees and large section which the older people are moving out of, and into a low-maintenance (i.e. all on one level, not too much gardening) rental unit within walking distance from shops – which they live in prior to assisted care.
i think older people can make perfect long-term tenants – they just want to settle and not move around constantly so that could mean a good many years. and that there’s a definite plus to buying rental accom which is old-people friendly.
Like any strata thingie I would be wary about anything that has high management fees which could rise. Unless you own the whole thing, of course.
cheers-
minigood on you bear.
I agree that it’s easy for people to find the properties themselves for sale once you’ve disclosed details about where. I also think there are many different ways to structure the deal you do if you act as a property finder. This might vary from person to person as not everybody has the same needs etc.
I think a lot of the times it’s not just ‘find me a deal’ but ‘explain to me why this is a good deal compared to others for sale’ and ‘help me do all the steps in the right order so i don’t buy a lemon’. people are trying to leverage off an investor’s (hopefully) knowledge of the market, contacts, and skills in analysis, research, organisation, communication, networking, and negotiation.
I agree that the deals are out there for everyone to find. But some have spent months looking and not finding, for a good many possible reasons. i think it’s totally valid, what you’re doing. i think if the Bruces of ths world (i.e. your potential client) have a problem and think they can do it themselves and don’t see value in what you are doing, then they shouldn’t do business with you.
i mean nobody wants to help or work for someone or have someone as a client who’s not happy with what they are doing – that’s just lose/lose!
Do your due diligence on your potential clients just like clients would do their due diligence on their property finder and purchases. Eliminate the tyre kickers and go for the people you click with and think are on the same wavelength, people with whom communication is easy and joyous.
win/win. fun, helping people, and financial benefit for both parties!
cheers-
minicheers-
minihey young investors, When you say amazing returns, can you tell us what they were?
cheers-
minii think that if you don’t apportion a certain amount to ‘personal’ which sounds legit and justifiable then there is a chance the ATO or whoever just says that you aren’t allowed to claim.
cheers-
Minibear,
I meant….
“Wonders if any one knows just how much it cost to keep this forum running? I know and it shocked me when I found out.”that bit!!!
cheers-
Mini!!
spill…?PS you are as fabulous as you are. it’s not a competition! meaning, I call myself minimogul because I ‘only’ have three houses so far. yet it’s infinity percent more than I had this time last year, and STEVE MCKNIGHT can take credit for being an excellent teacher and mentor for that.
Not trying to suck up or anything just to actually remind myself who was the most significant person that affected my property investing journey the most. Sure, we love Dolf and Robert kiyosaki and the gang and they got me to where I was looking for ‘more’ and found Steve’s seminar – but he really does teach well and without that Americanised hypey sound-bite style, he’s clear, logical, and real and i ‘got it’.
I mean,
I’d read the books and listened to countless seminar sets on tape and CD (and doing my tax return recently, I was shocked at how much I spent on education) – but it wasn’t until Steve’s seminar that i truly learned how to do the numbers, and was challenged to stop being fearful and take action and do something. So now I’m here….*whistles a happy tune*mini
grrr oil prices and the US dollar, don’t get me started – and don’t bother to try to buy oil with anything *but* the US dollar, because otherwise there might just coincidentally be a reason that you have war declared on you, bah humbug
OK where were we, property….
“put it in the bank (returns 4-5% per annum at the moment).” true.
If your bottom line (yield minus borrowing costs minus holding costs minus a buffer or ‘risk’ cost) is not more than 4-5 percent, then ask yourself what are you doing investing, and why?if the answer is capital gain, what will you do if it doesn’t eventuate and you have to sell short? what will you do if interest rates rise more?
cheers-
minifunnily enough enjolady…heheh
yeh -this has certainly opened my eyes to some possibilities –
i’ll keep you all posted!!
all of you who dropped your email address can now safely remove them (just go to your post and edit it!) that’s an OK workaround don’t you think, i.e. to post your email, and then remove it?!!!!
cheers-
minimaybe some of you should start a mentoring group and mentor eachother. Like having buddies to be accountable to. set eachother goals,etc. It’s amazing how between a group of you, you might have the answer, even though none of you might be experts on your own.
just a thought.
cheers-
miniBTW I can relate to your family being bored stupid by it, my BF is a bit over my pbsession with RE and wishes it would go away, actually!
Even though he’s been the most supportive in the world, and helped me do two renos! (maybe *that’s* why he’s over it, *grin*!)
that’s why late at night and when he is at work/uni is when I concentrate on it! and go nuts!ricky, I think it sounds good. I’ve got very good yields in NZ small towns. a lot smaller than 10k! Of course Aussie is different because it’s a lot bigger and the possiility is that towns are remote. But 1 hour 20 from a capital city doesn’t sound too bad. knowing the RE agent and there being employment makes it sound even better.
In fact, given most investors’ reluctance to invest in small towns, it might just be the last bastion of CF+ve properties and rental demand to boot, in Aus! Then again I know less than zero about the place.
very intriguing jubeirei, can you spill your interesting info about your town?
cheers-
mini
