hey pin,

in reply to –
“Also the thing with +ve geared properties they ONLY put something like $1,000. PER ANNUM in your pocket. (i.e. peanuts.) WHY?? because this is eaten up so fast by EXTRA expenses that you forgot to put into the equation.”

I agree you probably shouldn’t just rush out and buy property if you ‘forgot’ about strata fees, property management fees, mortgage application costs, mortgage insurance, loan repayments, closing costs, maintenance costs, insurance, rates, vacancy rates, letting fees, or any other expense to do with buying or owning a property. All that calculation stuff is the kind of thing I learned at the seminar I went to with Steve,
(I actually went twice just to cement some stuff!) along with the ability to work out what that all means in terms of the bottom line.

Yes, the yearly surplus might not be large if you are (like me) buying ‘baby-deal’ properties around the 30K mark which rent for 115 per week. but the important thing is that there IS a surplus. And the yearly surplus is the bit that makes me feel secure that i won’t have to put any money into that house – I have a buffer. it’s also the thing that means that i can start looking for another property straight away ….and then keep on going. As the years go by the repayments seem less in relation to the rent – which goes up each year. The property manager should ensure that you have regular rent -increases which at least are in line with inflation.

After analysing a good many deals this year, three of which i bought, I’m at the point where i’m pretty bloody confident that I know what I’m doing numbers-wise (PS – I had to be – my Dad is an accountant and initially was not convinced…until i showed him the numbers!!!) – and I’ve built enough buffer into my calculations to allow for rising interest rates – which also means I’m going to keep my borrowing to a point where I am comfortable. This means I will keep more equity in the deal than a lot of people would. I am happy to go a bit slower in order to be a bit safer. but that’s just me. Also I am freelance so the ‘not digging in to earned income’ thing is quite important to me.

So I agree that the numbers aren’t big on the small deals but like when you play Robert kiyosaki ‘cashflow’, you start with a bunch of small deals that increase your cashflow, and over time, you can ‘get there’ by just doing lots of small deals, or you can eventually move into the bigger deals. either way it has a cumulative effect and the principal of the thing means you can replicate it. with no loss of lifestyle (other than the time taken to set up the deals, which i am in no way underestimating! However now they are set up, all I do is check my bank statements!!

>For Steve this is a completely different story. He has the >money and the backing. I am thinking about your average >Mum and Dad here, who don’t know what they are getting >into to. “

Steve didn’t have the money when he started. Didn’t you read the book? Read it! You’ll never guess where they got finance when they were starting out!!! The ‘zero’ in the title of his book means none, zip, zilch. They had NO properties when they started and 130 3.5 years later. They didn’t start with any backing, other than finance.

As far as the average mum and dad, they probably spend 105 percent of what they earn. ( I read that somewhere. that’s what the average Aussie does. Scary or what?? Credit cards are a growing sector….) They probably own their own home. Negatively geared of course, because own homes always are.

You won’t see them here.

The UN-average people are the ones who learned to spend less than they earn, eliminate consumer debt, and maybe think about investing the surplus. That is SOOO not average. The average in debt to the eyeballs Aussie mum and dad take the kids on holiday if they have a bit to spare (read: room on the credit card.) That’s why only 8 percent of people that own property own an investment property. And only 6 percent of THEM own three or more. That’s 0.5 percent of property investors. Not the average mum and dad, for sure. Why can’t there be more? Because negative gearing is so prevalent.
Because most people want to invest in their own homw first, because of many emotional (amongst other) reasons. because properties that will be cashflow positive are a bit thin on the ground. because a lot of people are way out of their comfort zone buying outside where they live. because most couldn’t be bothered to learn to understand it anyway.

A lot of my friends and family are impressed/bedazzled/confused/overwhelmed/challenged with what i’m doing with property. Most are interested enough to have me explain it. Some have borrowed my CD sets or bought the book. Fewer have read it. But a couple of friends
who borrowed the CD set, listened to it, made their partner listen to it, rang me up lots and asked me stuff, looked for deals, analysed them with me, and made offers have now bought cashflow positive properties….they are not average people though….

cheers-
Mini

muppet- hi!
thanks for posting all the stuff. It’s interesting. re: the first one,

it reminds me of ktkiwi who posted here a while back and was slagging off +ve CF investing in small towns, and he turned out (whaddya know…) to have a website that on-sold property deals mainly in Auckland for a fee, a la richmastery.co.nz.

I’ve found that all the major the dissers usually have a hidden or not-so-hidden agenda.

cheers-
Mini

pin,
I’ll have a go,
though I’m not Steve,

” Positive cashflow. Is it really for everybody?”

no because a) some people think they don’t exist, so therefore they won’t be able to find them. b) it is estimated that only ten percent of properties in Australia are +ve cashflow (I read that somewhere) so therefore 90 percent of people can’t have ’em
c) if interest rates rise and a property is only marginally +ve cashflow, then it will become negative (scarce and getting scarcer)
d) most people (not necessarily on this forum, meaning most buyers in the market) don’t even know how to calculate the yield on their property, not to mention figure out before buying how much their investment might put into or take out of their pocket each week e) most home buyers are owner-occupiers, and PPOR’s are always negatively geared (liabilities) aren’t they?
e) only 25-30 percent of people rent, though this is rising.
f) not everyone is going to be comfortable purchasing in an area away from where they live. As most people live in cities, but most CF+ve properties seem to be regional, you’d need a higher yield than the 11 second solution 10.4 percent to cover property management costs, maintenance, rising interest rates, etc

>Different times, different strategies?
totally – I think it takes a great deal of knowledge to act counter-cyclically – i.e., to buy in Tasmania 2 years ago when it had had a declining population for 12 years and when even Dolf de Roos was warning against Tasmania by name at his seminars. But if you HAD bought there then – and you’d probably have had not only +ve CF because of the low purchase prices then, but capital gains since because of what’s happened there in the last year and a bit – you’d be away….

>Does a million dollars in property with a million dollar debt >make you a property millionaire?
i think for the purpose of the TT challenge steve defined it as ‘controlling 1 million dollars worth of real estate’. however i would say that (for example) owning 1.8 million of property but owing the bank only 800K would count.

>I am worried (NOT negative!) that some people are getting the >wrong message and will find themselves in serious trouble >soon.

What do you think the ‘wrong message’ is, and let’s say someone had got it, how would that get them into serious trouble?

cheers-
Mini

hi everyone.

re : “Yes I get sick of listening to people say they dont know where to find these properties but they keep asking so why not help. “

I’ve been a member here for a while (since ‘before Steve was famous’) and I love to help, but these days there’s not enough time in the day to read all the posts let alone answer them all.

It seems tiresome to say ‘do a search’ but seriously, if you took the time to read all the other threads (in treasure chest now, since the move) – there is SO much info there already.

cheers-
Mini

hi dags,

try this book

http://www.amazon.com/exec/obidos/tg/detail/-/0671725580/103-2780087-5622211?v=glance

“nothing down for the 90’s”
-how to buy property with no money down”.

Apparently still appropriate today! Robert Kiyosaki’s first seminar was with this guy. I haven’t read this book but I’ve just read another one by the same guy (robert allen) and he’s totally brilliant.

cheers-
mini (a fellow hippie)

what’s chinese whassit?

brewza,

there was a recent thread (or a couple of them) called finder’s fees, spotters fees, –
do a search,
if no luck start a new thread

all I remember is that there were people from this forum that were interested in passing on deals they’d found but couldn’t get

there are some ‘legit’ businesses doing the same kind of thing such as richmastery.co.nz for NZ deals

George –

*eyes popping out on stalks*

when’s YOUR book coming out!! Wow!
Is your last name Packer or something?

Am i allowed to ask some questions – or even take you out to lunch!??? (really!)
Like was that your first home purchase?
Did you have a huge-paying job or other income streams to be able to borrow that much? (i.e. you must have been able to service the debt even if it was vacant?)
Either that or you bought with cash…the mind boggles –
Anyway, how did you make your money – business? Shares? real estate? Basically how did you get to that point?
or were you born there?

“Purchasing 100 studios in Bondi is not going to put you on the Rich 200 list for example.”

Well – it might not. (i take it you are on the rich list 200?)
But don’t you think it would be a good start? I mean, bondi beachfront is always going to hold it’s value surely? And at the ‘bottom of the market’ it’s always going to have a large rental base, no matter what happens to the economy – right?
more than you can say about top end millionaire homes…?
Interesting that you sold it now. What does that say about what you think might have happened if you’d held on to it?
Yeah and if one was in the realm of buying 100 bondi beach studios, surely it would make sense to buy blocks?

anyway – it’s all very interesting!

cheers-
mini

I agree, shootingblanks,

a mix, and +ve CF properties are a great way of building up your passive income so you can afford to buy a negatively geared one

in fact I just went off an looked at some properties on the net at mcgrath.com.au

HMMMM very interesting

$255K to BUY on bondi beach, studio apartment, looked lovely, absolute beachfront building on campbell parade? Huh?
Have prices gone down or something?
i thought it would be heaps more.
to rent, can’t quite figure out how much a place like that would rent for.

maybe $250?
so a five percent return. Heinous amounts of fees though (strata, etc)

very interesting though

I think i will be watching this market for bargains

Hi Martin

re:
your post. i.e. “get real!….. I challenge Steve to show me one property that satisfies the 11-second solution in Melbourne or a country location that has the kind of attributes Steve recommends ……….”

Ever since I started investing (with Steve’s method) I have been bombarded with people saying ‘that can’t be done’, ‘it won’t work’, blah blah blah.

meanwhile i’ve been quietly going off and doing it. bought 3 this year so far (minimum 20 percent yields) and about to purchase number 4.

So what does that prove? That it’s *impossible* for the people that say it’s impossible (you) and *possible* for those who not only think it is, but look for and find deals, then buy them. (me).

So all you have to change is your mindset!!!! otherwise your opinion ‘it’s impossible’ will remain true for you.

cheers-
Mini

morvyn,
how interesting,
oh that guy is welcome to it!!
wainui is probably THE suckiest suburb in wellington. I mean, it’s locked in a valley, not on the way to anywhere (except wainui), it’s a hideous place really. I looked there earlier this year and I decided that there must be opportunities out there without me having to buy in Wainui. The returns were’nt’ even that fantastic and i thought the places were a bit overpriced. I think naenae would be a much better bet along the same lines but without the air of desperation. Naenae will do something before Wainui does. Wainui people move ‘over the hill’ to the hutt valley to move up in the world. On the other side of the hill, you have the paint factory, it’s near petone, it’s on the way up the hutt valley…

hello all wellingtonians
i am an eastern suburbs chick too, grew up in Seatoun