Forum Replies Created
things r lookin up not down
2012 gunna b good. I'm buying more. b happy b positive look ahead not behind
Hi fishmeet-
Here is a link to the local newspaper in Gladstone, so you can keep up to date with local news and realestate for sale. I have one IP there and still interested in more. The LNG industry there is in very early stages, and although rents have increased sharply in last 12 months, property values have not yet risen to the levels which most commentators and analysts expect they will due to the rapidly increasing population and the investment of capital occuring there now.http://www.gladstoneobserver.com.au/
Any residential builder or half decent carpenter could answer those questions. Getting one there without the likely prospect of compensation for their time would be the tricky part. You might have to consider providing incentive.
Hey ten_burner… I agree with your comments on risk factor. My own tolerence for risk is a constantly evolving equation based on my income, job, assets, local, national and international developments and probably whether I got enough sleep last night. And I also agree- good on Zaki for having a go, and at the rate he's going he will probably exceed his dreams.
And thank you catalyst for shedding some light on how Zaki has achieved what he has so rapidly. Again, on the subject of risk, it is apparent that with his high LVRs he has taken what would be perceived by many people to be high risk, but with proper research and careful selection, most financial risk can be moderated, offset and compensated. Achieving good rental yield is obviously one of the forms of compensation, and with the properties he has purchased, it is extremely unlikely those yields will diminish.
In light of the information you have provided regarding Zaki's progress,it is apparent my comments about purchasing blindly and without first obtaining an education about the property market do not apply to him!xdrew wrote:Its somewhat a matter between getting finance .. and owning property. The banks will put a natural limiter on what you can borrow .. so you can try getting your money from other sources.Believe it or not .. there are lots of people quite happy to be getting 8% or 9% secured by property from a guy who pays his bills on time. If you can prove that with ready documentation you'll find you can approach non-bank lenders to get your finance resolved. And since they arent banks .. their lending criteria is a lot more flexible. Five or six months later you turn to the banks to get the whole deal refinanced. And you end up with a reduced rate .. a happy lender .. a set of loans with the banks .. and an increased portfolio.
Dont get caught with loan sharks. They also advertise through regular means in the money columns and the internet. They just ramp up the interest when it suits them too. Which can leave your kneecaps in danger.
Gearing high works in a near neutral or close to positive market because your borrowings are high .. your movement is postive and upwards and your gearing means the input from yourself remains small. However the risks remain LARGE. If you find yourself in a slowing or downturn market .. the margin of ownership can revolve into a margin call .. as the banks now own more of the property than you do. They'll send you a pleasant letter stating that you now owe them money .. could you please pay up. That can be anything up to 20%-30% of the properties value depending on the losses incurred due to a price drop. So your 20k invest with potential on a 400k property can turn into a 80k liability to the bank.
Doesnt mean you cant do good calls. I started off my folio on positively geared country properties with upside. And once i had a couple the banks were prepared to lend on (NOTE THIS – banks are doubly shaky on some country areas for lending against them), I drew against my equity and income .. to purchase more central capital city properties with potential. I always considered my country properties long term buys and cash cows – higher risk. But they had to meet my strict criteria for workability. The real investments were always my city properties. With the excess cash i got from my country properties i was able to neg gear some of the city properties to offset the existing income. Worked fine for everyone.
After a certain size and value of the portfolio .. land tax and the purchasing relationship should be reviewed by you. Thats a longer term strategy and you should do that when you are ready for it. For the moment .. utilize the tax advantages of personal ownership and negative gearing to get the best out of your properties.
Hi xdrew
I phrased my question in my previous post poorly. It was late when I wrote it. I'm hoping you might elaborate on the non bank lenders you mention in the above post. You caution against getting caught out by loan sharks, but advise that there are lenders willing to loan in situations such as Zaki's. Can you suggest how one might go about sourcing such a lender, or suggest some potential contacts? I'm interested in expanding my portfolio rapidly, and have only explored banks for finance so far. I'm curious about other options. Thanks in advance, and for your comments so far.Hmmm…An interesting topic prompting some interesting responses. One other reason I found Zaki's story hard to work out was that he actually said he bought 11 of his properties in a 24 month period-all in one state, N.S.W., so of course he'll also have land tax bills to add to his list of expenses. He also says "some of my properties have required renovations, though I'm yet to lift a paintbrush and believe in leaving that to the experts". Tradesmen were presumably an additional expense. He has done well to pay all his bills on time and continue to impress lenders.
Xdrew, when you say " you can approach non bank lenders to get your finance resolved" who are you refering to?
Submitted by <a href="http://null/user/homersyd" title="cssbody=[bo_user_body1] cssheader=[bo_user_hdr1] header=[<div class="boxoveru_header">homersyd</div>] body=[<div class="boxoveru_body"><a href="/user/homersyd">View Public Profile</a><a href="/search?edituid=91189">View all posts by this user</a></div>] fixedrelx=[0] fixedrely=[10] requireclick=[on] singleclickstop=[on]” onclick=”return false;”>homersyd on December 8, 2011 – 2:17pm.
Joined: 12/03/2010
Hi all,
I've just started subscribing to API (best investment ever – had money mag b4, useless for property invesments IMO).
Anyway I skimmed read about this guy who got interviewed – he came from overseas as student, went broke (with 80k loan), then went and bought 11 properties in 2 yrs. I have a few question about his method:1. If he's broke and own the bank 80k loan for studies, how would he get the first home loan in the 1st place?
2. After his 1st IP (300k), how did he buy his 2nd-3rd 1-2 yr later? Is it via refinance and take equity out of the 1st and use that as deposit for 2nd/3rd etc and repeat?
3. Just to confirm the idea of buy X properties in Y years, is it simply the following and just repeated over and over again?
a. Buy 1st home
b. If 1st home value increased, refinance with bank, take out part of that $$$
c. Buy 1st IP with that $$$ from refinancing 1st home.
d. when 1st IP values increased, buy 2nd IP from refinance 1st IP etc….and repeat
e. What I dont understand is how come the guy from API can buy like 3-4 IP's in 1 yr?Many thanks for your help
All good questions, homersyd, and after reading the article I was also left wondering how the claims he has made in the article could possibly be true.
I noted that except for his PPOR, all his other properties show a LVR of 95%. Although it is possible to purchase a property with this LVR, my mortgage broker has told me that I can not refinance any of my properties with an LVR higher than 90%. So, even if we take the great leap of faith and assume that his properties ALL increased in value enough in such a short space of time to cover deposits, loan mortgage insurance, stamp duty and legal fees for additional purchases, I don't believe the banks would have loaned him 95% of the value of his original properties.
The article neglects to outline how these subsequent purchase were financed. If he obtained loans from family or friends for all his additional purchases, the article should have provided this information, otherwise it is misleading.
I read every issue of this magazine, and generally find the information in it useful and informative, however some of the stories about "young guns" and other "entrepenuers" who strike it rich in a few years after making blind uneducated purchases seem to stretch the truth to it's limits, and frequently leave out such important details as how in the hell did they obtain finance? I found this particular story especially dificult to swallow, and like you I would appreciate any enlightening information that others might be able to provide to clear up the mystery of this "young gun's" success.Article in Mackay Daily Mercury today;http://www.dailymercury.com.au/story/2011/12/01/demand-drives-9b-expansion-of-abbot-point/
Plans to expand Abbot Point have been "supersized". Total number of proposed terminals increases to 9 due to demand from mining companies. The mining companies don't seem to be fazed by carbon tax, resource rent tax or GFC2. As long as they' aren't, I'm not either. The only impediment I have is raising deposit capital quickly enough to buy as many properties as I want.
sporty1 wrote:Hi everyone,Does anyone have an update on the ULDA land release in Blackwater?
I have tried calling them several times re the time frame and size of the land release announced earlier this year.I've been told the ULDA land will be auctioned December 9th in Brisbane. Three? large blocks…I don't know how big.
Hi Amnesia
I had a look at the article you provided a link to, which is similar to one I read in the Gladstone Chronicle. As with so many other articles, the accuracy and reliability of their information is questionable. They both state that the median (actually your article refers to it as the "average") house price in Gladstone had risen by 10.5% at the end of the September quarter from $380,000 to $440,000. A $60,000 increase on $380,000 is not 10.5%. So which of these numbers, if any, are reliable?
Something I can rely on is the increase in rent on my 4×2 house in Kin Kora to $600 p/wk ( a 33.33….%increase).Hi Shoo Shoo
I ended up having unresolved issues with my planned purchase in Middlemount, and after wasting about three valuable months dealing with people who tried to keep me hanging on a thread with vague reassurances and delaying tactics, I have pulled the pin. Three months delay in the booming Bowen Basin has obviously cost me some lost potential capital gains. However, there is always another new opportunity around the corner, and often they exceed the value of the first option. Moranbah has had another big increase in capital growth recently, as well as in rents. I'm looking at Dysardt and Blackwater again, which are the 2 towns I was focusing on before the unfortunate distraction of Middlemount. I;ve read that the Queensland government has supported local communities by ruling that 80% of Caval Ridge's emplyoees must live in the local region, so the mine must somehow provide accomadation for them. This should set a precedence for other mines throughout the region, and can only be good for the communities around the mines. Evidence of this is demonstrated by the latest surge in property values in Moranbah. As more mine employees and construction workers arrive in the other regional towns (such as Dysardt and Blackwater) we should see a corresponding capital growth increase in those towns as well.
Where did your search lead you? This thread has become quiet during your abscence, so I assume you"ve purchased somewhere?Thanks Lee and Lefty for your replies. I'm currently looking at properties near the CBD with high density zoning and development potential with a view to hold for a while. I looked at similar properties in Gladstone about a year ago but bought a nice 4 bed 2 bathroom in Kin Kora instead. While I am of course very happy with that purchase, there would obviously be very good capital growth on the high density properties near Gladstone's CBD. Much slower movement in Mackay is inevitable, but the land near CBD is irreplacable.
I'm not sure yet, still negotiating through broker. Will let you know how I go. It's Interesting following your comments and progress and the conversations you stimulate. I'm very interested in the Queensland mining regions myself. So much activity and so much temptation! We're spoilt for choice in the current environment.
Hi Thommo
If you havn't done it yet, type in "muswellbrook" In search bar top right corner. A few threads will appear. I have a couple of properties there myself which are going well. The local council is proactive and aware that the rapidly expanding population will require increased services and amenities. They have purchased a large heritage building in the main street and are talking about a theatre and other facilities there. They are also upgrading the main street of town. There is a large council owned undeveloped area of prime real estate on the south-western entry to town which they have rezoned and plan to develop into a "light industrial" zone. Hungry Jacks have opened a new outlet, and KFC recently located to a new, bigger, and better facility. Of course, the impetus behind all the activity is created by new and expanding mines.
Regards
Hi Shoooshoo
I'm currently applieing with ANZ for finance in Middlemount. Not finalised yet, but early indications are that existing customers may be able to obtain much higher LVR than others mentioned here. Also, as there have been warnings on these threads about long-term completion dates for off the plan purchases, you should look very closely at sunset clauses in your contract.
Hi Jack
Buying new would probably increase the liklihood of leaseing to a mining company. The new developments are a little further from the amenities and the popular night life, which make them a bit less appealing to the workers, but I doubt if the mine managers are concerned by that aspect..
A big percentage of the current demand for rental accomadation is from those employed on the expansion of Mt. Arthur, with many more contractors expected late August and early Septemeber to work at the Ravensworth expansion. They are more likely to try to lease a property near the CBD.
The miners themselves are likely to purchase their own house, due to the fact that their incomes allow them to do this fairly easily. Many of them are from the local region anyway, as this is a preference in the selection process applied by the mines. However, about 20% of those employed at Mangoola, the newest mine, are from outside the region, and some are definitely buying homes in Muswellbrook. As the workforce required for the expansions and proposed new mines will exceed the skilled labour available, a higher percentage is likely to. be sourced from outside the region in the future, increasing demand for more housing.There are a couple of new mines planned at Denman, near Muswellbrook, as well as Mt. Pleasant, just outside Muswellbrook.
I chose established houses with recent renovations, which allowed me to claim depreciation. Both my houses also offer opportunities for further improvements. I have converted a rumpus room in one into a fifth bedroom, which has made it attractive to contracting companies.
My leases in both houses will expire soon, and my realestate agent advises that demand is high, and increaseing, allowing for a rental increase.
One established area to avoid is on the northwest of town, near Wollombi road. This is a housing commision area, and there is a disproportionately high crime rate there. Part of the area on the southeast of town is apparently undermined, and subsidience may be an issue. My properties are near Coles and Aldi, on the southwest, which is the direction in which the town is expanding, and the properties there are generally newer and in good condition.
The general new versus old rules apply, with old having established sales history and closer proximity to CBD and potentially greater long term land value etc. My personal preference is for good quality established.
Hopefully that helps your research
Moxi10
Sorry for late reply shoooshoo, but I see Josh gave you a comprehensive answer to your question on another thread. His advice is sound.
Hi everyone
On the fly-in fly-out topic, it's worth noting that some unit developments currently on plan and under construction in Middlemount and Dysart apparently have mining companies competeing to lease units at rates in excess of !0% yields on long term leases. This indicates that they still anticipate long term high demand for rental properties in the region in spite of the prospect of an increase in fly-in fly-out employees.
Taking into account the limited accomadation in the region, and the projected large increase in employees required for the workforce to construct and operate the expanding mining industries, it is obviously necccessary for the mining companies to consider every available method of accomadating and transporting their workforce. My impression of the situation is that although the current extremely high yields may ease slightly, they are likely to remain at attractive levels in spite of any increase in the fly-in fly-out numbers.
A friend of my wife has told her that her husband is in Blackwater doing some contract work for a mine there. Apparently he and some co-workers have been "hot-seating" beds, as they have been unable to find accomadation for everyone. In that sort of environment, it's very difficult to imagine a decline in rental returns.Hi Josh
I'm sticking as close to the CBD as possible, but on relatively high ground for all the obvious reasons.
