Forum Replies Created
Hi dj
I went to one of their seminars about 6 or 7 years ago. They seemed knowledgeable and plausible but their main thrust was negatively gearing properties that were valued at higher than bank valuations. The explanation was that this would accelerate equity and therefore the ability to repeat the process many times over a relatively shorter period of time.
The centrepiece of the concept was in the valuation of the properties. It then turned out that at that time, these seminars then offered properties for sale, which were owned by Custodian. In comparison with other properties and bank valuations they appeared to be overpriced.
One of the areas we looked at with them was excellent and has grown enormously (Wynnum West in Queenland) but we didn’t buy through them because their prices were higher than non-Custodian properties in the same area.
Hope that this is of some help.
Cheers
pr
Couldn’t agree more clones.
The residential market operates in a spectrum but your example is by no means an extreme. In fact not uncommon.
The marketing of properties involving depreciation and “tax benefits” from negative gearing is of concern. The aim of investing is to make money, not to lose it, even if up to half of those losses are returned by way of tax deductions. Depreciation is a furfy because it diminishes the cost base resulting in a higher capital gain at the time of sale.
I understand the arguments about capital gain in the long term, but that is unpredictable and there are a lot of people who purchased units off the plans with that idea in mind, who are now in dire straits.
Good educational posting clones.
pr
Hi Munjy
As a general rule of thumb property is based on demand, and with commercial property, as you have indicated this is determined by the rental yield and the security of that yield. In other words a good tenant with a good business and a good revenue. With doctors etc there, is it near a hospital? If so then they are more likely to be utilised by them and for a long period of time.
If the yield is good then the vendor must have something very special to want to divert his/her money elsewhere.
If you are starting at a good yield then you are buying well so why worry about 10 years time? The money is made in a good deal at purchase not at sale. Market rates may be very different in 10 years and the difference between your building and others may be even greater. However, there are a number of assumptions made that are pure speculation.
Rental yield is critical and capital gains unpredictable. Will you retain this property for 10 years or more?
Having an exit strategy is important and monitoring the property will assist in effecting a good exit strategy.
Hope that this is of some assistance to you.
Cheers
pr
Hi gilad,
Have looked at car spaces and found that they claim around 8% return. But that is gross, very gross[biggrin].
After costs etc they were not CF+. Also they are very small areas that can’t be adapted to anything else.Storage units can be ok but just like every other type of investment they require due diligence of the individual investment.
Unless you have educated yourself in the share market it is unwise to get involved in direct shares without assistance. But that assistance costs – reducing your returns. Trading is often made to sound good but it is very time consuming and not a great return on a comparative hourly basis in the vast majority of cases. Option trading is a leveraged situation which means that losses as well as gains can be multiplied. The very few people who really understand options make money off all the rest that think they understand options. This is how the market works.
Gilad, do you have a plan and a time frame for that plan? If not that should be the starting place. Then put into place the education you need, to be able to take the action necessary to achieve that outcome.
If you take a long term view and become good in an area of investing, whether property or shares etc you will do well. Some people have done well out of property while others have done well from shares. Pick one area initially, learn about it, get a good mentor and stick to it until you’re where you would like to be.
Regards,
pr
Hi Kittee
With what you’ve already achieved why would you need inspiration?
Inspiration comes from within and then that drives motivation and action. Sometimes encouragement and support may help but if you don’t generate your own inspiration you will be limiting yourself to what others can do for you rather than what you can do for yourself. In doing so you will be handing control of your future to others. You are already educating yourself through experience – well done! Don’t rely on others for inspiration, you’re doing great already, trust your instincts and your own ideas. Continue learning and find a good mentor and you will continue to do even better.
pr
Hi Sam,
The main difference between investing in smaller towns and larger ones is in the risk management. It is possible to go without tenants in both scenarios and the likelihood will vary on the specific individual circumstances of each area. Due diligence will assist in that decision.
Population is not always a deciding factor on where to invest for the next boom.Sorry to disagree but population is a deciding factor. Not necessarily the absolute population size but the growth in population and the time frame. Demand is what determines price, and people determine demand.
pr
I had a look at a number of these DHA properties in Queensland and NSW last year. The reason I looked was that I received some brochures in the mail informing me of the investments. On the surface they looked very interesting with “guaranteed” 9% returns and potential capital growth.
My plan being geared towards CF+ IP’s these looked worth investigating. Unfortunately, on doing the sums the 9% was gross return, and the net return was between 4% and 5%, making them CF-.
If looking for CF+ then currently these don’t qualify.
pr
Hi Trent and welcome
Congratulations on starting the self education process.
What historical/current data points do you use to identify a positively geared residential purchase … and where can one source this data?The question everyone asks when starting out is where to find CF+ properties. These days in residential investments they are extremely rare unless you look in regional areas or commercial property. The trick according to Steve Mcnight is to create CF+ investments. The data available varies in recency but estate agencies may be one source of recent property prices in a given area.
I’m assuming that accurately assessing a deal basically means being able to compare realistic purchase/ongoing costs with plausible rental returns etc etc …I have found the software promoted by Steve called Investment Detective quite helpful in assessing properties, once I have the data, to determine the returns on a potential investment.
Hope this is of help.
Cheers
pr
Hi giddo,
Unfortunately people on this forum can give only their own views and not those of the average investor. It is hard to know what the average investor is, and even harder to determine how (s)he may think either collectively or individually.
I am working on the assumption that it’s value is a function of it’s return.I think that strictly speaking its value is a function of demand rather than simply return. Some investors may interpret high returns as high risk for example. Apart from investors there are other people who buy property as their PPOR and so returns may not be relevant to them.
You can get information about the yeilds in the particular area of Toowoomba and use that as a guide in determining your strategy.
There are still people negatively gearing. In fact in the current market with the returns the way they are in metropolitan areas the great majority of purchases are currently negatively geared. A number of my colleagues continue to do so because their philosophy is based on capital growth. But over the past twenty years or so, the most they have been able to do is to have up to three properties at any given time.
Risk vs return applies to the seller as well as the buyer. Maybe you should determine the level of risk with which you are comfortable and determine the return you are prepared to accept on the basis of this, rather than what others might think with little knowledge of your proprety, your situation, and a different risk profile.
Chhers
pr
Both Steve McKnight and Rob Kiyosaki are successful investors and great motivators and educators, and neither of them makes any guarantees. They both have different approaches and attitudes indicating that there is more that one way to skin a cat.
They do have things in common though. Amongst other things they have learnt through failures. They are passionate about what they do, they have developed success attitudes, and have learnt to persist no matter what others may have thought about them or their ideas.
One of the keys to successful outcomes is not listening to what people say but rather doing what they do if you want the same results. Interestingly, Kiyosaki declares in his book “Business School” that despite his intial beliefs and concerns he has embarked on a business in network marketing because he now understands the concept and sees the benefit.
Each to his/her own.
pr
None of the so called experts are able to predict booms. Do you have a crystal ball?
I can always tell when a boom has happened [biggrin].
As others have said, money can be made outside of boom times in both property and shares, one just simply has to alter the strategy to suit the market.
pr
UsanaAssociate
Kiyosaki is just one author expressing his view. There are many other authors of varying success with differing views. There is no one correct or best way to do things otherwise we would all be doing them. Surely what matters is what works for the individual. I know of people who have either never been involved in network marketing or have failed in that area but that have been successful in property investing and in life.
One point that Kiyosaki makes is that if you want to be successful in any area (including network marketing, or property investing) find someone successful in that area and learn from them. Makes sense.
Perceptions about businesses come and go – eg second hand car yards, banks, network marketing, real estate agencies, etc. Generally nothing wrong with the businesses, just some of the people. Eventually they are “cleaned out” and the perception changes again.
Many stories can be recounted in relation to various businesses etc, but interestingly, most are hearsay, interpretations, misinformation, and sometimes deliberately misleading for various reasons. Consideration of the facts and alternative interpretations may often lead to opposing conclusions. Seek out the facts rather than second hand stories and hearsay.
Whatever it is you want to do, if it is good and worthwhile, then learn to do it well, with integrity, and enjoy it, and you won’t have to worry about what others may think.
Good luck
pr
Interesting thread this one
I am looking at joining a certain network marketing company. Unfortunately Amway have given the industry such a bad name, which makes makes life harder for some of the newer ‘better’ ones.What determines “better”? Despite individual opinions and experiences, it is hard to argue with a business model such as Amway for example, that has businesses in many countries and turns over billions of dollars each year. Similarly, Mary Kaye, Herbalife and other older ones have been around for decades and operate on a sound business model, otherwise they wouldn’t have lasted for as long as they have.
I personally have found network marketing a waste of time and money. The products are usually way overpriced in order to allow commissions to be payable. Why pay $15 for some shampoo when you can pay $5 in the supermarket.Is this opinion based on proper research? These sorts of opinions are often expressed about many businesses that are not understood. In its early days franchising was one such example (including McDonalds). Comparing $15 shampoo with $5 shampoo with no regard to the product is like comparing a $5,000 go-cart with a %500,000 Rolls Royce, they are both motorised vehicles.
My investigations into network marketing indicate the it requires the same business skills as any good business. For example, it requires the building of a network, developing an understanding of the business, people and products. Above all it is important to have a vision, plan and a system with mentoring/support. A good network marketing business can take any product(s) and grow its business because of the business model, not because of the product (e.g. McDonalds), and still offer benefits to purchasers. Isn’t this how any good business operates?
Kiyosaki himself claims in his book “Business School”, to have recently joined a network marketing business.
I have now met numerous people who have had very positive experiences similar to those of starglow. If it’s going to benefit – go for it.
pr
Hi voigtstr
Don’t be so hard on yourself. Attitude is what determines our results, especially attitude about ourselves. Often we have skills and abilities to which we are blind.You say you are not a salesman. Actually you are, you sell your time to your employer. Just another way of looking at things.
When you say you can’t do things is that can’t or won’t? Selling in the broad sense is a necessary basic skill, especially in property investing. If you were able to learn IT, I have no doubt that you have the ability to learn other skills including selling. If your motives to achieve something are strong enough then you will learn the skills you require in order to achieve them.
You CAN do it.
pr
How good a friend is your friend? Have you had a good long term friendship with him? If he has spent $100K how much value has he added to the premises? What is a fair settlement on the money he has put in?
If this person wasn’t a friend what would you do?
Friend or not it is reasonable to have a fair and equitable outcome for both parties. Your friend may have a legitimate argument if he has added value. If you value your friendship above your investment then you may decide to take an “acceptable” reduction. Alternatively if the friendship is not that important then you are free to determine a fair agreement for any value added. Once that decision has been made it then only remains to determine which tenant and at what rental.
Good luck
pr
Simon,
I couldn’t agree more with you that there is no right or wrong here or even what’s best. It still begs the question though, as to what is education and are people without degrees less educated? If a limited vocabulary and grammatical errors are a sign then we’re in real trouble because the media and our political leaders often make grammatical errors as well as spelling errors. javascript:insertsmilie(‘[biggrin]’)
Big Grin [biggrin]Of course the other point is – what is “successful”?
I would doubt that most people would regard success as having material things alone. In fact, sadly, many of my professional colleagues drive nice cars and live in nice homes, but the banks still own the cars and the houses, not my colleagues. If a degree is so good why are there so many people doing more than one degree? Possibly, as you say, it is not so much for financial reasons as for reasons of satisfaction and other rewards. Or it may be that others share the same erroneous view that degrees equate with success.You have obviously done very well and could be regarded successful in a number of areas. I commend you on your attitude and support of your wife and I wish her the best. Medicine is a great career and I agree that through pursuing that both of you will continue to grow your relationships. Just one word of warning – watch the hours spent. There is a tendency for careers to encroach on family life, but probably you have already sorted that one out.[biggrin]
pr
Wow, now the debate starts hehe.
Kay, you may be right about Kiyosaki’s influence and that pre-school kids would be learning to sell counting blocks to each other; however, selling and counting are very important basic skills that all of us rely on. Also, there is an assumption that people who have passive income have no other wothwhile pursuits in life, sort of like a retiree. That couldn’t be further from the truth. I know many people who have totally residual incomes and are retired from “jobs” but not from life. In fact they are busier now than they ever were, but that time is spent with family relationships and contributing time and money to charities and their community. No chance of getting bored because they still have passions. And they use those passions and their skills to great effect. Passive income does not equate with passive lifestyle, on the contrary it appears to become more active.
I agree that formal education is nothing to get stressed about and in fact I am in favour of education, unfortunately formal training course do induce stress in both the students and their families.
Simon, I’m not sure where you got your data or whether you are just expressing an opinion. There is a vast difference between being educated and having a degree. Isn’t education about learning, experience and application of knowledge and skills? One certainly doesn’t have to have a degree or diploma to be educated. Probably all that serves is to develop some skills towards performing certain tasks. The greater the level of specialisation the deeper the level of our understanding but the narrower the breadth of knowledge. You are quite right though, these people do have something most others lack – and that is drive and persistence.
About 18 months ago there was a meeting of some of the most successful business people in Australia and interestingly there was anoverwhelming view that there was no shortage of talent in Australia, but the thing that was sorely lacking was persistence.
There are quite a few who share your view of a preference to be educated and comfortable, although we all know the dangers of developing comfort zones and the inhibitory effect this has on personal development and EDUCATION. The alternative to being educated and comfortable is not being uneducated and less comfortable. There are numerous alternatives of which that is only one.
Education is great and most important but certification as with a degree or diploma is not the only form of education. Nor does it mean that people with degrees are educated while those who don’t are uneducated. All it means is that people have undergone training in the skills necessary for them to qualify to perform tasks in a certain area. It says nothing about their ability to think or act outside of those areas.
pr
Dazzling’s points are very good. My degree was useful basically only for my first position, and after that it paled into insignificance in comparison with my experience and other issues.
Of course if you venture outside the area of your degree then it may have little significance. At the risk of provoking an outcry on this forum, I believe that too much emphasis is placed on degrees and consequently unneccessary stress is suffered.
The kind of work based on an hourly rate is only relevant if you have a job or an active income where you trade time(service) for dollars. The secret is to learn to work smart. The price for leisure can be high but it doesn’t have to be.
pr
Hi Lumwood,
Yes, good thinking. Probably our most important asset is our health while time is our most important “commodity”. The time problem is a viscoius cycle because most people are programmed for active income so in order to “survive” and achieve more income people tend to spend more time chasing that income. Then time available for other things such as relationships, and health activities diminshes to where the stress etc has detrimental effects on health and relationships.
I agree with you that although money is not limited, time is, and so time management becomes critical. You may have noticed that the really successful people are those that have a residual income rather than active income so that the time spent by most in chasing income is used for other purposes by these people.
Your time budgeting concept appears to me to be along the lines of prioritisation of time. In other words determine the order of importance of activities and then allocate the time accordingly.
As you have stated, monetary budgets are the result of setting goals which then allow plans to be set to achieve those goals. I see the time budgeting in a similar way. And if you want to increase the time available for other things then it makes sense to work towards replacing active income with residual income. This is exactly what I have done over the years and still budget my time but with greater flexibility and freedom.
Since you know what you want you will be in a much better position to budget your time according to your needs.
Good on you for your insights and the interesting post.
Cheers
pr
Hi again Jarred,
Great that you want to gather other perspectives but your comment about full time is interesting. What is full time?
When I was building my private practice I was working 80-100 hours per week (crazy I know) – is that full time or double time or what? Isn’t it priorities that determine the quality and the quantity of time that you spend in any area of life – sleeping, family, exercising/health related, work etc?
In my case I had to learn to prioritise my time to my family first because they were most important to me, and then allocate time to other priorities according to their ranking in importance. Everyone has different priorities and time is allocated accordingly. In fact there are sufficient hours in the day/evening to allocate and work towards other things.
We can be very resourceful and once we know what we want we can then find ways to achieve those things, as long as we keep an open mind and have access to appropriate mentors.
Interesting to think about full time in those terms isn’t it. Maybe decide what you would like to do, then prioritise them and allocate the time on that basis. I hope that is of some interest to you.
Cheers
pr
