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February 18, 2003 - 2:03 am
Hi 1….1
I am interested in Cairns area. ( also Darwin, Townsville, Alice Springs)
I haven’t done much research yet but am interested to share any of the information that I find out so if you would like to keep in touch with me on this feel free to email [email protected]
They say tourism is starting to boom in Cairs and especially good time to invest in tourism props.
Why is it moving now? What has caused the market to move?.
I heard ( just general chat) that it is heavily based on the Japanese tourist market and any global events such as war etc will greatly effect this market.
The Nth Territory, could really boom as live trade and exports grow further, which is why I am interested in Darwin.
Cheers Isagold
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February 17, 2003 - 3:12 pm
Hey all,
Thanx for the help!!
So what do i say when i go to a law firm or an accounting office? Is it best to describe my situation first? Is it best to set up trusts or companies first or wait until i am generating some positive casflow from my assets?
Thanx again, u all have been so helpful and kind!!
8>)
“Everyone wants to go to heaven but nobody wants to die”
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February 17, 2003 - 2:35 am
Hey there 6*1,
As i said it is a waiting game!! In the long-run (over 10 years) u might be right that house prices will go up or even double. But to me that is being too reactive!! If u r reactive then u r never in control. In ten years i could get my money back almost ten times, and therefore, have 10 houses with the prospect of capital gains.
See, when the 10 years are up i would have to say i have had more options/control on the way.
If you are doing it for tax purposes then it would seem a waste of time if your prediction is not absolute!!
I agree with AD where a mixture, in the right circumstances, seems like a safer and less risky bet. Furthermore, it would be reasonable to suggest today’s economic climate is one of those circumstances.
All i can say, u have to be doing it for the right reason at the right time!!
Thanx again
Alex
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February 16, 2003 - 12:10 pm
[]
Hi Everyone,
I just have to add my 2 cents here!
YOU are YOUR own CONSTRAINT!!![]
Cheers Isagold
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February 16, 2003 - 4:36 am
Hi Ireland.
I think ‘the property trader’ sumed it up best, you are way too much all ‘doom and gloom’!!! I think you pose a very valid point in that interest rates won’t stay the same for ever, after all Steve points out that the long term average interest rate is 10.31%. I don’t know if this figure accounts for the period of high inflatation seen in the 1970/80’s, but nonetheless i have still read articles quoting the long term interest rate at around 9.5%.
My point is this, if interest rates go up this high, and no doubt they will, it will make it a heck of a lot harder for people to purchase homes, in some cases impossible. Invariably this will strengthen the rental market and keep those of us with positive cash flow property still in the game looking pretty. Remember just as ‘Apim’ says, “people need roofs over their heads”, shelter is one of lifes necessaties.
The only problem i see with rising interest rates is people who have over extended themselves with first homes and (as Steve says) “Pretty House” investors with negatively geared property. Think about it logically, interest rates go up and people will no longer be able to afford the outrageous prices that houses are fetching these days. What does this mean? PRICES WILL FALL and negatively geared investors will lose, while positivally geared investors will find themselves in a situation of power, as they will be cashed up and ready to snap up property that has bottomed out. This then puts them in a position to ride the next the real estate cycle (remember history tends to repeat itself).
The key word here is CYCLE, property goes up and down and ultimately trends up, the share market goes up and down and yep you guessed it, trends up. If your only strategy is to buy, hold and sell how do you know whether you have bought at the peak or at the trough?
I am of the opinion that it is best to buy positivally geared property and enjoy the potential of having what a friend of mine terms as “THE DOUBLE WHAMY”, Positive cash flow and capital growth.
Ireland i think you are missing the benefits of this forum, which is to netwrok with people and gain creative ideas. If your only strategy is to profit in an ‘UP’ market, then that is not lending you to being very creative. As an investor you should be able to make money whether the market goes up or goes down.
As i said before, if interest rates go up ownership of property becomes a big stretch for many people, this means finance becomes a lot harder to come by. This is where those that are creative step in, what better position to be in than to be a financier for those who don’t qualify for a normal conforming loan. Enter the WRAP.
Thank you
PS i leave you with a thought for the day, this is from Rich Dad Poor Dad.
“The reason so many talented people are poor is because they focus on building a better hamburger and know little to nothing about business systems”
GET CREATIVE!
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February 16, 2003 - 3:23 am
Well I really dont think you got out at the top Ireland but time will tell. With interest rates it is quite a complex arena. What is worth looking at in more depth is housing affordability indexes. Housing was more affordable with higher interest rates in the late 80’s where as now affordability is lower along with lower interest rates. If you have a look at some of the situations people were in in the late 80’s they were probably better off when you look at the proportions of income needed to service a loan.
It is not as simple as just saying Interest rates are going to rise I am getting out!
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February 16, 2003 - 3:14 am
Tails,
1. Steve is recognised as one of Australias leading positve cashflow property investors, are you?
2. Just because someone has only been investing for 4 years, does this mean they do not have more knowledge or be more successful than someone who has been investing for 20 years?
3. Steve has put this site and forum together to HELP others to learn more about investment strategies. Perhaps if you think you know more and can do better, you should put together your own site and forum to help others who have your way of thinking.
My 2 cents.
Matt.
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February 15, 2003 - 2:33 pm
Steve the other day you said this.
P.S. For what it’s worth, my empire is built on the basis of buying positive cashflow property to the extent of building sufficient passive income to achieve financial freedom. I’ve bought cheap properties, which is all I could afford at the beginning, and I’m yet to ever lose money. I can testify that this is an effective strategy with more experience in the trenches than the vast majority of property investors.
You also said that you started investing in property in 1999.
Your decision to invest in property in 1999 was a great decision, with housing prices increasing in value two fold. Now if i remeber rightly 1999 was the year mum and dad investors swamped the stockmarket (attracted to huge growth thru technology stocks). Now as we all know stock prices were out of control, some even doubling over night. Now why did the share market rise so quickley? Because normal everyday people were scared of missing out. You have all heard the term of what goes up must come down (economic cycle). And as you know it came down with a thud, stocks that were worth $10 were now worth no more than 35c, now i here you say what has this got to do with the housing market! The reason why the tech stocks crash was because people were paying $10 for a stock when it was worth no more than 25c (Demand v’s supply), the same as the housing market people want to get into and not miss out. I liken the tech boom to what has happened to the housing market of the last two years. Another eg is What ever happened to the show Money hosted by paul some one? Well it went of air because people lost faith in the share market which the show was based on, no all you see is Location location, hot property, and auction squad, what does this tell you? the majority are investing their money in to property. Now i am not saying i am in favour of shares over property im saying you need to read the market and be able to transfer between property ,fix interest, and shares. I have made great money in the tech boom in which i transfered in to the property market and have also made great money but now i am investing in fixed interest (due to unsertainy) with and idea to go back into the share market. Now i play things safe, when i see things are getting over heated i am happy to get out. As steve said “remeber success comes from doing things differently. Now as for what steve said above
Quote “I’m yet to ever lose money”. I can testify that this is an effective strategy with more experience in the trenches than the vast majority of property investors. Steve you said that you started buying houses in 1999! I put it to you that you have only seen Positive times and this formula will slowly die in bad times, and as for your claim that you had vast exsperience, well i would hardly say buying your first property 4 years ago as vast.
Remember when everyone is running away you run forword.
As steve says do things differently.
tails277
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February 15, 2003 - 2:21 pm
Unbelievable!! Finally some heated debate. I have read most every forum for the last few weeks or so and I must say that I have been very interested all the investment theories on this site. I am not a wrap advocate. It does not suit me but Tails and others that have spoken up (and been shot down I must say!) do have some VERY valid points.
I hold positive cash flow properties in Perth (close to city and beach) probably because I bought at the right time and in the right area/s. These properties have also enjoyed substantial capital gain. The best of both worlds. I only did this after making a few mistakes. I think some of the potential Wrappers in this forum are getting romanced by the +ive gearing aspect. Never forget that yes you can buy in a Country area but they do have the tendancy to be hit in the hard times. Always keep population growth, private and government investment and proximity to lifestyle choices in mind when buying. I lost over 33% on a +ive cashflow country property in a couple of years due to a downturn that is only now starting to turn around. Paper loss yes, but if I was not in a position to keep it and not panic I would have been in trouble.
While we are on this note there is I have noticed a few posters that get in here and fire off “I have done this +ive cashflow deal in an area I want to keep a secret so there!! ” attitude and this I think has frustrated posters such as Tails. I think sharing the knowledge of potential boom areas would be a great deal more constructive than some of the secretive bull that has been going on. It just causes frustration.
I just want everyone that does drop into realise that there are different ways of getting there. Steve has NEVER advocated that I have seen that wrapping is the only way. Thanks. []
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February 15, 2003 - 9:10 am
Hi Felicity,
Sounds like an intersting concept, i.e. we all like to buy with as little or none of our own money. Your example raises a few points in my own mind.
1. At 80% LVR, regardless of a deposit or not, your borrowing capacity will be affected so there will still be a limit to the number of properties that can be bought?
2. Asking price 170k, more like 150k, offer 165k. I personally wouldn’t do it that way as straight away I am paying 15k more than I believe the property to be worth for the sake of putting no money into the deal?
3. By paying the vendor say $250 a month, this would take too much out of my spread each month and to me, defeat the purpose of doing the deal in this structure in the first place?
I don’t mean to souund like its a bad idea, personally I am always trying to do the deal with as little cash as possible, however the example you described would not fit my strategy, but it may work for you.
I would be more inclined to use the first option and offer the lower amount of what the property is worth to me.
Cheers,
Matt []
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February 14, 2003 - 2:05 pm
Interesting post ireland. Care to share your investment strategy and portfolio with us since you’ve felt the need to condemn ours?
You both seem to be missing the point that others have tried to point out. The strategies that we are using suit our own individual situations. If you don’t like them, that’s fine, no one’s forcing you to do them but don’t critisize what works for others just because you don’t like it or think it will work for you.
My 2 cents,
Matt.
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February 14, 2003 - 12:07 pm
Hi all,
Well once again no one has been able to give a specific scenario on positive cash flow propities. If someone could reply to the following questions it would be great.
1/How would a 2% increase in interest rates efect a property.
2/ A tenent can not be found for a property for say 3 months.
3/ The banks want more security when times get tough (investment doesnt come up to valuation).
What is the point of cash positive properties? are they used for extra weekly income or will they be used to retire, if it is the latter how is this possible! Lets say you buy a 70k property at the age of thirty, that means you have to hold that property to the age of 60 or so (now i dont know of many 70k properties that are in a condition to last 10 years let alone 30 years.
Please fellow postees give me answers, you havent as yet
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February 14, 2003 - 7:22 am
Hey there steve,
Sounds great!!
Wot is the name of this new product?
Is there going to be a preview of it anywhere on the site at all?
In the meantime, is there any references out there currently that u would suggest i have a look at? Even just the basics?
Thanx again and i will be waiting for the arrival of the new product launch!!
quote:
“Do wot your hart thinks as u will be criticised either way”
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February 14, 2003 - 7:21 am
Hey there steve,
Sounds great!!
Wot is the name of this new product?
Is there going to be a preview of it anywhere on the site at all?
In the meantime, is there any references out there currently that u would suggest i have a look at? Even just the basics?
Thanx again and i will be waiting for the arrival of the new product launch!!
quote:
“Do wot your hart thinks as u will be criticised either way”
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February 14, 2003 - 6:55 am
Hey there,
Ever consider sheltering your income by means of companies or trusts? I am looking into this currently!!
-ve geared property is a waiting game that relies a lot on opinions and speculation, with little or no facts!! U have more control over your assets when managing +ve geared property!!
At the end of the day, no matter wot strategy u take, u should focus on buying undervalued property!! This way u can have a choice, furthermore, capital gains are already made without waiting and relying on market forces!!
Hope this helps!!
Alex
“Successful people make their profits when they buy, not when they sell”
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February 14, 2003 - 5:16 am
Isn’t the unknown what causes Fear? [?]I am relatively new to this game, however have done tons and tons of research, yet there is still tons and tons to be done. In my opinion property is the safer option to invest in during any times of uncertainty. For me the current uncertainty of war is the best arena to be starting in because it may turn out to be the hardest time to invest. So when things do become stable again, I will have “confidently” sailed through the storm and everything else will be a piece of cake. I agree each to his own, but you do need to know your arena well in order to do well in it.
Thanks again to everyone for being so helpfull with information and encouragement!
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February 13, 2003 - 1:21 pm
Steve thanks for your post, I beleive that most people on this forum are people with 9 to 5 jobs who have been romanced into the property boom of the last 2 years. Interest rates at all time lows banks pleading for us to use their money and the government stimulating a false economy. What happens in 6 months time when we are still at war, bussines stops spending, employment ceases oil prices increase, goverment spending large amounts on defence? I will tell you what happens interest rates will go up. Now if you have 3 or 4 properties then a 2% rise will be hard felt. Believe me this is the end of the cycle, smart people are getting out of the houseing market and are cashed up ready to transfer back into the stockmarket when things settle down. People will be burnt. Steve you said in your post that you have a property that is cash positive that is valued over 250k! So your trying to tell me that using the 11 second rule you have a tenant paying you more than $500 per week! Now i have been on the net all night looking for a place with rental income of 500 per week and the cheapest i could find is 445k i would need $900 pw to make this deal work. And to you dan i do have a retirment plan, which wont include driving across the country side fixing kicked in doors of properties being rented by undisirables. I am following my fathers lead who retired at age 39 with before cost income of 132k (one property) that is never vacant.
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February 12, 2003 - 4:48 pm
Hi Ziz, I really dont know where to start? I have looked at a lot of postings on this site and nothing has made me want to go out and get involved in a cash positive property. This 11 second rule seems to be a hot topic! lets do the sums on say a 250k unit 20 minutes from a capital city. $500/2*1000= 250,000. So to purchase a $250000 Perth outer suburb unit you would need to be getting $500 per week rental income (26k p/a). Now i dont believe their is to many people out their who would be prepaired to spend 26k p/a for a unit 10 minutes from the perth CBD. So lets go further out, 15km you could pick up a 2 bedroom unit for $130k, lets do the sums. 260/2*1000=130k. So you need to get $260pw to be cash positive with this one. So it looks like a capital city is out of the question! Ok so we need to find a property that is going to be cash positive and also be afordable for tennants. Lets get in the car and go for a drive and find a country town to invest in. Find a unit worth $75k, lets use the 11 sec rule again 150/2*1000=$150, Ok we have finally found a unit that a tenant can afford, but the only problem is that you now live 250km away from you investment, it is old and in need of constant repair, the capital growth in the small hamlet is bearly keeping up with CPI. So to be cash positive you need to be returning over 10% p/a, good luck. My second point Ziz is this. You have been investing since 1985 which means that you should have 7 or 8 properties ( buying 1 every 2 to 3 years). Now when i retire the last thing i want to be doing is having to repaint,repair,worry about the idiot who hasnt paid rent for two months and could be causing thousands of dollars damage because its not his property and if you havent had any trouble yet like this, you are very lucky. I would like to here from people who have cash positve investments to put their case forward on how we can rent a 250k,130k and a 75 property using the 11 sec rule
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February 12, 2003 - 12:20 pm
Hi Regina,
Thanks for the reply. It has cleared a couple of issues for me.
Cheers,
Matt.
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February 12, 2003 - 12:15 pm
Hi Oscar,
Thanks for the reply. I was hoping that 95% LVR was a possibility and others were doing it. In almost all the scenarios I run on properties with my excel spreadsheet, 95% LVR gets a return of 80% or higher.
Now all I need is a lender who will let me do lots of these deals. Do you mind if I ask who you use?
Cheers,
Matt.