Hi Property Investing. Com Staff
Please accept my appologies.
My personal problems should’t have clouded
my judgement.

Hi Andrea

Could you please explain the “variation” that u mentioned in your post?
Thanks!

@->
C.

Thanx Steve! [] I would say then, a better question would be is it feasible for a first wrap to be done out of town – is it too risky, even with a “borrowed”(tried and tested and 99% foolproof I’m sure) system?

[]C.

Edited by – [email protected] on 14/08/2002 1:04:21 PM

Thanks for your comments Felicity, Steve & Wei,

Actually, I had initially written a much longer post that answered some of your questions Steve, but then decided to shorten it as it seemed to go on for a bit too long [] Not to worry, I’ll make up for it in this post.

Regarding what I’ve been doing: for the last 10 months I’ve been living and working in China as an English Teacher. Teaching isn’t my profession, but at the moment China is calling out for native speakers to go over there and teach (only a Bachelor’s degree in any discipline is required). So I figured it would be a good opportunity to go and see what living there was all about (which BTW is *very* different from what most people imagine it to be). Plus I was interested in the language and culture so I looked at it as a way to learn the language and travel around China for a year with next to no cost to myself (always a good thing []

I’ve now finished teaching, but am enjoying myself in China and so I’ve decided to spend the next year studying Chinese at Beijing University. Once I’ve finished doing that, my plan is to look for work in China based on my qualifications, which are IT related. Hopefully at that time, I’ll also have the added bonus of being able to speak both Chinese and English. Ideally I’d try to find work with an international company, and therefore be able to earn a foreign salary yet have Chinese living costs (this equates to huge savings, especially if you also get living abroad/relocation allowances and/or accomodation).

What brought me on to property investment is the idea of continual positive cashflow (pretty much exactly what you’ve been talking about on this site. [] Before going to China, I’d also travelled and worked around Europe for a bit, and the more I travelled, the more I met other travellers who owned property (or other investments) back home, and were just using the income generated from that to travel around the world. This struck me as being an emminently sensible thing to do. [] What finally convinced me of the idea, was speaking to an Englishman I met just recently in Beijing. When he was young (teen-early 20’s) he’d worked really hard, saved up enough and started investing in property with a lean towards generating postive cashflow. At 25 he owned a number of properties (he didn’t say how many), had just spent the last year travelling around the world, and had a guaranteed monthly income for the rest of his life. And to top it all off he was 1 year younger than myself!

What attracts me to property investment is not the idea accumulating vast amounts of wealth/net worth, but rather the idea of having a steady and continual amount of income month after month, essentially guaranteed (assuming there are tenants) for the rest of my life. This doesn’t have to be a large amount, because in many countries that I still haven’t visited, a little bit of money can go a long, long way. As an example, in China I was paid ~US$3,000 for the year. A pittance compared to what I could earn (and had been earning in London) as a software engineer, and yet it enabled me to live like a king, and see parts of the world I could never have seen while sitting in front of a computer monitor 12 hours a day, 5-6 days a week []

My dillema is this: I actually have a reasonable amount of capital at the moment (~AUD$12,000). However I intended to use this for tuition fees and living costs for the next year while studying in China (the term starts this September). This is something I *really* want to do, as I enjoy living in China, and I enjoy learning languages – and my philosphy in life so far has been that it’s important to pursue things that make you happy and enrich your life, and when you do that, the rest will fall into place – and this has certainly worked well for me up to now.

However that money isn’t commited at the moment, and from what I have been reading and learning, it seems to be enough to get started in property investment – however if I do this, it will come at the expense of studying. At the moment, I’m not in any great hurry. When I decided that financial independence was where I wanted to head, I initially decided to have a five year plan to achieve it. It was (and still is) pretty much as follows

1st year: study
2nd-3rd year: work in China & save
4th-5th year: invest
6th year+: retire []

Currently I’m back in Australia for a short holiday, but I have a return flight that leaves for Beijing on the 7th of August – and once I go, then I see that money as commited for the year as I want to ensure I can live within my means while studying. However, as part of my teaching contract, the flight had to be paid by the school that I used to work at, so it’s no big deal to me if I decide to write it off, and stay around in Australia for a while to invest my money.

If I chose that path then I see myself having two options: 1) Spend a couple of years building up a portfolio strong enough to live off and then resume my studying interests 2) Try to quickly secure an investment that provides a positive cash-flow while still leaving me enough money to pay for tuition fees and a new flight back to Beijing in time for the start of the semester which is the 2nd of September (the costs involved would equate to about half of my capital). I’m a bit loathe to do the second option as it’s too rushed for my liking, and there’s not much margin for error. Option 1 I would consider, however it would mean giving up studying Chinese in the short-term (at least in the intense manner that you can only achieve while living in China!). In the long-term, this studying is potentially worth more to me than financial gain (did I mention how much I love languages already []), so if I were to miss out on this opportunity and not be able to get it back then I would regret it forever.

At the moment, I have time. I’m more than able to live within my means, and am actually happy to just stay with my five year plan (though possibly reworking it if I decide it’s more beneficial say to work for 1 year instead of 2). I have no problems concerning being stuck in a crappy job etc, and I really enjoy what I’m doing at the moment. This again makes me even more wary about trying to take short-cuts to achieve what is ultimately the same goal. Deciding to actually do something is not really my problem. I’d already decided on my plan, and started putting it in action, the only thing is that the first year of it doesn’t really involve any investing of money []. I guess I just wanted to hear what other people’s experiences starting up were, and then see how I can work that information into my current plan, to make it even better.

Ok, this post is pretty long, so if you’ve stuck with it, then it should hopefully fill you in on where I’m coming from, and where I hope to be going [] Thanks for reading.

Imron

Peta, thanks for your comments… i appreciate it, this is my first property and it is good to consider things from all angles.
I have attempted to reply to most things you noted.

High vacancy? at the moment there is a real shortage of rental properties in Tasmania. It is becoming a bit of an epidemic. I can only guess you were looking outside of the greater Hobart area. Hobart is a solid place to invest with an ever increasing number moving to the southern part of the state. The population decline is evident in the north and other less populated centres – Hobart is in fact growing and will continue to do so with current investments and future tourism boom with the 2 new ferries.

Ok enough about that. The unit i made an offer on is still, in my view, a solid investment. but i’d appreciate further comment.
as for the numbers:
body corp $0
rates fees tax etc $900 per annum
agent fees $0 (even the agent told me not to bother becasue the tenants direct deposit and still a newish unit)

but you are right after all expenses i will have around $1000. is this worth the effort? yes i think so. immediately upon purchase i get access to equity (the place is valed at $65+) which i can use to secure a second property (hopefully the unit i mentioned in my last post).

It seems to me that to properties over 60k become very difficult to positively gear. I do not expect this unit to increase significantly in value, but i do expect it will pay it self off without me having to contribute a cent.

Wei..
as for my proposal, i was thinking as i was typing. Seems to be alot of opportunity here, especially for wraps. I have attained a few good contacts and would be willing to look into a few deals if people wish. “commission structure” – i’m sure something could be worked out.

Hope you’re all having a good week

Josh

Hi:CHRIS
That is too bad because it is a great way to get into cash flow positive properties.I approached a seller last year he was selling his house for 154,900 ,it has a three bedroom suite upstairs and a two bedroom suite downstairs. Both have separate entrances and separate services. He owed 123,500 on his mortgage, I offered him 20,000 cash and I would assume his mortgage. He accepted.I found a joint venture partner who put up 10,500 and I also put up 10,500. The extra 1000 is to cover closing costs,which are much cheaper with an assumable mortgage.The payment is 900.00 a month, insurance is 41.70 a month and land taxes are 119.58 a month,allow 5% for maintenance and vacancy 135.00 a month the total expenses are 1196.28 .I rent the top suite for 725.00 and the bottom for 625.00 total 1350.00 a month rental income. The positive cash flow is 153.72 a month.If I was to default on the mortgage in the first year the seller would be responsible for the mortgage,which would mean reassuming the mortgage back in his name and reselling hoping to make another cool 20,000 with no risk.

canadian dave

Edited by – [email protected] on 12/06/2002 11:48:52 AM