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pinit2000
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@pinit2000
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Post Count: 85
October 13, 2003 - 10:29 am
Hi Kelly,
Don’t know if this going to be short or skinny, but here goes:
There are only two types of properties:
– Positively Geared
AND
– Negatively Geared
Positively Geared
A property that is positively geared means that the rent covers ALL costs (rates, interest on mortgage, maintenance etc…)
Also, when analysing a property to determine whether it is -ve or +ve you generally do the calculations on borrowing 100% of the cost of the property, and therefore paying interest on this full amount. (i.e it is 100% geared or 100% leveraged)
Therefore if a property will cost you say 250K including lawyers fees, stamp duty etc… you will base your calculations on borrowing 250K. Whether you do this in practice is another question. Generally people will have equity in their PPOR which will allow them to borrow 100% of the costs of buying an IP.
Negatively Geared
A property is negatively geared if the rent does NOT cover all your costs. (Again the calculations are done based on the fact that you have borrowed 100% to acquitre the property).
Now, having said that a negatively geared property can be positive cashflow depending on whether:
– It was built after 1985 and therefore you can claim noncash deductions (i.e. depreciation.) AND you have another income stream (i.e. your day job).
This means that for the SAME negatively geared property, for some people (who are in the top tax bracket) it will be positive cashflow and for others (who have a lower income) it will be negative cashflow.
– The amount you but into a property when you buy it. This is very simple. Say a property costs 300K and you have 300K in the bank. You decide to buy the property without borrowing anything. This property will then be positive cashflow, because you have no interest repayments and the rent will cover all the other costs. Is this a good way of investing? depends… won’t get into now…
In summary a PROPERTY can only be positive or negatively geared, it is the INDIVIDUAL buying it that can make it become positive cashflow.
Anyway I hope this all makes sense. If not ask more questions.
Pin
pinit2000
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October 13, 2003 - 12:43 am
* bump *
pinit2000
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October 11, 2003 - 12:07 pm
Good advice from Bill and Bribie,
Personally I would never buy a property nor land without seeing it first.
I would like to relate a story to you, for all it is worth.
A land salesperson that works for a large land developer gives me a call and says: “We are having a new stage release. This is going to be a beauty! there will be blocks with 180 deg panoramic views on the river, some are already sold etc…”
Well, I think to myself, sounds good to me. However I was a bit busy at the time so didn’t go and have a look. A week later he calls me again and says, “I will take you up there, when can you make it”.
OK so we make a time, he drives me up there and tells me there are still blocks with great views etc…
So we get there 40 mins later. Don’t like the feel of this place. (He did tell me it was right NEXT to housing commision homes.). He then shows me the views. I COULD NOT BELIEVE MY EYES!!! there was nothing to see!! (there were really NO views what so ever). They were all duds! He wasted my time and I was sooo disappointed.
The worst is that I was really looking forward to it. I thought I could trust him … I had bought quite a few blocks from them in the past.
So the moral of the story is:
– Don’t trust other peoples opinion, especially if they are salespeople. (they always see things a “bit” differently!)
– Learn the talk of salespeople! “a 180 deg panoramic views of the river” means “water glimpses through the tree tops”.
Pin
pinit2000
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October 11, 2003 - 6:22 am
Now that I have a bit of time I will make a reply…
quote:
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
This is correct. Actually the more I have been thinking about PGP (Positive Geared Properties) the more I agree that there is nothing intrinsically wrong with them! Actually in a down market they would probably be the better approach. However there are some SERIOUS questions one must ask themselves before launching out.
1) How much time do you have?
Finding PGPs takes a lot of time and effort. (This is not stressed enough on this forum)
Think about it. The people who have the most properties on this forum are the ones that make the most posts. If they make so many posts it is because they have the time… Time to post and time to find properties. Newbies don’t always realize that.
2) Do you realise that getting a PGP will put about $1,000 per annum in your pocket, therefore you will need about 20 or 30 of them to make it worthwhile….
3) What does “worthwhile” mean to you? What are your goals? How many properties do you want?
So now that you realize you need 20 or 30 PGPs this means you need even more time …
PGPs do have an advantage and that is they will probably rent easier in a declining economy because the rent is low. When things get tough and people loose their jobs they will have to rent cheaper properties (that is if they where already renting). However I am VERY wary of PGPs in *** rural town *** because if people start leaving town, then there will be NO ONE to rent your place and even worse NO ONE to BUY it!!
Steve has not bought a property in a rural time yet, and there is a good reason for that! (see my earlier replies on this thread.)
Not even a week after I started this thread and tried to bring to peoples attention that investing in rural is NOT a good idea
(this is what I wrote:
quote:
Most people don’t have the time to do proper research, and fully understand what they are getting into. So I am worried that they will go out and buy something just because property investing is the trendy thing. They most likely (after coming here) will look for a +ve geared property.
They will look far and wide and finally find something in some remote part of Australia, and because they have finally found *it* they will buy without doing due diligence. (this may not happen but this is what I am worried about!)
)
Someone posted this on another thread:
quote:
i have spent hours on end at well MAJOR property listing sites and found that none meet the 11 second calculation, however this is just making me more eager to find even one property.I am stabbing at every country town to see if i strike
This is exactly what I fear!! I think Steve should do more to worn people … and tell them to be more careful … Yes I agree that good people live in country towns too … that is not the problem. What happens when they leave town and no one is there to rent your place…???
*******
New TOPIC
*******
quote:
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.
It actually is not hard to get started with no doc loans. But the situation today is vastly different than 2 years ago!!. Also I would like to bring to peoples attention that Steve is a “business man” first, a property investor second. The only reason he has been able to accumulate so much is not just due to his property strategies on their own, but because he has MULTIPLE income streams (selling books and seminars.)
This is one for Steve to answer if he has the time…
Steve did you ever hit a bottleneck (I would say around the 20 or 30th pror), and then had to think of a way to make more cash. That is when you decided to sell your wrap kit, seminars and books…? And this is what has allowed you to move on?
I give a lot of credit to Steve for being IMAGINATIVE.. what I am trying to say is that he did not do it with properties alone… (I am more than willing to be wrong! Please correct me if I am.)
BUT really property is NOT an end in itself. You must think of it as a business, and always be thinking of other ways of generating income streams. (I am not talking about obsession here, just healthy business attitudes.) In other words your greatest asset is yourself… Educate yourself and always be learning and always be looking for new opportunities!
*******
New TOPIC
*******
There is something else that I have been thinking about (and this is for Steve again).
Of the people you selected for the mentor group:
1)How many of them have a FULL time 9 to 5 job AND are employees?
2)Of those who qualify for question (1) above, how many of them earn less than $50,000?
Ok enough for now…. I STILL have heaps to say … I will be back.
Pin
pinit2000
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October 11, 2003 - 6:17 am
*****
Reply by Mini
*****
hey pin,
in reply to –
quote:
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!!
quote:
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 home 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
pinit2000
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October 11, 2003 - 6:16 am
Hi Mini,
Thanks for giving it a go. I will reply to some points and make some other statements. I may have to make a second post later…
First I would say that I read the Today Tonight Q&A between Steve and TT. (http://todaytonight.com.au/factfiles/646144.html) and this reassured me, and helped understand where Steve is coming from. It is actually a VERY good read! Read it!
I would like to stress a few things however, when it comes to property investing. (Especially with positive cashflow properties.)
Steve said:
quote:
If you really want to do it and you are prepared to pay the price in terms of time and money I’m sure you will be a success.
Agreed!
I would like to stress the time factor. You NEED lots of it! Please remember that this *IS* Steve’s full time Job AND he has a business partner (Dave).
If you really want to get into IP you will have to get rid of your day job sooner or later.
IP requires a lot of work and research. (probably more that a normal day job.)
And yes, you will need access to some money somewhere, somehow.
quote:
I concentrate on larger regional areas, but the truth of the matter is that because good people live everywhere, opportunities abound.
This needs to be stressed! Very reassuring…
quote:
Personally, because I know that good people live everywhere, I’m interested more in the person than whether or not the town where they live has a KFC. Having said that, I don’t invest in rural property as it’s not my niche.
PLEASE REREAD THIS!!
This is one of the things that has been worrying me. People have been flocking to rural areas to find +ve geared properties, which they will most probably regret. (OK If you have bought anywhere in the last 2 years you will be fine, But I am thinking of people who come to this forum NOW and think “OK I have to buy something, somewhere, NOW!!” and go to woop woop to buy something . Only do so if you a ABSOLUTELY sure about what you are doing!!
quote:
I think everyone who invests in property needs to expect that sooner or later they will come across a tenant from hell.
This is not mentioned enough. Interestingly there is a thread right now that does mention this a bit: https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=4344
IN CONCLUSION
Most people don’t have the time to do proper research, and fully understand what they are getting into. So I am worried that they will go out and buy something just because property investing is the trendy thing. They most likely (after coming here) will look for a +ve geared property.
They will look far and wide and finally find something in some remote part of Australia, and because they have finally found *it* they will buy without doing due diligence. (this may not happen but this is what I am worried about!)
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.
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.
Property is deffinitely the way to go BUT you will not become millionaires over night and you MUST do your due dilligence. It CAN be very rewarding however, BUT also VERY demanding!
OK enough for now. I feel that I have left a lot out, but I might write another post tomorrow.
Pin
pinit2000
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October 11, 2003 - 6:14 am
******
Reply by Mini
******
pin,
I’ll have a go,
though I’m not Steve,
quote:
” 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
quote:
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….
quote:
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.
quote:
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
pinit2000
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October 11, 2003 - 5:53 am
Sorry, but this should work now
**** Other Interesting Posts ****
Can someone point me into the right direction – TOPIC_ID=4582
Research methods – TOPIC_ID=4437
You Can’t be Serious??!!!! – TOPIC_ID=4437
pinit2000
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October 11, 2003 - 5:51 am
Let me see if this works …
**** Other Interesting Posts ****
b]Can someone point me into the right direction TOPIC_ID=4582
Research methods TOPIC_ID=4437
You Can’t be Serious??!!!![/b] TOPIC_ID=4437
pinit2000
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October 11, 2003 - 5:47 am
OK I will set it up, and also take the liberty to reformat your posts to make them easier to read.
Pin
pinit2000
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October 11, 2003 - 5:24 am
Hi Diclem,
Sorry I didn’t repond to you previously, but you must have posted your reply wil I was still writing mine!
Anyway, here is the answer:
No I do not use this strategy personally but have read about it on the net and in the newspaper. There was a really good article on this once.
Some people bought a property with 5 or 6 rooms that nobody wanted. (so they go it for a song.).
They renovated it etc…
– You can place adds in the paper.
– You can call the uni directly. A lot of them offer a service for you to advertise freely. Something on a website. They do this to help their students. (definitely worth a call.)
– Bulletin boards at the uni itself, next to the food hall or something.
Should you take care of it yourself, or get an agent?
Well it depends on how much time you have… Another thought, you can make someone the “boss” and get them to collect the rent for you and make sure everything runs smoothly in exchange for a reduced rent. (Choose that person wisely!)
The experience is generally good.
– Japanese are the best
– Chinese are good but get oil all over the kitchen
– Ausies … well … hmmm, if they are not partying or drinking they are OK
It is up to you. Choose well, spend enough time thinking and organising it and it should work well.
Finally, people will pay a premium for special features like:
– Broadband
– A good desk with a nice chair and lighting
– Little kitchenette in their room
– Computer (you can get some really cheap ones, nearly free which are good enough for browsing the net and sending emails.)
*********
TheENJOLady
Italian?? LOL …
Pin
pinit2000
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October 11, 2003 - 5:06 am
Hi Pete,
Excellent points.
quote:
But with a job you can’t just get up and go, so you lose the deal unless you’re willing to buy sight unseen.
True most people have jobs AND families to take care of. The people on this forum that say they bought 3 properties last week etc.. are “professional investors” or they have a lot time to spare. This is not always obvious to the newby and that is why they get so frustrated!!
So what do you do?
– Organise your holidays so you can have a good time and look for IP’s (be careful from a tax point of view though, if you want to claim your expenses).
– Learn time management.
– Network with other people.
– Do as much research on the NET and on the phone.
However, IP is not everything in life, and shouldn’t become an obsession.
I wouldn’t recommend people buy sight unseen! Always check on the place.
*******
redwing
quote:
And was interesting to note they were “not” country towns !! as i know them anyway, i think in the book Ballarats population was at 80 000+ wasn’t it??
Exactly! but see my other post for some ideas on how to find pcf props in major towns.
Pin
pinit2000
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October 11, 2003 - 1:23 am
Bear
quote:
… and offer a small spotters fee to the locals.
I wouldn’t do this. I think it gives the wrong impression to people. Just get as much info from them and leave it at that.
Leaving your card with agents is a good one, but I have found that agents will call you for anything and everything, so make sure they know exactly what you are after, and ONLY call you when they have found it.
************
alf,
quote:
Well yes it is great if people have time to walk the streets but not everyone is in that position ….Just my thoughts when you got people struggling to find one then someone pops up i just bought 5/10/or 20 etc the other day sounds just a bit cocky.
The reason for this is either lack of TIME or DETERMINATION. (But for most people it would be TIME.) They are out there, you just need time to find them.
OK to make this even more clear. You need at least 8 hours a week to spare.
So what do you do if you do not have the time?
– Get some one to look for you. (I don’t recommed this though, but can work.)
– Give up your job. (How determined are you?) (Thi s is NOT a recommendation either.)
– Aks Steve, he might know of an easy solution.
I fully understand your frustration, because it is not as easy as some peole would like you to believe, especially when you are first starting out. It does get easier with experience…
quote:
What i think would be of great help to all users would be like a template of steps.
Please don’t get me wrong, this is a reality check. If you have the steps but no time, what use would they be to you?
This is the only ONE thing (i.e. time) that is not emphasised enough on this forum…. and I hope people won’t shoot me down because I bring this to your attention.
Pin
pinit2000
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October 11, 2003 - 1:00 am
Hi Steve,
First I want to apolagise if my first post offended you in any way, but I misunderstood you.
In your first post you said:
quote:
I have two investment properties with a positive cash after tax
In your second post you said:
quote:
because now I work abroad and the short fall comes out my pocket.
OK, if this is the case then positive gearing is fine. However my reply was based on your first quote…
However I would like to kindly point out that if you live abroad you will have a very hard time finiding them (this is a reality check). However nothing is impossible. If there is a will there is a way!
quote:
Why, because at the end of the day I would like to have an income off the properties and start paying off one at a time and the snow ball starts rolling.
OK so here is another strategy that may suite *some* people. Why don’t you sell one property and put the profits into your other mortgages…
In fact something that works really well (if you have say 3 positive CASHFLOW properties is to sell one and and put the profits into the other two. They then become POSITIVELY GEARED!!!)
For every property you sell buy 2 other ones as well. (If you want I can elaborate a bit more later.)
quote:
Yes, you make the time and yes if I could help or contribute I would love to.
The reason why I asked you to contribute was because you said you already had two properties, so you must be doing something right! I just thought you could share that with us.[]
quote:
we would hate to loose everything because we made the wrong move.
I completely agree, and wish you all the best!
****************
TheENJOLady
quote:
please try to be more mindful when you post replies like that to new people.
I read my posts two ore three times before submitting, and I thought that I was being nice. (I really did!). What do other people think… I will be more careful then in future.
(that is the problem with forums people can’t see me. And for all it is worth I am a kind, thoughtful person.)
I just want people to think for themselves…
quote:
We all know your position on neg gearing, I know you also try to sound like your view is on both sides but let people make up their own minds.
I think you have not read me correctly. What I am saying is Positive cashflow (technically negative gearing) is not ALWAYS bad. (especially if you are on a large income.) That is all!
If you don’t have much then positive cashflow is the ONLY way forward. I completely agree with that.
Yes, my views are on both sides, because it depends on *each* pesrons situation!
And, yes, letting people make up their own minds is EXACTLY what I want them to do. If I wasn’t here, peole would think pcf props are the ONLY way.
quote:
Pin I mean it this is not an attack on you just a request.
OK, but please make an effort to understand where I am coming from.
Why do I ask questions? Because it is good that eveyone knows why they are doing something and are sure that they are right.
For example I use to teach maths to a teenager. I would give him a problem and wait for the solution. If he got the right answer, I would say to him: “Are you sure” (with a look that insinuates that he is wrong.) and then I would wait… The reaction to this is very interesting. If they are not sure abou their answer they will say, “Oh, oh I think I made a mistake.” So they re do it this time MAKING a mistake.
I do this until, until they can tell me with a resounding YES that they are sure they are right.
Only then do I move on to the next level.
You see if they can’t work out for themselves whether they are right or wrong doing exercises, I guarantee you they will get it wrong during their exam… We only have one shot at life, so get it right! but please let me make double sure that people know what they are doing.
Pin
pinit2000
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October 10, 2003 - 12:22 pm
Hi Jane
quote:
BUT where are these properties?
Everywhere! You just need the *** TIME *** (and dedication) to find them.
First get on the net and start looking. Once you have found a place you will have to think about going there and see for yourself.
Also you MUST be IMAGINATIVE!
OK here are a few tips. If you are going to buy properties in rural towns make absolutely sure you know what you are up for. Also, Steve doesn’t buy properties in rural towns, only major towns.
So how do you do it? Here are some “positive geared” ideas:
– Rent to students. Buy a house next to tafe, uni etc… with five bedrooms and rent each room out. This will be positive geared but can be seasonal…
– Buy a motel/ hotel!
– Buy a motel/hotel and “remodel”the rooms into a studio and rent each room out.
– Buy a corner block of land and put 2 houses on it. (Warning! Your neighbors might hate you if you do this.)
– Buy “commercial” properties. (They generally are positive but you MUST know what you get into.)
– Look for flats in major towns. (they generally are +ve, but you will have to buy the whole lot in one shot. sts)
Anyone else have some ideas?
Pin
pinit2000
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October 10, 2003 - 11:50 am
Mini!
I have been busy replying to other people on the property forum!
I am still thinking about this thread…
I think we should take this discussion to the “Specifically Property!” so that everyone can benefit… What do you reckon?
We will just copy and paste and start afresh!
Pin
pinit2000
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October 10, 2003 - 11:07 am
Hi Steve,
Welcome aboard. I hope you will get some great info here and that you will also be able to contribute.
You said:
quote:
After reading Steve’s book, I now realize I have to change my strategy.
Why? Yes what made you come to that conclusion?
quote:
I am very interested in property with a cash flow before tax.
Do you have a LOT of time to spare?
quote:
I would appreciate it if some body could direct me in right direction for me to start looking.
You will find that there is no “right” direction. It only depends on EACH persons situation. However you will find heaps of info here, and I hope it will allow you to think about things and help you to know exactly WHY you want to do what you want to do and then once that is rock solid in your mind, nothing will stop you.
In the mean time you might be interested to read this thread, but please answer my first question (*Why?*) before reading it.
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=4437
Cheers,
Pin
pinit2000
Member
@pinit2000
Join Date: 2003
Post Count: 85
October 10, 2003 - 10:39 am
Hi Pete,
Great stuff!
I think something that would really help is knowing what questions to ask, and how to strike a conversation and get the info you need!
Yes, spending ***TIME*** on the phone and *** TIME *** on the internet is a MUST. (Hey I can’t write everything in one post!). Find the area you want target first, and do as much research from home, … and then go. Have I already mentioned that all this takes time?
OK so here are the questions:
Hmmm actually there are a heap of them and they all have different roles… OK let’s say you first meet someone:
– I am new to this area, and am looking at buying a property, is there any suburbs you would recommend?
– which suburb has the best reputation?
– Are there a lot of people investing here? (I prefer it when there aren’t too many.)
– Where do people go to work?
etc…
Another tip, don’t be arrogant and act slightly naive (should I say slightly stupid?). People will always want to help you out. (I love this aproach, occasionally you will even get someone that tries to teach you how to invest … [])
Maybe you can add a few more questions and we will try and keep the ball rolling…
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pinit2000
Member
@pinit2000
Join Date: 2003
Post Count: 85
October 10, 2003 - 10:21 am
Hi MJK,
I know what you mean. Loosing everything I wrote happened to me a few months back…
Seems like we have slightly different definitions, but hey, if we agree in principal there are no probs.
Yes and I did it a “bit” in purpose to get people thinking. I am always worried when people don’t know what they are doing and simply try something because everybody else is …
So here are my definitions:
– Positive gearing: The rent covers ALL costs and you have a net positive cashflow BEFORE tax. (Full stop)
– Positive cashflow: The rent does NOT cover all costs, however due to the non-cash deductions (and depending on your tax bracket.) it saves you money AFTER tax.
– Negative Geared: The rent does not cover all costs and does NOT save you money after tax.
Postive cashflow ONLY works if you have a large income (> $70,000 to be safe, can work for > $50,000), and the property you buy is relatively new. Is this for everyone? NO!
A property that is positive cashflow for a high income earner will be NEGATIVELY GEARED for a low income earner.
quote:
Great conversation though. Exersises the mind.
Agreed! (let’s keep it up.)
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pinit2000
Member
@pinit2000
Join Date: 2003
Post Count: 85
October 9, 2003 - 11:26 pm
HI alf,
“Walk the streets” means, you first have to go to the place you want to buy in, and stay there at least a week.
Once you arrive there this is what you do.
1) Go to the council and have a chat with the town planning people.
2) Go and see every single real estate agent in town, and have a chat. (*tact* when dealing with them is VERY important.)
3) Talk to as many builders as you can. Where do you find them? On the job!
4) Literally walk the streets and get a feel for things. Talk to people (again “tact” is important.)
– Talk to people watering their lawn
– Talk to shop keepers
– Talk to the Police
– Talk to cashiers
– everyone that can talk… talk to!
If you do all of this I am sure you will find a good deal, because one of the people you will talk to will say: “Hey, my brother (aunt, cousin, mate …) is selling a property blablabla…” All you have to do is follow up on it. They may say, this is a really bad place … If this is comnfirmed, get out of there!
OK I have said it in nearly every post, but I will say it again. The thing you need most, is not “money” BUT ****TIME****.
I think this is something that is not stressed enough here.
Pin