Hi S,

ANZ used to go to 65% LVR on freehold property and 60% on leasehold.  ie up until sept 2009 at least, not sure if things have changed.  I work for another lender and we go to 60% at best.  Suncorp I think may go as high as 70% but I'm guessing you are close enough to check that one out yourself.  This is in regards to land.

Most lenders will also offer you a stock mortgage, but generally only over stock pastured on land they already hold the mortgage on.  Stock mortgages are generally low value, ie the bank assigns a base value per head and then only lends 30-40% on that.  Simple reason being that no bank wants to restrict your ability to buy and sell stock or leave you hanging in the event that there is a temporary crash in the market, or redo the paperwork everytime you sell some steers.  

So working on your 60% LVR against land value of $2mln you have $1.2mln

If I assume a land  purchase cost of $3000 per beast area ( which is likely under the market, depending on where the property is) then the property should run about  666 adult cattle, probably less. My employer would extend another $60k of debt being 666 head *$300*30%.  Seems stingy but as mentioned it protects your flexibility.

Giving you total borrowing capacity of $1.26mln.

From this you buy the property, the cattle and hold back some reserves for working capital to tide you over until your cattle sales start rolling through and what ever budget you might need to subdivide.

I have no idea of your start up position but lending is basically a function of Net Asset Value/equity/LVR and cashflow.  If you can show strong equity then you have a better chance of getting finance with a tight cashflow over the first couple of years. 

If you have a strong cashflow but weak equity it is much harder to obtain finance, because cashflow esp in agri can be quite volatile and weak equity means that the bank is likely to lose money on their investment if things really go pear shaped. A guarantee  supported by property or a cash deposit from another individual with surplus equity is reasonably common and could help get you across the line.
 
If for example your guarantor placed net assets valued at $2mln behind the guarantee  then you could borrow 100% of the purchase price. (not realistic as your cashflow would likely bring you undone on the 100% lend).  But you would really want to have confidence in your ability and your cashflow to ensure that you never put that guarantor in a postion where they had to bail you out by giving up their cash/asset.

If you are weak on both fronts, then you are perhaps not quite ready to roll yet.

As to the subdivision, obviously this can be quite lucrative if you are able to turn rural land to lifestyle land.  How it would be viewed would depend on the cashflow effect both short and long term.  ie can you afford the development and holding costs and for how long can you carry it? once that land is sold can the remaining land support the remaining debt?

This is a bit of ramble but hope it helps. Make sure you check it out thoroughly with whatever lender you choose and take the time to read the documents thoroughly. 

Cheers

Rav

Hi,

I have spoken to Spiro a number of times this year, trying to work out whether his service would add value to my portfolio.

At all times he has been reasonably quick to respond, quite helpful and easy to talk to. I am 90% of the way to becoming a member, just need to bed down another couple of other projects first before I finalise membership with Spiro (if I do).

Initially I asked him to provide me with 5 contacts that he had sold QLD property to ( as that is my area of interest).

It seems the man’s enthusiasm is infectious as 2 of the 5 I spoke to had actually signed on to become part of his business since december 06. A third has become a mortgage broker and now associates his business with cashflow capital. In each case this came about after initially having purchased through cashflow capital in the preceding 12 months.

A chicken and egg situation. were these people so genuinely happy with their experience that they became part of the business. Or now that they are part of the business, does it seriously compromise their opinion of it??????? Quite frankly the jury is out.

The other 2 contacts had differing investment goals, differing exposure to property investment and one lived in WA.

All were quite happy with the service they had recieved and all 5 said that their first contact with Spiro had arisen due to their desire to buy a property and their contacting him through his website.

The appeal for me is three fold
Firstly Spiro apparently provides reams of up to date information, websites, RP data reports etc on the particular area you are interested in. It gets me a long way in front with my DD, if someone has already compiled a host of relevant info. Particular points of interest I naturally cross reference.

Secondly, if his network is as good as he says it is, there is a time advantage in that you could well find out about the property before the broader community is aware it is available.

Thirdly, there is the time and money component, I live in remote queensland. To fly out of this place at the drop of a hat, will cost me no less than $800 more likely over $1000 and once I get there I need accommodation, food, and transport. Then if what I see is not what wanted or my offer fails then that is all just dead money. the tax man isn’t going to give me a discount either. Using Cashflow Capital or someone similar reduces the liklihood of this happening.

Is his service, all he says it will be? I have no idea. If I do go ahead with this I will be sure to put an update on the forum

cheers

Rav

Hi Dom,

I saw an add recently for taxi licences. The way I understood it, you buy the licence and lease it to someone else. Price was something like $380 000 returning $1000 per week total for 3 licences (from memory, roughly)

Can’t imagine there would be much management/time committment involved in that.

cheers

Rav

Hi Dr X,

I have a couple of suggestions but their suitability would very much depend on the type/class of tennant and whether they were new to the area or not.

1. Meal Credit at a local eatery. Somewhere popular with locals and a private business rather than mainstream Franchise. Maybe a coffeshop or somewhere that does breakfast/brunch. Help new people get to know the area a little.

2. Membership to the local PCYC if there is one. I paid $30 pa where I am and it might be good for young families as there is a wide range of activities.

3. Gift Voucher – similar to the bunnings idea but target stores such as Spotlight, Adairs, Pillow Talk etc which all do soft furnishings. Just thought it might limit the temptation to make hard changes you may not support. Polka dots in the living room for eg. LOL

cheers

Rav

Hi People,

I do wish forumites would stop making such personal judgements on others in forum.

The question initially was a generic one on the why’s and wherefore’s of establishing yet another delineated group.

My two cents is this.

Firstly everyone has been jumping to conclusions about it being a way in which to exclude male investors and the knowledge they have to share. Not so.

I’m sure that people of all walks and talks will be invited to share their knowledge and experience as guest presenters and such. Wendy would simply have been trying to draw together a group of people with similar interests and needs. It is highly likely that a group of women investors would have some very similar information and support needs, thus making the direction and activities of the group much easier to define.

Secondly,as I see it, Investor groups are usually formed as a source of motivation and inspiration for it’s members. With respect to the experienced and successful investors on this site, much as I enjoy reading their posts and discussions. There is extremely little that I can take away and apply in my own situation.

For myself it would be much easier to be motivated/inspired by those who had a similar starting bloc to myself. It proves to me that what I want to do is possible and in many cases offers information that is directly relevant to my situation. I see this as the catalyst for the womens group.

There is no doubt that there are issues that only women will face in the investing world. A case in point is that many male investors have a building experience, a trade or just a practical hands on background. So doing their own building inspections, negotiating with tradesman and effecting their own repairs on their IPs is something well within their capability. Even their social circle often allows them to obtain handy tips and info without effort. Invite some friends round for a BBQ and you probably have at least one mate you can grill about tiling the bathroom. My immediate social cirlce includes a few teachers, a nurse, and about 4 young mums. Tiling the bathroom is not their thing.

Perhaps one of the biggest advantages of the womens group will be the word of mouth network about tradespeople and professionals who have provided value for money, efficiency and most importantly the basic respect that any client deserves. I wish the ladies well.

That said, Simon I definitely understand why you raised the question. Sometimes the human race does seem bent on delineating and segregating itself to the enth degree and often with no obvious purpose in mind.

Anyone wanting to start a group for young female investors, living in remote queensland with little equity and less cash and no partner to lean on should PM me as soon as possible. LOL!!!!!!!!!!!!!

cheers

Rav

I wonder which caravan park they bought…

The two most likely are on the cloncurry edge of town, but you would not think them central enough unless someone is planning a heap more subdivision out breakaway estate way.

If anything I thought they would have set up at the bottom of the Healy subdivision and let the town keep expanding towards Duchess. Perhaps not…

It always great to see the big players tipping more money into the place though. They definitely would have done their DD.

As to the prices I cannot believe how much they have gone up in the last 4 months. And as you say the latest listing prices just seem astronomical.

there seem to be quite a few new listings coming through right now. I am wondering if these are people planning to relocate at the end of the year and are testing the market with pie in the sky prices knowing they have time up their sleeve. If someone bites, they sell and rent back until their ready to move.

If so it’s clever. I know a few people who sold late last year for lower than market value as October to Jan saw the market hit a real flat spot. If they had been able to hold out to march there would have been at least another $20 000 in it for them.

Rav

Hello Salacious,

I live in Mount Isa and totally agree with your optimism for the town. at least for the next 5 years.

It is perhaps time that vanessa updated her information sources ,as Xstrata the major employer here has a strict residental policy. you want to work for them you live here. A policy which has really turned things around in terms of the feel of the place.

Supporting contractors however can fly their workers in from whereever they like.

Most people I come into contact with are genuinely enjoying living here, albeit usually for a short time, anywhere from 2-4 years especially among the professional staff. As a community there is plenty going on if you keep your ear to the ground. A daily (perhaps twice daily ) Qantas service to Brisbane is handy and is usually keeps any homesick cityslickers sane.

Lack of shopping facilities is the main complaint, lack of coast line the next one and thirdly concern for schooling and social direction for teenagers.

Cloncurry, I am not really up to date on, except to suggest that there is a hell of a lot of speculation in the real estate market due to suggestions of immenent action on the mining front. The projects closest to becoming a reality are over 80km from cloncurry and most workers won’t want to be travelling over 160km a day to work even if it is by bus. 12 hr day plus travel, I don’t think so.

cheers

rav

Hello Mark,

Good luck finding some advice on that one.

Judging from the figures you gave and the fact that it is Native Title Leasehold. I would say that you are dealing with a situation that has not really been tested yet.

Unfortunately your “lease landlord” may not really have a vested interest in the long term growth of the town. So perhaps there is little to guide you on their potential behaviour. At least if it was crown lease or mining lease you would know that the owner of the land was committed to the economic growth of the area.

I would be trying to source a solicitor who has dealt with residential native title issues previously. Sorry I can’t help there.

cheers

RAV