Forum Replies Created
Right now? I’m in exactly where I want to be for now.
Another 5 years? Still tossing up between Pittwater (far north Sydney) and Akaroa (just out of Christchurch NZ).
In a perfect world? I’d be in lush rainforest, a little elevated above a pristine surf beach with great diving and snorkelling, within an hour or two of a major city but with good privacy. The temperature would be between 22-30 degrees all year. Oh, and did I mention the 4500+ metre mountain range with great climbing and skiing less than an hour away (through the bush of course).
Now, if anyone finds that place, can you let me know? I’ll start planning the move immediately [biggrin]. New Zealand has places that come close on all but the temperatures, though…
C.
100% of the shots I don’t make don’t go in – Wayne Gretzky
Matt,
good on you for looking at how to get started. However you end up moving forward, one thing you must do right at the start is to set up the rules of the game.
Make sure it’s well documented in a legal agreement exactly what everyone’s roles are, what they each put in and what each gets out. Specify exactly what will happen if things go well AND if things go wrong. You won’t really need this while it’s all going well, but if things go pear-shaped, you’ll all need this clearly stated, in a legally binding document.
Whether it’s a Joint Venture agreement, a company plan etc is up to you and your solicitor
, but it’s really important you have that in place before anyone actually puts any money in and before anything else is signed on behalf of the group.One other thing. Think about who’s in the group. Do you all have the same skills and shortcomings, or do you each “fill a gap” as it were. If you’ve all got the same strengths and weaknesses, you’ve not leveraging your resources nearly as much as if you compliment each other. For example, if you’ve all got no borrowing capacity, you probably won’t have a whole lot more together. But if one of you has lots of time, another has money but no time and a 3rd has heaps of knowledge and contacts, you’ve got a potentially great team.
The bottom line though is you’re making a great start. You’ve thought about it and you’ve asked for advice. Good on ya.
Cheers,
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
I haven’t read her “Truth” book, but I found her “pocket guide” quite useful. There are definitely some things in there I don’t agree with, including some strong opinions, but that’s the same with anyone, isn’t it.
Just remember, it’s your game, so be realistic, but take the bits that fit your game and leave the rest. Don’t let someone’s negativity get you down if you’re convinced you’re on the right track for you. What is right for her may not fit you and vice versa.
e.g. I’ve heard plenty of people say wraps are a rip-off strategy, yet there are hundreds of people who have used them as a great service. I’ve also heard people say landlords are all greedy pigs. Yet all of them ripped off their landlords at every opportunity they could get. It’s all a matter of your viewpoint.
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
It is a bit of both, really.
Say you find a property you reckon is worth $100k. You look at the recent sales in the area and all the other houses around that are like the one you’ve found sold for between 95k and 105k. But you negotiate and find that the vendor would love to take, say $85k if you can write him a cheque today, no conditions.
You’ve just found a house at a “wholesale” price. Or, you could also say you found a vendor with a problem and you can provide a solution (assuming you CAN write them that cheque).
So, it could be looked at either way, really. The main thing to remember is that negotiation is aiming for a solution where both [or all] parties win.
Cheers,
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
I agree, serve the notice and do the reno.
One other motivator, though – don’t forget that if it’s Cash Flow Negative, it’s not only the fact that you could get an extra $30,000, you’re also losing money every extra week.
If you want to sell anyway, you know you can get more by doing a quick cosmetic reno and you’re under time constraints – just do it. serve the notice.
Good luck.
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
I’m not too long in the investing tooth, so my opinions are only that. But…
We had a house in a city of 180,000. We bought it for ourselves, but when we moved out, it was positively geared. Right now it’d be neutrally geared at it’s current value (we sold it a few years ago).
I grew up in a town that 20 years ago had 4000-5000 people in it. It now has nearly 30,000 and is still growing. It’s also just down the road from a city of over 200,000. I don’t know if there is much “out of the box” CF+ property there now or not. I’ll have to go back and have a look.
I’ve also seen properties that would still pass the 11 second solution now in towns <2000 people. There ARE still some around.
On the other hand, there are citys of several 100,000’s in the USA at the moment that are shrinking and property prices are falling. Size is not the only important issue. Sustainability is important. Unless you’re only looking for a short or medium term investment, in which it only needs to be sustainable for the period of your investment and a bit longer for safety.
The real catch is to make up your mind about the long term viability of the town. Is there only one company supporting the whole town, or are there 3 major industries all moving in and expanding. If there are expansions – is it just a short term boom, or is likely to be a long term thing.
Then the other part of CF+ is to look at how to MAKE the pfofit, not how to BUY it. if a property is CF- as it is but you can clearly see a way to make it CF+, then it’s worth taking a long hard look at it. If it all stacks up, do the Nike and Just Do It. If the town looks sustainable, is expanding into other industries, has expanding infrastructure, has sustainably growing population, who cares if it’s 1500 people or 15 million. IF the numbers stack up and the town’s industry is sustainable, go for it.
Anyway, I’ll get off my soap box. After all, this is just my strongly worded opinion [blush2]
Good luck. See your goal and go for it.
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
Hi Mat,
This is what the NZ government opted to do with all their beneficiaries a few years back. Now beneficiaries are almost “in demand” tenants, ’cause you’re rent is government guaranteed – well until they get a job, anyway.
good thinking getting this to work with Centrelink.
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
Thanks Guys, that’s a great start all round. I’ve been thinking from entirely the wrong perspective. I’ll start from the outside – in, so to speak and look for that book asap.
Thanks again,
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
In NSW, I know that as a Kiwi living here I was able to claim the FHOG, including stamp duty exemption.
I’d suggest a call to the Office of State Revenue in the state you’re looking at buying in. They are the ones who actually enforce the rules, so go straight to the horses mouth, so to speak.
good luck.
100% of the shots I don’t make don’t go in – Wayne Gretzky
Thanks Adam,
I have the same hesitation about potential Capital Gains, so I’ve been trying to figure out the demand/supply equation for the area. If I was looking at houses, I’d be pretty happy with the suburb (except their price of $500k+).
The prices are among the lowest around, with great transport infrastructure (train, bus and river ferry) and a new 10,000m commercial/retail area being developed, along with some gentrification of the surrounding suburb. My thinking is that the improvement to the suburb should lift values enough that any buyers will get the CG they need to refinance in a sane time-frame. Well, again, I’d be comfortable about that with houses, but I haven’t dealt with units…
Unfortunately, the units would still be in the late 200’s for the wrappee to buy, which is the other half of why we’re still hesitating. The risk seems to start increasing by the time we’re looking at 250-300k for the wrapee.
After your thoughts and a couple of responses from other forums, I may just look a little further afield for freestanding houses again. I can always come back to this later once I’ve got a bit more comfortable with the whole process and maybe worked with someone who invests in units. Maybe they would suit more of a “handyman special” marketing approach to ensure only people willing to add value themselves would purchase so they’d be more likely to get the equity for refinancing.
thanks again for the advice.
Craig.
100% of the shots I don’t make don’t go in – Wayne Gretzky
I did the Reno Kings’ property masters workshop last year.
I thought the day was a pretty good intensive overview of how to profit from a capital gain approach to property. Really quite good for a beginner (e.g. me). I’m sure a more experienced investor would have been able to gain valuable insight from it as well.
My only complaints are as follows – not to be negative, but you asked for good and bad, and I generally try to get the bad out of the way before the good. I leaves a better taste…
I thought they tried to cover too much information for the time they allocated. As I said – intensive. Unfortunately they tended to gloss over some stuff and their manual, while good, is missing some of the detail they glossed over. Pity.
Because their approach is mostly aimed at capital growth, I was surprised at how much they advocated “buy – improve – raise rent – use new equity to buy” without seeming to take into account the extra outgoing needed for the increased debt. I would have expected more “buy – improve – raise rent to make CF+”. They alluded to getting properties “as close to positively geared as possible” from the outset, to help affordability. Other than that, positive cashflow seemed almost ignored (maybe even a little put down) – oh, except for using positive cashflow property to fund the negative cashflow for your negative geared property.
Now don’t get me wrong, I’m not saying the day was a waste of time. I had a great time and learned loads. They opened my eyes to more ways of increasing the value – and hence the rent – of a property pretty easily and cheaply, as well as some of the stuff to look out for in the first place. They covered some stuff about getting good rental managers vs doing it yourself. They showed lots of video snippits of how easy some renovating really is to do (well, it looked easy when they did it!). And they had several experts in related fields on hand to answer questions.
I thought the seminar was pretty good. Just remember, though, if you’re in these forums, you’re probably more into CF+ investing, so this seminar won’t be aimed directly at you. It may be useful though.
If you were thinking of doing one seminar this year and the choice was between this and Steve’n’Dave’s one, I’d probably choose Steve’n’Dave’s one, purely because they are aimed directly at CF+ property.
Hope this helps.[?]
Craig
100% of the shots I don’t make don’t go in – Wayne Gretzky
