Nikki,

Yep, that’s the way to go.

But add a practical element to your theory too by looking for real deals where you can test your theory without necessarily having to purchase.

Part of gaining confidence is the ability to find deals that fit your solution mindset.

It’s a shameless plug, but try to get to a masterclass if you can to find out what professional investors are doing right now to profit in the marketplace.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Ivan and thanks for your post. Welcome to the forums! [biggrin]

Well…

Is the issue the bank won’t lend because an insurer won’t pick up the loan, or is it because of your credit circumstance and a high LVR on this deal?

If I read your post correctly then it is the first issue before you. I know that some banks self-insure (e.g. the CBA used to). It would make sense to go with that type of lender. I would certainly be finding out which branches of what banks are in the town where you are buying and I would approach them directly to find out what their lending criteria are. Be sure to ask what there lending limit is before needing head office approval and try to stick below it!

If it is because of your own circumstance then perhaps try to pay down some debt so that you don’t appear like such a risky proposition even if you do offer to pay a 50% depsoit on this deal.

I hope this has helped. To try and get other opinions I have moved the thread to the finance area where there are contributors with more knowledge re: finance than me.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

It is still possible to buy positive cashflow deals, but it is getting harder and harder.

Martine is right, generally speaking, today you need to create the cashflow stream by solving problems.

In essence, this problem solving mindset is the key theme in the masterclass events that I facilitate. During the day we look at how you can create positive cashflow by solving certain types of problems.

For example, John and Rondah, who were featured in the MAP (book 2), have a niche were they:

1. Buy a property (which is certain key features),
2. Sub-divide the back for a profit
3. Use profits to pay down the loan on the front
4. And thus end up with a positive cashflow outcome and equity to boot.

Really, I can’t over estimate the importance of getting that sort of training as opportunities continue to exist is vesry market but you have to know what you are looking for. The days of good deals falling from the sky are well and truly gone.

Hope this has helped.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

My experience is that there are two ways to go:

1. Offer Aus property as security AS WELL as NZ property which will allow you to get finance here for property there.

2. Get finance in NZ for NZ property, but, being an Oz citizen, the LVR may be as low as 60% or 70%.

If you’re seeking finance then it would be worth putting in an inquiry at http://www.propertyinvesting.com/finance as we have an affiliation with a NZ broker who is highly regarded.

Cheers,

Steve McKnight

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Hi,

Further to the policy of this site, Rob was right not to name the product.

It also seems that the discussion has gone off track and as such I have locked this post.

As this is a property forum, it would be wise to stick to discussing property.

Regards,

Steve McKnight

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Hi,

Great pick up!

The whole issue of taking a risk is very underdone in many discussions.

Finding the resolve to beat the comfort zone can be difficult, but I’m yet to meet a success in any field that did not have to risk something to achieve a better outcome.

Thanks again for the contribution.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Shortly we will be releasing ‘Investment Detective’ which is software designed to help you crunch the numbers and keep track of your property profits.

It is designed to work alongside a MYOB or quickbooks so that you enter in the day to day information in those programs and then input the totals (for the relevant items) into Investment Detective for returns to be calculated. The special introl price will be around $70 (give or take). Stay tuned for more info.

Other than that, I know that Somersoft have something called ‘PIA’ which I assume will be relevant for your purposes. The product blurb can be found here. It is priced at $245 though.

Cheers,

Steve McKnight

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Hi Michelle,

Hmmm…

Well, to add to the discussion, the first question you need to ask is “what outcome do you primarily want from investment?”

The two options, at this stage, are either positive cashflow (this is, income) or capital gains (that is, growth).

Inner City Apartments whould normally fit into the growth model given most are negative cashflow. Therefore, the name of the startegy is to get more cap gains than any income loss.

That said then, let’s quickly crunch the numbers:

Rent: $26,000 (fully rented)

Loan payment: $12,250 ($175k @ 7% I/O)
Management: $1,820 (7%)
Body Corporate: $2,500 (say)
Repairs: $500 (say)
Other: $500 (say)

Net Cashflow: $8,430

Cash In:

Deposit: $175,000
Clsoing costs: $18,750 (5% of PP)
Total: $193,750

Cash on cash return (CoCR): 4.3%

Capital gains: ???

The reason this is +ve cashflow is because you have contributed so much cash. On the flip side, doing this kills your CoCR.

You can get 4.3% at the bank no-risk, so it is not enough to go into the investment considering the extra risk. As such, it will be the expected capital gains that makes the deal sweet.

Having said that, I’m not too sure if Inner City Apartments are well placed to earn cap. gains… but you need to make up your own mind.

I hope this has helped.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi John and Paula,

Thanks for your post and welcome to the forums.

I’m not sure who told you not to use loans as leverage is important to access ‘professional’ returns.

Having said that, borrowing money has risks involved which need to be mitigated and managed rather than avoided.

As for a downturn… my own opinion is that it is likely, however, in the same token, not all properties will be affected.

Personally, on the face of it, a 72% CoCR deal sounds pretty good to me! Furthermore, if you focus on the income does it matter too much if your property loses some capital gains in the short-term?

Just avoid being placed in a situation where you may be forced to sell and bank your income in the meantime as the momentum to carry you through the flat periods.

If you feel comfortable, can you flesh out the nature of the deal in more detail? It would make for a good discussion.

Bye,

Steve McKnight

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Hi Simon,

From the research I have done they offer +ve cashflow deals based on some rather large assumptions.

Also, the deals I’ve seen are not +ve cashflow in their own right… they are net of tax deductions.

Just go in with your eyes open. In particular, be mindful of the fees, the budgeted vacancy, the attainable rent, and the annual expenses.

One final thing… ask yourself, if this is such a great deal, how many of them would I need to own to achieve my investing objective.

Hope this helps.

Bye,

Steve McKnight

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