Hi,

Thanks for your post. What I’m talking about are deals that may seem unusual or creative, and once upon a time would have been accepted by speculators, but now are seem as too risky.

However, for investors with the right skills and attitude, these deals are as profitable now as they were in the boom, as the result is made rather than bought.

A good example is a development project. Not long ago just about any novice investor could have puchased a suitable block of land as, since the broader market rose, made a proft.

Now though, more skill is involved as the profit must be made in the value add in the deal rather than relying on broad cap. gains to drive prices higher.

Hope this helps.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi JoD,

Welcome to the forums and thanks for your post!

Congrats on taking the plunge, but don’t let the pace of the market force you into a hasty decision. One possibility is to agree to buy, but to add a ‘subject to a building inspection to the purchaser’s satisfaction’ into the purchase contract. That way you’re not delaying showing your intention (i.e. sitting idle while someone steals the deal), nor are you locked in completely to the contract.

Some very quick calcs for you:

Cash Down

Deposit (say 20%) = $40,400
Closing Costs (say 5% of purchase price) = $10,100

Total Cash In = $50,500

Rent

Per annum = $18,192

Expenses

Management (7%) = $1,274
Interest = $11,312
(say 7% and I/O for ease of calc)
Other costs per you = $6,995
Insurance (say) = $500
Repairs (say) = $500

Total expenses = $20,581

Est. Cashflow = -$2,389

On these numbers it looks to be a borderline deal, especially when you factor in 100% occupancy for the rent. Also, if you do P&I loan repayments, or load up the debt further, then your cashflow will almost certainly be more substantially negative.

As such, IMHO, buying as a +ve cashflow deal (not inc. deprecn) makes it ‘on the line’ at first glance.

Check for ways to reasonably / creatively increase rent, or else is there another use for the property to increase profitability?

Nice to see you on the forums. Don’t be a stranger!

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Okay Jo,

It’s time for me to turn the other cheek.

If I have done worng then I have attempted to right this by reposting to the original question.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Sonja,

It’s my pleasure.

Thanks for your support and feedback. It’s nice to see that the effort contributed is appreciated.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

You are correct that the gross would be higher than the net.

Nevertheless, gross was chosen as a more accurate basis for comparison given that using net would have meant employing more budgets for forward estimates.

As mentioned at the book launch, my estimation of net cashflow would be somewhere b/w $450k and $550k per annum. Such a figure was never measured though.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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The great Gatsby…

You crack me up! []

Blessings brother,

– Steve

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The day is what you make of it! Now go lift weights [wink4]
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Hi,

Yep – this has been discussed in some detail at various times.

I guess Rick and I discuss the same issue from different perspectives. Ultimately you need to weigh up which you prefer for the asking price.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi again,

My point about financial burden is more of an accountability to do the most with it that I can rather than squander it.

Good passages (Matthew 6:19-24):

19″Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. 20But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. 21For where your treasure is, there your heart will be also.

22″The eye is the lamp of the body. If your eyes are good, your whole body will be full of light. 23But if your eyes are bad, your whole body will be full of darkness. If then the light within you is darkness, how great is that darkness!

24″No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money.

The burden I talk of is to remain wealthy and humble before God, at the same time as being accountable for the blessings he has provided (i.e. parable of the talents).

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Pleased you enjoyed the book and thanks for your post.

Re: the 2.25% figure used.. it’s just a reference point as such, taking into account the overall fee and dividing it by the total sales price. Naturally, some commissions will be higher and lower.

Perhaps just remember that commissions are negotiable [wink4]

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

I’ll get Brent to look into it and get in touch with you asap.

Cheers,

Steve McKnight

**********
Remember that success comes from doing things differently.
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