Hi Peter,

quote:

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It’s been suggested that rather than passively scanning the net or looking at papers, it’s better to strike up relationships with RE agents and ask about properties in their ‘bottom drawer’ that may not be up on window. I might adopt this approach (as well as scanning ads) for the second IP.

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Yep – I do this too, but at the end of the day, unless you are constantly calling agents then most agents pay more attention to the buyer walking in the door than the buyer on the phone.

That’s my experience.

Cheers,

Steve McKnight

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Hi,

Since I’m online and since I’m not doing anything better… let’s have more of a look at your reply.

quote:

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I’m 32, earning a reasonable wage, married with 3 kids. I have had my first IP for just over 12 months now and built up about $30k in equity.

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That sounds like an excellent start []

quote:

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I would like to build up a reasonably sized property portfolio to use as a retirement nest egg and maybe retire early. (Don’t we all!)

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Well – the difference b/w a dream and reality is a quantifiable plan. Eg. how much in passive incopme per week do you need to cut down from 5 days to 4 days and have more time with the family? By waht date do you plan to have this accomplished?

quote:

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My plan? To do this I’m not sure how many properties I will need, just thought that each year I would look at the finances and if I found the right property, invest again.

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Hmmm – sounds a bit wishy-washy to me! This is not the talk of a determined mind, but someone waiting for opportunity to find them. You need to work out how bad you want that early retirement.

quote:

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Not much of a plan I know. I don’t know whether to build up a number of lower priced properties at around $100k range, (the first IP cost $110k) say 3 or 4, before moving into the higher priced properties. I’m hoping some of you good people might be able to give me some direction.

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As a rule of thumb, it’s better to own 4 * $100k properties than 1 * $400k property.

That way you can spread your risk of vacancy wiping out your cashflow.

My advice would be to work harder at deciding what you want, for when you have a goal it’s just a matter of method (and effort) to get you there.

Bye,

Steve McKnight

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Hi Michael,

Wonderful idea.

Might I suggest that you simply sign a ‘normal’ listing agreement that has one additional clause, which is that the agreement is subject to an attached memorandum of understanding (MoA)

In the MoA simply flesh out what you have written in this post (sort of like a job description) and then have the agent sign it.

In other professional circles (such as lawyers and accountants), such a document is called an ‘engagement letter’.

IMHO, that would be the path of least resistence to get the outcome you desire.

Don’t revent the wheel… work with the system rather than fight it.

On a different note, I’d like to personally thank you for all your wonderful contributions. You are a fountain of knowledge and a real asset to this community.

Warm regards,

Steve McKnight

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Hi,

I’m currently in Mackay, an area where properties that meet the 11 sec. solution are as rare as hen’s teeth.

Or so I’m told, except that there in yesterday’s paper is the following ad:

quote:

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“Investors possible over 9% return”
This neat and tidy 3 bedroom home could easily be rented for $155 p/w which if purchased for $89,000 gives over a 9% return very hard to beat around town on residential property.

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OK – it’s outside of the 11 sec. solution, but only just. Perhaps this is the sort of property that would warrant further investigation to see if the numbers stack up?

This post gives you a good insight into the way that I find the majority of my deals… reading papers and scanning the net.

Of course, these options are available to us all.

Bye,

Steve McKnight

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Yep, I agree with Terry.

I wonder… what happens if there is a capital loss?

And seriously, what is the target market for a tenant that will pay 75% above market rate (that is $700 for a property with a market rent of $400 per week)?

Like most things that come from the NII, it might seem attractive on paper, but what is presented is usually based on the best case scenario and simplified beyond belief.

The devil is in the detail, which I suspect is yet to be properly fleshed out by real life deals done at arms length and on a replicable basis.

I’m happy to be proved wrong though.

Bye,

Steve McKnight

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Hi,

My advice in this respect is that there is no ‘right’ journal as such as it is for your benefit more than it is for mine.

Note what you feel is necessary to flesh out the ideas and experiences you’ve had.

The journey is far more important than the outcome.

Warm regards,

Steve McKnight

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Hi Craig,

Thanks for your post and welcome to the community!

It might seem like a small question, but it requires a 2-day seminar to provide you with a proper answer.

Might I suggest that the place to start is not “what to buy?”, but rather “what profit outcome do I hope to achieve?”

Furthermore, think through the issue and ascertain when you hope to be financially free from the need to work and then consider whether property can help you achieve this goal.

Your profit outcome choices are either capital gains and/or positive cashflow. Your choice will then determine what kind of property you need to focus on.

As for areas, well, as recent APIM graduates know… good deals exist in all areas when you know what to look for, which is solving the problems of vendor’s and tenants.

Good luck and keep posting!

Regards,

Steve McKnight

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Hi,

Hmmm – I see red warning lights flashing here.

A common trick is to try and sell overpriced property to off-shore investors who don’t know he market.

For you, used to London prices and with a favourable pound:dollar exchange rate, the prices might seem cheap.

However, that is not to suggest that you will be paying too much for the property!

I wonder, who do you think is paying for the seminar, flights to London etc? It will be the overseas buyer.

If you decide to go ahead, then I would suggest that you have an Austrlian do the negotiating for you here in Oz. Perhaps consider using an independent buyer’s advocate to act on your behalf.

Cheers,

Steve McKnight

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Hi,

I’m not a big fan of these as I view it like neapolitan icecream – it has a little bit of everything but not enough of anything.

A hybrid trust incorporates a mixture between fixed entitlements (like a unit trust) and discretionary entitlements (like a family trust).

I’m yet to hear a good argument for why a hybrid trust is needed, when a unit or a family trust seems to be a cleaner and better option.

I’ll talk about unit (fixed entitlement) trusts in the next newsletter.

For those interested in detailed structuring information, I draw your attention to the recently released Wealth Guardian product.

Regards,

Steve McKnight

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Hmmm….

Good questions, but out of my specific area of expertise.

However, I seem to remember something about owner builders haveing to provide a 10-year guarantee???

My neighbour is a owner:builder, I’ll see if I can remember to ask him.

Can anyone else shed any light on the matter?

Steve McKnight

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Remember that success comes from doing things differently.
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