Forum Replies Created
Hi,
There was no secret agenda here, although I regard all the reponses to this post as precious.
I just wanted people to understand that:
1. Making money is incidential to property investing success.
2. Property investing success is incidential to being passionate.
3. Being passionate is incidential to doing something you love.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Interesting discussion.
My thoughts on the Rich Dad thing is why let the truth get in the way of a good story?
Does it really matter that Rich Dad is fake? Only if Kiyosaki first made out that he was real in which case it is a personal integrity issue.
I believe that Kiyosaki’s value is in the output of his teaching methods. I doubt I’d be where I am today if I had not read and acted on his material.
It makes no difference to my results or my opinion of Kiyosaki as an educator if Rich Dad is a fictional person.
But it does change my opinion of Kiyosaki as a person.
As for Mr Reed… once again, some solid points, but I’d imagine that Kiyosaki has had a much more positive impact on people’s lives than Mr. Reed.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I really enjoyed your post [
]I think it illustrates the attitude that many agents have towards tenants.
A good friend of mine yesterday was complaining that the real estate agent he rents through knocked on his door the other day.
It was answered by his sister who was out from the US at the time. Being told that an appointment had been booked, she let the agent in.
Shortly afterwards the agent opened the door to my friend’s bedroom and there he was with his partner asleep.
He was furious. The agent has issued an unreserved apology, but the violation has already happened.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
What Phil left out was that I used to coach him in junior basketball about 10 years ago!
Oh how time flies.
Thanks for doing your homework mate… now translate the theory into action by taking action.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
The confirmation e-mail with all the necessary information will be out this afternoon.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I’ve been doing some research into this statistic when writing my book and thought I’d share it here:
Col1: Average 1/4ly growth over 20 years
Col2: Average 1/4ly growth extrapolated yearly
Col3: Years taken for property prices to double (approx)Adelaide, 1.82%, 7.28%, 9.89 years
Brisbane, 2.21%, 8.83%, 8.15 years
Canberra, 2.07%, 8.29%, 8.10 years
Darwin, 1.49%, 5.94%, 12.12 years
Hobart, 1.11%, 4.43%, 16.25 years
Melbourne, 2.5%, 10.01%, 7.19 years
Perth, 1.78%, 7.11%, 10.13 years
Sydney, 2.14%, 8.57%, 8.40 yearsNow, allowing for inflation:
Col1: Average 1/4ly growth over 20 years
Col2: Average 1/4ly growth extrapolated yearly
Col3: Average Inflation Over Recorded Period
Col4: Years taken for property prices to double (approx) in after inflation value.Adelaide, 7.28%, 4.90%, 2.38%, 30.25 Years
Brisbane, 8.83%, 4.90%, 3.93%, 18.32 Years
Canberra, 8.29%, 4.90%, 3.39%, 21.24 Years
Darwin, 5.94%*, 3.8%*, 2.14%, 33.64 Years
Hobart, 4.43%*, 2.4%*, 2.03%, 35.47 Years
Melbourne, 10.01%, 4.90%, 5.20%, 13.85 Years
Perth, 7.11%, 4.90%, 2.21%, 35.58 Years
Sydney, 8.57%, 4.90%, 3.67%, 19.62 YearsOK – anyone want to hazard a guess as to what all this means?
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Contrary to public opinion, I am not totally anti-negative gearing.
However, I think that’s important to see a strategy for what it is, and re: -ve gearing, it’s about capital growth.
If your goal is financial independence then I think a better model is to build cashflow assets first and then reinvest in capital growth assets out of replenishing income returns.
This way it doesn’t matter if your assets increase or decrease in value as you always have the regular income stream.
This being said, you need to weigh up the cost of selling your home vs. redrawing the equity.
However, the question of keeping or selling should boil down to answering this question…
Will keeping my property bring me closer to, or push me further away, from my investing goals?
quote:
…I am living in my own moderate home and hold a portfolio of investment properties yielding me passive income.So, does turing your property into a -vely geared property help or hinder you here?
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Fireman,
Thanks for your post and welcome to the forum.
I thought that Nivia Pryor and her husband, Michael, but out a budget planning template which had good reviews.
Give freestyler’s a call on 1800 626 011. Their website is: http://www.freestyler.net.au/
Bye,
Steve McKnight
P.S. Don’t forget about Quicken, MYOB and Microsoft Money for software packages.
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
It’s not a matter of where, rather it is a matter of how!
Find problems and then match them with the appropriate real estate investing solution.
For example, you can wrap any value property – but the real art is finding a client that wants the property and can afford the repayments.
The problem solving here is finding the client, not the property. Hopefully this illustrates the point that it’s not really a matter of location.
This theme… problem solving to make money in property, is the central theme of the Property Masters seminar.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
quote:
With low population growth, they are unlikely to show much capital growth, and it might be a hard to get a tenant, but the cashflow should be excellent (assuming around $100pw rent).Remember that I invest for +ve cashflow so I’m not so fussed about the cap. growth prospects.
The issue of the tenant is very valid though. I use a range of incentives to find and keep quality tenants, so I’m confident that I can find tenants in all markets using the philosophy of treating them like the assets they are.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
FNQ… Far North Queensland?
Anyway, some good resources for you:
ANZ bank discussion of Lines of Credit (LOC)
US site that explains the concept nicely.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
OK,
This might be arguing a finer point, but I don’t hink you can actually buy below market value, you can only by at market value, since what you pay is market value.
However, you may be able to buy below assigned value… such as improved land value, independently appraised value, below median house price value etc.
There is a fixation with trying to buy at a huge discount.
I look at the issue slightly differently. As an investor I have a price I can pay where I make money.
Depending on what that price is vs. the sale price determines if I put in an offer. I don’t see much value in low-balling as it results in lose-lose outcomes.
However, I will try to negotiate a reasonable discount on the sales price to improve my return.
HOWEVER, when I find a deal that makes money I don’t argue the finer points over a few hundred. If I make money and so does the seller then no probs… it’s a win-win sale.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Patricia,
Thanks for your post. Interesting problem you have there and it underlines the importance of due diligence in a potential acquisition.
Based on the numbers you have provided, I’d walk away. You have used some words in your post that I would think very carefully about.
That is:
quote:
This is a gamble, but homes on the canals are rising almost weekly.It sounds to me like your ‘reasonable’ head is telling you that it’s a risk, maybe a big risk – while your greed gland is secreting wildly and tellling you to go for it so you don’t miss out.
Only hindsight will tell us if you would have been better of in or our of this deal.
However, here’s some financial blurb about your chances of making money.
Let’s say you buy for $330,000 on a 80% loan. Closing costs are $11603.50 plus legals and loan fees, so let’s call it an even $13,000.
Cash in you need is therefore:
Deposit: $66,000
Closing costs: $13,000
Total: $79,000I accept that you may choose to use equity in other properties to fund your deposit, or alternatively you may borrow >80% and pay mortgage insurance. But I need to start somewhere…
Anyway, you mention that you’ll also have to tip in $700 per month. OK… and let’s say that you CAN find a tenant the second it’s finished (say the beginning of April).
Your loss until the end of the year will be 9 months * $700 = $6,300
OK – now let’s imagine that you sell after nine months. The first question I ask is why would someone buy a used apartment off you when they could probably buy a new apartment assuming they are continuing to be built.
Pushing that issue to one side, let’s assume you CAN sell for $380,000. Deducted from this needs to be agents costs, let’s assume 3% – which comes to $11,400, plus let’s say another $2,000 in solicitors fees, mortgage discharge etc.
Your numbers now look like this:
Total acquisition costs: $343,000
Add Negative cashflow: $6,300
Less sales price: ($380,000)
Add sales costs: $13,400
Profit: $17,300Now, don’t forget the tax implications of the profit. Because you have held the property for <12 months there is no CGT discount, so up to 50% of it will be lost. Best case scenario is you’ll probably lose say 1/3rd, so your bottom line BEST CASE SCENARIO is you are betting $79,000 to make a possible $5,709.
I can see why you said this was a gamble!
To me there is far too much risk given that your key assumptions are:
1. Property continues to rise in value at current rates
2. You can find a tenant
3. The property is completed on time
4. You have access to capital and can afford the loss each month
5. Your likely gain is small compared with the risk.Perhaps the investing Universe is telling you something by providing you with a way out of this deal.
Maybe it’s your chance to build a relationship with an agent by doing them a favour and moving on from this deal to pick up a more profitable deal later.
Finally, whatever you do, if you are making a $330,000 investing decision without a proper analysis of the numbers, such as that outlined in Financial Analysis Template in Buyer Beware, then you’re asking for trouble.
Best of luck,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Pammy,
Last post for the night.
Welcome to the forum!
My thoughts are that if all you did was make money, then you’d have to make money!
The problem with -ve gearing is that it forces you to stay in your job to earn enough money to fund the -ve cashflow and also create income to soak up the tax losses.
Here are four possible options:
1. Pay off your loans to make them +ve cashflow
2. Redraw your equity and invest it in +ve cashflow property to balance out the -ve
3. Sell your property, pay out your loans and use the balance (after tax) to buy +ve cashflow property
4. Do nothing… keep the status quo.Have a wonderful weekend and thanks for your post.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Greg,
Great to see you on the forum.
Unfortunately there is generally no CGT roll-over relief in Australia for property like there is in the USA.
As for what should you do re: your property, I’d do what brought me to my investing goal the quickest.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
By “NII” I assume that you mean National Investment Institute?
As I remember this is Henry Kaye’s organisation.
I have never been to one of his seminars or information nights, although I did have a private consultation some years ago with someone called Victoria.
I was ushered into a room that had Robert Kiyosaki books on the shelf and was told that Henry sold property that Robert mentioned in his books.
At the time I walked away as the numbers did not confirm the assetions made about wealth building.
However, in hindsight, because of the boom in property, provided people could absord the -ve cashflow and wanted to keep working, then they would have made substantial amounts of money.
Nevertheless, for me, making money is not enough. I wanted to make best use of my money and didn’t want the obligation of having to work.
I recommend going along and trying to glean good ideas. When the sales pitch starts, weigh up the cost vs. the benefit and see if you want to go further.
Finally, remember that people who sell property lack independence about whether or not it is a good investment. Be certain that before you ever sign a contract to buy an investment property of any sales agent that you receive independent financial advice.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Thanks for your post and welcome to the forum.
I’m a bit short of time… but here’s some quick ideas.
quote:
1) Should I sell a property down here to finance the purchase of my PPOR? I am ineligible for a loan because I am currently unemployed (the loan and LOC was approved because of the income of others on the loan). However, i have been travelling overseas for the last 12 months and haven’t worked – so it may be a good time to realise any capital gains this financial year.Be careful not to confuse a lifestyle decision with an investment decision. If you want to buy a home then great, but don’t view it as an investment.
You are right that now might be a good time to realise capital gains from a tax position, but remember you will also lose profits in terms of having to pay agent’s costs, loan payout fees etc.
Tax is only one of many considerations. Will selling bring you closer to or push you further away from your investing goals?
quote:
2) When i move to the Gold Coast i’d like to start buying old properties, renovating them and reselling them for a living. But because I cannot service a loan on my own (no job), maybe i should rent and use the proceeds of the property sold (about $170k) to start me off?Again… don’t cofuse investment and lifestyle. Which decision will bring you closer to your goals? For how much longer can you be satisfied with renting and delay gratification of home owning?
quote:
3) Is there anyone out there who would consider going into a partnership with me to do some small deveopments in South East QLD?Stuart is an excellent point of reference.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Mark,
I have not spent a lot of time investigating landlord’s insurance, however I have an understanding that may help you.
A landlord’s insurance policy covers tenancy risk – usually both from a income and potential physical damage perspective.
The cost of a policy varies with perceived risk.
Personally, unless I know that I’m dealing with a risky tenant, I will not take out landlord’s insurance. I see it as insurance for a risk I already mitigate by carefully pre-screening my tenants and also constantly managing my investment.
Whether or not insurance is right for you depends on your perceived level of risk and how active you are with your investment.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
4Walls…
I diversify! I have property in residential AND commercial [
]Re: your laptop issue. Send Brent an e-mail ([email protected]) and he will try to help you further. You can also ring the office (do it Wed am) on 03 9897 1477.
You gave me a shock for a minute… how could my bank balance being rising so rapidly when I only get $140,000 in passive income?
Then I realised, as did BDM, that you’d taken rent per week and multiplied it monthly.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
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