Forum Replies Created
Well the first place I search for is the council web site for the location you are researching.
Just go to google and enter xxx shire council or town council (don’t actually use xxx because then your net nanny will fire up![biggrin])
You can often get demographics about the region from there, such as age, population, gender and so on. Then if you want house price data you have to buy it. You can get land values from the state authority responsible and median house prices from various online sources, just do a google for it.
Surrey.
Yeah, gearing amplifies losses too. [biggrin]
But like to be positive[thumbsupanim]
Hi,
As above plus I’d recommend taking advantage of being at uni and take some elective courses in economics and or accounting and financial management. I learned lots of useful jargon and concepts while studying economics and AFM (plus contract law / business law has payed for itself a couple of times over)Also, while your situation is simple, do your own tax. Use e-tax if you can and read through all the help and doco. You’ll learn so many more ways to save money (and earn it too) than if you just hire an accountant to do all your work. I still do all my own tax and I recon I pick up more deductions and such than if I got a tax agent to do it for me (though an expensive specialist accountant could probably squeeze a little more for me, I at least save by not paying for them).
In Victoria you don’t need a solicitor to hold the deposit in trust. You may open an account in the names of the vendor and seller to hold the deposit until release.
However, unless the property is of very low value it is probably easier to use a solicitor to hold the deposit in trust.
I’m selling, for example, a $10,000 storage unit and the fees for solicitors to hold the, at best, $1,000 deposit for the short time it takes to settle would not make a great deal of sense.
Surrey.
Indeed Ayr007 there are many sneaking little costs here and there when buying and keeping property.
I’m hoping the rough working I presented was enough to demonstrate the way you work out positive cashflow.
I think what it also demonstrates is that positive cashflow is tricky to orchestrate (without just paying cash with no mortgage).
Hi,
Well based off what you’ve said, $30 / week for one house means you’d need 100 such houses to make $3,000 / week. Can you own 100 houses within 8 years? yes. Can you buy and hold 100 houses from the first to the last? Probably not (unless you have a huge income)The reason for this is that 100 houses / 8 years = 12.5 houses / year that you need to purchase and earn income from. Based on $5,000 closing costs per house you’d need $62,500 each year new money. So if you were on $150,000 a year pre tax income you could have a good stab at it.
The other way is to make money from real estate faster, you do this through leverage.
If you buy a property that grows quickly (maybe you renovate, or change it’s use or get planning permits, or subdivide or whatever) and then sell it to buy two houses, one that returns positive cashflow (and probably no CG as that’s the way it often works) and one that grows quickly then keep repeating, all the while as you save deposits buy more houses you might have a good shot at reaching your goal.
The point I’m making I guess is that you really need to work quite hard to (mentally and financially) achieve decent “passive” income. That is where the planning comes into it that everyone talks about. It’s not just planning “a” purchase, but more like business planning your investment process and life business. You need to make sure you clearly see what you will do with each asset.
PS: if you fully pay off an IP you no longer reap the gearing benefits that amplify your gains.
Surrey.
Hi,
With 100% finance it is a fairly simple equation.To be positive you need to cover
-interest payments (assume IO loan)
-council rates
-maintenance
-property managementSo, assume interest rate 7%, assume $700 rates (just plucked this out of the air as an average) assume say $500 maintenance and $500 property management and vacancy. That means we need:
700 + 500 + 500 = $1700 + 7% purchase price
In other words for a $150,000 property you’d need annual rent of $1,700 + $10,500 = $12,200 or $235 / weekThat works out at 8.1% gross yield for a $150,000 property to break even. Any money above that will be positive cashflow.
You could set up a spreadsheet with these sorts of figures in it to help you work out what you need for any given property to break even or be positive.
Oh and don’t forget stamp duty. There are a number of stamp duty calculators available from bank web sites.
Hi,
You can get the DIY Conveyancing kit from http://www.diyconveyancingkits.com.au/index.html
You can get one specific to your state for about $60. It comes with all the forms you need and a manual that tells you everything that needs to be done and give references to government departments and such.I’ve used it to purchase and I’m currently using it to sell. If nothing else it give you all the info about the process so that when you engage a solicitor you have a bit of a heads-up on what’s going on.
You don’t need any particular qualification to sell your own property or buy property for yourself, you just need a brain like a sponge and a bit of free time.
Personally I love learning and love doing things myself where practical.
Surrey.
I think the simplest way to answer this is to analyse where your money is working hardest.
EG: loan interest rate = 6.5% then every dollar you pay off the loan is effectively earning 6.5%. If you have an internet only account earning 5.5% every dollar should go to the loan in preference to the account as you will get more out of it. If you add to the equation the opportunity to buy another property earning you 20% on your money (by whatever means) then obviously you are better off buying the second property.
Generally speaking what tips the balance for me is the consideration of cashflow vs paper profit. By that i mean I bought a house that is returning about 40%, but that’s a mix of CF and CG (so it’s 40% unrealised profit). At the moment I am happy with that as I have a job that pays me and i don’t need the cashflow to live. My plan however is to sell a couple properties to cash in and buy a PPOR outright then build up my equity again to provide replacement CF so I don’t have to work any more (though I’ll still be putting effort into making money, it will be for my own benefit and fun).
If you want/need CF then pay out the laon at least until the point where rent excedes expense. However you could do this by buying a pre-release land alottment then selling in 1 year and applying the CG against the loan (for example). So work up a budget and plan for cash and it should all become clear.
Well for one thing you could try a private sale to start with. You coudl save many thousands of dollars doing it yourself and lets face it, unless you’ve got a strange property or a very expensive one the basic RE agent will just put up a picture on the net and hand out the keys for inspection. On a $250k house you could save in the region of $5k (which would get you and the missus or mister to SE Asia for a week or two).
Also, take a cue from the DIY shows and make sure the place is cleaned up, the yards tidy, any strange smells gone, chipped paint fixed and so on. Only really costs you time but could mean a couple thousand on the sale price.
Hi,
The bond you paid is yours by default. If you end your lease you normally get given a form by the RE agent or owner to claim your bond back. If they don’t give you the form you can contact the RTBA (residential tennancy bond authority) for a form and fill it in yourself. You don’t need the property manager or landlord to sign this document. Once you lodge it the RTBA will contact the landlord and they will have 10 business days to make a claim against the release of bond back to you. If they don’t, then you get your money back within 2 days if you nominate an account for EFT or 5 days (I think, I’ve always nominated an account) for a cheque to get to you.Something to keep in mind both as a tenant and as a landlord is the bond belongs to the tenant, not the landlord, and by default the tenant gets their bond back. Many PM’s are of the mistaken belief that the bond belongs to the landlord and try to steal it from the tenant at any opportunity, they also tend to give the tenant the impression the bond belongs to the landlord. This in my opinion creates bad tenants as they (like me) become resentful of the greedy and manipulative ways of the evil real estate agents.
Are they born with black souls, or do they just end up that way?[biggrin]
Hi,
By liquidity I mean how easily you can get your money back out. For example a bank transaction account linked to an EFTPOS type card is 100% liquid. At any time day or night you can get your money out and use it.A house on the other hand will take at least a month or so in the best case scenario.
Shares listed on the stock exchange for a large property trust like Macquarie Office for example would probably take a working week to get your money and so on.
The concern with property trusts that are not listed is that they have a smaller market and it may take longer to sell your units (or shares) to get your money back out. Not a problem if you are using the funds to buy a house as that transaction takes months to complete.
Debentures are essentially shares in a loan made to a business (or businesses). A property trust often raises money to buy property by:
1. Selling shares in the property which then return rent.
and/or
2. Selling debentures on which the trust will pay interest.The property shares tend to be backed by first mortgage and so are generally more secure (if all else fails they sell the property and money is returned). Debentures on the other hand tend to be second or third in line for a payout (banks come first). As a result they usually pay a good dividend.
Debentures are often less liquid than shares in a property trust because they represent a loan and the trust is probably using your money for something so you have to sell your debentures to another investor or wait until the maturity date and the loan is paid out. Shares represent a chunk of the actual business so are generally easier to sell and trade.
NOTE: this info is reduced to an essential level, different shares and debenture arangements are available.
I’m with the idea of make the tenents happy by giving them a place they want to live in.
I’m a tenent also and frankly I couldn’t give a stuff about the landlord or the prop manager. I pay for a nice place to live and I’d be most happy if the land lord kept it that way or improved it. I look after the property because it’s where I live and I for one don’t sh*t where I sleep. If the landlord thought they should reward me for being a normal person respectful of private property then the world is a topsy turvey place indeed.
Pizza once a month? I’d rather a kitchen with better appliances so I can cook my own. A movie once a month? I’d rather a good aerial able to receive digital TV. How about a dual register power meter so I can get off peak electricity (no I’m not just talking about hot water). These are the things that work for both of us. I get a nice place to live and the landlord gets tenants and thus rent. I’m expected to keep the house in good order because that’s the proper thing to do and because that’s what I agreed to do when I signed. If I fail at that, I lose a place to live and lose a little self respect.
So: don’t lease your place to people with no respect for themselves or for other people’s property. That’s where pre-screening comes in.
Surrey.
Hi,
I’d spruce it up a bit and offer it as a weekend retreat. Just get some gourmet food delivered for saturday breaky and you’ve got a wonderful romantic cottage for two.Or
Set it up as a training room for any sort of training. That is, put in plenty of power points, maybe knock down a wall to make a large conference/presentation room and put up a covered area outside with a BBQ.
To my knowledge those sorts of uses attract good rent and a 5 acre block that close to the CBD would be great.
If now is not a good time to invest because of interest rates, then when is a good time?
If you start now before any further rises that would be better than starting after no?
You’ll find that the terms people like to bandy about (and this goes for any field of study) are more intimidating than what they actually mean.
eg:
“make sure you know about strategies.”
Sounds technical and difficult and like you need some special knowledge taht only learned people know. What it actually means is: “make sure you know what you’re going to do with your property.” Like are you going to buy a neutral geared property and keep it until it goes up enough in value to buy another one? Or are you going to renovate and sell? Or are you going to get it positive geared and use the income to replace work income?
“have strategies in place to protect yourself.”
As in don’t borrow so much that you have trouble when the rates do go up.“tax structures”
As in keep track of your expenses and interest for investment properties because you can claim them against taxable income.“returns and yields”
As in the money you get from rent and selling the property versus the money spent to get the property.Any new field of study appears bigger than it is (and oddly smaller at the same time). Just take a bite and start chewing. People less clever have been successful (on purpose) so you should have no trouble if you try.
Surrey.
It is important to point at at this stage that Steve didn’t do his thing by attending his own master class.
Heck for a couple grand I’ll readily tell you everything you need to know about any aspect of property investing. Anything I don’t know I’ll happily look it up and tell you.
Alternatively you could invest the money in a couple books (that’s $100 spent) and some time reading. While you are doing that you could stick the money you would have spent on seminars in an account. If you put $11,500 in at 5.25% for 2 months you’d have earned interest to pay for the books you bought! [biggrin]
There’s nothing someone else can tell you that you can’t figure out for yourself (after all, they had to do it sometime).
Just run the numbers and if it adds up then buy it. How do you run the numbers? I think given a few minutes anyone can figure that out (eg: income – expense = profit)
Surrey.
PS: Alternatively go on a course and then take action.
Hi,
Property trusts are a good way to earn income off property without having to fork out a lot of money.Generally you can get in for $10k and earn 7%-10% income. The good thing about this form of investment (as an income generator or cash holdiing place) is it is backed by real assets (unlike debentures for example).
I think if you’ve got a stack of cash laying around waiting for something better to come along a property trust isn’t such a bad place to put it.
I’ve only gone through listed property trusts however so I don’t know what the liquidity is like.
Surrey.
Update on what I’ve found effective so far:
Well I put a post on DIYSell.com and that got a couple of enquiries but the biggest generator of interest has been:eBay!
I’ve gotten about 6 requests for more info with at least 2 of them waiting for my vendors statement. I love eBay (this is not an endorsement for any particular use of the product). Anyway, listing on eBay cost only a few dollars and got at least some results. When I sell I update with what method got the sale. This could be helpful for others looking to sell such items (like student accomodation?)
You can’t eat raw olives, the tanins are waaaaay too high. That’s why you only ever find pickled olives.
To make them edible you need to soak them in water and salt for a long time. Search the net for recipes. But they are certainly not a fruit to eat fresh from the tree [ohno]
Hi,
This is the method Henry Kay taught in his seminars. The idea is that you secure the apartment now off the plan with settlement due in a 18-24 months. Hopefully when the apartments are released they are worth more which means you can either sell with settlement on the same day as you are supposed to settle (like a flip) and you pocket the increase in value without having to pay for the apartment (arbitrage). Alternatively the apartment goes up in value enough that whatever deposit you have (if any) is enough to meet the required loan to value ratio of the bank so you can get a loan.Does it work? It certainly can and many people do this to buy a place to live in when they don’t have a deposit. My friend signed a house/land package deal with a builder due in 1 year. By the time the house was all ready to settle (he used the fhog to secure the land) it’s value was such that the bank would loan him the money without LMI (insurance).
The problem: apartments in particular are a fickle thing to value. With very little land component to them they are largely at the mercy of whim and local favour. In general they go up, but most often not as readily as will a house and land. Also apartment builders often talk up the likely gains or include a portion of the likely gains in the “off the plan” sales figure. Make sure you value the apartment at today’s value and take account of the time value of money (as in an apartment that you buy today and rent out for the 2 years is worth more than an apartment you need to wait 2 years to use).
Anyway, that’s what I’d do personally, particularly if I was going to live in it (an apartment in 2 years to live in means 2 years more rent I’d have to pay).
