what’s the money tied up in ? will you have any left after 5 yrs? i’d doubt it was capital guaranteed.
some of us remember Pyramid and other building societies that offer great returns. sadly they went bust loosing the depositors funds.
i’d check it out carefully before putting in one cent. How are they making a profit? by lending it out at 18% ? we know what type of people have to pay that much for their money.
westan

Hi muppet
how are things going, i purchased a house inDunedinlast week for 58k renting for 170pw i could have paid up to $85k for it to fit the 11 sec rule. So the deals are about even in large NZ cities. But i agree with you the 11 sec rule is not always indicative of a cash positive property. Especially at the lower end of the market, if you were lucky enough to find a 40k property but it was let at 80pw you would be loosing money on this deal. So Muppet i think a bit more time evaluating the true figures (as you suggest)is the best way to go.
Steve
you have to admitt that it is hard to find deals, i’ve been buying since 1997. in the Good Old days you could drive into any town and take your pick. You could offer 30% below the asking price and you would find someone happy to off load the house to you. No times are changed. Speaking to some folk who are driving all over the place doing 100’s of KM’s and not finding one deal, things are really difficult for people just starting out.
westan

hi fudge

i don’t think you would get anthing that cheap in Stawell as far as rent goes (90pw). I own properties in Oliver ave, freeland st (commission area and rent is 120pw, my properties are OK but typical excommission homes.
westan

Hi all

one thing i’ve observed with some of these MLM is the business is incredibly fragile. i have a friend who was in Amway, he made it to the direct level (where you are supposed to have made it). in talking to some “diamonds’ (even higher up) he was told that they knew the business was not as solid as they presented and always at risk of collapsing if downline legs fell apart. Anyway that is what happened to my friends business 2 key couples in his downline both had a marriage breakup, it destroyed their whole downlines and my friends business in the process.
Having said all that another friend in Amway lent me Rich Dad Poor Dad and other “recommended” books these have been really important to me in getting me to where i am. No MLM for me, no i’ll take property any day thanks.
westan

hi Gocats

i’m surprised that you could find properties with such low rents.

In stawell ex commission homes rent for 120pw, horsham you should be getting 155pw, and Araart about 110pw (at least that s what i’m getting.

regards westan

Hi all

George you are right in some of the things you say but you are also miainformed about the true benifits of positive cash properties.

Firstly you may be right some areas, perhaps Cobar (i’ve never researched it or been there) will be a bad investment, even if they are cash positive. Just because a property is pos does not make it a winner.

But if you can combine cash positive and capital gains you can amass a huge property empire. my net worth 6 yrs ago was 25k my income was about 40k, today i have 25 cash positive properties and i should never have to work again (unless i stuff up somewhere).
You seem to think that cash positive properties can only exist in little outback towns. i bought 5 last week including one in a city of 100,000 people for 58k the rent is 170pw.
Another misunderstanding is that you give up capital growth by buying cash positive, most of the properties i have purchased have outperformed the best performing suburbs of Melb and Sydney. For example in Hamilton Vic i purchased 3 properties all for under 42k last year today they are all worth over 80k. (over 100% increase in 14 months). If you keep an eye out for areas on the improve you can get excellent returns.
Another advantages of positive cash properties is even people on low incomes can build large property portfolios. all of the properties i buy actually improve my servicability ratio with the bank i use, unlike negative geared properties where each one deteriates it. how many negative geared properties can someone on 45k afford ?
Finally just because a cities population has been in decline doesn’t mean it is going to disappear. there has been a shift back to regional and rural living in very recent times. many people recognise that life style is more important than trying to make a living in the rat race, these people are selling properties fetching record prices in Melb and Sydney and moving into better homes in less expensive areas.

regards
westan

Hi chrissos
anythink is possible. the US have recently been talking about the possibility of deflation, who know what the effect of that would be. But the world of finance is different today to the 1920’s, then even the banks were putting depositors money into the stockmarket and those poor people who thought they had money in the bank and not in the stockmarket were devestated also as their money disappeared. there are always going to be people who get badly burned after a bull run of any type, so it’s important to make sure you aren’t one of them, the idea of cash positive properties reduces the risk incredibly in comparisson to negative geared properties. i suspect it will be those who have bought inner city appartments at over inflated prices who will be burned the most. No matter what you do in life there is risk the best thing to do is become an astute investor and learn as much as you can to reduce the risks. What are the option for you, do nothing put the money in the bank? then what if you are wrong and prices continue as the have for the past 30 yrs and end up doubling in the next 10 yrs.
While it’s been great riding this boom i would rather see prices go flat for a few years before the price increases.
regards westan

hi brent

it is all the extra cost you have which will include
selling agents fees
conveyancing costs
mortgage discharge costs

if you have owned the property of more than 12 months then you only pay capital gains tax on 50% of the profit.
regards westan

hi guys

As i’mstillhungry said ask a lot of agents. i purchased a house recently and one agents told me the rent would be $130pw but 2 other told me $155pw. obviously i went with one of the $155 agent, and they achieved this for me. So it is wise to talk to a few agents, sadly some rental managers under value their homes or haven’t kept up with the increases in rents that are happening.
regards westan

Hi Nvios

yes if you put 20% deposits down you should be able to buy many properties. I bought my first 10 in 12 months a number of years ago when my taxable income was only about 30k, and my wife wasn’t working. sure along the way banks knocked me back but i’d just look for a new one. Hopefully your properties will appreciate in value over time then you can refinance and use the equity to for a deposit for your next property. As i said i purchased 10 in one year and i started with a net worth of only 25k.

I think the thing thats holding me back from making more money is that i’ve got a job. Perhaps not having one could be your one big advantage over everyone else. Another idea is buy properties that as minimogul would say are “cosmetically challenged” actually she said “serverley cosmetically challenged”. it’s so easy to add big $ to properties buy giving them a paint and a clean up. read some of Dolf deRoos’ material.
i actually made more money in the last 12 months by adding value to homes (and i had to pay people to fix them up), than i made working.
Go for it and have a good time in the process
regards westan