You can find a JV to finance part of the development project.

Try some creative techniques such as vendor financing when selling to increase cash flow. This would ease the pressure off a negatively geared property and allow you to hold it longer.

I’m sure one of the finance brokers from this forum may be able to offer some other finance solutions. I’m just offering the types of things we do, both my husband and I dont have jobs [biggrin] (and loving it!!!)

Investment Property Management
http://www.adprop.com.au

Hi James,

I tend to agree with everyone else (how unique of me [biggrin]).
We were faced with a similar problem years ago, we identified the most negatively geared of our propertiies and increased the cash flow using vendor financing techniques and multi tenancies.

Actually one of our cash flow solutions has been publised in Sep API page 34 [biggrin]

Using creative techniques rather than just straight selling has the benefit of not having to take a possible loss on a property. Because you are financing the property the same price is higher! With multi-tenancies, there is no sales price, just cash flow!!!

The extra cash flow can then be used to fund your other properties giving you some breathing space while at the same time allowing you to enjoy capital appreciation in other properties.

I can certainly help you set up these creative techniques if you are in SA, feel free to contact me any time [biggrin]

Investment Property Management
http://www.adprop.com.au

Hi Peachy,
We have bought a few in recent times and aim for 20% under the median for the area.
Expect to get many of them knocked back, but remember that if it was easy everyone would be doing it [biggrin]

Investment Property Management
http://www.adprop.com.au

Hi Wealth,

I have used call options to buy and sell properties and use them combined with a lease to increase cash flow for clients that we manage properties for.
I don’t like to combine them with a put option because I like the buyer to have the discretion of buying or not. A put option will force the purchaser to buy so would limit our negotiations for a higher puchase price!!

I have also purchased properties by taking out a call option. Most investors understand the concept of trading time value for money and we usually offer a higher than asking price for the “right” to buy. Again, put opions will not benefit the negotiation.

How do you use them?

Investment Property Management
http://www.adprop.com.au

If you find a property manager who can successfully manage your property (that includes alot more than just finding a tenant and signing a lease), then you can use your free time to be looking for the next property deal rather than managing existing properties.

That’s the whole idea, leveraging from other peoples time [biggrin]

Investment Property Management
http://www.adprop.com.au

Agents can legally charge ALOT more than 7.45%!

Cheaper property managers are not always the most cost effective!!!!

Property managers who are also investors can offer what you are talking about [biggrin]

The trick is to find a property manager who has their own property portfolio and can think outside the square with regards to maximising returns on investments.

What do you mean by non-real estate company? If you are dealing with other peoples money ie collecting rent, you need a trust account that is regulated and audited every year. It is illegal to hold money on behalf of other people in your own bank account.

To open up a trust account and be able to act on behalf of vendors for property transactions including property management, you need either a real estate license or a law degree

sorry but that’s just the law [biggrin]

Investment Property Management
http://www.adprop.com.au

They only started several weeks ago and they said that they don’t get that many clicks. Vendor financing is a new age concept, give it time it will catch on [biggrin]

and so will the web site [biggrin]

Investment Property Management
http://www.adprop.com.au

PS, the Adelaide group is not age-specific [biggrin]

Investment Property Management
http://www.adprop.com.au

Great to see that there is something for private landlords. [biggrin]

Just keep in mind though that most properties are managed by property managers who would probably prefer to use the more established tenant default databases such as TICA, so even though tenants could be in default, it does not mean that they will be listed on the landlrord site!

Do you know if it allows you to list tenants who have trashed properties but where the damage was covered by the bond??

Investment Property Management
http://www.adprop.com.au

Yes, the property is negatively geard but the return is above the average for SA (anything above 5% is high for SA).

What area is it in and how are you basing your growth calculations?

Buying positive cash flow properties is not the ONLY way to invest, infact, if there has been no growth in the area, you are left exposed to debt with no incease in equity to offset it, it is high risk!!

Negatively geared properties are also higher risk because sooner or later (5 properties for most people) will leave you with servicability problems when it comes to finance, that means slow growth in your portfolio and you are at the mercy of capital appreciation.

Factoring in depreciation and tax benefits may increase your returns, its a method used by some investors (not me personally [biggrin]) but it may suit your investment style.

In SA, you could consider some creative investing techniques such as offering it back for sale on vendor financing as a method to increase cash flow that you can use to service other properties, allows your portfolio to grow at a faster rate than negative gearing, while not leaving you exposed to dept as in buying properties just for positive cash flow.

Hope I haven’t confused people with all the jargon, I can understand what I’m talking about [biggrin]

Investment Property Management
http://www.adprop.com.au