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Under the Guru Watch forum – look for the topic entitled Peter Spann.
Its well worth the read even if its a little long. The names of the books are there.
He basically says buy growth properties (normally cities) that are normally ve-, renovate to increase equity and rents, use increased equity to buy next and repeat the process.
Sold a 2 bed unit in July 2004. Made a $70k profit.
Now sitting on my bum consolidating what I have. Got deposits for 3 more houses in surburban Melbourne (built from increased equity). But I am not happy about rents and servicing issues and prices too high.
Oil prices and other inputs are on the rise. This will feul some inflation and I expect there to be a further rate rise in the next 12 months. Will look at buying then.
This is what i would do
1. Use the $20k cash as deposit.
2. Borrow the rest for a property worth $250k.
3. Sell the managed funds (pay any capital gains) and put proceeds into offset or line of credit.
4. Then take out the proceeds and buy managed funds again and this way you can deduct the interest on these borrowings for the fund.
So here is the end picture.
House $250k
less deposit $20k
Home Loan $230k.
Sell mgd funds $35k
Home loan $195k.Buy Mgd funds $35k
Assets = $250k and $35k and loan = $230k
Go to bank and say I want to have loan at 80% ie (250k * 80%) = $200k.
Loan now is $195k less $200k – so bank will give you an extra $5k to do whatever.
Anyway its a rough idea – but best to wait for property value to go up before refinaning and then you can get more money from bank.
Before I parted with my hard earned $60k cash – I would also read the two books by Peter Spann. Or maybe a Jan Somers as well.
Property Investing is a long term proposition and I would read his approach as well.
Then decide which is best for you. Me I prefer the Peter Spann approach.
Geeeeez – Another one.
I wonder who he learnt his stuff from.
We did not do much in Singapore. The purpose of our trip was a wedding in Canada and we decided to see some family in the UK. We had around the world tickets and had to have 3 stopovers. So we decided on Singapore.
We only stayed the one night and spent most of our time with the kids in the Pool. Our kids are 3 and 4 and we thought it was not too fair on them dragging them around after being away for 6 weeks.
I got a brief taste of Singapore and look forward to my next visit.
I once acccidently knocked my diet coke on the keyboard. I bought a new one – it was cheaper than my wasting time cleaning it.
Your equity is $100k. (180k less 80k loan).
Talk to a broker. The further amount you can borrow will depend on your income.
We just got back from Singapore. My favourite photo is one of the kids at a restaurant and between them is a menu saying “Curry Fish Head”
I love the photo – did not taste the curry.
I have not heard of this system in Victoria. It does not make any sense to me unless they deliberately only want owner cuupiers in their area.
I too wish to formally thank Steve for hosting this site. But hopefully, it gets recouped with all the courses, book sales and other material sold at this site.
So keep buying the other materials, attending the courses and buying the books.
That way I get to keep enjoying this forum.
Kids that did Bible studies at my school had no life and got beat up. I had a low pain threshold in those days. Ah and today too.
Why not do vendor finance with your grandparents at $300k. ie. get a mortgage of whatever the bank will give you (this way your grandparents have money for nursing home) and the rest is vendor finance with grandparents.
I dont like to hear stories of paying $220k when its worth $300k, esp the elderly.
Peter Spann is a must read.
You can compare Steve Mcknight – ve+ low growth rural properties to Peter Spann – ve- high growth, renovate, city properties.
Me I prefer the Peter Spann strategy with a few Mcknight type properties.
I reckon you are better off, fixing and doing renovations prior to a tenant. Once the tenant is in you can set and forget for a while.
Pay for another valuation from an independent property valuer. Or try and find out which bank and find another valuer from the banks panel.
Also from Peter Spanns Book – Well worth a read. Do your homework, justify why you reckon its worth $XXXXXX and present that to the valuer.
In other words – do his job.
Good luck with it.
I have bought 3 units in surburban Melbourne over the last 5 yrs. I have done well, but in hindsight I would have made more if I bought houses.
But they would have cost me more to own initially.
So it was a bit of a trade off.
From now on, I am only going to purchase houses, even if they are not in as good a location as the units were.
A reasonable budget – how long is a peice of string.
This is a very subjective topic – there is so much to consider – income, kids, home exps, entertainment etc.
As they say – you should pay yourself first and budget around that.
Kay Henry – well summed up. Thats pretty much what I have been saying all along.
Property investing is about investing for the long term not the short term few dollars you have made.
Steve Mcknight made his money from capital gain, not the few extra dollars he received on a monthly basis from some of his ve+ properties.
If he did not have the capital growth on those properties he would still have them. He also bought them prior to interest rates going down so he was able to get extra cash flow as rates fell.
Now rates are trending up – so not much extra cash flow to follow.
How old is he? 15!!!!!!
