Forum Replies Created
Dougall
Just read the intial message on this post by redwing. It has a list of 24 points about property investing. Henry Kaye was charging $15k to tell people these points.
Sounds ok. Pay the money for termite extermination. I dont think you could really re-negotiate for a fairly minor matter that shows no sign of damage and can be easily corrected.
If the bank valuation is lower than what you paid, how can you get out of the contract? All the bank will lend you is 80% of the valuation. It just means you need to find a little more deposit.
And another thing. In my view its never a time for shares.
Why?
You have $10k cash. You buy shares and borrow $5k. Thats about all you can get.
You buy a property for say $150k.
Shares more volatile but go up by 15% and property more stable and goes up 8% historically.
In a years time you have made $2250 (15% of $15,000)from the shares and $12,000 (8% of $150,000)from the house.
You tell me, can you retire on $2k or live better on $12k.
Is it Over? Well I dont know. Buy i know its going to be tougher. We have historically low interest rates still, so the world wont cave in.
I feel rents will start to rise as interest rates rise and prices may fall and start to stablise.
But I am consolidating waiting for opportunities in 2-3 years. And learning a bit about commercial properties now.
Hi
The post is called ‘Propertyinvesting 101’ by Redwing. Its a good read.
As for a seminar – ANY Seminar. A cost of $1,000 is a lot for a one day session.
My employer does not spend $1000 a day on my training.
If I had $1,000 and was a newbie – this is what i would do.
1. Spend $300 on 10 Real estate books. Both local and US books.
2. Go speak to or find an accountant. Go speak to the local accountant. Tell him you want to do property investing. Even if it costs you another $300. Get some personal attention.
3. Sheeeeet. You still got $400 bucks in your pocket. For that you could still see the accountant for another 4 hrs personal tution or even go away for a weekend or have a great meal out.
4. Get in the car and go see estate agents and drive the area looking around at real estate.
5. Surf this and other forums.Do you really need to spend $1000 patting yourself on the back or hearing all the hoo haaa.
Just my simple thoughts.
Its just a rule of thumb. I have doubts it applies today. I have never used it.
I invest for growth and work out what I can afford.
It varies with the price of gold.
ON RADIO – NO CHANGE
Net equity of $1m in addition to your PPOR in my view is a millionaire.
Having $1.2m in property and owing $800k is not a millionaire.
YES – up .25
Dont worry about paying for a seminar – just read the post Investing 101.
Thats just what you get from a seminar anyway and thats all you need.
What are the tenants like?
Hi
I have the same friends that I went to high school with and I am in my late 30’s. But I do find it difficult to tell them that I am a property investor in addition to my job.
They have a vision of having bad tenants and then having two mortgages. They dont understand that by having a second property, one day that will pay of the PPOR mortgage.
I dont know how to broach the subject, so we discuss other things. But I only give them the half truth of how many properties I have. I have even suggested that maybe we get a group of us and buy a holiday house. We all have kids with similar ages. That way they may see the benefits of property ownership.
Anyway, I see where your coming from fitness.
I reckon you have summed it up very well. All you need to do now is start the Redwing Institute and charge a fortune for the 2 day course.
I am going to Cut and Paste it and put it next to my Desk in the Study at Home. It may not look too good in my office at work.
Steve
Thanks for the update. Your honesty is re-assuring. I love the forum and enjoy referring to it on an almost daily basis.Good luck to the Mappers. I too am on my own Millionaire Apprentice Program. Its just my mentors are me, my parents experiences, the books I’ve read and the forum.
Cheers
Andrew
aussierogue
I like that idea of yours.
ALARM BELLS – “tenant is a friend”
A commercial property is only worth what income you can get from it. Does the tenant have a long lease?
If the tenanat leaves and you are stuck with no income the property is not worth having.
The bank will value the property and risk according to the lease agreements.
I am presently looking at a commercial property for the first time. I have several residential properties and can use the equity in those to purchase the commercial property. I am paying the bank $550 to value the commercial property. I will get a copy of valuation as I am paying for it. If they think its ok, I may proceed.
The interest rate is determined by the risk according to the bank and they take into account the term of the lease agreement and the state of the tenant business.
Richmond.
You say you are selling. Have you had enough of the Peninsula? Are you saying now is the time to sell not buy? I know its taken a long time for the peninsula to grow in price and I expect when interest rates go up and people start to hurt thats the time to buy on the Peninsula as the first thing that goes is the holiday house.
I am not saying now is the time to buy, but when I can afford it I will. And all i really want is to rent it for one week (but available all year) and claim all the interest as a tax deduction.
So what your saying is – wait for the Book.
Anyway regular updates in the Monthly Newsletter is good. We dont need a alot of detail but some general comments would be good.
My theory – for my situation. I am on a reasonable income (graduated uni with 15 yrs experience). I could get a higher income elsewhere but with a young family I have balance between hours and income.
Buy properties in high growth areas. Yes, near beach, 10-20 kms from cbd in cities etc.
Yes, they may be or probably are negative geared. You want growth. And yes, you need a job to support this. Buy traditional homes or units. Not inner city stuff.
Once the first goes up in value – use the equity to buy next property, then the next etc.
Sure – buy a property in a rural area that is positive geared – just see what growth, if any, you get and see if the management hassles are worth it. For mine, its not worth my time and the management hassles of having rural properties, even if they are positive geared. As stated, I have a young family and full time job, so I am time poor.
What if your just bought a PPOR? How do you start buying a negative geared investment property? Just pump what you can into your PPOR. Don’t worry too much about paying the PPOR off. Buy an investment property (when you can affford it and use interest only on a fixed 5 year term) in a growth area and before you know it the equity you have in the investment property will more than cover your existing mortgage on your PPOR. Buy properties at about the $250k to $350k.
Then eventually get a portfolio of about $1m. If property goes up at an average rate of 8% a year, then you will make $80k a year capital gain for just managing your properties. This is a heap better than looking at shares, managed funds etc. Don’t even look at them. Feather your own nest not brokers and financial advisors.
That’s what I am doing. I am not there yet, but I have started (I started slowly about 5 yrs ago) and that’s my medium term aim. Sure its not easy to start now. You may have missed the boat, but there will be another boat. Save cash to pay off your PPOR. But buy a property in a growth area. This means in a major city.
This does not work for all – but it will work for most people as they have an income.
Then as you near retirement, you can reassess your property portfolio and look for some positive geared properties.
