What can I expect to learn at THE SEMINAR ?

Hi,

There is some pre-reading to complete which Brent should have notified you of.

If you haven’t received it then please contact him at: [email protected]

Beyond that… I think what AD has said about having an open mind is all that’s required. The notes provided are quite detailed.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Here’s what I have in my library and my comments:

‘Streets Ahead’ has lots of good stuff in it, but bear in mind that it is biased heavily towards capital growth rather than cashflow.

For example, it compares one growth property with one cashflow property, when it would have been fairer to compare it with 2 or 3 (due to the often lower purchase price of the latter as well as the ability to pay the latter off quickly).

However it also advocates starting early. Unless you’re a medium-high income earner who already owns their PPOR and/or is willing to borrow lots and take big risks, starting early is easier said than done.

In contrast, starting with cashflow positive is heaps easier, due to their normally lower prices and thus smaller loans. It’s also better psychologically as you can pay the property off fairly quickly and even with one property can have 20-25% of your income passively derived, and are thus well on the way to financial independence without risking everything.

How to Create Income for Life (Lomas) is good and concentrates on cashflow positive property. There is only one key message not contained in other books, and that’s buy properties built after 1985 for the tax benefits. The software you can get if you buy the book is excellent, but the online cashflow positive property register wasn’t (expensive CBD apartment blocks and if the tax laws changed, you’d be stuffed)

Borrowing to Invest (Whittaker/Resnik) A good primer for beginners.

Books by Anita Bell (Your Mortgage and Your Investment Property). Many handy hints and ideas. Cheap paper means books are cheap to buy. Don’t like interest only loans.

I like the approach of saving interest and paying the property off quickly, but I think some of the very fast repayment time frames assume you’re a married couple earning $50k/year each living in your own home (ie not paying rent). If you’re single, renting and earning $30k/yr, 10 years is more realistic than three I think, at least for your first IP.

Various Robert K books – Rich Dad Poor Dad, etc. Very good at motivating, and especially in urging that you get a financial education.

Some of the specific ideas are a bit doubtful, but to be fair he does suggest that those worked for him and you should go away and think up some of your own.

I believe he is not 100% right when he says that your PPOR is a liability. Yes the cost of furnishing it is, but you’d have to do this if living in a rented house. If you own, you’re saving rent and getting an asset that will appreciate. Probably the worst thing though is that if you’re paying it off, it reduces your borrowing capacity to buy investments that pay (though you could redraw from it to get a deposit for an IP).

I would say that provided you don’t spend much on it, your PPOR is an asset, albeit in some areas a poor performing one compared to other investments you could make. In my case I did not buy my PPOR ($120pw rent, $160k value) and chose instead to get an IP ($160pw, $92k) as it more than pays the rent with a mortgage only about 50% the size.

I haven’t got any Jan Somers books, but these are also supposed to be good as well.

Peter

Hi Sooshie – I just happen to love reading []

I find I’m often racked by indecision, lethargy and think of reasons not to do things. I am also sometimes let opportunities slip by.

But when the evidence is overwhelming that the potential benefits far outweigh the risks, I can move quite quickly. The books/software mentioned above, along with my independent analysis have helped considerably.

I’ve been investing for about 8 years, but never in direct property. I did go to one of those free seminars a couple of years ago, but was turned off by the the big loans, negative gearing and slick presentation, which was directed at people with high incomes who already owned their home (ie not me!).

Then one night last December I woke in my sleep with a thought about cheap properties in country towns/cities. I couldn’t get the thought out of my head, so I turned on the light, wrote it down, then went back to bed. The plan was for ‘low priced, high yielding property that at least held its value’.

A country town would be OK, but I’d prefer it to have a growing population. All I’d do is put up a deposit and the rental income would pay the rest.

I approached the bank and got pre-approval for finance (after looking at offerings from other institutions), to make sure that what I was thinking could actually happen.

And so the book buying frenzy began! Checking estate agent websites for prices and rent showed that there was potential for this. I made up a spreadsheet to show that the figures worked out and started looking at this and other sites.

I went on trips around Melbourne (Preston, Sunshine, Noble Park) but the prices even in those areas were not conducive to positive c/f. Also I’d only be buying at the bottom end of the market, but at the end of a R/E boom.

I looked at some country areas in country Victoria. The yields were OK, but I had concerns about population growth in some centres.

Annual leave and a trip to Adelaide in March 2003 for another purpose had me wondering about WA (where I’ve spent most of my life). I did some research on the web and found there was positive c/f property available in a large regional centre which was experiencing steady pop growth. I monitored the web listings, got a listing of recent sales and prices and talked to people. Also before I left got a city map and shortlisted streets/areas of interest. Also told agents that I was coming.

I’d squeezed in a week in WA before Adelaide specifically to look around and buy a place. I located a suitable place with tenants, put down an offer and secured a place. Spoke to council and got engineers and pest inspections.

Now waiting for settlement!

If all goes to plan, everything will have been achieved in under 6 mths. Maybe this was too hasty, but I did heaps of research, found the figures were good, am not experiencing ‘buyers remorse’ and was not discouraged by the 4 Corners show.

However I can’t understand people that will buy properties unseen. What good is being right near the city when you can’t cross the road to get there, easily back out into your street or have to walk over dingy unsafe railway overpasses? The seven days allowed was about right, and I wouldn’t recommend that anyone spend less.

Peter