Back to original quote yack. personally I wouldn’t have plan to get to that situation, however one can also sproose up the joint. ie.. get feng shui master to do his/her stuff maybe then rent can be upped a bit. Definetly price will sore then one will be able to get in better sted for higher yeilds.
[strum]
sis, please don’t think I am getting at you, but I have a problem with that whole sentence and in particular the words
“predict accurately what the value will be”….I mean, sure you do the yield/IRR based on the known costs. income, and how much cash you put in. Writeoffs too. Steve calls it the cash on cash return. I realise that gross yield means nothing, it’s the net yield or IRR that counts.
But let’s say I buy a house for 27K and today it’s worth 35 k (boom) and next year it’s worth 29. (slump.)
but let’s say rents are constant and in three years go up ten percent. All I should care about as a CF investor is the relationship of my income versus holding costs which haven’t changed. Value is only factored in if you plan to sell, or might want to sell. Timing it right. but as I’m not a trader and a B+H long term I’m more Kiyosaki in my approach, really. He says he values a property on how much cashflow it gives him. If my property’s rent rises five dollars and the yield is now 24 percent, the value of the property has increased to me, no matter what the market says it’s worth that particular day. I guess i see it a bit like commercial property. For example when looking for deals, a tenanted house always has more ‘value’ to me as an investor than a vacant one, because there’s one more thing that’s known that you don’t have to ‘predict accurately’.
cheers-
miniI think property investing is a combination of art and science.
Nice to have hard figures but there needs to be context to the actual numbers.
James
I agree. Its one of many tools.
Interestingly though, learning about this particular technique and tools, and understanding discounting and NPV is a very useful when analysing other things like stocks or funds..
EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.comHi Ez-rent & Mini,
Agree with you guys also,
but, knowing and understanding all these caculations, make investing so much more fun, yet much more rewarding….
Good luck to both of you and wish you’s greater success in all your investing…[king]
Cheers,
sisyes indeed, being able to do the numbers means eveything
cheers-
MiniHi guys,
Are there any books in particualr that you would recommend for young players? I’ve read steve’s, also two from the rich dad series, i’m reading on accounting at the moment…. very very dull…… ZZZZZZZzzzzzzzz but I realise that I need to know it… any other really good books that I should be reading (property related)??
[shades2] also, is it just me or does this one look like cartman from southpark wearing sunnies without his hat??
itsa
One of these days i’m going to put a good, funny, witty comment here.
Hi itsamoorey,
im not sure if you want a book on IRR’s but the best way to do IRR’s is to use property software program, there way to hard to on paper.
the 3 main caculations most people use for finding returns and % amounts are.
Yeilds
CoCR
IRRthe rest are more of formulas that the guys and gals on here use for quick arthmitic, with out having to get into, too much detail or straining on the brain… [headphone]
Cheers,
sisHi sis,
I should have been more specific, I meant books in general…. probably should’ve posted a new topic but am busy surfing…
thanks,
itsa
One of these days i’m going to put a good, funny, witty comment here.
http://www.travismorien.com/FAQ/reading.htm
The Millionaire Next Door – Thomas J. Stanley and William D. Danko – Fantastic book – found this at my library
Down the bottom of the above webpage is the real estate books secion with some comment..
Originally posted by itsamoorey:Hi guys,
Are there any books in particualr that you would recommend for young players?
EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.comThanks ez,
I’ll have a read.
itsa
One of these days i’m going to put a good, funny, witty comment here.
Itsamoorey, one of the most important factors for success is to be persistent.
Make it a numbers game (which it is). Keep making offers, keep looking at properties, keep on going.
Pisces
Sis. All I can say is that i,m now totally lost.Glad they didnt have all that in the book or I dont think I would have got thru it.
So many +CF properties out there.Let me help you and achieve a win win situation.Russ.
Hi RussH and All,
ill shoot another example of an irr.
lets presume, back in 30 years ago, there are 2 fellas, both of them purchase a property one buys in Sydney and the other buys in a country town.
now lets furhter presume both properties cost $4000 each, but both men put down a $1000 cash deposit and borrow, $3000 each…
lets say, the country property is +ve cashflow and the Sydney property isnt, but over the duration of 2 years, the Sydney property does become +ve cashflow… due to tax rebates and benefits.
… would both properties today still hold the same value in price, or has one sky rocket yet the other one has slowly gone up in value, yet both are +ve cashflow….
but, that country property that was bought for $4000, may only be worth $50,000 today and maybe renting for only $100 per week…
has the irr, returned a great deal or has the irr on the Sydney property return a greater irr than expected, and caused the ability to further fund and purchase more properties…?
irr’s can be very confusing but it is very important that people and investors understand the return of an irr.
hope this is clear to all…
Cheers,
sisinteresting sis.I dont think in todays market where I live that u could buy a property in rural area and then in city for same price.prices r rural $20k -$100k +cf City prices $150k -$??? -cf.I am just starting out and would rather a few property +cf in rural area like brenda irwin she seems to be doing ok.City prices are too volatile for me.Anyway better to have 10 small ip than 1 big one less risk.
So many +CF properties out there.Let me help you and achieve a win win situation.Russ.
exactly. Russ.
SIS, the country property bought in 1991 for 5k rented for 20 bucks a week is today worth 50 K and rents for 130. The yield in year one is 20 percent, , and in year 13 it’s 130 percent.
Plus capital gain. Which might not be much as a percentage, but it’s something – I mean, the house is worth 10 times as much as in 1991. Sydney 1991 200K, Sydney 2004 2 million?
maybe. Is it possible the country property not only made a humungous wad of cash returns for the owner, but could have even out-performed Sydney in capital gains? Maybe.SIS, I know you are against +ve gearing, but I’d be interested on some numbers of what you consider your best performing deal so I can see what you’re on about.
cheers-
miniHi Mini,
im not too against +ve gearing, just as long as the property does go up in value, consistenly and so does the rent, im really more concerned about a property holding its value and its rental over time.
… but sure im happy to share some +ve cashflow stories…
here a few of the better returning gross yeild property i have that have had really high evaluations and growth.
property 1
purchased price and including all cost $55,000
weekly rental of $150 pw
gross yeild return of 14.1%
property evaluation $70,000
predicted IRR growth for this year $80 – $85kproperty 2
purchased price and including all cost around $65,000
weekly rental of $150 pw
gross yeild return of 12%
property evaluation $80,000
predicted IRR growth for this year $88kproperty 3
purchased price and including all cost $73,000 weekly rental of $165 pw
gross yeild return of 11.7%
property evaluation low $90,000
predicted IRR growth for this year $100k – 105kthese are the really best examples of my better performing +ve cashflow properties, though most importantly, these properties before being purchased, were tested for their irr.
Cheers,
sis
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