Post-
6 things I’ve learnt about real estate investing !
Hi ALL..
Feel free to post your replies here.. i’ll put mine up shortly [biggrin]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorIf you had the chance to start over again, knowing what you know now, what would you do differently the second time around?
What Advice can you disperse ?
Do The SUMS..
The condition and location of your Investment properties is of major importance, however, more so is the Mathematics of the Deal !
The saying “you make your money when you purchase” is never truer than in times of low Capital Growth. Look at the deal as a business purchase.
Use Steve’s Cash on Cash Return Calculator ( CoCR ) or access JAFFASOFTS calculator on the link at the bottom of my Post.
A Motivated Seller can secure you a better deal...
If the seller is NOT motivated, then no matter what the condition or the location of the property you still are not going to get a great deal.
If you find a motivated seller, then you have a greater chance of a profit no matter what the condition or location.
Wealth = Assets + Time..
A no Brainer, considering the rapid escaltion of property prices over the last 2 years or so in Australia.. If you bought well, you would have experienced Great Capital Growth.
They say Property doubles in Value every 10-12 years ( Peter Spann mentioned that if you had 10 IP’s valued at $100 000 and even if you owed $90 000 on each loan, 10 years later you would have doubled your value, pay remainder of your loan and walk away a Millionaire )..
Hmmmm 18 reads of this Post and not 1 posting ??
Next 3 soon
REDWING
Protect Your Investment
Invest in a home inspection if you are purchasing a home or considering a major home improvement project. Choose a reputable inspector who is appropriately licensed and insured.
Recognize that regular, proactive maintenance adds years to the life of your home. It can also help you avoid damage to the irreplaceable family treasures within your home.
Keep good records of maintenance and repair work on your PPOR and IP’s. Retain copies of all manufacturer and builder warranties.
Use only licensed and insured contractors for repair work you cannot perform. Obtain references from sources you trust.
A wide variety of protective devices are available for cabinets, drawers, stairs, windows and electrical outlets for homes with children.
Protect your homes with safety products such as fire extinguishers and alarm systems. Warning Systems can be designed to detect intruders, smoke, carbon monoxide, freezing temperatures inside the home, and unwanted moisture.REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThanks for the post, Redwing :o) I’ll add a couple. They’re a bit less technical than yours, but here goes:
(1) Never buy a house/IP depending on the funds of another to sell to finance the new one. It’s a recipe for disaster- you might have to almost give the old one away in desperation. [ohno2]
(2) you can buy in a small town, as long as it’s a “village”. It doesn’t need a Bunnings or a McDonalds (god forbid) if it has an ocean. [fez]
(3) It’s better to work on fundamentals of what *is* now, rather than projections of what will be. So, for example, projections of immigration, population growth, CG, etc. are really guesses. Projections of industry/new forms of employment can be verified, so they’re not so slippery as the abovementioned. [guilty]
(4) Read everything you can about RE- so you know about economics (macro and micro), CPI, IR’s, tax changes etc etc. It’s all relevant to making good investment decisions. [withstupid]
(5) The sleep at night factor is important. If you’re a risk-taker, then increase your debt. If you are not a risktaker, then make very careful decisions or you’ll panic and the joys of RE will disappear. [wacko]
(6) RE is fun and incredibly interesting and I learn a heap of new things every day! It’s also very humbling as there is so much to learn! [mellow]
That’s my list and those things have relevance to me, but may not to you
Thanks for asking, Redwing!kay henry
Have a defined exit strategy so that you know the potential profit in the deal from the start.
eg – buy and hold, wrap, reno, whatever – be able to picture the deal through to completion and you walking away with your profit ready to do the next (bigger) deal.
John.
(I believe that later this year there will be no +CF deals left in NZ, so I’ve moved here to invest full time. I can find +CF deals for your NZ portfolio for a fee, just email me [email protected])
If an oportunity presents it self and the figures add up don’t hesitate as it will be snapped up from underneath you. I used to sell realestate in townsville and I had a set of flats for sale that owner really needed to sell. They were underrented and in excellent condition and right on a golf course but no one wanted to buy them (this was just before the boom in the market). The would return around 13% gross if they were rented at market value. As I was in no position to buy them I tried to get my boss, sales manager or any other sales person to come and have a look at them to see if they wanted to buy them. As i was only quite new and quite young no one took me seriously, until (after a chat with my helpful father) I put a contract on them. The outcome was a positive cashflow property and instant equity. The funny thing is that after I had put a contract on them everyone wanted in on them. If I would have hesitated I might not be in the position I’m in today. [thumbsupanim]
Ok Redwing I’ll bite but I’m just echoing what you said really. Don’t have 6 though..
1. If your all fired up about property investment as your gateway to riches and freedom, then take a cold shower and then come back. Those who are good at this game are very savvy, have educated themselves and avoid making decisions based on marketing induced emotion.
2. Hone your RE Bullshit radar. Comes with self education and experience. We all have one – it just needs to be maintained
This industry has a lot of bullshit in it.3. Until I read the “Millionaire Next Door”, I realised that almost all people with high net worth and financial freedom were in reality, quite different to whom I thought they would be. When I realised this I was able to see just how good RE investment marketing is at pushing peoples emotive ‘buttons’ by emphasising material wealth with cars, boats, etc. This helped sharpen my RE bullshit radar.
4. Try do your tax return yourself. Will help you understand CGT, deductions, etc. I believe that doing this is quote empowering as it shows that its not all some mystical black art.
Jeez what a cynic I am. Guess I’m still pissed that the Eagles got hammered.
Paul
[email protected]EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.comHi Redwing,
For me the six things I learned over the last 19 years are;
1. Look after your property and your will continue to attract a better quality tenant.
2. Manage your property manager very carefully – they are critical in the performance of your property after purchase.
3. Ensure you have good recording keeping processes so your accountant has an easier time of it – and so you can process returns very early in the new year and maximise your legal deductions.
4. Keep your eyes on the big picture without losing sight of the detail.
5. Ensure you talk to, and work with, people who know what they are doing and are in a position to help you.
6. Be committed to your investment goals – but ensure you have time for smelling the roses.
7. Your partner needs to be working in sync with your goals – but also has the capacity to put in appropriate checks and balances.
8. Know your financial situation.
9. Don’t leave it too late to start – but at the same time there is no need to rush.
10. Educate yourself and find a niche that suits you – even though this may be different to other people’s path.
11. Let compounding growth and time exert their influence.As you can see maths is my strong point – there are 6 things I learned. Compounding growth has already kicked in.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Well, I’ve learnt heaps over the last couple of years, can’t list them all, but here’s the more interesting things I’ve learnt:
1) RE investing means doing lots of K’s. I’ve become very good at playing I spy, counting bridges, looking for green cars and finding suitable trees for toilet stops! Travelling with a 5 year old does make RE investing interesting. [cowboy2]
2) When the kid says “Lets buy this one”, don’t let the real estate agent give him a pen. The great room full of toys doesn’t mean it’s a great house. It probably means it’s time to find a park in whatever town/suburb we are in and let him have a play for half and hour before looking at more houses.
3) Next time the tenant says “Part of the fence has fallen down”, get a contractor in. Replacing 13m of “super 6” fence on a 41 degree day and coming across horrendus tree roots is not fun. [weird] (Thanks to hubby it was finished, he was star! And yes, I’m well aware the stars were out by the time he’d finished).
4) All DIY jobs take at least twice as long as you planned.[blink] And you become very good at nailing left over bits of wood together for the 5 year old who’s idea of helping is recycling the leftover bits into swords. [medieval] Oh, and mustn’t forget the tile cutoffs become his “special rocks” which just have to be taken home for his treasure box.
I could go on but won’t, you get the idea. It’s all memories and part of the learning process and in hindsight part of the fun of it all.
Thanks for the post Redwing, that should be an interesting topic.
I’m still relatively junior in property investment. Anyway, here are the major things I wish I knew when I started.
1. Start with strategy. Work out what best fits your situation and personality: reno, + cash flow, cap growth, subdivisions, whatever works for you…
2. Educate yourself as much as you can before your first purchase: books, internet, forums, friends, mentors, …
3. Work out the right structure to hold your properties: trusts, your name, joint names, ….
4. Select an area to focus & get to know the market in that area very well.
5. Never rely on any agent related information. Check everything. Ask questions. Do your own independent research.
CarLover.
I know that’s only 5. There must be a sixth one but I can’t think of it at the moment.
CarLover.
2. Manage your property manager very carefully
Derek,
Can you elaborate please?
Interested in learning how to do this better.
Thanks, Dianenever attempt to renovate whilst drunk. seemed like a good idea at the time, but the paint job was crap and i had to do it again.
cheers
shaunLead, Follow or get out of the bloody way
Originally posted by everdine:2. Manage your property manager very carefully
Derek,
Can you elaborate please?
Interested in learning how to do this better.
Thanks, DianeHi Diane,
Your property manager is the one that deals with the day to day issues and as such you tend to rely on them to fulfil their obligations properly.
Some strategies I use are;
MS Outlook Calendar facility to mark (with a two week warning bell) in when my leases are expected to expire. I get in contact with the PM at this time and remind them that the lease is due to expire and they need to find out what the tenant is doing and take appropriate steps. If they are moving out – start advertising, if they are staying renegotiate a new lease.
I also ensure I stay abreast of current rents for similar properties in the area and ensure I am not doing myself our of income. The need to maintain market rents can be balanced with long serving good tenant type issues.
I also check my monthly rental statements to ensure there is no lagging behind. No point letting a bad habit form – if the tenant is lagging I require that abreach notice be issued and copy of same sent to me for my records.
I also check through property condition reports and compare them to the previous report to see if there are significant changes or issues that need my involvement.
I also stay in regular touch with my PMs and develop a business relationship with them so that they know I am an active landlord.
Having said all of the above I have also fitted airconditioners to some of our properties and in one case with a minimal rental adjustment. I have refunded part rent on another unit when an airconditioner installation was delayed, repainted a property with no increase in rent and bought a good PM a bunch of flowers.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
[thumbsupanim]
Good points Derek, we’ll take them on board and thanks for your time in sharing them, much appreciated!
Diane
This relates to everything, not just RE
Not technical, or are they?1) don’t believe everything you read
2) but read the fine print
3) if in doubt – don’t
4) but don’t cry over spilt milk!(or he who hesitates is lost)
5) do what you want for you, not for others
6) if you have a partner, make sure you are both on the same playing field, helps to play the game!
7)trust me, I’m a sales man, rings true in the property domain as it does for the local car yard.
in hindsight we have 100% vision, (quote) but we dont have a crystal ball for the future. Nothing is guaranteed.
9)if you are scared of going out on a limb, dont, (like Kay says, sleep at night) is the best tonic. you have to feel you can get your feet wet first…but even the small steps are a way forward.
10)owning property, doesn’t make you a better person than the next.
11) only be prepared to lose what you can afford to, rather like a pokie gambler, take in what you dont mind losing, and leave the rest safeElves
” a blind man may see what a sighted man may not”
1. There’s no such thing as cannot.
2. There is such a thing as should not.
3. Don’t expect others to make you rich.
4. Creativity comes from within.
5. So does confidence.
6. Everyone starts with the same skills – which you choose to learn through life depends on your self image.
7. Doing is the only way to get to done.
8. Is too many tasks to focus on simultaneiously for most people. Find your own multi-tasking sweet spot.
Cheers,
Aceyducey
Some great post’s , looking forward to many more !
Great post re: your PM Derek, and keeping on top of things, it’s a ‘business’ after all and at the very least most of us have Thousands invested.
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator1. Relationships are key – the more you can chat in a personable way the more information you can get – i.e. people skills are key.
2. I learned how to pick an area which is going to rise in value, before everyone else catches on.
3. The better you know the market, the better you can spot a deal. Knowledge is power.
4. Don’t listen to anybody who doesn’t know what they are talking about. (i.e. non-investors, friends and family who are fearful or financial nightmares, people who don’t know the area you are investing in like you do.) And have the research and the number crunching ability to back up what you know.
5. Positively geared properties go up in value just as much as capital gain properties, i.e. the ‘top’ areas rise and the ‘underdog’ areas catch up so that the price relationship between the two stays about the same
6. Even the worst property in the worst street next to a gang member can turn out to be a great performing investment returning 20 percent yield and 60 percent capital gains in one year.MS Outlook Calendar facility to mark (with a two week warning bell) in when my leases are expected to expire. I get in contact with the PM at this time and remind them that the lease is due to expire and they need to find out what the tenant is doing and take appropriate steps. If they are moving out – start advertising, if they are staying renegotiate a new lease.
Derek
Derek, Is there an advantage in doing this? Most of my tenants are on expired leases and going along fine.
Yo Ho Samwise
One more to add to the list:
Become educated on property financing strategies -it is half the battle and the key to leveraging into property.
Brendon
Acute Mortgage Reductions
http://www.acutemr.com.au
[email protected]
Thanks for asking, Redwing!
in hindsight we have 100% vision, (quote) but we dont have a crystal ball for the future. Nothing is guaranteed.
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