now Mt Isa is looking fairly attractive, 11 second solution looks to fit, new coal mine opening, due dilligence needs to be done however, any thoughts from you all, I will be jumping on a plane next week.
Steve
<<<any thoughts from you all>>>>
My comments
1. Go read the new Peter Spann book “$10 million property portfolio in 10 years”
Re-read Pages 136-139 several times.
2. Interest rates are at almost historical lows. Will they still be ve+ if interest rates rise 2-3%?
Then decide whats best for you in the long term (5-10 yrs).
For me – Mt Who????????? and save your airfare.
Hi Steve
I bought in Mt Isa before the rush, and am doing quite nicely.
Yack’s comment: Will they still be +Cf when interest rates rise 2-3% is valid, but I have a slightly different slant on it. Pundits tell us that won’t happen for quite a few years to come (whether rates rise that much in the short term is your call).
Speak to:
1. Lorraine L’Estrange at Jays RE (0409 485 856) and
2. Sonja at Ray White (07 4743 9499)
They are both straight shooters. Tell them “Greg from Gympie” suggested you give her a call and that “Greg spoke very highly of you, especially the fact that you guided him into the good streets, and well clear of the bad streets.” (You need to tour Mt Isa on a street by street basis).I have a number of quality units and townhouses (no w/board, all of them are brick/block, 2 are brand new 3BR, 2bath, DLUG, reverse cycle a/c executive townhouses), and, critically, all of them are in very well regarded areas. I enjoy very close to 100% occupancy, but there was one flat which was vacant for nearly 2 months. I dropped the rent, and it rented very quickly.
If you want rental security:
~ Buy a good quality HOUSE in a good area (w/board/zincalum etc is fine if it’s in a good area) rather than a block of flats: there’s a lot of old, rubbishy flats in the Isa, and houses are much easier to rent in the inevitable hard times).
~ If you can get anything in Happy Valley, GRAB IT: more expensive, but highly desirable area.
~ Ask Lorraine and Sonja to let you know immediately anything in Happy Valley comes onto the market
~ Don’t rush, you’ve got plenty of time
~ Do it in the knowledge that you won’t get capital growth for quite a long time
~ Feel comfortable dabbling in the market while you…
…simultaneously spend money on seminars etc educating yourself to the next stage/s BEYOND THE TRADITIONAL “BUY AND HOLD” PHILOSOPHY.Steve, in fact, that’s my biggest tip of all. Buy one or two HOUSES in Mt Isa to get it out of your system (so to speak), then spend the money to get yourself to a well regarded, quality event such as Rick Otten’s Boot Camp
http://www.webuyhouses.com.auIt’ll cost, but it’ll change your life helping you get into wraps and lease options, sandwich leases etc so you can make money in Real Estate INDEPENDENTLY OF THE STATE OF THE MARKET. That way, you are taking out de facto insurance against future interest rate rises. As long as you KEEP MOVING ALONG YOUR PERSONAL RE LEARNING CURVE, everything will work out fine.
Cheers
GregMt Isa could well be a bit of a regional boomer. Interesting area, probably worth a look.
I did some telecommunications work in the Isa many years ago and Greg F summed it up nicely.
Some parts of the Isa are really crappy. Stay away from them.
Some unit construction is so cheap and poor you’ve got to see them to believe them!
Good luck
Here’s a relevant article that’s just been written on CF+ and negative gearing. It might be useful to work out what’s more profitable- after all, isn’t that what it’s about?
kay henry
_____________Cashflow Positive Property
Pinnacle Wealth, 23/08/2004
It seems there is an emerging trend of property educators & promoters pushing investment strategies and properties that are surrounding the current property buzz phrase cash-flow positive.
Firstly let me explain the concept of cash-flow positive property.
Properties that are cash-flow positive, mean that the rental revenue plus depreciation and tax deductions give you positive cash flow.
Having money in the bank sounds far more attractive than paying money out of your pocket to service debt – but is that simple?
Some property promoters & alleged educators are passing off investment strategies and properties that are cash-flow positive. This may very well be the case but more often than not these properties tend to be located in outer-city or rural locations and experience very little capital growth.
What this means is that even though you may be getting a positive return, the property that you invested in will not increase in value anywhere near as much as if you’d invested in a property with high capital growth.
For example, if you invested in a $200,000 property & the capital growth rate on that property was 5% per annum, in 20 years time your property would be worth $530,000.
Now if you invested in a property which achieved a high capital growth rate, say 11%, in 20 years time for that same initial investment of $200,000, your property would be worth $1.6 million!Investors can also get trapped in other issues that surround positive cash-flow property. For those who have borrowed to their maximum capacity and are relying on this cash-flow to service their debts, what will happen if interest rates rise and you are unable to increase your rental yields? What will happen in the event of tenancy vacancies?
There are ways to generate positive cash-flow from property but to achieve the greatest returns you need to look at investing in high growth properties and you must also utilise other strategies such as purchasing property below market value & adding value to achieve maximum rental yields.
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.
Although Steve McKnight didn’t get rich from the “few extra dollars he received on a monthly basis” It did allow him to retire and use the time he spent being an accountant to find more +CF deals and increase his income exponentially.
The more income, the more property you can buy (and hence the higher the capital gains – e.g. Have a $1M worth of property, goes up by 20% =$200K; Own $6M, goes up by 10% =$600K).
As for extra CF+ if you spend more time on your own business and not in someone elses, you will learn how to add extra value at a very low cost.
Rgds.
Lucifer_auHi Steve
The fellow in the article pushing Capital Gain puts a strong case, but he’s also probably a developers agent. To learn from him (and he has got something to teach you), pay close attention to his summary paragraph:
“There are ways to generate positive cash-flow from property but to achieve the greatest returns you need to look at investing in high growth properties and you must also utilise other strategies such as purchasing property below market value & adding value to achieve maximum rental yields.”
Bottom line is this sentence: “There are ways to generate positive cash-flow from property….”
I suspect he’s talking about:
~ Becoming a developer yourself
~ Become a wrapper, flipper, lease-optioner, sandwich lease man etc etcAs I said, the key is knowledge, and you’ll have to pay a reputable guru to get it. I wish you not only good luck but more importantly GOOD FORTUNE in your ongoing learning curve.
Cheers
Greg
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