I like the book “0 to 130…” but I think the whole movement CF+ investing is a bit deceptive. You don’t need to be a genious to understand how it works mathematically and wether the concept flys or not only depends on the rental yield achievable in the current market condition. If rental yields of an area are in line with the market then CF+ is not possible because that would mean arbitrage is possible and the market is not functioning. If the rental yield of a specific property is above the market yield then the seller would be unclever to sell the property because he can earn more income keeping the property. So the only way to make CF+ investing work is to find people who are forced to sell off and who offer you a bargain.
Do investors in this forum agree or has anybody ever bought a property he had found in the newspaper or online and earned CF+ immediatelly (without putting 60% down!).Your assuming that first the market is a “efficient” market. The stock market is not efficient market and if thats not efficient (with all the rules, regulations and requirements) – then the property market is very inefficient.
Secondly many people buy property or sell property for totally emotional reasons, and because of the time it takes to sell a property there are inbuilt inefficiencies in the market (the more liquid the more efficient the market is).
And yes I’m finding CF+ properties with 5% deposit. Of course it’s hard , but if it was easy it wouldn’t be as fun.
Rgds.
Lucifer_auHi Lucifer_au, thanks for yur comments. I’m not sure if the property market isn’t efficient. Just look at Dubai’s market which has soared in the last 24 months with house prices doubling just because international investors have realised that the rental yield is above 10%-12%. Now house prices have quickly gone up so far that yields are starting to be in line with a more mature market such as Australia where yields are sadly around 5%. Steve’s whole book and CF+ is based on one assumption: rental yields are above 10%. If they are in general, anyone with half a brain can create CF+. If yields go below it will not work.
Sure, I take you point and the one of all the other CF+ advocates around here. “It’s just harder to find CF+ properties” but then it’s NOT possible to find these opportunities WHILE you are still working fulltime. Thus the praised Financial Independance is not possible with the CF+ strategy.
Please, dear CF+ property investors tell me your experiences, prove me wrong and let me know if I’m wrong or too pessimistic.
Regards,
JGOriginally posted by ajgebhard:
I take you point and the one of all the other CF+ advocates around here. “It’s just harder to find CF+ properties” but then it’s NOT possible to find these opportunities WHILE you are still working fulltime. Thus the praised Financial Independance is not possible with the CF+ strategy. Please, dear CF+ property investors tell me your experiences, prove me wrong and let me know if I’m wrong or too pessimistic.
Regards, JGHi JG
I don’t see you as pessimistic, mate. On the contrary, you present your thoughts with real intelligence and maturity. But may I respectfully suggest that you appear to be operating primarily from the traditional “Buy and Hold” mentality most of us (myself included)started out with as property investors.
The secret here is to realise that the more creative +CF strategies of wraps, lease options, flips etc help you become largely independent of property cycles (ie., with these techniques, you make money ON EVERY DEAL whether the market is rising, falling, or static).
A friend of mine read steve’s book, and said: “I got all excited, took a drive out in the country, and found that I couldn’t buy a single property that fitted the 11 sec formula, and figured McKnight made money because he got the timing right. So I stopped reading his book.”
When I probed further, he admitted he’d got so excited he’d only read HALF the book, and dismissed it without carefully studying the 2nd half which discusses wraps etc in more detail.
The moral? You’ve got to change your whole way of thinking before you really understand the secret of +CG property investing.
TIME appears to be one of your biggest problems. Many seasoned investors get around this by linking with like minded “go-ahead” investors who have both time and expertise on their side in a range of Joint Ventures (JV’s) and splitting the profits. PM me for more details, or go to Rick Otton’s website http://www.webuyhouses.com.au and download his standard JV agreement for $95 to give you a basic idea of how people on this forum get around your problem.
Lots of forumites strive for a happy blend of +ve CF (for income) and -ve CF (for capital growth). Read the highly respected Peter Spann for the perspective of a committed -ve CF advocate.
Myself, I like the notion of “buying wholesale, selling retail” and am venturing into sub-divisions with a JV partner.
There’s lots of ways to make money in EVERY property deal. Lots of us are doing it, but you’ve got to break out of the standard mindset. Your posts show you’ve got more than enough intelligence [buz2] to not only get my key point, but move ahead very fast indeed down this track once the penny drops in your mind.
Cheers and happy further reading [biggrin]
GregDear JB,
No you are not wrong in fact your comments make a lot of sense. I find that prices seem to be dropping in my country NSW area of operation and I see good possibilities just around the corner. This area’s expectations seem to be inflated after the recent boom but vendors are realising that these prices are not sustainable and are reducing prices accordingly. Soon to cash positive levels?Regards Marsden
Hi Marsden, can you hint as to your contry region??? I am currently selling houses to pay off my ppor. By Jan 23rd(my birthday) I will have it down to $250k. House is worth $900k and we moved in in June so Im pretty pleased.
A very important point is that I am also divesting myself of the less performing houses and moving on. Admittedly when the house or bad debt is paid off, I will be very happy with a $500k line of credit as deposits and reno money to play seriously again.
A high sentiment of gloom and doom is creeping into this forum in general and the scepticism some show to the market at the moment makes me smile and look forward to happy investing times ahead.
Sure Im buying another 2 bdroom townhouse in december but its only because it is in the same complex I own 4 of 8 already and its a private purchase so it just sneaks into my 7.5% rule.
This is in brizzy so I am very curious to find your country zone( i dont want specific towns as this would be unfair to your research) I do however need to look regional for the first time.
If you could help then thanks.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Another aspect of my previous reply….. rentals seem to be on the up. Combine the two, that is, the prices are settling and rents are rising and we are growing closer to cash flow positive. We are not there yet! Even with deductions for depreciation and considering tax gearing there is a way to go.
There is a need for some gloom. We are facing a market of falling prices,rising interest rates and asset release by Baby Boomers. Surely people have these things on their mind and perhaps will share their ideas on these things.
To DD…My area is generally 3 hours from Sydney.
Regards Marsden
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