I would like to hear the comments from the seminar holders. I believe start of small and grow and learn along the way as information takes time to sink in. I wonder if any of the experts that hold these seminars would pay or have paid $3k to attend one themselves.
I would love to here from those of you who are capital rich and cashflow poor that are using Michaels strategy
of using Equity for cashflow ie borrowing against Equity as Michael describes below and how it is working for them.I can understand how it works over the longer term for good properties in goood capital growth areas as the Capital growth over 10 years will more than pay for all annual borrowings plus interest but it would be great to hear how this actually works in reality on a day to day basis
Takeaction
Originally posted by MichaelYardney:Originally posted by AUSPROP:Michael – even at 80% retail I suspect your properties are still quite neagtive…. are you saying you refinance your other properties to cover your annual shortfall? The stamp duty and loan application fees would be huge wouldn’t they?
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
You are right that it is difficult to positively gear a new investment property, even when we build them ourselves.
Theer is no stamp duty on mortages any more and my bank (NAB) does not usually charge me establishment fees, and even if they did, it would be irrelevant.
Imagine I went and got a real job and earned $100,000 After tax and medicare levy I would have $50,000 and even less after super.
If I have a property portfolio worth say $2million in good capital growth areas my properties go up by say $200,000 per annum (on average).
The bank will lend me against this extra equity and I borrow $100k at 7%. (I could borrow more)
This would cost me $7,000 interest and I would be left with $93,000 to live off or invest, or pay off other loans.
If I worked for the $100k and paid tax I would only have half that.
When you own enough equity; cashflow is not important.
Equity = cashflow.
Banks will lend against the equity of your properties,and you don’t need income (lo or no doc)
Having debt is not risky, not being able to have it is
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auHi Guys….Michael and all the Others
I’m still relatively new to Victoria. In the last year I’ve learned that property developing here is probably better than my buy & hold strategy that I used in NZ. Through my circumstances I ended up refinancing anyway and bought a property that I’m trying to subdivide. My question would be about land tax as this is new for me. It makes perfect sense to hold onto your properties and use the newly created equity to propel you ahead but how does land tax affect you…?..as I said I’m still not sure how it works….so I assume that for a 2 million portfolio your land tax is over 15K (1.7% over 175k) which is an expense when calculating your income tax? Although if you live on borrowing against your equity then this is just another cost on top of your interest payments, right? Still short of the more than 50% if you’re on a salary or business income.
I’m sorry, I can still not see how you can live on a LOC secured against a rising property protfolio when a LOC requires a payment each month, which in turn requires a cash flow….. am sure I am missing something here. However is my first post, am here to learn. Also understand how a lender will lend 80% on value, but given that rent will not cover this (and payments are required on the LOC), unsure where the short fall, or negative geared post tax, portion comes from.
True enough, a $2M portfolio rising at an average 10% / annum can support a life on credit. After all, it isn’t too different from what I do anyway. Except the way I see it, I borrow the equity AND I work a regular job so I get $140k / year to live off and invest with. Now my annual living expense is pretty close to $20k (Yes I live cheap), so I get to re-invest $120k / year, which earning 10% return through capital growth begins to far outstrip my interest payments.
As you could imagine I’d only have to keep that up for so many years before I cash in, kill all debt and live on cashflow rather than equity. Lets face it with no real cashflow I can’t quite stomach the risk from living on credit.
What I like about developing though is you are value adding which means not only do you gain from a rise in the market, but you can design and plan your own capital increase. That (to get to teh topic of this discussion) is a benefit of development.
surreyhughes, are you in VIC? If you are could you please shed some light on how do you fit land tax into your strategy? Thanks.
As I’m still waiting for my first subdivision application to go through, I’m trying to access some more equitiy and as land is very cheap now and builders deals are getting more and more attractive, I am tempted to to do some developing in new housing estates. However, I’m not so sure that even with the most careful planning I can achieve the 20% equity on completion.
Hi
I’m also from Vic and have seevral questions re land tax, so if anyone knows where I can get answers, that would be excellent. Thanks.
Vicgirl, interesting that you think land is cheap at the minute, have to admit that I have not looked too closely as following Mike yardley and the Wakelin’s, I have been looking in the 5-15km radius from CBD. Take it that teh cheap land is further oiut, say someweher between melb and geelong as in the current Aust Prop Invest magazine ?
Originally posted by AUSPROP:If you have $93k of expenses and only $50k to call your own you are bankrupt!
The point being made is you can take $50k as cash, or leave it there as $93k cash and a debt of $93k secured against the property. The cashflow from subsequent developments funds the slight negative gearing on the earlier properties. My problem with this whole scenario is that a new building will drop down significantly in value (like a new car) once it has been lived in as you are dealing with a retail product, so you need to consider whether that $93k asset is really worth $93k, or if on the second hand market it will be worth $50k, in which case you may as well pay the tax and run with the cash.
http://www.megainvestments.com.auWRONG!![biggrin]
If you develop your properties you will build your $500,000 at cost for $400,000.
But this stratgey doesn’t depend on development.
All you need is a portfolio of good properties that on average will go up in value. They may not all go up each year but on average my portfolio and those of our clients go up well over 10% per annum.
As long as your properties and therefore your equity goes up more than your debt does each year you are ahead.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by redwing:IMHO Money begets Money and when your into Property Developing you ‘need’ money..
AUSPROP & MICHAEL
There must be ‘many’ traps for novice players when it comes to the developing game and Michaels Seminar sounds ‘great’ (honestly) but…is it for the average investor?
What income level etc would this seminar be applicable for?
I’m sure ‘any’ attendee will pick up great tips from the presentors you have, but how many people will have the resources/funds to put the majority of them into action?
REDWING
You are right Redwing.
Development is very risky and is not for the average investor. We take great pains to explain this to any potential client.
Further we have them get independant legal and accounting and financial planning advice before the become involved in a project with us.
We only run our workshop once a year and run it for a small group of experienced investors.
They are very different to the seminars run by Steve McKight who’s principals are relevant to a much broader base.Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by MikeJackson:I think Michael Yardney’s seminars are a bit of a rip off / scam. He uses them as a vehicle to get peoples money to fund his developments (or project manage as he calls it) and to take a large slice of the pie. The only reason he is on this site is to sell these overpriced seminars. He says he never sells his properties but I bet if you knocked on the door of any of the developments on his web site, he would not be the current owner. Whilst I am sure he is a knowledgable man he seems to only give out small peices of information on the forum and says come to the seminar you will find all the answers, ddid this guy learn from Jamie McIntyre.
Mike
Thanks for your opinions Mike. I must have done or said something to upset you.
Have you been to one of my free seminars?
Were you one of the 1,200 people who recently came along to my $55 property briefing? (I believe everyone who went thought it was great and learned quite a few things.)
Have you spoken to anyone who has attended my $3,500 weekend workshop?
If you haven’t I would be happy to send you an unedited CD of the opinions of EVERY attendee who came last year and the year before. I have them all on tape. EVERY ONE and no editing – just so you can see how they felt.
You will find every one felt they got much much more than their money’s worth. No one has ever asked for their money back and these workshops come with a money back guarantee (Interesting…..)
I’m not explaining this to advertise my services. I don’t need to. This year’s workshop only has a few places left.
I’m just doing this to add balance to this interesting discussion.
For what it is worth the Reno Kings, of TV fame, came to my workshop last year and PAID full price to attend.
Most of the other attendees owned between 5 and 22 properties. These people were all well off if not wealthy. Sure there were a few well read beginners.You see… this annual workshop isn’t for everyone. It is for a select few and each year we have a similar discussion on these property forums.
Until you are in the right paradigm/headspace to accept that you can learn things from others and it is worth paying for this you will stay where you are.
But you have to be careful who you listen to.
I can cleary show I have made profit from property invetsing and development since 1979.
Every year I spend thousands attending seminars and each year I learn something new. At one seminar (Brad Sugars) Pam and I paid $7,000 each to attend and I only got one really good idea. But that idea made me millions.
You will find most welathy people invest (not spend) thousands on their education each year and are happy to have high paid advisors.
The poor in general cannot see the benefit of ongoing education, especially after they have left school.
Again the problem lies in whom are you going to pay to educate you.
By the way why hasn’t anyone mentioned that every year I give away 2 “sponsored” places for FREE to people in need and 2 places at half price to students pensioners etc
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auMichael I am wondering what is the difference between the free seminar and the paid for one?.
Also you say development is very risky yet if someone pays thousands to attend seminars to gain info which is freely available they will make millions?, or mitigate thier risk in development to the point of getting over 10% return, and then draw on your equity depending on this factor, you sound like you believe there is no risk at all using this type of strategy, that is not advise I would follow.The high cost of many R/E seminars just seems to smack of opportunism and unreal expectations, created by the boom in property values.
If I were to paint someones house and tell them I COULD add $50,000-$100,000 to the value of your property so I will charge accordingly whether it does or not, this would not be acceptable.It doesn`t seem to work this way for anything but R/E seminars, see my point?.
A little knowledge can be dangerous. Going to free seminars and picking up bits of information in order to embark on a major development project is asking for trouble.
Property development has the potential of making massive profits and loosing as much. Over the last few years I was associated with an organisation that miss-managed over 40 development projects. While this provided me with useful first hand knowledge on how not to do things it also showed me that there are many intricate paths with property development that the average person would not be aware of and each of these little twists and turns could cost you thousands.
You see, each development will present you with a new set of challenge and unless you have years of experience over multiple projects you would not have encountered this challenge before and therefore you cannot prevent the problem from arising.
Michael Yardney, has this experience and his seminars will give you a greater insight into property development. If by going to his seminar you learn one idea you may end up saving thousands.
You would outlaying such an amount if you were seriousely considering embarking on a development project.
I would imagine the majority of people would realise the complexity of undertaking such a project (especially if you are still working)and get someone else to manage the project for them. However the knowledge gained would help them understand the processes and keep up with that is happening.
I must applaud Michael for putting together such a course as it requires a lot of time, effort and cost. If there is a profit in it for him then I am sure that he deserves it. However once you consider the cost to market and hold such and event will cost many thousands (I think I saw free airfares and accommodation somewhere) the price he is charging is justifiable.
Sailesh Channan
http://www.developersedge.com.au
“Helping you select,develop and profit from property”
Originally posted by markpatrick:Michael I am wondering what is the difference between the free seminar and the paid for one?.
Also you say development is very risky yet if someone pays thousands to attend seminars to gain info which is freely available they will make millions?, or mitigate thier risk in development to the point of getting over 10% return, and then draw on your equity depending on this factor, you sound like you believe there is no risk at all using this type of strategy, that is not advise I would follow.Thanks for the response.
It is interesting that since you have never been to any of my sessions, yet you would bother to go to the trouble of knocking them.
Why would you do that???
Anyway…
At no stage have I suggested that property development holds little or no risk.
In fact I started a thread on this forum called “the risks of property development” and I only responded to this one on its benefits.
We spend a huge time at our workshop explaing the risks and maybe we will save some of the attendees some heartache. So many beginning investors are taking on some form of development without knowing the risks.
They don’t know what they don’t know.
It may interest you to know why I began conducting my annual workshops…
Like you I was disapointed by the scams of the many “get rich quick” seminars and that’s why I called our workshop the “Real World” workshop.
We brought a level of reality to the scene.
For the last 2 years I have warned that property prices in many areas would stagnate or drop. And I have done so publically in my newsletter.
Thanks for giving me the opportunity to better explain what I am about.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auMichael,
I subscribe to your newsletter and I think you actually have quite a lot of good information to share and do so willingly and with little vested interest. I do, however, see how some people might think that education costing $3500 for 3 days could be overpriced. And, for these people, it is! (if you know what I mean). Even for me, at the moment, it is. Not due to my mindset, just due to my current lack of financial assets and passive income. However, I hope that in years to come I will be in a position to truly benefit from the sort of information you deliver in these sessions. I would definately love to hear Dale speak as I know he’s the guru on trusts and structures. I haven’t bought his book “Trust Magic” yet but its on my must buy list. I’m off to Steve Navra’s financial structures course tomorrow and at $180ish it looks like great value.
One quick question around the draw equity to live approach that you described if I may:
If I’m drawing out my equity growth to live on, then in effect my net equity is not increasing. i.e. As my net worth increases, I draw it out and live off it. Now, if I’m neutral or slightly -ve, then I don’t have any passive income on these assets and my equity is being “consumed”.
How then do you build your net worth? IMO, its your net worth that allows you to retire from the 9-5 grind and live off the passive income. Either that or cash in the equity and buy an annuity stream or some such.
Just can’t get my head around how drawing and living off your equity growth on a neutral or negative structure gets you ahead. Unless of course you’ve got so much equity that you only draw a small portion of it and the rest still gets you ahead.
If this is the case, then the approach is really only of any use once your equity growth exceeds your cost of living by a decent degree. If it doesn’t, then there’s nothing left to re-invest for compounded growth.
Thanks,
Michael.Michael Whyte you are spot on imo.
Michael Yardley you asked why I would question the price of your seminar?…..because simply imo it is a bit steep!.
I get your newsletter and while R/E is all speculation I agree with some things you say and never even hinted you did not know what your on about or that you might be a “scammer”, I simply question the cost of these two/three day seminars.
I personally could easily pay but would not pay that kind of money for some piece of info I MIGHT use in an industry where the goal posts are often moved.
I don`t stand in judgement out of spite, if I have a question I simply ask it, no offence meant.
A true money back guarantee is credability in one hit.just out of interest, I use to work for a company that offered ‘best price guarantees’ etc, I think it was ‘best price garaunteed or double the difference back’. Most people in our culture are too shy to ask for their money back, heck most can’t even complain if their food is served cold at a restaurant. No one ever claims them and it’s a great marketing tool. I doubt very much that anyone goes to a seminar and makes personal contact with soemone and then at the end says “actually you are pretty ordinary can I have my fee back”, regardless of how good or bad that seminar is.
Having said that, I do know someone that works at a leading retailer for which people bring back yellowed underwear and worn out bathers at the end of the season – go figure.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Hi all,
Will and I have both booked for Michael Yardney’s Property Workshop in June. It is also a bit expensive for us, (especially in this property market), however…
This seminar is going to be packed full of information, from many outstanding investors and professionals, and we are keen to network with all the other like minded “property developers” and “hope to be property developers” like us..[blush2]
There are lots of “seminar junkies” who even after 4, 5, 6 or more seminars, always find reasons why they can’t take action. I am sure that part of the reason for the slightly higher price is in hope that these people will be deterred from coming.
As far as Property Development being risky, for us, the biggest risk is the fear of the unknown in property development – in not being educated enough to give it a try. Hopefully this seminar will help us to not fall into some of the traps that other amateur property developers fall into.
This seminar is mitigating that risk, as best we can. [biggrin]
Regards,
DelOriginally posted by markpatrick:……I don`t stand in judgement out of spite, if I have a question I simply ask it, no offence meant.
A true money back guarantee is credability in one hit.Thank you for explaining that markpatrick. I’m sorry if I was a bit sensitive.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au
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