Heya Derek
)I went to the URL on your signature, and saw that Kwvin Young (Investor’s Club) has written a book. I notice that Chapter 3 is:
“Positively Geared is Positively Dangerous”
Just wondering what his thesis is on this, or are ya gonna tell me to go out and buy the book to find out
I am just interested in 2005 perspectives on why people do what they do, or why they don’t invest in certain things in 2005.kay henry
Hi Kay,
Go and buy the book.
Nah – the comment arises from comments that have come back to us from varous sources.
In short pursuit of cashflow+ property without other due checks and balances can be dangerous – a bit like all property investing really – and can result in an investor failing to see the long term costs that may be incurred which can then result in a property costing more than it returns, not only from a cashflow perspective but also from a sustained growth perspective.
Buying a property in an out of the way place (and we have seen the questions asked here on a number of occasions) purely because it is cf+ can be a little short sighted.
Some people may have seen a recent comment in one of the Sunday columns about someone who paid $50K for a property and now cannot sell it for $15K.
I also heard of a similar instance in Carnamah (small WA town) when a local bought a property for $6K, put $10K into it and sold it to a cashflow investor for $48 in a less than 6 month period. Is that a 300% or 800% capital gain in a short period of time?
All I can say is that knowing Carnamah (which is shrinking) the investor would have got better returns at the front bar.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Thanks, Derek
The Investor’s club lists its core pronciples as:
The core principles behind the Investors Club plan are:
1. Each investment property must involve minimal cash outlay;
2. Property selection is critical;
3. Every property must be as close as possible to positive cashflow from day one; and
4. Never, never sell.
http://www.theinvestorsclub.com.au/aspnet/about_history.aspx
____________I guess point 3. and cashflow positivity, means using depreciation allowances etc to not lose money.
kay henry
Having been to quite a few IC meetings over the years, but never found it necessary to ‘join up’ by buying a ‘club property’, I was surprised in Feb of this year when the front speaker said that positive cashflow properties were a myth, have been for a quite a few years, don’t believe all these trumped up gurus who say they are out there and just forget it, it’s not what the Club was chasing.
I was staggered. Later in the evening the speaker admitted that they held exclusively to residential, had no idea about the myriad other types of property out there, but did say Kevin Young was dipping his toe in that water. In the same brochure handout Kevin is pictured saying he is now chasing CIP’s and IIP’s as the potential seems to be a tad better than what his club has been traditionally chasing.
I was invited to speak about C&IIP’s and what that could mean for the club members, but first I’d have to buy a residential unit from the club list. I politely declined and keenly watch as Kevin and his members try and climb up this new learning curve, which many people have already successfully climbed.
It seems as if property investors are welcome to talk at the IC meetings, but only if you buy a club property first…regardless if that is the best for your portfolio.
Have you found that too Derek ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
quality CF+ is definitely not a myth. But if you walk into a Holden dealership don’t expect them to sell you a Ford!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Originally posted by Dazzling:I was staggered. Later in the evening the speaker admitted that they held exclusively to residential, had no idea about the myriad other types of property out there, but did say Kevin Young was dipping his toe in that water. In the same brochure handout Kevin is pictured saying he is now chasing CIP’s and IIP’s as the potential seems to be a tad better than what his club has been traditionally chasing.
Wasn’t a fly on the wall to your discussion but we did dabble in commercial stuff commencing middle (rough memory here) of last year – but it is fair to say the ‘take up’ rate wasn’t that flash.
Did get some interest in buying a commercial office block in downtown Brissy with a view to strataing (is there such a word) and entering into a pooled rent situation so all investors were protected against a vacant office syndrome.
As we know if your commercial tenant leaves finding a replacement tenant can be somewhat elongated even with the best research available. By contrast people gotta live somewhere.
I was invited to speak about C&IIP’s and what that could mean for the club members, but first I’d have to buy a residential unit from the club list. I politely declined and keenly watch as Kevin and his members try and climb up this new learning curve, which many people have already successfully climbed.
Not sure about the steep learning curve given that KY has been involved at a personal level in industrial, commercial and residential investments for close to 30 ish years.
It seems as if property investors are welcome to talk at the IC meetings, but only if you buy a club property first…regardless if that is the best for your portfolio.
Have you found that too Derek ??
No – have heard some great speakers at various forum – and I am dam certain they were not the owners of Club properties.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Personally i think Commercial and Industrial properties are a slightly more ‘specialised’ field and an area where you don’t want to make a mistake on your first deal..potentialy it could ruin you..
We all know about residential property, we spend time in it every day, pay the bills for it yada yada..
CIP and IIP is different and usually more expensive IMHO finding and securing a tenant being the main aim (lock them into a contract), on the positive I believe the tenants pay for the majority of expenses.
I had a look at CIP’s at one stage , but couldn’t find anything that suited my ‘comfort level’ , though they suited my price range.
An ex-partners uncle made his fortune from them (CIP’s and IIP’s) though, he started as a panel beater then he and his partner bought an IIP; then some time later another , then the lawyer who was doing their paperwork wanted in..they continued onwards and upwards and were buying IIP’s around the $1-2M mark when I last saw him several years back..now comfortably retired. Suffice to say, he preferred IIP’s to Residential Property, he couldn’t understand why I paid for my tenants needs (fix air-conditioning etc etc).
Fear and that being “lack of understanding†would be what has held me back from CIP and IIP’s.
Loved Dolf DeROOS books though and he did ‘very’ well for himself with the above.
You may have to educate us Dazzling (or me at least [biggrin])
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorI just purchased Kevin Young’s book. The chapter on
“Positively Geared is Positively Dangerous” is only 2 pages long!He is basically warning against buying cheap, old, rural properties with no depreciation benefits, and no prospect of growth.
Of course he is in favour of positive cashflow property if it could meet all of their other requirements such as being in a good growth are etc.
Sounds like good advice to me.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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