just curious, im agreeing (so far) with lee.
investors say they did this they did that,
but never say how they start…. its all talk..
ive looked in RE.com.au
ive been dirivng (last month) only at uni.. and not ready to buy so cant go to estate agents…
and bought stacks of books.Michael 888 wrote:Hey Yorkie,outstanding stuff, especially the Albury units. I figure 7.3 % yield before expenses and not having allowed for whatever depreciation you've got to write off.
Did you need to put any cash into the deal (not equity from other properties) and if so what was the LVR (if you don't mind
sharing) to bring it to positive territory, and at what interest rates.cba did a 95% loan against abviously with lmi, which was about 6k, reasonable to say not much cash down from me.
at 8.88% which has now come down to 8.63%, which is good. i also got all the depreciation reports which the previous owner had done when he completly reno'd them 18months prior.+ he'd done all the strata title plans and searches etc, which took about 8 months foir him to complete, but never did the final strata plan which i have bought all the plans off him for 1/2 there original price(he gave me the original receipt) which was a huge bonus, so i will strata them and then get it all revalued and it should then be worth Approx $155k + per unit. i paid $126k. so not abad return…. wish they were all like this. but i did the hard yards and negotiated well, he originally trying to sell them for $155k and i got a discount for buying all 3….so the numbers stacked up.
Thanks for sharing your purchases. Wouldn't mind talking with you about Frankston.
am just about to reno a house in frangers, was for sale for $ 220-$240k, i paid $183K. it had some very old termite damage in some weather boards and 2 floor boards only, which was the bonus for me being in the trade, $400 dollar termite treatmnent if needed and replace 2 baords.. $50. bargain, 600sq block res2 (medium density) and on no through road with school at end and shops 200mtrs away…… bring it on… more tea vicar. sorry lost it then.
so give me a tinkle or email if you interetsted in frangers or seaford or rosebud etc… also looking for some j.v if anyone interested, 3 bed unit development in rye,20mtr to beach and shops next to existing 3 unit site so the precident has been set….?? [email protected] or call me. wayne 0411 331 225
Nice strategy Yorkie,
You will certainly add even more value to the equity equation if you go thru with strata, however your costs will also go up. Council, water rates, possibly land tax etc. Weigh up the pro's and con's of doing this. Of course if you are looking for a future sale of one or all (one at a time) then it's all roses. If it's for a long term keep…..think twice before proceeding with strata.
I purchased four doors in Sydney about two years ago, and they were strata approved (reno'd and all council work done), however they were not registered. All I needed to do was pay council $1500 and they would be on their own title..
However as the intention for these was as a long term portfolio hold, I elected to leave them as is and keep holding costs of rates, etc lower. I also got a great yield for middle Sydney and with great depreciation write off. Not CF +ve at that time, but very close.
Any way, good to hear about what you're doing. You sound like a useful bloke who's out there doing it, I'll give you a call some day or email you and we can chat further.
Michael 888 wrote:Nice strategy Yorkie,You will certainly add even more value to the equity equation if you go thru with strata, however your costs will also go up. Council, water rates, possibly land tax etc. Weigh up the pro's and con's of doing this. Of course if you are looking for a future sale of one or all (one at a time) then it's all roses. If it's for a long term keep…..think twice before proceeding with strata.
I purchased four doors in Sydney about two years ago, and they were strata approved (reno'd and all council work done), however they were not registered. All I needed to do was pay council $1500 and they would be on their own title..
However as the intention for these was as a long term portfolio hold, I elected to leave them as is and keep holding costs of rates, etc lower. I also got a great yield for middle Sydney and with great depreciation write off. Not CF +ve at that time, but very close.
Any way, good to hear about what you're doing. You sound like a useful bloke who's out there doing it, I'll give you a call some day or email you and we can chat further.
hi micheal, point taken, there a long term hold as well so mite just let them tick over and get it refinanced and use the equity.
thanks for that insight.
will be good to chat, always open to new learnings…..
thanks
wayneg'day all..
this is one of the best forums available. thanks to adam for getting it off the ground. very informative and open…thanks again.Is there Any CF+ properties availble in Vic
Hi Rejectedworm,
The current market is producing good positive cashflow properties in many areas. Victoria certainly is a state worth considering, however don't limit yourself to one location. The opportunities also come up in markets that you would not expect, keep your criteria open and dont box yoruself in, also ensure that you approach the negotiations with a clear strategy, you might be suprised with the resutls you achieve. Good Luck.
Positive Results | Educating Property Investors / We Find Houses
http://wefindhouses.com.au
Email Me | Phone MeHelping You To Invest With A Purpose To Finish With Successful Results
Some interesting points made here. As an Aussie living overseas I thought I should say that there are also other places in world you can invest that are not in the same stage of the property cycle as Australia. If you find the right deal they can be very secure and straight forward. They do not have to be complicated. I guess it depends on what you are looking for.
For those wanting specific examples here is one. This year I purchased an apartment that is part of an existing 5* hotel/resort complex in Malaysia. It is prime beachfront. The purchase price was about $300K at the time. Deposit was 30%. 20 year P&I loan at 4.8% variable with a Malaysian bank (CIMB). The apartment is leased back to the hotel on a 5 year lease with a further 5 year option. There are no outgoings. The net return is 7.25% for the first 5 years. At today's rates that works out to be about $1000 AUD CF+ a month after P & I repayments. In fact the CF is so good on this you could even use existing equity for a deposit and still have a +CF (you will have to do your own sums of course). Malaysia also has no capital gains tax.
I am not saying this is for everyone but it fits my plan and I share it to show that there are CF+ deals out there off the shelf that require very little other than good due diligence and some thinking outside the square. If anyone wants to know more drop me a email.
Cheers
Adrian
Hong KongThis is an awesome thread, thankyou to everyone who has contributed ideas
Dazzling wrote:1. Renovating 2. Flipping 3. Wrapping 4. Packing 5. Buying old daggy flats and strataing 6. Buying LPT's and sitting back drinking coffee 7. Buying acreage on the town's edge and waiting [sleepyanim] 8. Buying daggy warehouses and leasing them out – our fave [thumbsup2] 9. Smashing down old 40's houses and whacking up 4 brick boxes 10 The list goes on and on and on…..But I have this question: what are LPT's?
Hi Aureliana,
LPT's are Listed Property Trusts
They are managed by a fund manager and can diversify into residential, industrial, commercial, retail, etc., asset classes.
This is more of a passive form of investing where you alocate the responsibility of asset selection to the fund managers. Also gives you exposure to much larger assets than if you were to invest solo, eg: office buildings, large industrial sheds or industrial parks, or shopping malls, etc.
I think that now they are referred to by the ASX (Australian Stock Exchange) as A-REIT's – Australian Real Estate Investment Trusts.
AHA! Thanks Michael 888! – I like your picture by the way, The Matrix is a fave of mine.
Now I am not sure I am familiar with LPT's, would you mind answering me more detail and/or PM me if it's not applicable to this thread?
I have a Company as Trustee for a Trust set-up (Chan&Naylor Property Investor Trust Deed), but no IP as yet (kicking myself, had a perth metro residential ++cashflow offer accepted and we pulled out cos of low deposit). Now do I have the appropriate set up to utilise as a LPT?
Is an LPT similar to property syndicates whereby a bunch of people purchase a property (cases I have observed are CF++ office buildings and/or rural land for subdivision)?
Where would I find a Fund Manager to research the investments, pool investors and manage the fund?Am I on the right track here – or pretty damned clueless?
The LPT investment is like buying shares in Westfield or Centro (for example). This can be done in your own name, or in a company or in a trust.
I think you may find the PIT that Chan and Naylor set up for you is quite specific in the Trust Deed that it can only invest in property. The purchasing of LPT's are like buying shares and may contravene the trust deed's rules. Please check with them to clarify this.
Their PIT deed allows direct property investment or develpment, not to buy shares or units in a unit trust or to run a business.
I guess you could liken a LPT as a mega-syndicate (however usually in a syndicate most of the members know each other as you set it up for a common goal).
This may help with some basic info on LPT's better than I could explain it:
http://www.asx.com.au/markets/pdf/LPT%20Retail%20Sheet.pdf
The above should not be construed as advice. Please check with Chan and Naylor that what I have described is accurate and please report back for the benefit of all here.
Hope this helps
Hi All,
I'm extremely new to everything regarding property investment. I sheepishly have to admit that I even had to google what 'CF+' even meant. That said, I must ask, an apparently stupid question, of what makes a CF+ property? In the most basic example, is your loan interest only or do you pay interest, principal and all expenses with money left in your hand at the end?
I am looking in to Bathurst right now and have no idea if I'm doing the right thing. Anyway, I'll do my homework and I guess I'll tell you in a few months time!
Thanks,
RichHi Rich, thats a good question.
There are two types of property when speaking about cashflow: one is positive cash-flow and the other is positively geared. + geared allows for all the benefits of deductions etc so the property is positive on paper at the end of the financial year. You need to factor in all your personal circumstances to determine if a property is going to be ultimiately positive for you and make sure you don't miss any of the benefits you are entitled to.
All my properties are interst only loans and that seems to be the most common loan structure for our clients too, the benefit of interest only is that it allows you to manage your cashflow however it dosent mean you can't reduce the principle from the loan as well if you are in a position to do so. If you manage your cash-flow so the interest only payments are met and any surplus comes off your PPR or any other personal debts it will give you the most effective tax leverage as well, of course you need to check all this through a good accountant to make sure that is the best situation for you.
When you look for the right property, make sure you look at the key indicators to ensure you are getting the best bang for your buck and that it will fit in with your ultimate long term strategy. Don't go in blind and hope that it all works out, investors who do that are the ones who need the most help being bailed out of the mess they created, always start with the end in mind.
Remember that you can navigate your way through the property maze on your own but you don't have to, research the best method to help you get to your goal in the quickest possible time frame, and then go full steam ahead, the results are worth it. There may be more than one strategy that will help you get to your your goal, consider all of them when planning your next move.
Kind regards
Paul.Positive Results | Educating Property Investors / We Find Houses
http://wefindhouses.com.au
Email Me | Phone MeHelping You To Invest With A Purpose To Finish With Successful Results
Thanks Paul,
Mate, don't reply if I'm wasting your time with basics (Thanks again for first reply):
I was just looking at your web site and saw a property for around $108K. I have been assuming the whole point of buying a property at this end of the market is to try and pay it off quickly and generate a income stream. That said, the ANZ loan calc tells me that a loan like this would require repayments around $175 p/w which is $25 p/w over the rent. If I go interest only, I'm sure rent would meet expenses for an interest only loan but a property like this wouldn't have much property growth. So I guess my question is, how do you make money off a property like this?
Man I feel dumb right now!
:o)
RichP.S. Any suggested reading to get the basics would be very appreciated!
Hi Rich,
I think our phone conversation helped clarify your questions, for others reading in summary. "Income" is the cash-flow, "If come" is the growth, you need to clarify your strategy and identify what your first priority is and then ensure you build a portfolio that will meet the medium and long term goals. I think from out chat you will agree Cash-flow and Capital Growth properties are both valuable in your portfolio, you need to ensure you use them both to maximise your results.
I look forward to speaking with you again soon.
PaulPositive Results | Educating Property Investors / We Find Houses
http://wefindhouses.com.au
Email Me | Phone MeHelping You To Invest With A Purpose To Finish With Successful Results
About October of last year I wrote about buying CF+ve property in the Latrobe Valley. Specifically Morwell. I’m sorry I’ve taken so long to get back to the forum but we were bedding down a subdivision in Geelong.
I was asked a question about Housing Commission areas. Was it wise to buy, subdivide and build in such areas? That is all we do so it’s easy to guess where we are working in Geelong. We work on numbers and percentages only and we are primarily after cash flow to strengthen our hand for later purchases where we will have to sit on CF-ve property to get good capital growth (but still under the median house price value).
Unusually the Morwell properties have shown about 13% capital growth pa. in the last two years. We did not expect this. It is a bonus. We research demographics and council plans before buying. What we uncovered there, but not in Moe or other areas, was a pretty safe return of about 6-7% on prices then prevailing and no valid explanation for this being overlooked. All conditions prevailing there existed in other centres.
As I said we subdivide and build. The method really is just the construction of cash flow. The land is usually free or a capital bonus. This is what we do and it will not suit everyone.
I got one amusing reply about crime and population decline. We live in each property as we work on it. Morwell was an ok place to live. I’ll go back for our build in 2010 after doing one in Norlane, another Housing Commission area. Population decline occurred because of a unique set of circumstances and as a part time resident crime is less of a problem than in St Kilda East where I am regularly the victim of theft or vehicle damage. The drugs in use are different I will grant you.
Business is going well in the valley and it is no longer an area reliant on one source of employment.
I’ve been letting property to people on benefits or low wages for 20 years and find them mostly to be very reliable and good tenants. I also try to provide the best quality shelter for their dollar to encourage long tenancies.
I’ve lost money twice on my formula. Once when I built in an upmarket area and once when I was letting a house in a nice area. I will never go above just below the median income/median house price combination again. I’m not the only one who does this, there are quite a few of us. It allows us to do a little and often. We have just got approval for a build and a buy. This is because we have strong cash flow which interest rate drops will only increase. In exchange for this we take smaller capital gains but we have many of them. It has allowed us to give up our day jobs and live in a way where we are the boss.Hi
Yes i m a Newbe
just starting out and looking for IPs
just wanting to know how people feel
about properties in broken hill at the moment
as i seam to have found a few positive cash
flow properties out there.________________________________
Reno Airport Rno limo service I 100% agree with fatboy i'm an investor from canberra i own 3 properties in canberra and 1 in nsw i went to morwell 2 weeks a go as its an area i've been studying for about 3 months i was amazed at how strongly positive cash flow property was there so impressed that i bought 3 properties with my brother it has cost us $348,000 total for all 3 properties and combined rent of $500 with long term tennants 2 of which wanted to extend for a further 2 years which means that even if we borrowed 100% plus property management fees and rates etc we will still make $260 each per year. But the main reason i purchased there is because it is listed as a real boom area with a lot of infastructure coming to the area and the new road links to Melbourne its an easy hour and 15mins drive along the highway on the new stretch of road. Housing is very affordable and not only is it a boom area but the property pays for itself without contributing a cent. I love property and research it everyday and from the research i've done there is no better place in australia to invest. My favourite saying is BE GREEDY WHEN PEOPLE ARE FEARFULL AND FEARFULL WHEN PEOPLE ARE GREEDY as we seem to be a country of followers not leaders don't miss the boat cause when everyone starts jumping on board your returns won't be as strong as you will have more competition which pushes prices up which pushes interest rates up etc there is no better time than now to invest in property.
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