It could be a student accom deal – rent each room individually.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Originally posted by intriguing:Here’s one for the synics:
I grew up in good old “Deni”. My mother still lives there. Good town, friendly people.
The town is not doing a lot these days – slowly going backwards in population. The main industry is rice, wheat, sheep and cattle farmers. Probably not a good prospect for cap growth in short term.
There is a bit of buy, reno and sell of older period homes at the moment – you need to buy them very cheap as they usually need lots of work (my mum owns one).Houses are relatively cheap, but the rent return isn’t great and without cap growth, not a lot to shout about for investors.
Units like these are on the edge of town usually (as is this one) and quite often are rented by the not so fortunate in society. Could be high maintenance issues.
The agent says it is a “fabulous location” – it isn’t.
Do some heavy research on location and existing tenants.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hi Everyone,
I'm a newbie to the site and have been interested in investing for quite a while now, even though I haven't yet taken the first step. Perhaps I am a little over cautious. For example I saw a property in Greymouth, NZ a couple of years ago selling for $55,000 and being tenanted for $170 pw that needed around $30k worth of work done to it over time to tidy it up. I was over there for Christmas holidays at the time not really looking to invest, however we saw the property advertised in the newspaper and thought it was worth a look. In the end it really came down to not having enough time to carry out due dilligence on the property and there were already interested parties who had looked at the property before and did have the luxury of time to research it more thoroughly. One particular lady was putting an offer in that night. So, I didn't purchase the property, returned to Australia, and soon learned that finding CF+ properties in Australia is, depending who you talk to, nearly impossible! I do believe they are out there, however more often than not it seems to me that CF+ investment properties are made, not found. So it can take a trained eye as well as lots of time to find properties where you can make the numbers work in your favor. For the past two years I have been keeping an eye out for such opportunities as well as speaking with people and learning as I go. I am quite conservative so I'm still not prepared to go into a deal unless I understand the implications fully. I also believe, from reading Robert Kiyosaki, that you make your money when you buy, not when you sell (if you know anyone with a "crystal ball", please let me know), I also believe that your exit strategy is just as important as your entry strategy. So, having said all that, it appears that I have finally found a way to make considerably more than 12+ p.a with property which I am, well, really quite excited about. The properties I am looking at are in Brisbane. Are there any other investors here, preferably in Brisbane, who wouldn't mind taking a closer look at these investments with me?
Cheers,
Ann Marie
[email protected]Dazzling wrote:Good onya Adam for starting a thread like this….maybe if we ask one of the Mods nicely they might make it a sticky. [upsidedown] To follow with your post, perhaps my best suggestion when you are starting out is to take 6 months to chat with people in the game. I take every opportunity I can to chat with elderly people (anyone who's 40+) [biggrin] They've got some amazing stories once you sift through the bluff and fading memories. The lessons are the same…..very little has changed over the years with the dirt and the boxes where you make the money. Best thing you can do is turn that damn computer off, close the door and go out into the real world and see what deals are being done. It's easy and comfy sitting at home staring into the laptop (or as my wife calls it the "haunted fishtank"), but easy and comfy is not where the money is at. Personally, I've never logged onto realestate.com, but given the responses from everyone, I gather the cracking diamonds in the rough where you can add value and/or fix a problem to reap the benefits, are not listed there. We've only ever bought 2 properties that were listed on the internet by an agency. Both props had been listed for around 6-8 months and had been passed over by a couple of hundred people surfing over the top…..high level internet screening mostly doesn't work. Get down into the "weeds" and sniff out the great deals that the majority of buyers simply fly over, give 5 seconds attention and then move on. Also, after you've chatted with a whole bunch of people (brokers / agents / old folk / friends / strangers / tradespeople etc) over the 6 month period….pick out a specialty that suits your skills set. People are making good money doing any number of things ; 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….. Pick one that suits your strengths and have a crack at it. If you are a single girl and don't own a screwdriver, maybe # 1 isn't your thing. If you're a brickie and married to an internal decorator – maybe # 6 isn't the best use of your skills either. All this research and book reading and studying only goes so far….it's amazing how sharp your mind becomes and how motivated you can become when you have a couple of 100K on the line with a Bank Manager breathing down your neck……and it's either down the chute if you gin around, or take a massive leap forward on the road to wealth if you work smart and hard. Get that first deal under your belt, document all of the lessons learnt, (share them here with others !!), show the financiers that supported you that you know what the hell you are doing, and that you are prepared to put out to get ahead. They'll see the successes you have and mostly approve the next little venture you've got on the boil. I've found it's amazing all of these inflexible Bank policies and limits seem to just melt away when you have a good reputation and they are prepared to back you up. Write up your ambition on a big sheet of paper with a concrete step by step plan to achieve it and shove it up on the bedroom wall, and on the back of the dunny door. Makes sure it's constantly in your face. Last thing you see at night and first thing you see in the morning. Before you know it, you'll be like the CEO's of the world, able to survive on 3 or 4 hours quality sleep before you jump out of bed recharged and ready to tackle the next stepping stone on your way to wherever the hell you want to go in life. Make sure the partner and kids are on board with the burning desire, otherwise it'll for sure, die a slow and drawn out painful death. As this involves other human beings with differing priorities and skills, this is by the hardest step to overcome. On an average salary, with a couple of mimicing American "retail therapy" shoppers in the family, with every modern whizz bang gadget and every member of the family with their head stuck to a mobile phone spending like the Watsons….I'd just give up and go home….don't even start. This is squarely in your court and nothing will rectify those bad spending habits once they are entrenched…..you're destined to look and act rich…but in reality be poor forever. Harder to run with a ball and chain around your feet, than a stiff tailwind at your back. Lastly, don't get stressed that everyone else is smarter than you, richer than you or more experienced than you. Hell, most investors are smarter / richer and more experienced than us as well, but that doesn't stop us. Most of the extremely intelligent 80 and 90 yr old people I've spoken to as part of my research haven't got two brass razoos to rub together….so I don't consider those aspects as a strong factor. Just paddle your own canoe and go at your own pace….take comfort in the fact that it'll be a damn sight more than most of the population. But most important of all….paddle – don't drift.
Could you please elaborate on these;6. Buying LPT's and sitting back drinking coffee
7. Buying acreage on the town's edge and waiting
8. Buying daggy warehouses and leasing them out – our faveadambc wrote:Hi everyone, I, like most other forumites who have visited the forum once or twice, sometimes get a little bored with the good old stock standard question "where can I find CF+ deals?". So I decided to start a thread with suggestions for the people who ask this question, so in future this thread can be the "one stop shop" for this question. My intent is certainly not to give town names, postcodes or geographical areas, but rather to assist these people to make a start so they can get out there and look for themselves. I have a couple of pointers, and then if anyone else has anything to add please feel free. This way, the next time a new forumite asks this question, we can refer them here. So here goes… – Start by narrowing down your search, as follows: – Look for properties under $200K in your region (eg. SE Qld, NE Vic, Western NSW, etc etc). CF+ deals CAN be found in any price range (apparently), but for those just starting out it's generally best to "start small" and work your way up. Also, if you are concentrating purely on residential property (as I would imagine most people do when just starting out), you are far more likely to find yields of 10% plus in the less expensive end of the market. As a general rule, the higher the price, the lower the yield (having said that – this rule is kind of like learning English spelling and grammar. There are more exceptions to the rule than there are abiding by the rule! But it's a good start…). Another reason to start here is because this is the lower end of the market. There will never be a shortage of tenants in the lower third of the price demographic. When times are tough, people tend to "downsize". And where do they go? The lower third of the market. – Look for properties within the above price range within 10km of a regional centre. You may be able to find lots of high yielding properties in the middle of nowhere, but if the current tenants leave then you may be faced with long periods of vacancy. Also, you may find it difficult to get finance for these places. So a good rule of thumb is to look for regional centres and concentrate your search around them. – Now that you've narrowed your search down to a particular area or areas, get to know those areas. Every chance you get, drive around them. Learn the streets in your areas. Learn where the schools are, the parks, the pigfarms (!), the good streets and the bad streets. – Visit every Real Estate Agent in the area, and tell them what you're looking for. Get to know them. Establish a relationship. Develop it so that they start calling you first, before they go public, when they get a listing that sounds like what you're after. – Keep a look out for "For Sale By Owner" signs. Check them out – sometimes they can be more flexible on price or terms than those dealing through a REA. – Inspect lots of houses. Lots of them. And then even more. Each one you inspect you will learn more. And don't just wonder through them with the agent. Develop a checklist of things to look for when you are inspecting them (advertisement – Steve's "Buyer Beware" templates are great!). – Each time you find a potential property, think to yourself "what can I do to this house to improve the cashflow or add value?" Or to borrow Steve's formula from his new book "Problem + Solution = Profit". So ask "what is the problem here, and how can I solve it?" – To elaborate on the above point – LOOK for problems. Ask the agent "what is the property you've had on your books the longest?" "Who is your most difficult vendor?" "What listings do you have that you think will be hard to sell?" And then ask "why" when they show you the property. That will be the problem. Then ask yourself (silently, not aloud – the agent might think you're strange otherwise!) "how can I solve this problem?" If you can come up with an answer, do something about it – more research, confirmation on various points, etc etc. Then if you're still happy that you can solve it – make an offer! Okay – that's a couple of suggestions from me. As I said before – please feel free to add to this. I certainly haven't covered everything I'm sure! If we can make this a good comprehensive resource for the new forumites who ask this question, we will definitely be doing them a service I think. Cheers, Adam Oasis Finance for your Vendor Finance solutions Achieve the Dream! [email protected]ok I too am a newbie to this forum. I can see the potential in propertys but dont have the capital to put into buying an IP at the moment, and patience is not one of my strong suits!!! I recently purchased my own home (4 bed 1 bath garage and underhouse storage) and put 20% of my own money into the deposit with has now grown over the last 4 months since i moved in. Being impatient I would love to go out and buy more property but silly me put all my money into my own home. So how can I get more money to purchase my first IP? I am paying almost double my repayments per fortnight, and want to continue this to decrease my interest repayments.
You would need to restructure your loan so you can access the equity in it.
There are several different products on the market that allow you to do this; you probably need to meet with a good mortgage broker to discuss your options. There are a few good ones on this forum if you don't know any.
There is nothing wrong with pouring every available cent into your mortgage by the way; the interest you pay on your PPoR is not tax deductible, so the less of it you have to pay the better.
This will add to your equity and get you on the investing track sooner.
The normal way the equity scenario works is that the banks will let you use up to 80% of your property's value, less any outstanding loans. The remainder is your usable equity for the deposits and purchase costs of the next property.
There are some lenders who will allow you to use higher amounts of your property value than 80%, but in my opinion this is becoming too exposed.
Remember; they will lend you the money, but it is you who is taking any risks.
How do you get to physically view all the properties Dazzling? We work 5 days a week. I have physically checked out properties on Saturday's in nearby towns but anything further than an hour to one and a half hours drive away is much tougher and partner is sensitive to wasting $ on fuel looking at properties we won't buy. Time off means no pay for us. How do you work around this or are your working hours flexible?
Do you have flexible working hours Dazzling? We work 5 days a week which leaves only Saturday for inspections and Sunday's for drive bys. Anything further than 1 hour's drive away starts to get difficult both time wise and petrol wise. I have been physically looking at properties for a couple of months on Saturdays but the towns nearby don't have a great capital return either (rental isn't much but some are better than others. Taking time off means lost pay. Don't mind losing pay if I'm am certain that a property is the one I'm going to purchase.
How do you work around this?
Stevie07
You also have the option of selling your PPOR – and accessing the money there to use for investing.
In the meantime you would be able to rent which, depending on where you are could be 1/2 (or more as you're paying more on your mortgage) of what you're currently paying on your mortgage.
Then buy a PPOR in the future with profits from your investments.
Linda
I'm curious as to replies to Bashy May 6 2007
Do you have flexible working hours Dazzling? We work 5 days a week which leaves only Saturday for inspections and Sunday's for drive bys. Anything further than 1 hour's drive away starts to get difficult both time wise and petrol wise. I have been physically looking at properties for a couple of months on Saturdays but the towns nearby don't have a great capital return either (rental isn't much but some are better than others. Taking time off means lost pay. Don't mind losing pay if I'm am certain that a property is the one I'm going to purchase.
How do you work around this?
I too have the same problem – time to go and view properties in other states……….how does one do this?
Hon
It can be done online; ask the agent for photos. Tell them you want photos of inside and out. They may not want to do it, but if they are keen to make a sale they should. If not, you need to make a decision about taking the chance without the photos.
A good building inspector with a building inspection report can tell you a fair bit.
Buying online requires even more D.D than the ones you can go and see. It can be done safely.I am in the process of developing a CF+ deal. It is going to take 18 months, but it is worth the effort. I purchased a subdividable corner block in a country town in SA ( strong local economy and high employment ). The subdivision has just been approved and in the mean time I have ordered a three bedroom transportable home from Allsteel Adelaide. The house will be delivered on site in a couple of months time. I am taking some leave from work to complete landscaping / fencing / carport etc. The land and house, plus connection of services and finishing off will cost $110 000. The final value of the IP will be $135 000+. If rented will return $150 / week. I am about to order a second transportable home for the other half of the block. Land costs are reduced to subdivision costs ( $13 000 ) This second house will be completed for around $100 000 ( $10 000 less due to not having land purchase costs ). This second house will also be valued at $135 000+. My idea is to keep the first property for 12 months and then sell it. I will transfer the profit from this property to the loan on the second property reducing the second by $25 000. I will then have a loan on the second property of $75 000 with a rental income of $150 / week. You can work out the yield for yourself.
It sounds like a lot of work, but most of it is signing contracts. There really will only be about 6-8 weeks of hands on work in the whole project. I work full time and it is not hard to do.Monty,
Just out of curiosity, are your loans interest only or P&I?
Im doing a similar thing somewhere down on the Bass Coast in Vic with a couple of friends. But in this case we are building them ourselves. Two of us are plumbers and the other guy is a builder so hopefully we can build them cheap enough.
Jarrah,
Just read your post and I couldn't agree more. We are just getting started, have already defined our area, type or property and more importantly, our customer… we couldn't open your link for some reason, it seems to throw us back to the "posts" page? I wonder if you could attach it to this response?
I won't ask you for a copy of your five pager as I think we all have to find our own niche.. I know how to hammer a nail but that's about it??? The missus and myself will be jumping in the deep end soon but we are taking this time (we are saving like crazy) to get out and about, do the learning and the grunt work… and we are talking to people!!!
All the best to all the other newbies
Al
I like to look of this approach….hope it works out for you
Hi All,
Great Post Adam,
Its interesting to read such a mixture of positive and negative opinions on the ability to buy cashflow positive properties. In the last two weeks we have secured returns for properties ranging from 8%-10% as a gross return before rent adjustments or value adding.
A key point to target these properties is to have your finance in place and have a relationship with a lender who can support you borrowing to buy these type of properties. Although investors love them you need to be in a situation that the bank will be happy to lend for you to buy them, as they are very popular a lender who drags the chain can cost you a great opportunity.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
G'day all,
Wondering if anyone has used a buyers agent around NSW to find cashflow positive deals & what they thought of the whole experience.RJ Hand
After 2 years of searching I finally found one.
It's out there, keep looking! Hi, I'm pretty sure timing has a lot to do with it. I had a property in the uk (my home) which I had for 10 years. Sold it for what I paid for it. Nightmare. After another 7 years it's now worth 4 times as much. Just my luck. I bought a property here in Oz in 2000 for 137k. Gone up in value very nicely! So I'm in luck with this one. Trouble is I can't access the equity – well I can officially, but my parents live there and they want to buy and….. long story but it's painful.
As a newbie (I also don't hear too many of "How I did it" stories), here's how I'm doing it. I have set my goals – income required from CF+ properties, the reason for it, where I want to be etc. First thing I'm doing is sorting everything else in my life that's financially related out – first of all I'm getting all my super into 1 place. My aim with super is to make 20% every year, and I'm currently getting 30%+ each year. Happy with that. I sat down and analysed what I owe (excluding the mortgage) – motorcycle loan, credit card etc. Ranked them into what was costing me most (interest rate). Now I'm hammering those to pay them off. Actually, my CC is the first one to go. Then I'll pay out the bike loan with the CC to take advantage of the 55 days free interest period, and hammer the CC again during that period. This way, I know when I'll be debt free except for mortgage.
My current IP is costing me $500 a month – yes I know, but try upping the rent for your parents, or kicking them out so you can sell it, especially as they're retired. I've agreed with them to up the rent so I'm out of pocket $400 a month. Shortly I'm changing the mortgage from P+I to I/O which will mean negative by about $100 a month. This will be through ANZ Money Saver Residential Home loan – 7.37%, flexible principal payments etc. (It was taken out as P+I because it was going to be my home and I wasn't focussed on investments back then). Then I'll hammer the principal for a few months to get it into a breakeven or even +ve position. During that time I'll be looking for another property. I don't mind taking a NG property for a while, but after getting IP number 1 down to a positive state, I'll use my salary to hammer the second one down to make it positive, plus look at other methods (making improvements etc). Yes I'm working and have to for my strategy to work well. I'll probably be going for 100% loan, IO for future investments, unless I can unlock some equity for a deposit. Then hopefully I don't have to pay the principal down for too long before it becomes CF+.
After reading Steve's books, I know it's not easy – I remember him saying they lived on bread and jam – or something like that. Well, I've done my budget for the next 2 years, keep minimum required for bills, food etc, will put all I can into mortgage, look for opportunities and MAKE them happen.
My goal is to live overseas, but I want a strong financial base here in Oz before I go with property, super and a few shares. I'm aiming for about 20 IP's. I regret buying my motorbike (new not secondhand), but I've decided on how to pay it off quickly. I drive an old car that's reliable and have no interest in renewing.
So I've started. I hate HAVING to work to pay the bills. I want to be in the position of being able to choose to work, start a business etc. First though, I had to have my goals. Now I understand what I want and how I'm going to get there. IMHO and in my case, it's not just property, it's sorting out all financial aspects – debt, super, shares, etc AND property. Now I know when I'll be financially independent, how I'm going to get there, and importantly, why i want to do it.
Cheers and good luck to all!
Phil
It's out there, keep looking! 
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