good advice. can i ask you what you mean by not borrowing over 50% leveraged?
Someone correct me if I’m wrong but LVR = Loan to Valuation Ratio meaning wealth4life does not like to borrow more than 50% of the property’s value.
Thats correct doondoon,
Markets and times change – when i first started out i had savings and put down a 40% deposit on my first property which was a one bedroom unit. I worked hard and saved putting my money into an investment account.
Currently we are involved in the negotiating of an 88 acre sub-division for 2mil on a no money down deal. The block can accomodate 250 600/m2 lots plus two town house sites. We will get the da done on the 250 and sell for 30k eack or 7.5mill leaving a 5.5mil profit and retain the town houses for future development.
Today we see more greed with young people starting putting down no deposit and borrowing 100% of the loan in some cases, which IMHO is shere madness.
Young people today expect to get rich over night and don’t realise it’s takes time and knowledge to succeed, as i have learned. If you make the wrong decission you can lose more than you invest, so you need to work smarter and not harder.
D
What is IMHO? Still trying to catch all the acronyms… NWIM!
IMHO – in my humble opinion
a few more i have picked up
PPOR – principal place of residence
IP – investment property
Hi guys, can we have Perth in the discussion again? Every week has a different feel here in W.A. Is a 500k home in a southern suburb [Baldivis] that will rent for $300 pw at 90% lend bad investing? Should’t the growth rate now steady to 8%pa?
Probably posting the wrong question here on a +ve CF site but I really don’t mind a few $500k trades go through down that area. These darn WA valuers just can’t seem to keep up….
What do I invest in? Mostly residential property with something extra to add, ie a “potential” that I have assigned a value to and factored into the price of the deal.
So working backwards from an end value to me I can determine the correct purchase price for me! It’s not really rocket science.
I love property!! How can you not get excited and be postive about it? Will I be able to buy random property without any due dilligence and expect to profit? No!!!!!!!
cheers
I Buy Property http://www.cashflowproperties.co.nz
Cash Flow PropertyHi, everyone
My first posting. Just started reading up on Steve’s first book on property investment a few days back.
Spend some time reading this post, and found it really insightful. Was wondering about Big Ben’s figures on the $500k property. Did a very rough calculation.
90% LVR 450000
monthly payment @ 7% -$3,180.51
25 yrsCash deposit 50000
Closing cost @ 5% 2500
Cash invested 52500Annual cash in ($300 *52) 15600
Annual cash out
Loan pyt -38166.12
LMI @ 3% -13500
Maintainance @ 1% -4500
Total Cashout -56166.12Net Cash in/out -40566.12
CoCR Net cash/Cash invested
-77.27%Seems like the property is negative cashflow! Too much speculation over in WA and it is inflating the property pricing sky high.
I am definitely missing out some figures, as I am new to property. Can someone give feedback on the calculations. Wanna know I am on the right track.
Cheers
Daniel [specs]I don’t understand why every one panics with the interest rate hype… Do I look at things through rose coloured glasses? As long as your interest rates are locked in and you have purchased wisely in the first place you can sit back and watch everyone else panic. People are always saying to me “its not the right time to purchase now”. Well it is always the right time, you just have to do your home work.
Thanks Andreahttp://www.investmentpropertytoolbox.com.au
Complete guide to being your own property manager and all the legal document’s required.Excuse me ….. but is there an echo in here ???????????????
Originally posted by AJS:I don’t understand why every one panics with the interest rate hype… Do I look at things through rose coloured glasses? As long as your interest rates are locked in and you have purchased wisely in the first place you can sit back and watch everyone else panic. People are always saying to me “its not the right time to purchase now”. Well it is always the right time, you just have to do your home work.
Thanks Andreahttp://www.investmentpropertytoolbox.com.au
Complete guide to being your own property manager and all the legal document’s required.Yep, spot on.
But fixed period is only temporary. Once it’s over you will get hit with extra interest.
What upsets people that one way or the other as interest goes up you pay MORE money to the bank rather that using it for principle.I would say†I do not care much†as well as my PPOR is less that 50% now in and it will take me less than 2 more years to get it down to “0†but I still hate to see as my interest rate got jacked up from 6.5% to 7.26. This easily added another few months on the duration of the loan.
Yes AJS i agree with you so how many properties do you own currently and what are you looking at buying at present.
There are a lok of experts out there with great theories and empty bank accounts.
What is the sence in owning an investment if it’s not going to go up in value by 10% a year, thats what stock traders expect so why isnt property investing any different.
I would like to know what Steve is doing, does he have a blog as the CEO of this site it would be great to get inspiration from the top.
D
Originally posted by foundation:A lot of money has recently moved from property into the share market. There is some speculation that the current share boom is almost done whilst others believe it has another year or two in it.As sure as night follows day it will end and money will move back to property.
I would say it’s not quite that simple. If this money that you say is due to flow back into real-estate is the product of debt (and / or debt-funded bubbles), the markets historically have demonstrated an interesting, though brutal way of absorbing excess liquidity…
What type of investor are you?.
F.[cowboy2]
Hi All
I have been somewhat absent from the forum for a while – activites concentrated in other areas somewhat (work – it gets in the way of life )To respond to a couple of these questions:
SHARES:
Money comes in, money goes out – the rate of either side determines the direction of the market. Thankfully as money flows out of the market, or even better, if investors get extremely bearish the market falls really quick – the best time (for me) to make money in the market. Shorting is extremely lucrative.PROPERTY:
I must admit I haven’t been able to find a +ve geared property to date. Not sure if that’s because of my location (WA) and people getting more for their property than they ask, or, asking lots for run down places. Rent just doesn’t seem to be able to keep up – yet. Not saying they’re not out there – just I haven’t been able to find one yet Having said that, a couple that I looked at, with the speed the market moved, I could have made reasonable money on refurbs – just at the time of viewing it didn’t fit my risk analysis – I guess I was too cautious WHAT TYPE OF INVESTOR ARE YOU:
I look at almost anything that I think has a $$ to be made. The good thing about a cash rich economy is that everything goes up in price. I have made a few $$ from importing classic cars from poorer countries to sell to cashed up investors here. Even that market goes in circles and the ‘bargains’ are hard to find as the source works out pretty quickly whats going on and prices hike quickly. Not the sort of thing you came make “real money/living” from unless you have a huge backing as the lead times and holding costs are pretty big.I am a share/CFD/FOREX trader/coach on a daily basis. The market has been quite choppy the last 5 months – but there is still good money to be made. Clear trends are better, and downtrends are the best for making money – NOTE – for my style of trading!!
So far as property is concerned, between myself and my GF we have 3 properties, 1 of which is under construction and still increasing in value. It will however be -ve geared when completed (build price locked thankfully as the shire has dragged its heels for about 5 months now). “My” house still has a mortgage albiet a small one and only because I have owned it for so long that it is +ve geared. My GF’s house is owned outright. This will probably become a rental in the next year as well as we seek a 4th property – and going against the grain we will have a large mortgage on this one, our new “home”, as we want some acreage. However, talks with the accountant will be in order to see if we can solve that problem.
Comments??
Anyone in WA looking for others to join in JV’s feel free to contact me – I am open to looking at any possibilities. I have just sold my business as well and will have more spare time to committ to running around to do ‘property stuff’.
Cheers
OK so i’m watching the Sunday news and i hear that 5000 people per year in Sydney are losing their homes because they can’t afford to pay the mortgage.
Will it get worse?
Developers in Sydney are moving to QLD to get profits in a more boyant market, which is slowing however over the 10 year prediction is the most stable.
So who’s buying at the moment and what are you buying or are you scared to make a move?
D
Originally posted by wealth4life.com:OK so i’m watching the Sunday news and i hear that 5000 people per year in Sydney are losing their homes because they can’t afford to pay the mortgage.
Will it get worse?
Developers in Sydney are moving to QLD to get profits in a more boyant market, which is slowing however over the 10 year prediction is the most stable.
So who’s buying at the moment and what are you buying or are you scared to make a move?
D
I think in about 12-24 months will be good time to buy for us. Not because market is ready but simply because we will have PPOR payed out and 30% deposit for IP. Than in 12 more months we will manage to get loan down to 60-50% and than can relax as IP will become self sustained. Than it does not really matter how interest or market moves you are in the “safe buffer†area. This is the plan.
Anyone else want to share of there’s view of future?So theres an article in today’s SMH about m’gee sales being twice the amount during Keating’s 17% interest rate era and affordability index in Syd being still at 37% (30% the avg), with Syd at 20% back in 1997. Hence Ryder and Jenman advises that now is not the time to buy in Eastern Seaboard. Yes we all know that – there was the St Clare story and then the Annandale one was the main story today. Traded $750k+ 2 yrs ago and no bid at $550k with one ridiculous offer at $330k.
Extreme examples I know but wonder if its a pre-cursor of things to come from current WA boom?? Syd is proof that it can happen, prices WILL go down. Wonder what will happen to the WA market when all these new homes are constructed in 12mths time? We’ve already seen many tenants on short term leases only to vacate when their homes are constructed. And just the other day I saw a heap of advertisements for H&L packages in Perth here in a Syd RE window. Looks like the spruikers are still out there however have replaced Gold Coast high rises with middle of nowhere private sub-divisions on very ordinary homes. Similarly up north, we are also seeing the lagged effect of an oversupply of newly constructed homes in greater Brissy. Cairns is also going through this phenomena at the moment with herd like investors building like theres no tomorrow in the previous cane fields of Edmonton and Gordonvale.
I find this activity very reminiscent of the private equity firms offloading their stock at the peak of the tech booms. The winners: banks, brokers and venture capitalists. The losers: us!
Might be time to put our WA portfolio on the market…
asdf – very surprised that a firm would bother marketing WA house and land in Sydney when (a) there is no land available in Perth, so where is it coming from and (b) why not just sell it locally as they would have queques for it. Would suggest the price is loaded??
I would like to know how many Syndey investors, have used the slowly disappearing equity in their homes to buy into overpriced Perth.
Know of a few personally, I think the Sydney boom, has been a significant contributor to the Perth boom.
Don’t think it is all Perth locals.
Having said that, a couple that I looked at, with the speed the market moved, I could have made reasonable money on refurbs – just at the time of viewing it didn’t fit my risk analysis – I guess I was too cautious 
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