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July 31, 2008 - 1:05 pm

You gotto love a bear don't you? Lets get this crash over and done with so the bulls can rule again!!

I would love for some of the houses I'm looking at as a PPOR to drop by 50%. What a bargain that would be! Unfortunately these are the homes in well located areas which the retired baby boomers are in and who flatly refuse to move because they have cashed up super and $0 mortgage. Very contented to live in a mansion and have their grandkids come over to play instead. Facing such supply constraints, how else do I expect to buy these homes but pay 10x median salaries? Off course these days no family can survive on just one median salary living in any Aust capital city. 

As for IPs, if your rent and tax refunds are keeping pace with the interest rate increases, then why would you need to sell? 

 

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July 20, 2008 - 12:07 am

Ed doesn't promote or recommend any funds. His business probably doesn't have an AFSL hence he is too smart for that. As we know Ed talks a lot, thats what he does and in his seminars/CDs he mentions a guy called  Andres from Landau Securities located in Vanuatu. He makes very clear that every person he mentions is a crook and that you have to do your own DD on them. Whether this kind of disclaimer is sufficient to absolve him of any promoter liabilities, I'm not sure but he also states that he doesn't receive any commissions from them but know they very well, been to their place…etc.. etc.. But who pays for entertainment/dinner…? Soft and hard dollar commissions, very difficult to draw a distinction.

We all know that theres been a massive growth in hedge funds in the last 10 years. I think what Landau does is the DD for you. A lot of these funds are wholesale so its the old caveat emptor and yes, they can potentially give you access to asset classes and geographic locations which you wouldn't think existed. The returns may be large but losses would be too. Publicly available information is almost impossible to come by so trying to do DD on these funds might be difficult. Apparently andres meets with the managers regularly and do the utmost DD on the funds. It is only by association that Ed gets drawn into this side. At the end of the day, he is a property man and thats his expertise.

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July 19, 2008 - 12:32 am

Anyone else still in Ed's groups or rceceive his CDs? Apparently in the last 12months, hes moved back into real estate and not so much the marketing stuff anymore.

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August 31, 2007 - 2:03 pm

Thanks for the response guys. A shame I missed the web cast but still I'm no clearer as to some specifics of the deal. I understand in principle how wraps, buy and holds, unit developments, flips, OTP…etc.. all work. Just wanted to hear some real life stories thats all.

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August 30, 2007 - 1:32 pm

Just curious what kind of deals the RESULTS guys have done recently? Theres no need to provide specific locations or numbers but if its development sites – did you get it cos of the contact through the group? What analysis did you do to spec the deal out as I come across many site opportunities but rewards at the back end is just not worth the risk and equity tie up. If its buy, reno and hold – have you priced up cost of subbies and contractors these days? Its astronomical. Affordability is really at its lowest for homes with a piece of dirt and in decent locations. ie. within 15km of CBDs so am curious if all the buying is out in the country or just units to boost the yields up.

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December 6, 2006 - 5:39 am

Close to city yes but cheap no. My mate bought the 2×1 terrace he was living in with his partner off the landlord. Its a small single fronted narrow place with small courtyard, no garage much similar to the stuff in Paddington and Balmain which us Sydsiders are used to. Paid $420 or $440k I think but was only paying $290 p/wk in rent. Was a walk to the tram and pubs nearby and only short distance into town. But with the negative carry, you’d be maxed out after one of these.

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November 28, 2006 - 5:45 am

I find the show very interesting also. Used to watch it religiously every night at 11pm. I think it is now on perdiodically. There is another called Property Developer. I often laugh at the end of a show and think how glad I am to not be involved with what she calls “property development”. All they are doing are reno jobs. Some even quit their day jobs to take on the projects. Thats crazy trying to project manage and deal with tradies, suppliers..etc.. No thanks! Shes also an avid supporter of flips. Get your money out and move on to the next deal they all say. I wonder why when buy to let is so much more profitable over in the UK. Their rental returns are a lot higher than ours, most are cash neutral plus resi tenants also pick up taxes and rates as well. Plus UK rates are lower than ours. I know buy to let rates a slightly higher than owner occupiers over there. Why I don’t know. If you lose your job, you can’t pay your mortgage. If your tenant loses their job, you kick them out and get another in. Other wise you are the back-up. I don’t understand why its higher risk when someone else pays your mortgage. Go figure!

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November 28, 2006 - 5:34 am

Agents like to keep it simple so these strategies work in theory but takes a bit more effort to execute. One way to secure it is to pay over the offer price but in a flat to down market, you want to be sure that the “doubling in value every 7-10 year IP theory” holds true for your offered IP. I’m afraid a lot of cra* on offer would struggle to get you the cap gains. If it does get there, you’d have burnt an equivalent hole in your pocket due to the -‘ve cash flow over the 10 years just carrying the IP. Another thing to note is that m’gees are reluctant to offer up the CT for a 2nd mortgage. Perhaps you can convince the vendor to take a caveat instead. Less security than a registered mortgage but a way to get around modern day practical issues which the text books don’t really talk about. Keep at it though, I’m sure there would be desperate enough vendors out there leading into X’mas.

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November 8, 2006 - 2:41 pm

Mate, $1.2M for a piece of dirt. Whats the address? Did you bid for the one which got passed in at $950k vendors bid only? Only 400m2 or something ridiculous like that. How big is your block? Are you a builder? cos I have heard of beachside and water view premiums for duplexes. A guy I know got a DA approval for his tiny 450m2 block in Woollahra. Builders wanted $1M to build duplex….. wait for it, that is each! Perhaps you can leverage off what Michael Whyte is doing from Somersoft. Good luck mate. I am very envious. Would liek to buy that PPOR in Nthn Beaches one day. Perhaps I should offload my IPs…..

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November 8, 2006 - 1:48 am

Originally posted by Qlds007:

In saying this both the main MI’s will go well over a Million each so that gives you 2 Million of borrowing on the basis that you have sufficient income to service.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.

Just to clarify Richard, as far as I am aware, you may still me MI’d even if you got a 70 or 80% no-doc/low doc loan IF you went through a securitised lender. So it seems this limit is still in the $1M / MI mark. Is there not another MI in the market?

Hence wouldn’t a prudent strategy be to go to the Big 4, Suncorp, St George, Bank West to get the 70%, 80% full doc then no-doc loans where theres no MI attached to these loans? Only when this “avenue” is exhausted do you start with the securitised lenders such as Resi, Macquarie, Rams, non-prime lenders..etc.. and you don’t care if you went 90-95% LVR as your credit file will show MI against those loans anyway. The extra 1% LMI is probably worth paying for the capital you save. By then you could accumulate $4M worth of debt so won’t care if you never buy anything else.

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November 8, 2006 - 1:36 am

I’m sure you have checked out Pacific Palms already. Blueys and Boomerang certainly coming to its own in the last 5 years. A lot of Syd money in the developments in that area. Terrigal and Avoca seems to have taken the back seat this decade. Perhaps market has already moved in that area? There are a lot of holiday homes up there. Only the prime properties will be rented first and there are a lot of new ones with wooden floor boards, water views, shmick appliances…etc. My mate just finished a pole home for $400k unfurnished. Block was $300k 3 years ago so say $800k all up incl surveyor, architect fees and holding costs. Not sure what its worth but has lake views through the trees on Amaroo. I know I wouldn’t pay $1M in that area. Run occupancy rates at 6-8 weeks a year. I think you’ll find it should be more of a holiday home than an investment. Good luck.

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November 8, 2006 - 12:02 am

Heres how I think, your wealth is determined by the amount of debt you hold and not the total net assets. If your IPs are quality investments in the first place, the ability to control these assets will ultimately make you rich. The market in NSW is really depressed. Not a good time to sell at all. Are you sure you can get high $400s for your townhouse in Baulko? I know you can buy houses for that kind of money. With your options trading, $20k is not much at all starting capital and as you know, can burn that very quickly. I dropped over $5k on the SPI futures on this rally last couple of months and was only trading one contract! To me its just play money to get the juices up but if I really had to make money from trading, I know I’ll lose even more. Remember, not many fund managers/traders beat benchmark consistently in the long term. Most traders in banks survive on flow and client business. Proprietary trading is a whole different ball game. Good luck mate.

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October 23, 2006 - 10:08 am

If rates were at 17%, I’d say the 30 day bank bills would’ve been around then. It would’ve taken the recession we had to have to reduce the rates dramatically. The yield curve would’ve had to be inverted. ie long term rates a lot lower than the short term rates. A couple of years later, cash rate dropped to 12% or so then more normal levels of 8%. So rates doesn’t stay high long. If you have enough buffer/LOC and fix a portion of your loans, you will be fine. Inflation/ higher rates are good for investors anyway. It means house prices are going up but your level of debt ain’t!

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October 17, 2006 - 1:58 pm

Not sure where the cap gains are going to come from at this point of the cycle especially with another 25bps firmly on the cards. Unless I get an absolute screaming bargain, I’m hanging put and waiting to ride the next wave whenever that is. Can’t bear holding negative geared property for just the tax benefits.

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October 10, 2006 - 3:24 pm

Thanks ger1. Find anything of interest from the websites that you can use here in Oz? I heard about re notes when I was holidaying in the US. Didn’t think we could do that here?

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October 10, 2006 - 3:14 pm

Originally posted by wealth4life.com:

The only major change i see in the near future is the Baby Boomers entering retirement from 2010 and what effect this will have.

We effectively have 3-4 more years to make a killing. Debt is still cheap, baby boomers are still spending, asset prices will continue to go up. But I’m with Harry Dent in his latest book – beware stagnant a decade of stagnant growth from 2010 to 2020. Scary stuff, not in the realms of impossibility. When and if that happens, you liquidate your negative cash flow assets and move to somewhere cheap like Thailand for 10 years. [aacool]

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October 4, 2006 - 2:16 pm

Hard to say. I replaced one up in Cairns for about $9k incl removal. Needed it plus I got $7.5k rebate off vendor price anyways cos the place was left in a bit of a mess after I signed contract. Looks nicer but definitely does buckleys to the rent, only re-sale in that area. If you’re not going to sell, just update kitchen and bathroom, pain job or install air-conditioning. Tenants will prefer that.

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October 4, 2006 - 2:12 pm

Show me what deal you got that will be better than the 20% mez returns I can throw my $ at.

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September 28, 2006 - 10:18 am

I thought the “experts” were saying the market will bounce in 2006?? So now its 2008. Gee, they must be right then. Maybe we’ll give em another shot at it in a couple of years…

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September 27, 2006 - 2:34 pm

Would banks do any favours for us poor struggling consumers?? Sorry dumb question. They have some of the smartest capitalist brains in the country & if they don’t they will pay for a consultant.

I don’t think this product will be a traditional loan in the ordinary sense. The funding cost will have to be built into the end pay-off which they can model based off historical growth data. There will/should also be a time limit on this. I think the superfund angle is whether this can be sold as an investment product.

Would you as a super fund take a punt and lend/invest your money into a portfolio of residential properties for a future capital pay-out? Or the bank could pay you a coupon and keep some of the increase. Theres quite a few possibilities actually. But believe me, there are no favours here. Financial institutions are pretty good with coming up with new products and ideas but its all the same – shifting risk from counterparty to another and creaming off the top, middle and sometimes even bottom layers nicely.