Forum Replies Created
Hmmm
Interesting topic this… I’m just wondering if we will look back at this point in time, in say 10 years and shake our heads.
It seems to me that the price growth is being fuelled mainly by cashed up investors taking advantage of easily accessible funds and record low interest rates.
So in my mind, we are in a rare point in time where the fundamentals are more or less perfect for this type of investing.
I guess my question are
i)Will the gloss come off Positive cash flow property investing when interest rates are say 9%+, and those that jumped into this niche see their cashflow being eaten away by increased operating costs (ie interest rates) and in addition the lure of a rapidly increasing sharemerket once again comes into play?ii) Is the growth especially in regional areas real or artificially inflated?
Not a doom and gloom statement; just a thought and 2 questions.
Things will not remain as good as they are forever.
My 2 cents
David U
Hi
I’ll address the last part, this is in no particular order
i Read all the posts in this forum
ii Get rid of the $38k ASAP; ie develop great financial fundamantals which lookks like you are on your way in any case, ie your ability to save $80k
iii Read as many books as possible on property, investing etc
iv Ask any questions you have on this forum, there are plenty of people who are willing to help
That’s my lot.
I’m sure others will have some additional input
Cheers
David U
Hi
You’ve possibly discovered a great opportunity and as Mr Hedge states there are plenty of opportunities out there. You will need to do your research/dilligence and then quickly ACT upon it.
Unfortunately most people will see an ‘opportunity’ like this and put it down as too good to be true, there must be something wrong with it or I’m not smart enough. One the other hand, those in the game will do their research quickly, buy the peoperty and then move on to the next one.
I guess the question is ‘Do you want to get in the game or sit on the sidelines’?
I’ve bought several properties that I have never seen and possibly wil never see; the only thing I need to know is whether it makes me money or not. That’s it bottomline…
Just a thought
David U
Hi Pranil
No offence but I wonder why you’re bothering to look for cash flow positive properties here in Oz, when there are literally 100’s (no exaggeration!!) of cf positive properties with 10% yields in your own back yard.
Was doing some research and found around a hundred in a couple of hours looking at just a few provinces.
Just my 2 cents
Cheers
David U
Leigh
I know the areas but not very well as I have only been there a few times.
Shepparton and Mooroopna are the 2 main regional centres close to Nurmurkah. Shep’s population is in excess of 30k and Mooroopna is less than 10k.
Nurmurkah’s population is only about 2000 or so.
Main industry there is mainly agricultural with quite a transient population, ie quite a few backpackers, fruit picker, ie seasonal workers etc
Problem is no bank will lend more than 80% (if you’re lucky) due to the popultion size.
Hope this tiny bit of info helps
David U
Hi Ringo
I made a recent post (a couple of days ago) along the lines of ‘Are you investing or speculating?’ This may or may not be useful in assisting you with your decision
Cheers
David U
Thanks AD
An independent valuation would be in excess of $100k which is based on recent sales for similar properties in the same street.
True, my wrappees could cash me out at any point, but I guess ultimately that is their call.
Refinancing was/is not a consideration as it is illegal for myself to refinance a property once it has been wrapped in Victoria in any case.
I am just trying to work out what figure to put down in my assets column in future loan applications; ie purchase price or ‘current market value’?
Cheers
David U
Thanks Nathan
I was looking at this purely from a sense of filling out finance application forms. I guess what I am saying is although I have currently taken out all 90% loans, my ‘real’ LTV ratio is below 80%.
I was just wondering how finance institutions and in particular mortgage insurers viewed this particular scenario.?
Thanks
David U
Hi
What is your strategy with these properties?
I would have thought that the lower the price, the better cash on cash return (%) ?
David U
Hi
Maybe this particular agent gets plenty of calls from wannabe ‘out of town’ investors who end up being a no show and is quite willing to help ONCE you show up.
Who knows?
My thoughts are if it’s a good deal, it’s a good deal… Just do your research first…This will mitigate the majority of your risk along with a good building and pest inspector that YOU choose not the agent.
Just my thoughts…
Cheers
David
Hi BKW
Have to second what AD… Just looked on the same website AD mentioned and in less than 30 minutes found over 50 properties that would easily be positive cashflow.
It’s not just about searching on the net. You probably also need to pick up the phone, start speaking to agents etc… and also think outside the square… ie don’t necessarily look in the areas that you live.
An example I can give you is
3 bed room weatherboard home… In need of minor TLC; ie coat of paint… near schools $34,990 Country town location
Will rent for $90 pw based on my reasearch
Also need to think creatively, there are many ways to turn a property into a cashflower and there are plenty of resources available that will assist you with this
Don’t stop looking..It’s all out there waiting for you
Regards
David
Hi Patricia
Positive cashflow puts money in your pocket from day 1. That is, nothing is left to chance. Do you think this will help or hinder you when you eventually retire in a few years from now?
Just a thought
David U
Jezzah
You’re spot on with what you’re saying. Also rememeber when you onsell your wrapped property you are collecting a deposit so this lessens the amount of cash left in the deal.
Take care
David U[
]Hi Felicity
Just regarding the terms you mentioned, ie $27k @ $250 per month; this means according to my calcs, it would take 9 years for the vendor to receive their cash in total.
How about making a bit more attractive to the vendor, by offering a balloon payment after say 2 years. It would work something like this ($250pm x 24 months = $6k with the remaining $21k paid in entirety at the end of year 2) This would/could coincide with the wrap purchaser cashing out.
Just my thoughts
Regards
David
Brilliant Steve
You’ve answered all my questions except how can I continually keep funding 20% deposits…. Now that is the EASY part as I have investors on board…
You’ve certainly put a lot of clarity in my mind in the way that I should move forward and grow my biz…
Thanks again
David
So Andrew
Just to clarify what you’re saying is:
1) Max out lending capacity in structure no 1 where you will assume responsibility as guarantor for these loans as the director of this company
2) Do exactly the same in structure 2, 3 etc….
3) The only limitation is the ability to come up with deposits (Which is no real problem for me as I have investors on board)
The only quetions I have are (i)Does it matter about the LVR… I am currently operating using 90% LVRs and (ii) You mention guarantees are limited to each partuicular structure… but at the same time won’t my CRAA be affected as this continues. My financial institution checks my persoanlCRAA every time I get a loan… Won’t they at some stage put a stop to this?
Look forward to your response
Thanks
David
Wei
I think that’s what most people do, I cerainly do. It also saves time as I don’t have to waste too much time negotiating on just one property. If I can’t get property 1 at the right price, then NEXT, on to property 2 etc…
If I didn’t do this, my buying efforts would be stalled if I couldn’t get the one and only property they have put in front of me at the right price.
Cheers
David U
Dave
That is such a sad story and so unnecessary really as it is relatively easy to make money in property with limited risk. It seems that this will be the one of those many heart break stories we are bound to hear about in the future. Ultimately the savvy inestors will benefit at the expense of those less experienced like your friend.
David U
Hi
Whilst I appreciate the difference between fact and opinion, the likelihood of interest rates increasing further given today’s events is in my humble opinion fairly high.
Given this, how do fellow wrappers intend to mitigate their risk using Low/no doc loans. By this I mean Low/no doc loans are generally of a variable nature (and generally cannot be fixed easily dependant on the lender).
How do wrappers reduce their interest rate exposure and ensure that repayments remain affordable to their clients with these type of loans?
Any comments would be appreciated
David U
Thanks Darren makes perfect sense.Regards
David U
]
