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Thanks for your replies…I wasn’t trying to make it too complicated for him, I was actually trying to help him out and he was the one that came up with the $220K price, I just asked if it would be possible to do the deal with 150 now and the 70 later, as I don’t have the deposit in cash, only equity in another property which I didn’t want to refinance as a family member is a co owner and I wanted this deal to be my own. He was also happy to take the 150K now and the 70 in 12 months time at 6% vendor finance. It was only after he had legal advice that he decided it was too complicated and went with the agent option instead.
I’ve actually been talking to him on and off about the property for the past month or so (he lives up the road from me) and up until Friday he had no idea that the retirement unit would become available so soon. He was originally talking about selling his home but wanting to rent it back until a unit in the retirement village came up (which could have been next week, next year, or in 5 years for all he knew)
I can totally understand where he is coming from and understand that now he has listed with an agent then we couldn’t do the same deal, I was just trying to give him the money he needed now ($150K) to get on with moving into the retirement unit, and it would enable me to have some time to either do another deal with enough profit in it to put towards the 70K or to sell our home and move into theirs. I just hope that the property sells quickly for him and he can move on.
I personally thought it was a win win deal, as I was prepared to give him the amount he wanted and didn’t try to bargain him down, I just wanted a little bit extra time to pay the full amount. My question to forumites was did anyone have any ideas as to was there another way to approach the situation? Mainly for experience sake, as the last 2 posts come across as if they feel it wasn’t a win win situation.
Thanks again…I’m always keen to learn!
Hi Property Angel,
Good on you for having the enthusiasm to go out there and set upi your first business.
My two cents worth of advice would be this….Make sure you put everything down on paper – write a plan of how you are going to operate the business and visualise how you see your business after one year, 5 years, 10 years….can you see yourself still in it in 10 years time, or will you have a bevy of workers doing al the work for you whilst you enjoy life? It’s such a cliche but “most people don’t plan to fail, they just fail to plan”.
Also, concentrate on systemizing your business and business systems so that anybody can run it, not just you, because the last thing you want to do is start your business and work 100 times harder than you ever did for an employer for less pay for the next 10 years!! If you’re studying for your licence etc then you’ve got plenty of time to sit and plan how your business is going to look and feel and run before you even spend a single cent on it. Read as many books as you can about small business, I recommend “The E-Myth”, but probably the best piece of advice I can give is to read as many books on marketing as you possibly can. Plan how you’re going to get your niche business ‘out there’ and keep it out there – just putting an ad in the paper doesn’t always work. Read as much as you can and good luck with it all!! [biggrin]The problem with taking anything a RE Agent says is that they have a vested interest in property, and whether they’re talking it up or down, they still make their money one way or another.
When it’s booming and a seller’s market, they make their money pretty easily without having to do too much cause the market is swept away in a frenzy of greed and promises of making fortunes….in a buyers market they may have to work harder to make the sale, but they’re talking up how fantastic the bargains are now – just the other night on Today Tonight (always an honest and reliable source of information….NOT!) they were talking about the bargains where vendors had dropped up to $400K off the asking price of homes……I very much doubt they were bargains, just very overpriced in the first place. But, back to my original point of vested interest…..whether the papers or the re agents are talking the property market up or down, it’s all still good for them……agents still make their commissions, they still advertise in the papers, the papers make their money out of the advertisers, and the buyers still buy the papers to find the bargains. Booms can easily be created if you market something effectively, and no one would be any the wiser.I still believe as i said in my last post that you can renovate for profit in this market…..you just have to know what houses are selling for at the end price, and then buy really, really well at the beginning. No longer can you just buy and make a profit a week down the track………now you have to make your profits and be a lot smarter about your investments.
I think there are a lot of people out there that are making very foolhardy investment decisions based on one book they may have read and the promises of making a fortune out of CF+ property…..you just have to read some of the posts from newbie investors to realise that..and that is kind of scary.Dazzling,
It will be a very bland place if you were to leave, and it’s good to hear that you couldn’t stay away.
If you can get 2 acres in Perth for block value, then you have a lot of experience and advice for everyone else that frequents this forum.
I for one have taken some of your comments and advice to other forumites and applied them to my own investing dilemmas and I am happy to say that you have helped enormously by getting me to look at my personal situation in a different way.What sort of forum would it be if we were all policitally correct and couldn’t express our opinions in fear of hurting someone’s feelings??? Incredibly boring if you ask me!! There is a line though – there have been some horribly critical and bitter posts made on this and the other forums and personally I feel some people have really crossed the line, but I’ve never felt you’ve done that Dazzling.
Hope to read some more from you in the future and good luck with your most recent adventure!!
Cheers,
JunkersOriginally posted by gmh454:Originally posted by Derek:Was a interesting piece in the Fin Review last weekend on Qld development market. Found it hard to absorb how the building costs had blown out.
Also the big drop in renos seems to indicate that part of the market is slowing.It may (the drop in renos) have something to do with the fact that people who originally jumped on the renovating bandwagon have either sold or rented out their properties after spending every weekend and nights after work renovating for 6 months on a showstring budget with absolutely no idea of what they were doing threw up their hands in disgust and tiredness and gave up, never to touch another renovation project again.
Or it could be we don’t have the plethora of renovation shows like Location, Location, Hot Property, Auction Squad or The Block that were showing people making gazillions out of renovating. The buying public aren’t stupid, and in the last series last year of Auction Squad, the amount of houses that didn’t sell was embarrassing – the main reason why is because people knew it had been done over by the renovators, knowing that the vendors then had totally unrealistic ideas of what their properties were worth. More often than not most of the people in the crowd were nosy neighbours and other gawkers. It’s the same as basing what you think your house is worth compared to what your neighbour says they got – 9 times out of ten they’ll probably tell you they got more for it than they did to save face. The only real way to gauge what the market value of a home is, is to look at the numbers in reports such as Residex etc. And with The Block (the first series anyway) what a lot of people don’t realise is, the units may have gotten record prices, but the majority weren’t bought by individuals, they were bought by corporations….one was bought by the Daily Telegraph and leased out for a year rent free as a promotion (so how much money do you think they made out of that one, and do you think they were able to write it off??!!), and the one that won, Crazy John bought it and he couldn’t have paid enough in advertising for the publicity he got out of that sale! He’d write it off as a marketing expense and still have an asset to boot.I still believe that renovations are a way of making money in this market, but only if you buy really really well and bring the house into line with what other houses in the neighbourhood are presenting and fetching in sales price. The home gmh454 is describing sounds like someone who has jumped on the renovating bandwagon without thinking about who the end buyer will be and what they would want, it may have been better for them to have knocked the whole thing over and built new on the block.
The last boom was triggered by a number of things, one predominantly being the introduction of the first home buyers incentive, so that naturally brought an amount of people into the market that you won’t see for a very long time to come, if ever again. People forget that, and base their decisions on boom times, rather than ‘normal’ times of stagnant growth. It didn’t help that it seemed every man and his dog was getting on TV and saying it was easy to make a fortune out of property!! The property boom was just the modern day version of the old gold rush times in my opinion………..will happen again if enough people get on telly or the papers spruiking how to make your fortune in property……. [blink]……it’s all in the marketing IMHO
How good are you, your partner, your mum or anyone you know with a sewing machine??
Get down to your local Spotlight store and you’ll be amazed at what you may find. I made curtains for my IP out of Indian cotton at about $4 a metre, my curtains cost $10 a pair at most and look fantastic.
Or, you’ll probably find in places like Spotlight that they have reasonably good curtains premade in packets that are quite cheap. But honestly, running a hem around a length of fabric can do absolutely wonders for not much outlay at all.
The trick is to buy fabric or pre made curtains that look stylish and will do the job, but look like they cost you a lot more than you actualy paid for them. You can also buy curtains on E-Bay if you’re into that sort of thing.Wouldn’t do the wooden shutter thing at all until you do your reno, and only then if you think the $2000 you spend on that is going to bring you in at least $10000 in increased value.
Hi Jenny,
This is probably a stupid question, but have you had a look at what is under the wood panelling?? I have just bought a house which has wooden panelling (thin plywood with grooves cut into it) and underneath is wallpapered gyprock. So all we’re going to do is pull off the panelling and ascertain whether we strip the wallpaper or just paint over it.
Our first reno have wallpapered masonite covering tounge and groove boards – we ended up ripping out the masonite and painting the boards and it came up a treat. Whoever started that trend ought to be shot!!
Good luck with it all!Replacing weatherboards is quite easy. All you have to do is lift the board above the rotten one up so you can get it out, and either replace the whole board or just cut out the rotten bit and replace it with a new section.
Go talk to the guys at Bunnings, they will tell you exactly how to do it.Wayne,
Never, ever, ever give a counter offer during the same phone call as a counter offer from the vendor. I always make my offer, and then wait with my heart in my mouth until the agent gets back in contact with me. If they counter offer, I then go up in as little an amount as possible, but not in the same phone call. I’ll wait a couple of days at least, and I always have my walk away price in mind, believe me, deals are like buses, there’s always another one just around the corner. You may be able to afford to pay up to 180K, but is the land worth that amount? In this sort of market, you’ll probably find you’re the only interested buyer, so it’s worth making the vendor sweat a little to get your deal. It can be nerve racking waiting, but seriously, it’s worth it if you get your deal. Do as Foundation suggested, when they ring back tomorrow, tell them you’ve thought about it overnight and you can’t go any higher than $175K and see what they say. The fact that you’ve spoken to them 3 times today says to me that teh real estate agent thinks he’s got a live one on the line, and it’s just a case of steeling the nerves and getting the best deal for yourself.
Go for it!!!Wow….I am so amazed at the amount of people who have disinterested partners when it comes to property investing….thank god there are others out there! I have had resistance too…..
I started on the path to learning more about business and property investing in 2003, after going to a seminar and getting all fired up about the possibilities that were out there. My partner was always very cynical, a bit of a “I know everything and everything is a scam’ type thought process, basically he thought I was being ripped off but supported me if going to the seminar was something I really wanted to do. Anyway, to cut a long story short, he never really came around to my way of thinking until we (other seminar goers) started a monthly meeting, and he finally got to meet some of the people I had been talking about and could hear from them himself what they were up to and what they had achieved. Now, he’s well and truly supportive of investing in property and although he still walks through houses that I pick and says they’re absolutely crap, by the time we’ve finished renovating them he’s eating his words. [biggrin]
My mother, on the other hand, who helped us get off the ground with our investing initially, is still very scared of owing money to the bank. It doesn’t matter that the money we made on our first IP in a year is double her yearly wage – she still has trouble with the concept that we owe money. I have yet to have the ‘good debt, bad debt’ conversation with her, but will attempt to do so soon. I think mainly her fear and hesitation comes from her upbringing, where her parents worked in the same job for the same company for years on end and she was taught that if you can’t pay cash for it then you can’t buy it, and to pay off your home first. She believes any type of debt is a bad thing and should be gotten rid of as soon as possible.
I did say to her the other day, “last year you owned one house, now you own 3” but I don’t think she truly comprehended that – sometimes I think it just goes in one ear and out the other…..
Anyway, I think we all need to just keep plugging away and explaining things to our partners, and just say that if you don’t invest, then you (meaning your partner) won’t have the money to get the play things they want.
Have fun everybody!Are you kidding???[blink]
I can’t for the life of me think why anyone would want to pay that sort of rent per week and live in a caravan park….but each to their own and I do hope for your sake the figures are right.
Why would a tenant want to pay that sort of rent to live in the relocatable home, when they could rent a equally as good standard 2 – 3 bedroom house (although depending on where it is you’re looking) or possibly buy the property themselves?? At $55K on a low doc loan of say 7.5% on IO means they would be paying around $79 per week in repayments, plus let’s say they pay the $100 a week in site charges, then they would still only pay around $179 a week and not have to worry about ever being turfed out of their property. Something sounds a little odd, and I think that Leo’s advice could be a little dangerous – I don’t think these sorts of properties are likely to sell quickly if something were to go wrong, or how quickly they can be tenanted if yours moves out…but then I don’t own a relocatable home in a caravan park and have never looked into one to buy so I can’t really comment. You may also find that it’s extremely difficult to get finance for these types of properties. I did notice in this month’s issue of Australian Property Investor magazine that there was an article on caravan parks, if you haven’t read it already it might be useful.
Unfortunately the holy grail of 11 second solution properties isn’t as readily available as they may have been a couple of years ago, and canny investors have to look at other ways of making their properties cashflow positive either through renovation, depreciation, buying well below market value etc etc.
Read Steve’s 2nd book, as the market has now changed greatly and his new book reflects that. I do hope that the media keeps on with it’s negative hoo haa about property prices falling, better buying opportunities are coming and you’re probably better to wait for a while and invest in proper bricks and mortar than in relocatable homes.
But as I said before, each to their own, just make sure you do proper due diligence on your purchase, whatever you do.
Cheers!
JunkersWell done Ronulas!!!
I too have just acquired my second property – a year ago I had nothing.
I’ve managed to buy under market value for this 2nd one (the first one I was a real newbie and didn’t really have a solid understanding of what I was doing, but luckily we still made a profit on it in a cooling market) and it is definitely good advice to haggle hard and walk away if they won’t give you what you want. There are plenty of deals out there to be had, and it’s so much fun!!!But I truly believe that unless you really want to get ahead and make a future for yourself and are passionate about property, then you won’t get into it.There’ll always be something else that will take your attention, your time and your money away from you.
I’ve spent the last 2 years going to seminars, reading books and finding out as much as I can about the different ways of investing in property that I can and not only do I love talking about property, I love looking at property, renovating them and trying to find an even better deal next time around. I’m the boring one at dinner parties talking about the state of the market and what I’m going to do to my next house!!![blush2]I was given $140K in inheritance in 1996 as a 26 year old and I kick myself now that I didn’t buy property with it then. But I had no idea and whilst the money isn’t all gone (Firstly I travelled the world and then I started my own business and it’s invested in equipment) I certainly don’t have access to that amount of cash money anymore. It’s definitely taught me a lesson!!! I thought at 26 that I didn’t want to be tied down to paying a mortgage because prices would be too high – and I hadn’t even researched the market at this time, so I had no idea what houses were selling for!!!!
Oh well…..that’s life, now I have more idea and am probably prouder of myself for doing it this way when cash is tight than if I had the $140K all over again (although it would be nice….)Well done Ronulas and I hope you build an amazing portfolio in the years to come.
Cheers,
JunkersHi Leila,
The best thing to do for exteriors is to take a walk around your local neighbourhood, even a neighbourhood which is a ‘step up’ from your own (ie – houses are more expensive there) and take note of all the houses that make you go ‘wow, I’d love to live there!!’ As long as you paint and landscape your house in colours that fit in with the rest of the neighbourhood, and if you can see it done already on a house that is of similar style to yours, you’re not going to have too much of a problem.
There’s a story in Steve’s recent book about 2 of the mappers who painted their home a very bright ‘ginger crunch’ then wondered why nobody was wanting to buy the house – it turned out that it was just a bit too ‘out there’ for prospective buyers.Do you have a deposit already saved?? If you do, then the best thing to do when you are starting out to raise cash fairly quickly is to do a renovation. Renos don’t have to be huge, it could just mean painting, tidying up an overgrown lawn, prettying up kitchens etc – and if you look hard enough, there are plenty of bargains when it comes to building materials and stuff like that. All you need is a bit of imagination and a strong will to not overspend.
If you are able to buy below market value (i.e – if a house you are looking at would typically sell for $100,000, and you are able to get it for $80,000, then you’ve got $20,000 ‘instant’ equity.)
So, let’s say you spent $5000 on a renovation (and for each $ you spend you should get $5 back in value) and the house was revalued at $125,000, now you’ve got $45,000 in ‘equity’. You can then either rent it out and draw on that equity and use it to purchase another home to do exactly the same thing, or you can buy, renovate, sell.
Just keep in mind that if you sell you will need to pay tax on the capital gain, and you need to work out what sort of profit you are prepared to make out of each property if you choose that path.I have just completed a renovation where we bought for $195,000 spent $7000, and have had it revalued by the bank at $230,000 – so a gain of $35,000. That money is now going into purchasing another house which I have bought for $156,000 (market value is $165,000) and after spending $10,000 on it, it should revalue if all goes according to plan, at $210,000 (although me thinks that this one will go a little higher to maybe $225,000 – $235,000 depending on what the market is doing)
All this I have done without any of my own money – I found a money partner, who had the money but had a fear of doing it by herself, and struck a deal that she provides the money and I provide the grunt work and we split the profits 50/50. If you do this however, make sure you get your solicitor to draft up an agreement between the 2 parties so there are no disagreements when it comes to splitting money.
This may be something you may like to look at yourself to get you started – start with a reno, and then use the money to get into rental properties that you can buy and hold.
Cheers [biggrin]
JunkersI have a friend who is a real estate agent who has access to the data. Everytime I come across a property I’m interested in I ask them to print out the data on that street which will give me what price the original owner paid for it and when, and I can also see what houses in that same street have sold for recently, and I can also see what has sold in the whole area over the past 12 months.
It’s a nice contact to have although I do tend to bug him alot!
I’ve never purchased a Residex report, but maybe other investors have an idea of how you can get data on sales prices in your area?? I know the SMH lists in Domain each Saturday the sales prices for Sydney suburbs, so at least that is a start in the right direction.Whilst Ian from Brisbane may have thought it was a poor effort, Joe Bloggs down the road may have thought ‘Wow, this came at just the right time, I’m thinking of selling my house and I’ll give this person a call because they’ve made the effort to contact me first’. It does happen.Sorry Ian, I didn’t mean to offend…what I meant to say was…..Whilst MoJoJo and g1 may have thought it was a poor effort, Joe Bloggs down the road…blah blah blah….this is what comes of posting late at night and not re reading my posts before submitting. No offense intended.
The point I was trying to make was about marketing methods in general and how one person (Ian) was not interested in the marketing piece, but someone else may have been. It was more a discussion of marketing ideas, not a go at you (or anyone else for that matter) at all.
I agree Marc, I find marketing to be one of the most interesting and fascinating aspects to being in business – I love it.
Believe it or not, 95% of the marketing (small)businesses use is complete rubbish – most business owners wouldn’t even know where most of their business is coming from, or whether their ads are working or not.
I think the RE’s efforts where fine, I’ve copied many ideas out of many books, and tested which ones work and which ones don’t. Whilst Ian from Brisbane may have thought it was a poor effort, Joe Bloggs down the road may have thought ‘Wow, this came at just the right time, I’m thinking of selling my house and I’ll give this person a call because they’ve made the effort to contact me first’. It does happen.
I love to laugh at the Cars Guide ad where it says if you advertise with them 2,000,000 (or something similar) people will see your ad in the Cars Guide – unfortunately they fail to tell you that not all eyes are created equal – it’s very doubtful that of the 2,000,000 people reading the paper it’s in, that they will all be wanting to buy a car, especially YOUR car in particular as it is competeing with 1000’s of other cars listed in the guide – and so in actual fact they really have no idea exactly how many people will be reading the cars guide when it comes out, they just quote the readship numbers and hope that’s impressive enough.
I say good on the RE for trying something a little different – we all have to make money, even real estate agents, as much as you may loathe or love them. They’re not ALL totally bad…….Hi Dan,
The market isn’t the best for selling, but it’s not too bad for buying, and in August it may be even better – especially as it is end of winter which is always a slower time for properties to move and vendors are generally more open to offers. Inspect lots of properties and once you get a feel for what you think properties are worth, make some offers. And if you start low, you can always come up, but you never know, they might just say yes to your low offer! Asking price is not always the same as buying price, in fact, the area that I am researching to invest in, I can guarantee that properties generally sell for $20K below the asking price because i’ve been watching what the properties were originally listed for, and then looked at the sales data to see what the final sales price was. If you do this you’ll start to get a really good feel for what properties will go for in the area you choose to buy in.
You’ve got a good 6 months to inspect loads of properties, and prices may come off even more in that time.
A 20% deposit is a nice little deposit for a property, from your original post it came across that you would only have enough for a 5% deposit or something similar.
The crash will happen, the sky will fall in, the world will blow up on the stroke of midnight 2000……people will buy and sell property at any stage of the property cycle, no matter what the interest rates – the 80’s are a prime example. Whether they make money or not is another matter and whether that is their prime motivation in the first place, or whether they’re just happy to have a roof over their head and they can afford the repayments if interest rates go up.
I reckon it’s 3 oclock on the investment clock….tick, tock, tick tock……..Hi Daniel,
It’s a bit hard to give specific advice with the post you have written, as you haven’t really outlined your circumstances too much.
How much is a good wage? How much is your girlfriend earning?? How much are you saving each week?? Where do you want to live?? A 2 bedroom unit in Rooty Hill is a lot different to a 2 bedroom unit in Paddington…..
As for how much you can borrow, how much do you feel comfortable borrowing??? Do you like to eat baked beans on toast every night, or do you prefer to go out for dinner? Do you or your girlfriend like to spend money on clothes, cars, socialising etc and if you borrow up to the hilt will this restrict your lifestyle too much?? Money is the root of all evil, and probably breaks up more couples than adultery (don’t quote me on that – I’d have to go ask Dr Phil), but from experience, having no money sucks and causes a lot of fights between couples if you’re used to having spare cash around to spend on whatever you like.
Could you afford repayments if the interest rates went up by say 2%?? It can be a shock going from being a renter to a homeowner if you’re not prepared for it. The last thing you want to do is be the proud owner of your new unit, only to have interest rates rise, or something else happens and suddenly you have to sell quickly. The best advice I suppose is just make sure you can comfortably afford the mortgage repayments on even one wage, just in case something happens and suddenly there are little Daniel’s running around!! [cigar] But good on you for wanting to get into the property market, just make sure you do your homework first.
Hope this helps!
JunkersThat marketing message is directly out of a book I read called “Hot Marketing, Cool Profits” – don’t be surprised if you get another crumpled up note that looks exactly the same but has “Please don’t throw me away again” written on it!
It’s just another form of marketing and is designed to make you look at it rather than just throw it in the bin like most people do with their junk mail.
I’d say it did its job – it’s got you talking about it, which is what all good marketing should do!!
