Forum Replies Created
Very good point: oshen
Hi Xenia
Lease options are normally done with an interest only loan. If you are worried about falling house prices then use a P&I loan. This way at least you are paying some principle. This would bump up the repayments to the buyer but also gives them more equity build.
You can also off set any drop by getting a bigger option payment at the beginning. This way when the time comes to buy you out the house would be cheaper to your buyers. The option payment normally comes off the total price of the house, but non-refundable if they break the agreement. The negative side to this suggestion is you would limit your target area as most people do not have a big deposit.
Another way to approach the problem if your fears were realized and prices did drop would be to offer your buyer a second mortgage carry back on the short fall until prices rose again. This would be fine with the lenders as the buyer still would have X amount of equity already and with a small second mortgage from you the problem would be solved.
Lease options are very flexible it really is your deal in the end.Kerwyn.
Hi Steve
Good to have met you at the Melbourne seminar, it was great.
I would like something about buying outside OZ and NZ.
Maybe the for and against aspects of such a move.Kerwyn.
Hi Jaradnkaren
To do the second scenario you have to do a number of things.
First approach a lender and tell them what you have in mind and see if they will give you pre-approval on what you are going to do.
Secondly ask the lender what valuer they use then have a chat with them to see if you do Y to the property it will be worth X.
Now the critical part to doing this is to make sure you can get a long settlement, you will need it. Also to make sure you have your costing correct.Have you thought about asking for a second mortgage carry back with the vendor? If they will give you a 10% second mortgage even if it is only for 1 year you will have enough time to get the place fixed up and revalued. You then pay the second mortgage out and the place is yours. Sometimes they will do this especially if you refrain from low balling them and offer close to the asking price or even a few thousand more. If you are sure you can add a lot of value to the place it is a good way of getting what you want by giving the vendor what they want.
KerwynHi Westan
I am actually getting calls from agents 3 this week. Properties are in short demand not much under $100000.
The agents don’t seem to realise that once the +CF is gone so will the Aussie investors. I don’t think they believed me when I told them.
Rents have dropped a bit also, to many rental properties on the market.
This may change when the freezing works start up again.Kerwyn
Hi All
I tend to agree with Westan as far as the word retirement goes. I remember reading an article on retirement a few years back that reported than a big majority of people who retired to the so called easy life lasted around 2 to 5 years before popping of this mortal coil.
Now; that is not something I want to do for awhile so I have exactly 0% interest in retirement.
That doesn’t mean I want to keep working in a normal job or run a small business to make a living: I can think of much better things to do. What it does mean is that you have to do things you like to do and earn good money at the same time. If your job is making you stressed out and ill, then find something you like to do.
It is not going to be easy, but show me something that is worth anything and is easy, chances are you will not find it. There is an old saying ‘something you get for nothing is worth exactly what you paid for it’: nothing.I am 55 and came to this conclusion only lately, so I am doing something about it now.
How much do you need to have in dollars to feel satisfied? Well I would like around 1 to 2 million passive income a year. That’s the goal I am aiming at and I will just have to see what transpires down the track.
Most of you guys are starting a lot younger than me so you can spare yourself a lot of hard work doing something you hate just to survive.
You just have to drop the word retirement from your vocabulary and think of it as a change in life direction instead.
Kerwyn.Hi Terry
Thanks for the info. I am looking at doing some wraps in QLD soon and heading that way in July to have a look. Will be in touch if it works out.
KerwynHi Jaradnkaren
A couple of things you can consider? Is there libel to be good capital growth in the property over the next few years? If there is then you can look for a money partner to come in with you.
Secondly is there room for adding value to the property in the short term? If there is why not offer a longer settlement period and value add to the place, paint, landscape, fix it up. Then get it revalued before settlement and use the extra as more deposit: could make all the difference to the lenders giving you a loan.
Kerwyn.Hi Terryb
If you are in WA I would strongly suggest that you contact Aspire in Perth phone 1300 132 941 or call into the office at Level 1, 38 Rowland Street, Subiaco, WA 6008.I am in the Eastern States but I belong to Aspire. If you want to meet other like minded people who can help you, then give them a call.
KerwynHi Westan
The story was relayed to me by the PM as it happened to her (so she says). I know that she was really worried that she would get in trouble some how, but I don’t know exactly why. I think maybe the owner asked her for names of insurance companies and she was a bit vague in her replies.
I don’t think it is appropriate for me to mention names on an open forum, but I will PM you with all the details if you like? ( you to Don and Liz)
You know where I am investing Westan and it was in one of the far South suburbs of that town, near to the road to the port, freezer works etc.
She did say that the owner put in a claim a few months earlier and it was rejected and the insurance cancelled. Now maybe the owner got the s..ts and cancelled himself after being knocked back and then did nothing to find another insurance company: not a 100% sure?
The owner could have told the PM the insurance company had cancelled the policy, so as not to look like a dic.h.ad, who knows? But the PM just told me what she thought was the story. I did say to her that in was strange for an insurance company to cancel the policy, but she said that is what the owner had told her.
I don’t know much more than this, but either way it is a sad tale.
Kerwyn.Hi all
A little more information that has come to light.
Seemingly the house was in a bad part of town and only a couple of doors away from a gang house: you know the deal drugs, crime etc.
Obviously the kind of tenant this property would attract would be of a lower standard and probably the only kind of people you would get. Whether the owner made a conscious decision not to insure because of this reason is unknown, or if the close proximity to the gang house made any difference is also unknown. Although I would think it would have had a bearing on the insurance company’s decision.
I don’t think you could blame the PM for not choosing good tenants; they would not have a big choice you would assume?
Now: I would not buy a house in such an area but then again I do place a lot of emphasis on checking things out properly: due diligence is what it is called.
Again I wonder if this house was bought sight unseen from the net: most probably I would think. I doubt that any investor in his right mind would buy a house in the worst part of town? Then again stranger things have happened?
If anyone is in a similar situation and you bought from the net sight unseen? Then Don and Liz offer to cast an eye over your property sounds like an excellent deal, I would certainly take them up on the offer. Could save you a lot of heartache down the track.
Kerwyn
[biggrin]Hi Don and Liz
Yep. a lot of presenters do offer you money back. I have been to one seminar where you could get your money back Sunday lunch time if you thought it was a scam. That meant you had a day and a half free if you wanted, not bad from someone who just wanted to rip you off.Kerwyn
Hi Westinvest
I think you should always get a valuation regardless: this is a part of your due diligence.
In the event of sounding monotonous you must check as much as possible out about any property you want to buy. If you don’t, you leave yourself open to buying a lemon, I know I have bought some lemons: reality is a hard task master and expensive. Hence the title of my thread,
Due Diligence rules supreme.
Kerwyn[biggrin]Hi Mini
Spot on again. One day people may listen and save themselves a lot of problems.Kerwyn
Hi colbert1982
I have never attended any of Steve’s seminars, although I am about to remedy that in a couple of weeks in Melbourne.
I can tell you having gone to other seminars on property investment that it is not a waste of time. You may think it is a lot of money at first and I certainly did the first time I went, but what you learn is invaluable. I can tell you that education is costly, try doing a Uni degree now a day and see what they cost. If you are serious about property then you need a bit of education, anyone can buy a property and hold it for 10 years and make a bit of profit, but it is the other strategies that people like Steve teaches that will set you free from your day job.
Steve would have absolutely no reason to make false statements or post stupid replies patting himself on the back just to get people to go to his seminars, what would be the point. These people are educators they do it not only for the money but for the enjoyment of helping other people to be financially free.
If I had not won a couple of John Burleys books and then found Steve’s books, I would still be ignorant about true property investment. I now have 4 houses and 3 flats in the last 9 months thanks to people like Steve.
Kerwyn.Hi All
Couldn’t agree with you more Mini, great reply.
Having done a bit of bird dogging last trip myself I know it is not easy. In fact I ended up getting better deals for other people than I did myself.
The responsibility of buying for others is a lot harder on the nerves than people can imagine if they have never bird dogged before. It takes a lot of talking to the agents before they will trust you as being serious in what you do.
Luckily I have a good rapport with a number of agents who now know I am serious but it did not happen overnight. I now get calls from these agents before they list new properties; marvelous what happens after you buy 5 or 6 houses through them. I even bought a property that one of my clients could not get finance for, just to save face with the agent: although it was a good buy at $55000 returning $140 a week, located 800 meters from the CBD and right across the road from a large supermarket.
Having people on the ground is also vitally important; you simply can not beat local knowledge: as you said without it you leave yourself open to buying in the wrong area. Not much good having the best house in the worst street.
You are also spot on with your comments about finding finance in NZ and not looking in OZ. I had one of my clients assure me that his finance broker here could definitely get finance for him. He now is getting finance from my source and it is costing him $25 a day in late settlement fees: I have refrained from telling him “I told you so†but only just.
I would also recommend that if anyone is unsure about buying a property sight unseen from the net, they should have a talk to someone who has good contacts and knows what is what: your friendly local bird dogger is a good starting point.
Kerwyn.Now Now Richard no need to get bent out of shape.
KerwynHi All
Yet again you fail to understand that a fall in house prices is a positive thing for many Australians. It allows struggling FHBs into the market, and makes it much more affordable for existing home owners to trade up.
dmichie you are forgetting one thing? If the economy goes bad these same poor FHBs are going to be on the wrong end of the stick again. The banks will simply withdraw their lending and make it harder to get a loan, so FHBs will be behind the 8 ball again. To counter this the price of housing would have to fall far lower than 10%.
Kerwyn.Hi All
Correct me if I am wrong?
Doesn’t buying a property from a mortgage lender require a property valuation? If you add $10000 or $20000 to a property and the valuation comes in at that price, then you can’t be breaking any laws.
How does anyone know that the $108000 is the true market value for that house, it could be undervalued by $10000?
If the valuation comes in lower that the asking price then the banks will probably ask for a bigger deposit or won’t approve the loan.
Can’t see any problem if the valuation comes in OK at the higher price.
Kerwyn.Hi Sean
Try Aspire on 1300 132 941 they will know of anyone doing L/O in Perth.
Kerwyn
