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January 23, 2003 - 6:37 am

Cheers for that. It’s the way I imagined going, but most of the books I’ve seen came at it from the angle that you were going to use your house as the asset.

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January 22, 2003 - 8:50 am

Gday Belladonna, the hardest part l found was at the start all the people that tell you “NO” Push through them and belive in yourself.You can make it happen becouse no one else is going to do it for you Mitch

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January 21, 2003 - 5:47 am

Hi Bella, I am also a newbie to this exciting arena. After learning that Debt is not a scary thing, it opened up the possiblity of having all the things I dream of. Im learning from everyone’s input and experience all the time to be able to live the life that others scoff at. It astounds me that the vast majority are, it seems afraid or perhaps, just ignorant, of what they are capable of, yet, they still blindly put their lottery tix in weekly, hoping for thier lucky numbers to get them out of working for the rest of their lives!! If only they knew what we do~ IT IS ALL POSSIBLE![][]

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January 21, 2003 - 12:08 am

Don’t worry! you are never too young or too old to start! I am just almost 24 now and I started (with the help of my parents) at around 20. It is a great learning experiance! [] The earlier you start, the earlier you can retire..

remember…

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January 20, 2003 - 7:19 am

Sorry, to continue on… I believe that the best way to property investing is to build a business that will give you the means to buy these positive cash flow property that you want to buy. Cause if you want to just save with the money that you earn at your average day job to go towards the property that you want to buy, I don’t think that it will be that easy to buy more than one a year.. especially if you are putting up to 20% down for deposit.. It takes a lot of effort to save like $30k for a property!

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January 20, 2003 - 7:12 am

Hi Mike,

I am currently in the process of importing some cardboard and some plastics from vietnam. Basically, I can import anything, just as long as I can find a buyer and a seller. What do you need? [] You can be sure that I will try to find it for you at a competative price… []

Cheers,
Angie

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January 18, 2003 - 12:57 am

ULTIMATE GOAL
To build a business (weekend/spare time importing business) that produces a profit of at least $2000 per week so that I can quit my day job.

To buy and hold positive cash flow property with a passive income of at least $2000 per week.

SHORT TERM GOAL (3 – 6 months)
Fix up my ‘potential’ positive cash flow property so that it is positive. (Currently 4 / 5 units vacant).

Keep searching for positive cash flow property.

Continue trying to manage the current orders that I have for my business and hopefully get others.

GOAL 2003
Buy another 5 – 10 untis (positive cash flow)

Have at least 3 – 4 orders from my business this year

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January 15, 2003 - 3:41 am

It seems to me that the main focus of this site is property investment for “Positive Cashflow” and I guess that’s what most people here intersted in. As far as land investment, there is a time and a place for it. If you know the land value will increase over a given time and you have factored in all your holding costs, then perhaps you should go for it. Remember, your getting no return on your investment until you sell. You have interest costs and land taxes to content with. Then if you take the next step and develop your land, all of the associated development costs. All this can add up and take a great deal of time. All the while your costs are mounting up. The rule of thumb has always been land appreciates, buildings depreciate, but at least the building is bringing in rent to compensate for all your outgoings. I like to look at large blocks with a house. Located close to shops, schools and other relevant infrastructrure. I hold and develop on a yearly basis to fund my “lifestyle”. I have worked out a plan to develop the holding properties as required from now until I’m 75. Each development will fund my lifestyle and future developments.Most are unit developments. I still ahve a few “gaps” in there to fill, but I’m working on it.
Good luck to you!

Canuck

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January 15, 2003 - 2:54 am

Thanks for the reply Steve. Queensland is a bit far away for me at this point. Like you said you have to be able to get in the car and go have a look! Get to know the area. I have done this with close to a dozen areas in Victoria now and done the research on the criteria required. Some have come up to the mark and others, which I originally though were good, have not! Once you find out vacancy rates and expected rental returns and do the sums, it’s not brain surgery to work out if the area is going to be “cashflow positive” for you. It can be hard to find the right property, but they are out there!!
I find if I take the annual(gross) rental return, allow for two weeks vacancy and a further 25% for all outgoings, this gives me my net income. Then comparing this to the annual interest(ie 6.5%),you either have positive or negative net return. I know lots of people who don’t take vacancy or ongoing costs into consideration when doing the calculations. Lots of real estate agents don’t and advertise a high return on your investment. Good way to get into trouble! I have found if the property is cashflow positive after these considerations, the actual net return is higher as the 25% deduction is more like 12-15% in real terms. but better to be safe than sorry!
Anyway, good luck to all of us!!

Cheers,
Canuck

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January 11, 2003 - 12:49 pm

[]

Yep, great advice! I know someone who had that problem once. Thanks for reminding me…

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January 10, 2003 - 4:33 am

I was wondering if I found my own tenant (ie. the real estate didn’t find it for me) do I still have to pay the one month letting fee still to the agent as stated in the contract? If not, then I could give that to the good tenant as an incentive to stay and bring in her friends….

I would be very hesitant to finding your own tenant if you do not live close to the place where you unit is. One of the most important aspect in finding you own tenant is

1. the interview. Take the time to sit down with them for about 15 mins – yes thats all it takes and preferb if you dit it at the place were they are living at the moment. Usually tenants move to either upgrade or because their landlords wants them out especially in a red hot market like we are in at the moment. You can tell 95% about the tenat by looking at what they are living in now. Ask them why they wanna move…etc.
2. Reference checks. If you can get to speak to them in the current residence the only thing you need to check is that they pay on time. Other wise I usually ask for about 3 references

As a general rule of thumb if you can’t do the two, hand it to a agent. At least you have someone to blame if it goes wrong. Also with an agent in the rural center they probably know what the tenant is going to be like by asking one of his extensive networks (small country town mentality – the gossip capital). He can do a much better job at screening off bad tenants than any of us from a distance.

Buy insurance – It much cheaper if you buy landlords insurance with building insurance together.

Anyway I thought that finding a tenant was only one weeks rent plus the lease fee of $15

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January 10, 2003 - 1:42 am

Thanks Steve and Sooshie for the great advice!

I would also like to thank Tony for offering to take the property off my hands, but I think that this should be a great learning experiance for me.. If I can make this work, then I can make anything work right? What doesn’t kill you can only make you stronger!

I changed real estate agents when I purchased the property, so hopefully this one will do a better job than the last one.

Question. In regards to:
****
Then I’d go back to the good tenant and ask her for the names of any people she might know who might be interested in renting the units. Offer her one month’s rent free for each referral that ends up signing a lease (since that is what you would pay as a letting fee anyway).
****
I was wondering if I found my own tenant (ie. the real estate didn’t find it for me) do I still have to pay the one month letting fee still to the agent as stated in the contract? If not, then I could give that to the good tenant as an incentive to stay and bring in her friends….
(thanks Steve)

Also, I unfortunately live very far away from these properties, so a do-it-yourself fixup job is not really worth it, i think. By the time I get there, take leave, buy the stuff and do it myself, it would be more expensive than actually hireing someone else to do it for me (I would usually try to conn my brothers into doing them for me [] ) There is a couple next door than does the maintenance for me, maybe I will ask them if they can fix it for me.. []

Thanks again for the great advice!

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January 9, 2003 - 2:33 am

I think, but not too sure, as I am still a newbie, when the banks consider lending you money, they work out your total income (income from job, rent, and all else) and then work out all your debts (credit cards, car loans, mortgages, etc) and then they work out how much money you have left over each week. They use a percentage of this figure (cause normally people have living costs that they have to pay for as well) to calculate how much you can afford for repayments each week and that is how they come up with how much you can borrow. They also take into account all your other existing houses to figure how much existing equity you have. I think that there are other factors as well, but that is as much as I gathered from borrowing from the bank.

So in the end, the more positive cash flow property you have, the greater your borrowing power! You must always buy property to increase your power to borrow more (so you can buy an infinite number of properties)… otherwise, if you buy negative cash-flow property, you have less money to play with, your borrowing power decreases and you will be only able to buy a limited number of properties

Cheers,
angie!

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January 9, 2003 - 12:35 am

Good question Nathan! I have often wondered how far a single bank will go or if you have to end with numerous “Financial Institutions” to bank roll all the properties. And as you suggest, what is their basis for all the lending? Is it as simple as once the property is considered as cashflow positive, you can move onto the next one?

Cheers,
Canuck

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January 8, 2003 - 8:04 am

I talked to some locals and sourced three builders with good references. Well known for good quality unit developments at a realistic cost! Before I talked to the locals, I was given the name of a builder by someone that doesn’t live in the area and it turned out they have a reputation for being the most expensive in the area. Matthew, your thoughts on checking out the local builders has indeed paid off. I also double checked the names with two Real Estate agents and have narrowed it down to two builders that are set up for my type of development.

Cheers,
Canuck

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January 7, 2003 - 2:53 pm

Thanks for that PaulOS.

Also, another thing… the more that you put out in deposit, the more income you have and so the more you get taxed! That’s like a double whammy! You don’t get the tax deduction and you taxed extra for the extra income!

Tomorrow, you might wish you started today.

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January 3, 2003 - 2:26 am

Tough to do. Unless the local council will give it you, it could be very hard to find. With the new privacy act in place most council’s are reluctant to give any information out. There is a database called LocalWise that Real Estate Agents use to source prospective owners/clients. Maybe you could try a local agent for some assistance.
Good luck!

Canuck

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January 3, 2003 - 12:31 am

Thanks for the feedback. Good to see all points of view.
I agree that pre-selling is critical to the success of the financial backing. I do have interest in three of the units already, so this should help greatly. I have had one piece of advice that suggested getting these interested parties to sign a “Contract Note” on the units. This commits them to buying the unit on completion. But it does not obligate me should the project not proceed. The “Contract Note” would have a reference such as “subject to financial approval or the like” documented in it. Anyone familiar with “Contract Notes”?
Thanks Rosco for the advice on what the bank requires and how to approach them, but I am concerned about the misrepresentation issue if the units are not really sold. At the end of the day I want to be in Property Development for a long time. Honesty and integrity goes a long way to ensuring your name is respected in the business.
Does anyone have an opinion on the trends in the country areas? There are some good rents being achieved putting the properties into positive cashflowright away.

Cheers,
Canuck

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December 31, 2002 - 3:43 am

Hi thanks for the input.perhaps some more imformation.Ive been investing in IP since 92 and until 15/12/02 i was an internet virgin.I cant belive all IP imformation there is to study!In the last week ive learnt so much ive had a real confidence boost.Ifeel i can be alot more aggresive in my price offers after reading hints on how other people buy IPs.Back to my rate queston,if ive got loans of 400K against security of 600K (75%LVR) should i be able to get 5.5% to5.75% or is this too smaller borrowings? Also,when you calculate your return as a % do you do it on how much the IP cost when purchased or its current value? Thanks for the site,i enjoy reading how people overcome lifes speedhumps on the road to investment sucess Mitch[]

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December 26, 2002 - 3:58 pm

I have a good friend who is both a mortgage broker and accredited mortagage originator. He would be worth contacting to ask the kind of questions you need to ask. it may be possible to act as an agent of his business for a while to get the feel of the industry without the costs. He is in Sydney but that should not be a barrier for people in other states.

He is familiar with the wrap concept and has a good record of fast approval and settlements. Anybody interested in his contact details can email me at [email protected]
Cheers,
Roger Coggins