Hi there,

Thanks for your post!

I agree with the Great Gat in that it is better to ‘fix’ the problem that resulted in you being in debt rather than trading your way out of it.

However, I don’t necessarily agree that ‘woking in a job’ is always the best option to fix a past wrong. Back in my first book I outlined the importance of identifying the path of least resitance. This being the case, if your existing property is holding you back from achieving your goals then I’d be seriously weighing up the pros and cons of retaining it.

Now for the wisdom in book #2… Action -> Reaction -> Momentum. If you want something to change then first something must change! From my experience, thinking about change is nearly as effective as doing something that’s different.

So, why not go back to your accountant and tell him/her what your goals are and ask (not for financial advice) but the accounting ramifications of keeping vs. selling from the perspective of what is going to get you to your goal the quickest.

Hope this has helped.

Have a lovely night.

Steve McKnight

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Remember that success comes from doing things differently.
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Hi!

Welcome back to the forums. This is a timely way to make my 1,500th post.

Yes, I think there is still opportunity in real estate, but the nature of that opportunity has changed significantly in the last few years.

For example, during a boom market a good strategy is to leverage up and buy as much as possible on as little down as possible. However, that strategy in the current climate is likely to send you broke.

The idea behind the mentor program is NOT to do the deals for you, but rather to be available to help you beat fear and doubt and to get you to see investing from a different perspective outside the usual buy and hold.

Don’t think it won’t be a lot of hard work though… it will be. You are right to say that the r/e climate has changed and as a result we must change too as what worked well yesterday may no longer be effective.

So, to answer your question… is it still doable? For sure, but you can’t just repeat what has been done in the current market as times have changed.

It’s great to see you back on the forums and thanks for your contribution. Did you enjoy the newsletter?

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Here’s what I would do:

1. Agree to the council coming to have a look but request 28 days to ensure the tenant has time to clean up and is okay with the whole issue.

2. Approach council to see what is needed to obtain a certificate of occupancy for such a dwelling.

3. Conduct an audit on what is missing asap and then get busy in the 28 days to rectify the issues.

4. When the council comes be totally honest, plead ignorance and then ask them for a recommendation for “what needs to happen for this to be approved as a separate dwelling.”

I don’t like the idea of selling or passing on the responsibility to someone else. You have done will to think creatively, just see it through as all part of the learning process.

Have a wonderful night.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Hugu5282,

Thanks for your post.

There is certainly opportunity in every market, but every investor sees things differently.

For example, Dave and I just sold our Traralgon flats and my Dad just bought a Morwell commercial property (that will be +ve cashflow to a nice extent).

See, goes to show you that every coin needs a ‘head’ and a ‘tail’.

Watch out for closed minded comments though. Youcan’t see much while your back is turned and your eyes are shut.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Interesting post – thanks for making it.

It raises the issue about what is the best way to create money, through a job or other means.

Personally, I see taking a job as the easy way out as it trades time for money. Yes, the reality is that we all need money to live and have to trade some time for money, but the key is to try and think to create wealth rather than working to create wealth.

For example, time is an investors most precious asset, and if you want to be a property investor but are too tired after working two jobs then you may have more money but not have the time or energy to achieve your goals.

Also, the pizza delivery job – that’s great for Uni goers, but if you work out the true cost of driving around (wear and tear on your car) and then calculate how much per hour your time is worth… there has to be a better way.

Still, it’s a personal decision and as such there is no right or wrong answer.

Nevertheless, success comes from doing things differently so I’d be encouraging you to look for other investing ways to create wealth rather than trading time for money.

Good luck with your decision.

Regards,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Sorry guys. No plans for a repeat Perth Masterclass any time soon, and I doubt there will be one in 2006 either.

You best bet would be to use the discount code in the back of the second book to reduce the price to $495 and then use the savings to pay for the airfare cost.

Otherwise, I am now scoping out a formal mentoring program which should be due for release later on in the year. I don’t have much information about it as yet, so stay tuned to the newsletters for more information. This would be a pay-for-service arrangement though rather than a second MAP.

Regards,

– Steve McKnight

P.S. If you did want to get over for the Melbourne MasterClass then be quick as there is only about 8 seats left.

Hi,

A free seminar can be an excellent way to start your property investing as the information is usually okay but it’s the bending of the facts to suit a sales purpose that is questionable.

You can protect yourself against this by identifying the key assumption(s) in the financial model presented and then asking yourself how likely is it that those assumptions will be achieved.

For example, assumptions are normally made in respect to:

1. Your ability to borrow and usually at 100% (i.e. you have equity to secure against)
2. Interest rates may be low as the finance can be arranged via a back door. Watch out for this as there may be a commission paid back to the developer. That is, you may be able to get a better deal shopping around.
3. Certain rents can be achieved (usually best case scenario)
4. Low rental vacancy periods
5. The strength of a rental guarantee
6. Capital gains forecasts (about property doubling every X or Y years)
7. Depreciation expectations
8. Tax savings based on highest tax rate, which now kicks in at a much higher level.

That’s a start anyway. Good luck with it.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Stargazer,

Thanks for your post. I have quickly run your details into Investment Detective on the following basis:

Purchase Price: $200k
Closing Costs: $10k
Loan: $21k @ 7% P&I over 30 years
Rent: $290 p/week (no vacancy)
Rental management: 8%
Rates: $1k
Insurance: $300
Repairs: $500

On these assumptions, the software has come back with:

> A gross return of 7.18%
> Budgeted cashflow loss of $4,691.96 p.a.

Therefore, this property is better placed for a growth focus rather than a cashflow return. This is particularly true given you are doing 100% financing.

Interesting, if you put down a 20% cash deposit then the negative cashflow remains, but it falls to a shade under $1,500 per annum. Changing the repayment basis to interest only will result in a positive cashflow outcome.

The great power of Investment Detective is that it took me less than 5 mins to do these calcs and what-ifs. Beats mucking around with a financial caluclator. It doesn’t factor in your personal tax situation though.

Have a great day!

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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