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  • Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
    Post Count: 189

    My personal thought on this is, between RBA and the government. They should make a choice of:

    Either:

    a) do whatever it takes to prevent a recession

    or

    b) Jack up the rates to however high out of necessity to fight inflation

    Yes, either choice would suck for a group of general population or another, but at least it brings results and outcome. By that, it means we have a clear direction and can overcome challenges with the chosen path.

    But instead now they are being greedy and trying to do both…. and by doing both, I foresee they will end up achieving neither, and all it does is just keep everybody hanging and making everybody suffer.

    Seriously, sometimes I feel like say the F word to them.

    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
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    4. From what I hear, Perth might have “bottomed out” – although I believe we never know “bottom” until it has already passed. Thinking though that future Growth is more likely to come from Perth than Glastone, look at buying something far better in Perth once you have your DSR sorted once more.

    Perth has been performing well for the past 18 months, and is continuing to perform well for the moment despite all the interest rate rise.

    Of course, nobody has a crystal ball to say if this will continue and if so for how long.

    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
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    Buy/reno/sell properties

    Slightly harder to pull off in today’s environment, with all the increase in labour and material cost, it would definitely have an impact on your margin.

    Having said that though… I was able to do this a few times… the only difference being I did buy/reno/refinance instead of buy/reno/sell.

    Too much cost involved with the sell scenario… stamp duty, agent selling commission, CGT, etc….

    I would not consider the sell option unless I desperately need to increase my equity or if I run out of borrowing power.

    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
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    This is a very old thread that got brought alive!!!

    I came across one of their webinars years ago. While the content discussed by the presenters were OK (eg: don’t buy negatively geared properties, focus on good cash flow, etc…), however, it was after I spoke to their consultants as well as being offered some of the products that I decided to ditch them.

     

    1. They were selling house and land packages

    2. One of the consultants I spoke with even said (back then) something along the lines of “there are too much information out there that can confuse you, so you should let <quote> let us do the due diligence for you <end of quote>”….. my reaction was like “no, thank you!”.

    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
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    I don’t like how they are broadcasting loudly on this “voice” topic in main stream media every single day, and it makes headlines in news every single day and yet there is so damn little information on.

    I was watching SBC news the other day where the journalists interviewed some remote aboriginal leaders and those aboriginal leaders said directly to the camera: Tell is what it means.

    Pretty much sums up my thoughts…. there is very little explanation what it is and if someone asks me to explain what the “voice” is all about… then my reply would be “I have no f@#$ idea”.

    So I cannot convince myself to vote “yes” to something that I do not understand.

    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
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    With Covid19 starting in earnest in early 2020, the winds of optimism were cold at first – but since Sep2020 to current day (Dec21) there have only been upticks in values each month. Each of these were greater than 0.5% per month (6% per year) and have an average above 1% per month (>12% per annum).

    I reckon it is a combination of:

    1. Money are being massively printed and those money has go to somewhere. They are unlikely to go into things that will lose value over time in the long run. In fact, some even go as far as “if government keeps printing money with no limitation or intention to stop, then just buy” kind of thinking.

    2. Pandemic has caused people to spend less, and all of a sudden lots of people found themselves with a big amount of cash in their savings that can be used as a deposit (Whereas previously those cash saving wouldn’t be there due to they would have spent that money on — including but not exhaustive list of activities — holidays, entertainment, eating, etc….

    Profile photo of StevenSteven
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    @steven1982
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    Actually, I posted the same in whirlpool forum and the feedback so far has been that Coomera is the only one from those I listed that are worth considering, due to demographic reasons and crime reasons….

    Some suggest I look in Logan region, still possible to get a house with 300K, or some better suburbs where we can try to get a newer / better townhouse for 300K…

    Is there like an online database I can look at for a compherensive / easy to read map / table of some sort that can outline flood zones

    • This reply was modified 2 years, 9 months ago by Profile photo of Steven Steven.
    Profile photo of StevenSteven
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    @steven1982
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    Soundpost for a newb to read, digest and apply.

    Actually, one thing to add in.

    The first step I mentioned to “work out your goal”.

    I mentioned this is due to the strategy would be different depending on the goal. This is a “technical reason”.

    There is also another reason that I would like to add in. This is more of a “psychological reason”. That is during the process of making investments, everybody is guaranteed to make a mistake here or there, and some of those mistakes can be discourage. Everybody is also guaranteed to run into difficulty situations. Some people give up because of that.

    But if there is a “strong reasons” defined, or a goal that is strong / attractive enough for you to look forward to, then this will increase the likelyhood that you will get back on your feet and continue to learn and improve, rather than giving up.

    Profile photo of StevenSteven
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    @steven1982
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    I would say the best investment you could make is in education

    This.

    Also per one of my posts in the forum.

    Work out what you want to achieve first, then work out a strategy that aligns with your goal (eg: if you want to live of 20+ IPs passive income and be able to quit your job, then the strategy of buying negative gearing IPs probably isn’t going to align with your goal very well).

    Then find the right suburb / area that can work based on both your strategy and your finance.

    Only then start looking for specific properties.

    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
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    Both are important.

    Without high yield you don’t get serviceability to apply for more borrowing (unless you have an insane amount of cash that you don’t need to borrow)

    Without high growth, then you don’t get enough deposit to buy the next one

    Instead, it is also important to think which one will break you.

    Lack of growth may make things stagnate, but is unlikely to break you.

    Lack of cash flow will kill.

    Profile photo of StevenSteven
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    @steven1982
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    I hardly pay attention to Medium price.

    I have made the rule to do the following:

    1. Look at “Sold within 800-1500 metres radios in the past 2-3 months” and make offers based on that, as long as the numbers make sense to me. It is up to vendor to accept or reject my offer but it is up to me to make my offer.

    2. Never up my offer unless I am desperate for it

    3. Never buy from auction. If all houses in an area are sold via auction, then that’s not the right area for me to look at. The only exception is if this is an area where I myself want to live in.

    Profile photo of StevenSteven
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    @steven1982
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    I think the idea of buying under value is to be able to add your own values. As the likes of Steve McKnight and many investors on this forum would point out “don’t buy a solution, but instead implement your own solution and then sell your solution”.

    Where you make money is not when everything is done for you, but instead for yourself to overcome difficulties yourself and sell the final product to the others.

    My real life case.

    I bought a 3 bedroom house in Traralgon not too long ago for low 200K (with existing tenant), it is structurally sound with good bones but very very under renovated. Only in the past 2-3 weeks, the next door house across the road, being averagely renovated (3 bed house with similar land size and configuration) is listing for low 300K, while the other one also practically next door to mime (well renovated, also 3 bed house with similar land size and configuration) was sold for high 300K.

    My tenant has recently vacated and my builder has quoted some 40-50K to renovate to the same quality and standard as the high 300K property. (can probably do it for cheaper if I do it myself, but I am not a professional builder and rather than spending more time than usual and risking not doing it properly, I choose to let a builder to do it for me…)

    If I renovate and keep it, then I am looking at an increase of 30% rental.(approx increase of 80-100 per week based on current figure)

    If I renovate and sell, then I am looking at selling for approx 70-80K profit (before tax, before agent commission).

    So the idea for buying under value is never to “drag up the value”, but instead to “implement my own solution”

    • This reply was modified 2 years, 10 months ago by Profile photo of Steven Steven.
    Profile photo of StevenSteven
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    @steven1982
    Join Date: 2017
    Post Count: 189

    So in other words, if your spending is like this:

    $1500 for food

    $800 for loan repayment

    Not only will banks add a few on top of the $800 to make your loan repayment look bigger (akin to adding an extra 2-3% on the actual interest rate to stress test your loan), but they will also add some money on top of $1500 for food to make it look like you are eating more than you are actually eating?

    Profile photo of StevenSteven
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    @steven1982
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    What about non-debit related spending? Like food, groceries, etc..

    If my living expense (not loans, etc.. just pure non-debit expense) is 1500 per month, will banks automatically assume it is 500-1000 higher than my actual spending as well?

    Profile photo of StevenSteven
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    @steven1982
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    Post Count: 189

    I don’t like crystal ball gazing… in other words, I don’t try to “time the market” as I have no confidence that I will get that right.

    Experts get them wrong the whole time.

    Media keeps on hyping it up but gets them wrong all the time.

    Economists get them wrong the whole time.

    Business Analysts get them wrong the whole time.

    So what makes me think I am any smarter than those experts?

    The culture where I come from, we speak of “Heaven” and “Earth”. There is no way I can control Heaven but I can build my Earth. The analogy is like as a farmer, you can select your location, make sure your land has good quality soil, has reach water resource, you use high quality farming products, etc… but you can’t control there will be a drought this year or there won’t be a flood next year.

    In terms of property investing, “timing the market” is akin to “try to control the Heaven” and it just won’t work 99% of the time. Therefore, instead of trying to “time when is it the best time to buy”, you should always allow yourself some level of buffer when you buy. That is, you need to make sure that you have a level of “profit / buffer” even if the market growth is 0%.

    eg: Instead of buying at 250K and “hope the value will increase the next year”, why not buy at 150K and spend 50K to build the value up to 250K? That way, you spend 200K but got yourself a property with 250K value, so even if the growth is 0% the next year, you still have that 50K manufactured growth built into it. If the value of property dropped from 250K to 220K, that’s still 20K buffer you have to protect yourself. Whereas if you buy at 250K this year and the value drops to 220K the next year, then you are losing money. Similarly, if you buy at 250K and the value increases to 270K the next year, that’s 20K increase. Whereas if you spend 150K + 50K but manage build the value up to 250K, then an increase to 270K the next year means you have 70K profit.

    I can’t control “Heaven”, but I will build resilience with “Earth” so I have enough buffer so there is a baseline amount of money I make even if there is 0% growth in the market. Any growth bigger than 0% = bonus money.

    Profile photo of StevenSteven
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    @steven1982
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    The whole point is the plan an investor has for the property. If an investor’s focus is on making money when they buy, they may not have a plan in place for the property after they buy it. They may simply be trying to buy a bargain. They think they’ve made money when they bought. But they haven’t. By instead focusing on what happens after the property is bought, you’re more likely to realise a profit. E.g. reno, subdiv, dev, cap growth, yield etc. All of those strategies require a plan prior to buying and an implementation of that plan after buying. In the case of cash-flow, the investor will focus on the income vs expenses and vacancy rate and landlords they’re competing with for tenants. In the case of capital growth, the attention is given to supply and demand. In the case of a reno, the investor estimates costs and new value. In the case of … etc. The focus is not on buying cheaply. The focus is not on making money when you buy. The focus in all these cases is on making money after you buy. It’s that focus I’m talking about. Buying cheaply isn’t a feasible strategy. There’s no such strategy as the discount flip because we lose money when we buy.

    In this case, then we are talking about the same thing.

    In my example:

     

    Instead of buying at standard $250K market value, investors buy at $150K, spend $20-30K adding value and result in property achieving $250K value even though they only spent $180K on that. And as far as from practical application’s point of view, investors considers this as an example of “make the money when you buy” strategy and as far as they are concerned, it works.

     

    Which part of this strategy gives you the impression that the focus is on “buying cheaply?”. None. The whole strategy is well planned and executed in a very logical manner. You are just focusing on the “buy at $150K instead of $250K” part of the strategy while ignoring the rest.

    As far as investors are concerned, this whole strategy starts from “buy at $150k”, and ends at “achieving $250k after 1 month”. The strategy over all is loosely described as a “make the money when you buy” strategy. It is not just the buying part, but the entirety of it, and investor just happens to give it a very loose name and the name happens to be called “make the money when you buy”.

    Make the money when you buy is not about “you make money now and that’s the end of it”, but rather, it is about “instead of buying a property at standard market value and wait for 2 years before the property makes money, I execute a well thought after plan to something below market value and add value to it, so it can make money for me after 1 month instead of after 2 years and keep making money for me from that point onwards”. The term “make the money when you buy” just happens to be a name or a label we use to describe this type of strategy. There is no point of getting so hung up on “by dictionary definition, this is the wrong term to use”, and this is starting to become a waste of time debate. Especially considering we are talking about exactly the same thing, we just happen to label it differently.

    Profile photo of StevenSteven
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    @steven1982
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    I think the issue with this thread is it is getting hung up on trying to debate the “definition” of something that is defined loosely when in reality, at the end of the day, what investors really care about is the practical strategies and the outcome it drives.

    Instead of buying at standard $250K market value, investors buy at $150K, spend $20-30K and result in property achieving $250K value even though they only spent $180K on that. And as far as from practical application’s point of view, investors considers this as an example of “make the money when you buy” strategy and as far as they are concerned, it works.

    Who cares if people think from a dictionary point of view, that “technically this is not the definition of make the money when you buy”. We are not here to discuss dictionary definition.

    Its like someone isholding an Ox-ford dictionary and insists on correcting every single person on a few words that are frequently used loosely in a loose verbal conversation and telling every single person “your English is crap”….. well, nobody really cares.

    Profile photo of StevenSteven
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    @steven1982
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    I don’t exactly like the idea of “crystal ball gazing” the market, because expert economists get them wrong all the time, so what makes us think non-expert economists can get them right?

    In the Eastern Asian philosophy, they say “you can control the Earth, but you can’t control the Heaven”.

    Market is like “Heaven” to my opinion and I have no control of if it will go up or down.

    So it is much better to buy something that allows you to add value. Basically, the idea is:

    — Because you are adding value to make it profitable (rather than banking on wait for x years for value to increase naturally), it means even if the market growth is 0, you can still make a certain amount of “baseline” money, and you are already happy.

    — If market growth is above 0, you make bonus money on top of your “baseline” money and you are even happier.

    — If market goes down, you still have a degree of buffer to protect yourself and be able to at least break even rather than lose money.

    Profile photo of StevenSteven
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    @steven1982
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    OK. Interesting story you have with your Moe property. Was it a property located on King St by any chance?

    One of the things that always tends to get me is most people (agents, tenants, property managers) tend to think “a better kitchen / bathroom” adds more value than “better carpet / wall paint”.

    It seems there is a general perception that “a property with GOOD kitchen and bathroom but functional bedroom is worth more than a property with good bedroom but only functional kitchen and bathroom”.  So was it a case where you got a real bargain that you bought it at a below market price even though the property had “good (not just functional) bathrooms and kitchens”?

    The way I feel is a renovation itself may take a few weeks. 1 months of we can do it quick, but otherwise it may go beyond that and last up to 2-3 months.

    So if I were to spend $5k on renovation, I would prefer to be able to add $10 value straight away (that is, without waiting for another 6-12 months after renovation).

    eg:

    1. Settle the property at $155K in Dec 2019

    2. Spend $5k and 4 weeks, and renovation finishes in Jan 2020

    3. Property already value at $165 in Jan 2020

    4. Any increase after Jan 2020 becomes a bonus to me. The reason is because how fast the value increases after Jan 2020 is beyond my control. It can be a very good market and an $100K increase takes place between 2020 and 2021, or it can potentially stagnate. But the point is I have no control o what will happen after Jan 2020, which is why if I were to spend $5k in Dec 2019, then I want to make damn sure that $5k will add $10 as soon as renovation finishes.

    Profile photo of StevenSteven
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    @steven1982
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    When you say Latrobe Valley, do you mean area like Traralgon?

    I haven’t seen anything popping up that is below 200K in Traralgon recently. In fact, it appears the cheapest properties that show up now days in that area are now at least 250K or more.

    I bought a house in Traralgon for low 200K sometime last year, and recently I see a well renovated one which is located just a few metres on the same street, and that one got sold for high 300K just a week or two ago. So makes me think I can do a renovation and aim for perhaps low – mid 300K. I don’t believe it is an ex-comissioned home though.

    My strategy involves looking for similar “grandma” properties as well. Basically properties that I can improve and add value. Ideally my aim is to be able to add $2 value for every $1 I spend.

    The Horsham one was listed for high 100K, but agent thinks even with a good renovation, it won’t reach 250K. Agent thinks a tenant will be found quite easily on that area but at the other hand, that area of Horsham is considered as a “somewhat rough area”, so whoever buys that property is better of just rent as is or do a very basic renovation rather than do a thorough renovation.

    • This reply was modified 2 years, 11 months ago by Profile photo of Steven Steven.
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