Its not really my criteria, just an idea that I think would work well. I wonder if anybody else believes that it will. People with more experience than I perhaps. I think it is a very interesting idea that is rarely discussed. thanks for your input.[
]Originally posted by lawrence:Its not really my criteria, just an idea that I think would work well. I wonder if anybody else believes that it will. People with more experience than I perhaps. I think it is a very interesting idea that is rarely discussed. thanks for your input.[
]For me I totally disagree. That’s just me because I only looking for area where population 10,000+ at this stage…This way it give opportunity for +ve cash flow as well as capital gain.
Warm Regards
ChanDollars
[Keep going, you’re on your way to Frolic Freedom!]Fair enough, the positive cash flow is what helps you live day to day, the capital gain makes you very easy money, infact, growing out of thin air (or with the birth of every new child) I totally agree with you chan, but what about the ease of these small town properties, no capital gain, some positive cash flow slightly possible, BUT you get the assurance that you will be able to handle rate hikes (very cheap propety) find them easily, avoid realestate costs (lots are sold privately)and even the worst tenants are good because they expect less of you and the house wasn’t that good to start with. Maybe its an idea for the ‘poor man’ of realestate, one with no capital, or very little to start with??? PLEASE leave your thoughts here, it seems to make good sense to me. Somebody tell me the bad things about it, with back up, not speculation. cheers.
Originally posted by lawrence:Fair enough, the positive cash flow is what helps you live day to day, the capital gain makes you very easy money, infact, growing out of thin air (or with the birth of every new child) I totally agree with you chan, but what about the ease of these small town properties, no capital gain, some positive cash flow slightly possible, BUT you get the assurance that you will be able to handle rate hikes (very cheap propety) find them easily, avoid realestate costs (lots are sold privately)and even the worst tenants are good because they expect less of you and the house wasn’t that good to start with. Maybe its an idea for the ‘poor man’ of realestate, one with no capital, or very little to start with??? PLEASE leave your thoughts here, it seems to make good sense to me. Somebody tell me the bad things about it, with back up, not speculation. cheers.
Still not agreed because the way I think is that if the town die out then I lose everything.
I might gain for 15 years but I will the lot after all.
If you think it is good why not go for it and have a try for 15 years and let me know how you go.Warm Regards
ChanDollars
[Keep going, you’re on your way to Frolic Freedom!]May be it will work if you buy the whole town and then, when you need your money you can just place a signpost at the entrance of the town saying: Town for Sale.[:o)]
But seriously, I don’t know if it will work, you obviously have more local knowledge of the town than any of us, you understand how these people live, this is a new world to me (and most of us) so I don’t feel that I could be of any good help.
I still find it risky in my opinion, but then again, I am not experienced myself and still learning. Just I personally wouldn’t buy in really small towns.
Let us know what you decide at the end![]thanks for your honest thoughts guys. You wouldn’t buy all the houses in one town, you choose towns where a new establishment is going to occur, ie a new jail, a new shop, increasing the central school to year 12, suttle things that are easy to find out about. You would buy with in a region. You would buy where there is a good water supply, i.e. on a river, bore water available etc and where there is a larger town nearby. remembering that the people cannot afford to move to the larger town, and no body from the larger town, (larger means 5-6 thousand people) wants to move to the smaller town. A static population with people that want to rent because they couldn’t be bothered ‘wasting all that money’ on buying a house. And when they buy, they have to save the cash because a bank won’t lend to them, thus a private sale, very little associated costs. usually just legalcosts. I wonder if steve mcnight or mortgage broker, maybe oo7 have an opinion. This seems foolproof, maybe I should write a book about these ideas, somebody must be able to bring me back to earth. I do have a lot of experience in these areas, I lived in them and now I am doing well (by hard work, not investing). Am i speculating too much? somebody out there must be able to debate my ideas thoroughly.
Originally posted by Celivia:
I don’t believe that tenants actually want to live in them[xx(], it must be so depressing to live in a sh#theap and maybe to have to raise kids there. I couldn’t stand by and see cute little kids having to live in bad conditions. Even a dog should have a nice kennel imho.I lived in such a place for about 12 mths when I was 6.
30km out of town, no mains power, walls blackened by local ‘itinerants’ who’d turfed out the gas stove and lit fires on the (concrete?) loungeroom floor.
Power was either by an unreliable 32 volt generator or hurricane lamp. The radio was battery powered and the fridge and heater was kerosene.
As a kid at the time I thought nothing of it as I knew or remembered no better. Other people we knew were in a temporary tin shack. But it would have been tough on mum, especially during summer.
My tenants are housed better than I am. But the bit in Steve’s book is pertinant about the lady who loved living near a noisy busy road because it helped her sleep.
People have different priorities and what might be hovels for those with middle-class sensibilities might be an accepted way of life for others. (consider that city slum clearance programs were not necessarily a success for social reasons)
Peter
I totally agree peter, I am much younger than you and have had the same sort of experience. and although I am willing to capitalise (to a certain degree) on anothers misfortune, I agree that these people are often quite content. The ones who aren’t make an effort to get out. As I did. Can I interpret your message as support for my theories. I must say that nowdays, with extensive welfare and other sorts of help, very small towns aren’t that bad. the only thing they lack are the services ‘normal’ people take for granted, gyms, coles etc. but no ethics guys, business thoughts if possible. The cultural back ground of towns is also important. Some towns have great ethic for community spirit, others don’t. BUT back to business, do you have any more thoughts peter?. Anybody else.NOTE, small towns today of 2-3 hundred people are not as bad as peters story. I have lived in many towns less than 5 hundred with a central school, shops pubs, bowling clubs, maybe a cafe. Thats it. see what I mean, the people are content. and content to pay your rent. Any more thoughts peter? others as well. Maybe 007? or morgatgebroker.
Lawrence,
Just one thing…have you checked that the population is actually static? Many of the small towns are slowly decreasing. Others like yourself have also left some of the small towns.
PK
Fortune Favours the Bold.
Yes I agree, they are many that slowly decreasing, but on the whole, much more static. Where do people go when they can’t afford to move? nowhere.Thats why we, as investors look to the suttle signs that the town is static, i.e. the new branch of the council shire, a remake of a sports oval, new teachers put on, a new work for the dull scheme etc. The town is not growing, and it is not dying, because the services are being created there to maintain the population. Where do you think your taxes go to? they keep these people alive and content. Content to pay our rent? any more suggestions, there must be people out there who have tried this. Is this so new it has avoided everybody? will you buy the idea and follow it religiously if I put it in a book? how can I loose? (I’m an optimist, and the rest of you must be too, but bring on the opinions theyre welcome.)
do you keep changing the topic?????[
]
I keep losing the thread of itmust have lost it anyway……..
NO no, [
][]Im not changing it, just moving the idea forward… thanks for the interest. The whole idea is about investing in poor towns. I’ll rename it as that maybe?[^][]Originally posted by lawrence:I totally agree peter, I am much younger than you and have had the same sort of experience.
Are you? This was only in 1978. (But wait – that’s nearly 30 years ago, so that makes me same age as Steve!)
>Can I interpret your message as support for my theories.
Sort of but not really ; )
Afterwards we found somewhere better (nearer town and with MAINS ELECTRICITY!) but I speculate what happened to that house.
I suspect it’s become just one of the many thousands of vacant empty derelict houses that are sitting on farms around the country.
Your approach is more like a ‘slum lord’ (ie renting cheap but buying cheaper) whereas I’d rather have a smaller number of conveniently located and well-presented brick properties in regional cities that have fewer maintenance/tenant hassles and (in at least some cases) have growth potential.
>Anybody else.NOTE, small towns today of 2-3 hundred >people are not as bad as peters story. I have lived >in many towns less than 5 hundred with a central >school, shops pubs, bowling clubs, maybe a cafe.
But for how long?
The houses themselves are probably fine. But if the bank’s just closed, the train stopped years ago, and one of the farming families has sold up, taking their 3 kids with them. The school loses a teacher as a result and there’s less money to go around.
>Thats it. see what I mean, the people are content. >and content to pay your rent.
What if they get old and will need to enter a nursing home in the next bigger town? There’s no young people or migrants moving in to replace them as your tenants.
Your approach could work well but is risky unless you’ve done your research (like Westan). But I like the approach of SIS and have a mixture of high yield and high growth in the portfolio.
Peter
slum lord eh? made me laugh.[
] I like to think I have more integrity. Thank you so much for the thoughts, it brings me back to earth a little. Kind of refreshing. Thankyou.I might try to contact westan.[] for ideas.Anybody else reading? pleae read the thread and add to it. Its still an interesting concept.`Work for the dull` schemes? I am assuming (hoping) that was a typo…
I know many people who live in small towns- very small, less than 500 people. There are the usual problems for them- no doctors, no banks, and sometimes even the only shop in town closes- itäs a hard life for tenants, and I think some of them have to leave because the services and amenities just aren´t there and so they can´t stay- some become ghost towns.
But I do think that the houses are cheap, and that if one can provide housing to people and main tain the property to a decent level, then it can fit into your own scheme of investment.
In terms of looking after tenants… I think it´s pretty important to think of the history of the property. If it was being rented out at $60 a week for ten years and you decide to up the rent to $130 a week to maximise your cashflow, it´s likely that the current renting family might become homeless.
Lawrence, re Steve McKnight´s ideas on pozz cashflow, most of us would no doubt see the benefits of those strategies, and given that we were probably more aware of neg gearing, his ideas were a breath of fresh air. Steve has, though, changed some of his ideas since writing his book, and in the TV interview re the MAP Program, he was very keen to state that noe of the MAP participants used wraps to make their money.
kay henry
What about this idea
All of you are talking about extremes of property investment – truly positive cashflow and all the problems that go with it like poor CG and tennants either crap or non-existant or negatively geared but sucks your wealth and make you work forever
I am a person who belives in balance
What about getting neutral or slightly negatively geared properties in reasonable areas that are 100 – 200K that gets 5-6% return and in 5- 10 years time you have a balnce of CG and positive cashflow
You see during the time Steve bought in 97 he was lucky to get these properties cheaply in ballarat/bendigo and now also enjoys CG
Therefore props like these do not really exist anymore and the divide of positive/negative CF props are growing even further apart
Therefore i reckon neutral/slightly negatively geared props are a good investment in the long term
You may not retire in 5-10 years like Steve or Westan etc. but at least you would know you would retire early and if not retire comfortably while not sacrificing too much comforts in heavy -vely geared props or suffer the possible consequences of dud +ve cashflow propsJust for my entertainment I thought about these statistics.
If, in a town of 400 people just 10 of them decide to move out, or die, or retire to another, bigger town, then that’s 2.5% of the population of that town.If 2.5% of the population in Sydney would leave, we’d have about 100,000 people leaving[:0] (I think SYdney’s population is around 4 million now, if I’m correct.)
Of course, in a big city or large town, new people always flow in, but in such a small town/village this may very well not be the case.Originally posted by fjficm:What about this idea
All of you are talking about extremes of property investment – truly positive cashflow and all the problems that go with it like poor CG and tennants either crap or non-existant or negatively geared but sucks your wealth and make you work forever
I am a person who belives in balance
What about getting neutral or slightly negatively geared properties in reasonable areas that are 100 – 200K that gets 5-6% return and in 5- 10 years time you have a balnce of CG and positive cashflowThat is pretty similar to my strategy, except I favour somewhat higher yields (8-9%) and lower prices ($80-120k). Properties must be well-located within regional cities, highly tenantable, brick and <20yo.
These would tend to be slightly negatively geared (positive after tax).
This is not unlike the approach followed by Margaret Lomas. As Steve points out this sets a limit on the number of properties as your taxable income drops and there are risks if you lose your job.
But if you’re happy to live off the rent of 5 or 6 decent properties that have been paid off, then I think it’s a reasonable approach.
The main risk of selecting something in the middle is getting neither growth nor yield and ending up with an indifferent investment! Hence I like the idea of consciously selecting property for either yield or growth potential (even if sometimes yield properties can have excellent growth too!).
Peter
thankyou everybody, peter, j, c, etc.
Lawrence, good on you for persuing this!!!
I live in a rural town of about 400 down in greener Victoria, where it’s not so mutch of a droubt and understand about these people and the things you’ve been trying to say and explain.
Don’t worry i’ve been quit surpized for ages about what the city fold think of ‘us’ , ‘it’ in rural life[
].As Steve Mcnight says, “There’s good people willing to rent everywhere”. But his niche was larger metro towns. And why wouldn’t it be! He’s from a metro town i beleive and lived most his life in larger towns, don’t quote me on this but i think that’s Melbourne.
I have two minds open, one to invest in rural towns and one option open to invest in larger metro towns. If i can get anything out of my father , i will sit down and ask him one day to go back over and tell me what tenants have done in this town and how long they rented for, you know etc. He’s been here all his life, his parents all his there life. And l’ve been here all my life, accept went to a few metro towns for a few years. But i’m back home now.
I’ve got a lot more thought, but that will do, better go for now.
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This seems to be about demographic arrangements.
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] I like to think I have more integrity. Thank you so much for the thoughts, it brings me back to earth a little. Kind of refreshing. Thankyou.I might try to contact westan.[
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