Talked with another person and they asked where I am a and it inspired me to write the following. I wuold love to here others stories….I found it helped crystallise my path….hope you enjoy.
Well …where to begin. How about the start.
I have currently been on the investment road for the past 3-4 years and after the first 3 years in shares, Novel but too much is unpredictable, I decided to look at property as a means to freedom from work. I had been getting Steve McKnights emails since about 1999 and always read and said “sounds great but can’t find property like that here”. After what I then thought was treading water I went to Steve’s Seminar up at Hyatt Coolum (nice place shame I can’t afford it – don’t know if it would be positive ??) and bought his Property secrets revealed and Wrap pack. Well didn’t that open my eyes. Listened to 1.5 discs on my way back to Brisbane that night. Wow…could he be actually telling the truth…well only one way to find out.
In the end (about 8 months ago) I decided to look and low and behold (after any emails to Steve telling me that he was dribbling on and such things must be related to unicorns and died out together), I found a house that I though worked. After this epiphany passed I then went through the usual reticence ( I hope it is usual and I am not too much of a freak) where I put all the bad things in a big pile and let them stay there. This would have been about 6 months ago. I was looking in terrible places called Logan, Woodridge and Kingston where legend has it that to enter you must provide your first born as payment for your safe travel.
Now I know this to be untrue but allow me a little poetic licence. Anyway I hesitated and fussed a bout and in the end kept on spending time reading books, looking at real estate websites, pounding the pavement and generally fussing about. What I didn’t realise was that somewhere along the way I was educating myself as to what is this “game” called real estate. I talked to a lot of friends about this “game” and also about wrapping and positive geared property…..I received two responses to my discussions. Firstly those who patted me on the head knowingly and quickly called the companies counselling help line with my details, and secondly those who merely nodded and glazed and /or took the optional package of shaking their head an mumbling something about baloney and wandering off. Well never one to listen to others (just ask mum or my wife) I merrily kept going.
About 4 months ago I found an agent who I found helpful. She showed me quite a few properties and allowed my indulgences of ticking and scribbling (Thanks to Steve’s Pattern templates). I found a property I wanted and fit the bill of the 11 second solution so I went a hunting. After 2 weeks I said I was interested and the agent smiled she then said that there are already two others negotiating the deal. Here is mistake number one, With fear in my eyes and a complete disregard for anything I had learnt I said “What will buy it ?” …..In the end I paid $73K for a property renting for $145/week. Not bad but definitely not good. (By the way the property has gone up around $10K since I bought….gotta love a market that rumbles along. Since then I have bought another and am in the middle of transacting three right now ( settlement in two weeks). One of these is for wrapping and one is for a renovator and the third is a buy and hold. The one thing I have learnt in my brief stint in Property is that there are many ways to skin a cat. No that many months ago I was feeling very guilty that I had not bought a house for wrapping and done one yet when so many others who learnt around the same time have raced ahead. I now look and see that each deal I have done has taught me a lesson. I feel like I have come a long way down the road since I began and am much the wiser (self-adulation) and a whole lot more humble (in my acceptance that I don’t know much at all but that won’t stop me). So after bank problems, contracts falling over ( should I pay another $1000), wearing Steve’s CD’s out (can the be retreaded), and many other hurdles, I am still keeping on.
I hope you didn’t want the short version.
Enjoy
ADStumbling blocks are merely stepping stones for the successful.
Come on you guys….I’d love to hear some of your tales for inspiration if nothing else…….
Enjoy
AD
Stumbling blocks are merely stepping stones for the successful.
Hi DA
Why aren’t they all for buy and hold if they return 10% gross?
Cheers
ziz
Hey ZIZ,
The main reason some are not for buy and hold even though the yield is high is because I want to generate cashflow. Of the five I have (six as of tomorrow) I want to keep three definitely as they are in good positions and growing (Capital Growth) nicely and are yielding 9% or more (gross). The others are good yields but I only want to keep a core stock of what I consider the best properties and use the others to generate cash to pay off the core stock. I hope to end up with 25 properties in 15 years returning $200K and debt free. To do this I will use some less desirable stock to get there. I am only in my formative stage of planning but that is where I am headed. The difference to me between just renting the property (return ~ $1200-$1500) wrapping (return ~ $3000-$3500) is considerable enough to make the process worthwhile. I may miss out on capital growth but I am happy to use the cash to pay down my “core” stock.I hope this makes sense.
I am keen to get to the seminar in November so I can clarify some of my exit strategies. I have learnt over the last 6-8 months that (as steve says) before you buy work out your exit strategy. I am trying to be creative with the last two purchases as one is renovating (which could yield up to 50% Property value increase and the other is a subdivision and/or renovation as well. I enjoy the variety that my expanding exit strategies give me. Any more questions ZIZ fire away….I am only an infant but writing gives me further clarity.
Enjoy
AD [:0)]
A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithStumbling blocks are merely stepping stones for the successful.
Hi AD
I note from other posts that there is a problem with wrapping in QLd. How will that effect your strategy in wrapping. By the way I have never wrapped and simply buy and hold.
Cheers
ANdreas
Which problem do you refer to Andrea. Not qiote sure what it is ?
Thanks
ADA great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney SmithHi Andrew
The problem I refer to is associated with the tenant protection as per the landlords act
Dear Ad & Steve,While it is not unlawful to use a Lease-Option Agreement in Qld.,you cannot however contract outside the law and have the tenant pay all outgoings as it breaches the residential tenancy act of Queensland. I suggest then that you look at installment contracts and that you speak to Mark Game in Brisbane 07 3236 0001.
Have you solved this problem by approaching the same people or what? I am trying to get a better understanding of the whole wrap concept. For instance where you mention a return of 3-3500 is that pa and how is that configured, what gross income, what expenses etc. My understanding of the wrap situation is really a game of % over the finance you source. How do you avoid land tax as the property is in your name (or trust where no rebate is permitted).
I am going to the Nov seminar just to get a better understanding of the wrapping concept.
Cheers
Andreas
Nice post AD!
The other problem with doing this in Qld is that after you sell 6 houses in any 12 year period, you are considered a Property Developer. Property Developers, under the Property Agents and Motor Dealers Act 2000, cannot access money paid to them under and instalment sale until the final payment. Instead, the money paid must go to a trust fund. So you’re without cashflow until 30 years down the track when you get a lump sum.
But there are ways to get around this, the worst case scenario being you have to set up a new company for every 6th wrap you do.
Now for the questions:
– What are other people’s tactics for getting around this?
– AD – did you have a lot of spare cash to make all these purchases? If not, would you mind explaining how you’re funding the deposits and settling costs for all these places so close to each other? Anybody have their own methods?Thanks,
Mark Leet.
Hey Mark,
As to how I got the loans…I guess I am lucky in that the place I live in (own) has had serious capital growth over the last few years and I have a LOC which I use as a deposit base. That and a good broker.
Enjoy
ADA great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney Smith
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