Forums / Property Investing / Help Needed! / Answers to “Where to Find CF+ Deals”

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  • Profile photo of adambcadambc
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    @adambc
    Join Date: 2003
    Post Count: 145

    Hi everyone,

    I, like most other forumites who have visited the forum once or twice, sometimes get a little bored with the good old stock standard question "where can I find CF+ deals?". So I decided to start a thread with suggestions for the people who ask this question, so in future this thread can be the "one stop shop" for this question.

    My intent is certainly not to give town names, postcodes or geographical areas, but rather to assist these people to make a start so they can get out there and look for themselves.

    I have a couple of pointers, and then if anyone else has anything to add please feel free. This way, the next time a new forumite asks this question, we can refer them here.

    So here goes…

    – Start by narrowing down your search, as follows:

       – Look for properties under $200K in your region (eg. SE Qld, NE Vic, Western NSW, etc etc). CF+ deals CAN be found in any price range (apparently), but for those just starting out it's generally best to "start small" and work your way up. Also, if you are concentrating purely on residential property (as I would imagine most people do when just starting out), you are far more likely to find yields of 10% plus in the less expensive end of the market. As a general rule, the higher the price, the lower the yield (having said that – this rule is kind of like learning English spelling and grammar. There are more exceptions to the rule than there are abiding by the rule! But it's a good start…). Another reason to start here is because this is the lower end of the market. There will never be a shortage of tenants in the lower third of the price demographic. When times are tough, people tend to "downsize". And where do they go? The lower third of the market.

       – Look for properties within the above price range within 10km of a regional centre. You may be able to find lots of high yielding properties in the middle of nowhere, but if the current tenants leave then you may be faced with long periods of vacancy. Also, you may find it difficult to get finance for these places. So a good rule of thumb is to look for regional centres and concentrate your search around them.

    – Now that you've narrowed your search down to a particular area or areas, get to know those areas. Every chance you get, drive around them. Learn the streets in your areas. Learn where the schools are, the parks, the pigfarms (!), the good streets and the bad streets.

    – Visit every Real Estate Agent in the area, and tell them what you're looking for. Get to know them. Establish a relationship. Develop it so that they start calling you first, before they go public, when they get a listing that sounds like what you're after.

    – Keep a look out for "For Sale By Owner" signs. Check them out – sometimes they can be more flexible on price or terms than those dealing through a REA.

    – Inspect lots of houses. Lots of them. And then even more. Each one you inspect you will learn more. And don't just wonder through them with the agent. Develop a checklist of things to look for when you are inspecting them (advertisement – Steve's "Buyer Beware" templates are great!).

    – Each time you find a potential property, think to yourself "what can I do to this house to improve the cashflow or add value?" Or to borrow Steve's formula from his new book "Problem + Solution = Profit". So ask "what is the problem here, and how can I solve it?"

    – To elaborate on the above point – LOOK for problems. Ask the agent "what is the property you've had on your books the longest?" "Who is your most difficult vendor?" "What listings do you have that you think will be hard to sell?" And then ask "why" when they show you the property. That will be the problem. Then ask yourself (silently, not aloud – the agent might think you're strange otherwise!) "how can I solve this problem?" If you can come up with an answer, do something about it – more research, confirmation on various points, etc etc. Then if you're still happy that you can solve it – make an offer!

    Okay – that's a couple of suggestions from me. As I said before – please feel free to add to this. I certainly haven't covered everything I'm sure! If we can make this a good comprehensive resource for the new forumites who ask this question, we will definitely be doing them a service I think.

    Cheers,

    Adam

    Oasis Finance

    for your Vendor Finance solutions

    Achieve the Dream!

    oasisfinance@optusnet.com.au

    Profile photo of Mortgage HunterMortgage Hunter
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    Post Count: 3,781

    You are a good guy Adam.

    Thanks

    Simon Macks
    Residential and Commercial Finance Broker
    ***NODOC @ 7.15% to 70% LVR***
    simon@mortgagehunter.com.au
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of mobiusmobius
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    @mobius
    Join Date: 2004
    Post Count: 2

    Cheers Adam….
    im just starting out on my adventure into the world of property investing and CF+ properties and this post is just what i need to get me going strong.

    BJ

    Profile photo of DazzlingDazzling
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    <font color=”navy”><font size=2><b>Good onya Adam for starting a thread like this….maybe if we ask one of the Mods nicely they might make it a sticky. [upsidedown]

    To follow with your post, perhaps my best suggestion when you are starting out is to take 6 months to chat with people in the game. I take every opportunity I can to chat with elderly people (anyone who’s 40+) [biggrin]

    They’ve got some amazing stories once you sift through the bluff and fading memories. The lessons are the same…..very little has changed over the years with the dirt and the boxes where you make the money.

    Best thing you can do is turn that damn computer off, close the door and go out into the real world and see what deals are being done. It’s easy and comfy sitting at home staring into the laptop (or as my wife calls it the “haunted fishtank”), but easy and comfy is not where the money is at.

    Personally, I’ve never logged onto realestate.com, but given the responses from everyone, I gather the cracking diamonds in the rough where you can add value and/or fix a problem to reap the benefits, are not listed there.

    We’ve only ever bought 2 properties that were listed on the internet by an agency. Both props had been listed for around 6-8 months and had been passed over by a couple of hundred people surfing over the top…..high level internet screening mostly doesn’t work.

    Get down into the “weeds” and sniff out the great deals that the majority of buyers simply fly over, give 5 seconds attention and then move on.

    Also, after you’ve chatted with a whole bunch of people (brokers / agents / old folk / friends / strangers / tradespeople etc) over the 6 month period….pick out a specialty that suits your skills set. People are making good money doing any number of things ;

    1. Renovating
    2. Flipping
    3. Wrapping
    4. Packing
    5. Buying old daggy flats and strataing
    6. Buying LPT’s and sitting back drinking coffee
    7. Buying acreage on the town’s edge and waiting [sleepyanim]
    8. Buying daggy warehouses and leasing them out – our fave [thumbsup2]
    9. Smashing down old 40’s houses and whacking up 4 brick boxes
    10 The list goes on and on and on…..

    Pick one that suits your strengths and have a crack at it. If you are a single girl and don’t own a screwdriver, maybe # 1 isn’t your thing. If you’re a brickie and married to an internal decorator – maybe # 6 isn’t the best use of your skills either.

    All this research and book reading and studying only goes so far….it’s amazing how sharp your mind becomes and how motivated you can become when you have a couple of 100K on the line with a Bank Manager breathing down your neck……and it’s either down the chute if you gin around, or take a massive leap forward on the road to wealth if you work smart and hard.

    Get that first deal under your belt, document all of the lessons learnt, (share them here with others !!), show the financiers that supported you that you know what the hell you are doing, and that you are prepared to put out to get ahead. They’ll see the successes you have and mostly approve the next little venture you’ve got on the boil. I’ve found it’s amazing all of these inflexible Bank policies and limits seem to just melt away when you have a good reputation and they are prepared to back you up.

    Write up your ambition on a big sheet of paper with a concrete step by step plan to achieve it and shove it up on the bedroom wall, and on the back of the dunny door. Makes sure it’s constantly in your face. Last thing you see at night and first thing you see in the morning. Before you know it, you’ll be like the CEO’s of the world, able to survive on 3 or 4 hours quality sleep before you jump out of bed recharged and ready to tackle the next stepping stone on your way to wherever the hell you want to go in life.

    Make sure the partner and kids are on board with the burning desire, otherwise it’ll for sure, die a slow and drawn out painful death. As this involves other human beings with differing priorities and skills, this is by the hardest step to overcome.

    On an average salary, with a couple of mimicing American “retail therapy” shoppers in the family, with every modern whizz bang gadget and every member of the family with their head stuck to a mobile phone spending like the Watsons….I’d just give up and go home….don’t even start. This is squarely in your court and nothing will rectify those bad spending habits once they are entrenched…..you’re destined to look and act rich…but in reality be poor forever. Harder to run with a ball and chain around your feet, than a stiff tailwind at your back.

    Lastly, don’t get stressed that everyone else is smarter than you, richer than you or more experienced than you. Hell, most investors are smarter / richer and more experienced than us as well, but that doesn’t stop us. Most of the extremely intelligent 80 and 90 yr old people I’ve spoken to as part of my research haven’t got two brass razoos to rub together….so I don’t consider those aspects as a strong factor.

    Just paddle your own canoe and go at your own pace….take comfort in the fact that it’ll be a damn sight more than most of the population.

    But most important of all….paddle – don’t drift.</b></font id=”size2″></font id=”navy”>

    Profile photo of adambcadambc
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    @adambc
    Join Date: 2003
    Post Count: 145

    Dazzling,

    Great comments! Thanks. What excellent advice for all of us.

    Also – welcome back to the forums! I hope your time away was productive, and now you’re back recharged and re-motivated. You were certainly missed here!

    Cheers,

    Adam

    PS. Moderators – how about that “sticky” suggestion? In the last couple of days I’ve referred several forumites to this post – it’d be great if it was the first thing they saw!

    Oasis Finance
    for your Vendor Finance solutions
    Achieve the Dream!
    oasisfinance@optusnet.com.au

    Profile photo of aussiecamaussiecam
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    @aussiecam
    Join Date: 2006
    Post Count: 2

    As soon as I saw the page in Steve’s book that said effectively the way to CF+ve earnings is to find properties yielding in excess of 10%, I thought, “OHHHHHH OK, that’s what I have been missing, the key to wealth generation is spotting non-existent undervalued asset opportunities”. I am a believer in efficient markets. Rental yields are at historical lows (hello, anyone hear of the property boom???), because interest rates are low and capital gains are taxed concessionally. Having done a quick scoot around the market even country properties sub $150k are yielding 6% max. So in answer to the question “where do you find such properties” I would answer – “you don’t – the yields have been traded down.” Steve’s book may have been relevant when he started writing it, but I doubt it’s relevance now. I wonder how many 10% yielding properties has HE bought in the last 12 months?

    Sorry to sound like a cynic, but I am happy to be proven wrong. Anyone???

    Profile photo of leewizzaleewizza
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    It’s about time someone said it. Well done!
    I too believe it is impossible to find these CF +ve properties.
    Not one so called mentor or even guru investor seems to be able to tell us newbies how to do it without maing no sense.
    All I want is for someone to write a book or hold a seminar which isn’t about purely motivational talk and 1980’s investing strategies. CF +ve is something only achieved with 50% (exaggerated) deposit or with millions to invest on a development.
    If these gurus were so good at it and had sooooo much wealth, why the hell are they charging drug money to listen to them hype you up?
    And why are they even doing it? They surely couldnt be short of cash…

    If anyone can answer the common forum topic of how do I start without beating around the bush I would be happy to hear it.
    I’m super keen to learn all about the world of investing and have done nothing but read books, listen to successful people and browse these forums for months and months on end.
    I haven’t found a positive CF property and I’ve been looking for a good solid 6 months.
    Sorry to sound so negative but like the last post, I am just frustrated that all I want to do is learn and noone is willing to give the answers. Not even if you pay for their books!
    If someone can prove us wrong then please do, we’d love to share the facts not the theoretical preachings pulled out of outdated books.

    Thx,

    Lee

    Profile photo of andrew westandrew west
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    Lee

    Im on the bottom rung of the ladder too with one IP under my belt but think that you have missed the point. There is no golden goose that you walk up too with a bucket and then walk away with a 10% yield. If you think that you can buy CF+ off the shelf you need too look somewhere else. But if you do this you will do what have done for a year or so and thats go around in circles. From what I can work out CF + deals are made not found. But more importantly you need to get your structure right to start with.

    Andrew

    Profile photo of leewizzaleewizza
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    Originally posted by andrew west:

    Lee

    Im on the bottom rung of the ladder too with one IP under my belt but think that you have missed the point. There is no golden goose that you walk up too with a bucket and then walk away with a 10% yield. If you think that you can buy CF+ off the shelf you need too look somewhere else. But if you do this you will do what have done for a year or so and thats go around in circles. From what I can work out CF + deals are made not found. But more importantly you need to get your structure right to start with.

    Andrew

    Thanks Andrew,
    Iknow that this is the case but what I meant and didn’t say is that you hear all about someone buying 130 properties in 3.5yrs and someone retiring 9 years after being broke and all are very loose stories of theory and share no scenarios of how they actually did it.
    I unerstand I will have to “make” +ve CF or Equity but noone tells you how they started do they?

    thanks again,

    Lee

    “Practise doesn’t make perfect. Perfect practise make perfect”.

    Lee

    Profile photo of andrew westandrew west
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    Lee

    A quick one that im looking into is sub division. Then looking at moving a second hand house on to the second block. Saves time and money. Still researching the ins and outs of it. The rules change with each council bit if the numbers don’t stack up look somewhere else. They are out there Ive seen them but due to a poor structure (hadn’t work out finance) I missed out.

    Andrew

    Profile photo of DazzlingDazzling
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    Sorry to sound like a cynic, but I am happy to be proven wrong. Anyone???

    <font color=”navy”><font size=2><b>Aussiecam and leewizza,

    If you are looking for definitive proof that can be submitted in a court of law (is there any other kind ??) then logging onto an internet chat forum is simply not the medium for you.

    What I can do for you is relate our latest deal (detailed on the forum for all to read previously)….which we called our “ugly duckling”. It doesn’t constitute definitive proof probably in your eyes, but it’ll have to do….

    When we purchased the prop, it had been on the internet listing boards for 8 months. It was ugly and it was nasty. It also wasn’t cheap. The rental yield was 6.9% gross, and taking out all prop expenses liable to the owners, that brought the nett yield down to 4.5%. Compared to the cost of funds – 7.3%, it was a negative CF prop and obviously investors such as yourself were sailing over the top of it – dismissing it as a dud. Hell, we did too initially. Of course, none of that info was actually listed on the internet add – it simply said “wonderful development potential with some holding income” accompanied by a picture of a rusty ol’ truck leaning on one axle up against some very dated 60’s sheds…..hmmmm, real attractive !!!!

    But after some DD, and some head scratching about how we could turn it all around, we took the plunge. Our Banker thought we were nuts. I remember him saying “you’re braver than what I am taking on something like this”….perhaps he was right. But then, he’s just a Banker on only 150K p.a. Risk vs return – right ??

    After 11 full months of owning this ugly duckling, paying literally all of the holding costs and putting up with the following ;

    1. Fighting with illiterate tenants.
    2. Physically kicking out other dregs who refused to pay any rent whatsoever.
    3. Having shed walls purposefully vandalised with trucks and forklifts.
    4. Having 2 pallets of asbestos illegally dumped at the back of the block.
    5. Cleaning up 83 tonnes – yes – 83 tonnes of other people’s garbage.
    6. Spending lots of hours weeding and tidying the place up.
    7. Advertising and negotiating our little sox off

    We are happy to report that the “ugly duckling” property has now, together with our marketing and negotiating skills (developed over 11 years) attracted a “beautiful swan” Lessee who has committed in writing to a 15 year lease over the property, starting at a rental yield of 10.25% nett. At the end of the first 5 year term the rent will be 12.4% nett.

    So, the property is now cashflow positive, on the same cap. rate it’s now worth about 400K more than when we bought it last year, and although we worked our butt off during our time off, it now should look after us for the next 15 years hassle free.

    Of course, if we wanted to get rid of it now, the price would be so high….with everything now done a nice cruisy fat cheque nett of all property expenses lobbing into your bank account for the next 15 years…..you’d probably think it was a rip off. Maybe so, but then after all of the hard yards we’ve put in, and the likely growth on the large land component (89% of the value) over the next 15 years, the thought of selling it and handing a plum gift to some passive on-line investor over in the Eastern States just doesn’t appeal.

    Bottom line is, the property is nothing like it was compared to when we bought it, the daggy tenants have been booted out, a professional outfit has moved in, and none of the above could ever have been “seen” trolling RE.com or any of the other internet sites.

    There’s oodles of opportunities out there similar to our ugly duckling – ‘cos lots of people love living in and working in pigstys.

    What I can guarantee is that none of these opportunites similar to our “beautiful swan” are sitting there on the internet shelf just waiting to be plucked off. They are all still there mind you, but it requires a bit of elbow grease and negotiation before you can actually “see” them.

    Like I mentioned in my previous post above, the best thing for you guys to “see”, is to turn the computer off, get off that comfy chair and get out there and mix it with the real world. What’s not going to happen is you be handed something or you can ‘download’ the deal and email it to your financier.

    They’re out there, but you have to put in the hard yards first. This is where most people (maybe 92%) become unglued….It appears you’ve tried the “easy” on-line option….and you’ve hit a brick wall. How about try the off-line option for a change ??

    Good luck in your search. We currently have 18 +CF properties sitting on our desks that we are reviewing. None meet our other two stringent criteria (land component over 85% and must be less than 10km from Perth CBD) so we’ll keep looking as well, just like you guys.</b></font id=”size2″></font id=”navy”>

    Profile photo of leewizzaleewizza
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    Thanks heaps for your story.
    That is what I keep missing, real stories about how ppl did it.
    Did you turn it into an office? Demolish and rebuild?
    It’d be great to know.
    As for getting off my chair. It’s a bit hard (I work 6 days a week) and not many (if any) RE agents are open Sundays.
    I need to work, being only 22 and not a lot of fin. backing to leave at this stage. So it is real hard to do anything but look at these on the Net and in Newspapers, etc.
    Thanks for your guidance.

    Reg,

    Lee

    “Practise doesn’t make perfect. Perfect practise make perfect”.

    Lee

    Profile photo of DazzlingDazzling
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    Did you turn it into an office? Demolish and rebuild?

    <font color=”navy”><font size=2><b>None of the above. That’s a residential mindset.

    The Lessee has applied for a License from the council to turn it into a state of the art recycling depot. The License has been approved but is pending on the Lessee being forced to spend ± 150K doing up our property. He needs to completely re-bitumenise the full 7000sqm, install sewerage and drainage, install brand new sheds at his cost and submit traffic flow diagrams and revamp the front sheds into a modern office, all at his expense, before the License is granted. The contractors are there this morning (Perth Friday am) laying the bitumen as we speak. Works should be finished by the end of May, all the while he’s paying us nett rent.

    leasing the place for 15 years though, he’ll get his money’s worth out of the improvements, I’m sure.

    You don’t normally get that type of assistance from a tenant in the residential sector….one of the many reasons we stopped buying houses over 2 years ago.

    Anyway…things to do. Nice chatting with you.</b></font id=”size2″></font id=”navy”>

    Profile photo of JarrahJarrah
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    HELLO EVERYONE!!

    Specifically Aussiecam, leewizza and all the other frustrated newbies I read about daily in the forums!

    (Adam, Dazzler, you are more than worthy of praise!)

    Relative to most I am a Newbie only having “owned” one (vendor financed) property approx 5 yrs ago (own non atm) however I have been assisting family and friends in buying and building/renovating for over 2 decades never having had enough faith in myself or materialistic drive to acquire massive amounts of “property”…

    I have been writing a response to the newbie anguish I see daily. As Adam knows this “writing” is possibly too long to post, currently running at 2500 words and about 5 pages!

    It is about how i have found and go about finding ++CF property based on communicating with all and sundry about what I need and therefore want and in turn building relationships with the un-suspecting and sometimes unusual…(Moving to Brisbane last year I found dozens of +CF-IP’s in a very short period of time).

    It is an add-on to what Adam and Daz have written here already.

    If anyone would like a copy of this please let me know, I am sure it would help, it is written in very basic, common sense english as I am no genius and NOT A MATHEMATICIAN!

    It may end up as an article in the “Free stuff” at the bottom of the “Online Shop” drop down menu if I take Adams advice and ACTUALLY email it to admin!

    Please feel free to email me, perhaps if you put “CF+ brief history” in the subject line and I can mail it out to you…

    If anyone has any recommendations i am happy to take them on board…

    have a look at my post in this link below as it will help and give an idea of what I am talking/writing about…

    http://propertyinvesting.com/forum/topic/22335/3.html?sortfield=&sortorder=

    “ask and you shall recieve”

    Sincerely, Jarrah

    ++CASH FLOW PROPERTY HUNTER
    (your not hunting if your not hungry)

    arboralliance@hotmail.com
    Climbing & Consulting
    Arboricultural Services
    0431433288

    “be ye angels?”,
    “nay we are but MEN!”

    Profile photo of JarrahJarrah
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    Hi all!

    What has been said in the post I tend to agree with, these people are simply saying, “you need to go find your own niche, your own way, and your speciality”…

    There are a lot of people who think it’s a get rich quick, easy money deal, some who think, like the rest of society encourages, they will be spoon fed by the site and the people within this site…

    You must be unique, think outside the square and push yourself, also your intentions must be honorable and true, what you sow so shall you reap…

    Set goals, have a vision, dream dreams… Dream dreams, have a vision, set goals…

    Did you check the link in the above post, if so what were your thoughts? That post was more Vic specific…

    There have been some bush fires in Vic; this means some great deals around those areas!!

    Could you let me know if you have read my other posts before I send you out this info, read them and give comment via post on the site then let me know. I ask this as I am finding people are requesting the info without any intent on adding to the site or the thread and I am not prepared to put all my hard work out there just to have people take it then turn around and ask “what else, what next, what more” as if I am the holy spirit here to guide us all to the promised land (hhhmmm, maybe I am, wouldn’t that be cool! JOKE!!) Also, have you read Steve’s books? No point me sending you this info if you haven’t… Sorry to be a wet blanket but I’d rather you be wrapped in a wet blanket than in a sinking yacht…

    Also if you email me let me know your propertyinvesting.com name so I know who you are thanks?

    “Fortune comes to the fortuitous”

    “ask and you shall recieve”

    Sincerely, Jarrah

    ++CASH FLOW PROPERTY HUNTER
    (your not hunting if your not hungry)

    arboralliance@hotmail.com
    Climbing & Consulting
    Arboricultural Services
    0431433288

    “be ye angels?”,
    “nay we are but MEN!”

    Profile photo of crushercrusher
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    Post Count: 186

    Hi All,

    I agree that there was a time recently where CF+ properties almost dissapeared. I have noticed that they are slowly returning onto the market again though. They are there, you may have to search through creative ways, buy in a mining town, buy in a regional town negotiate the price down or do something creative with the property but the CF+deals are out there. I have a contract on one right now. To get the good deals you have to be quick to act though because it seems that every man and his dog has read Steves book. woof woof [biggrin]

    My suggestion is don’t let the lack of CF+ deals stop you from investing. I have had negative geared (sorry for swearing) and CF neutral properties that have given me great gains in equity and eventual profits (way above the money I had to put into them).

    Crusher
    http://www.freepropertyhelp.com.au

    Profile photo of Just LearningJust Learning
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    Originally posted by leewizza:

    As for getting off my chair. It’s a bit hard (I work 6 days a week) and not many (if any) RE agents are open Sundays.
    I need to work, being only 22 and not a lot of fin. backing to leave at this stage. So it is real hard to do anything but look at these on the Net and in Newspapers, etc.
    Thanks for your guidance.

    Hi,

    A lot of forumites, like me, are time constrained due to pesky full time jobs.

    Do you get paid holidays, if so, take time out “on the pavement”” in your choosen area(s) or even your local neighbourhood – walk the streets – streets you normally don’t walk/drive through. I have been surprised – “”mmm.. that old house has been knocked down and their building 6 units.. didn’t know it was zoned for that””… “”… that place has been for sale for ages… maybe worth a look”” “”… there was a “for lease”” sign put up 2 days ago, now its gone”” …etc etc

    Go to open houses, auctions, talk to RE agents, get a feel for the area.

    If the experienced posters here are saying there are cash +VE deals out there , then I would believe them, its a matter of time spent on the ground looking. Agree that you won’t find them clicking around the net.

    If you can’t spare the time, maybe a buyers agent ?

    Don’t take this the wrong way, but if I stumbled across a cash +ve deal I wouldn’t be telling you or posting the specifics here, until after I had bought it, [wink]

    For me personally, I have accepted that no one is going to hand me a cash +ve deal on a plate, especially in my choosen areas, and have accepted that in my current situation I don’t have a lot of time to go hunting, so have diverted my available time and energy into other investment options.

    regards,

    Paul

    Profile photo of Mortgage HunterMortgage Hunter
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    Post Count: 3,781

    For me personally, I have accepted that no one is going to hand me a cash +ve deal on a plate, especially in my choosen areas, and have accepted that in my current situation I don’t have a lot of time to go hunting, so have diverted my available time and energy into other investment options.

    regards,

    Paul

    yes they will. Buyers Agents will hand you a deal for a fee. Just like most investments!

    Cheers,

    Simon Macks
    Residential and Commercial Finance Broker
    ***NODOC @ 7.15% to 70% LVR***
    simon@mortgagehunter.com.au
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of Just LearningJust Learning
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    Join Date: 2004
    Post Count: 57

    Hi Simon,

    lol, I suggested a Buyers Agent to leewizza, maybe I should follow my own advice, [guilty] once everything gets bedded down.

    regards,

    Paul

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    Member
    @foundation
    Join Date: 2005
    Post Count: 1,153
    Originally posted by leewizza:

    It’s about time someone said it. Well done!
    I too believe it is impossible to find these CF +ve properties.
    Not one so called mentor or even guru investor seems to be able to tell us newbies how to do it without maing no sense.

    I can tell you exactly how to do it. Build yourself a time machine (see Here), strap yourself in and go back to the day when CF+ deals were plentiful. Here’s the trick. 1995 to 2001 were prime years for such deals. 1987 to 1990 – not so good. 1982 to 1985, pretty good. ’78 to 80, difficult. The 70s were a wild time for inflation, both in asset prices and wages, so CF+ deals came and went…
    Do you catch a pattern here? Buying off-the-shelf CF+ deals with small deposits is easy, but depends on timing. Shortly after the end of the biggest boom in history is probably one of the most difficult times to be looking.
    Sure, there are plenty of people who will tell you that “you’ve missed the good-time-to-buy boat”, that house prices bear no relation to wages or rental return, that we’ve entered a NEW PARADIGM of perpetually expensive house prices… but I don’t buy it. Houses, just like any other tradable asset or item are CYCLICAL. In the long term, everything will rise in price, just as long as the government and reserve bank continue down the path of deliberate, measured inflation. They overshoot their ‘fair value’ range in relation to this inflation as people get carried away by investment mania, then when they’ve peaked in relation to that ‘fair value’ range, they return to their long term trend. By this time people look at real-estate as a poor-performer relative to other investments, and poor neglected house prices fall below their long term trend. THAT, my friend is the time to be looking for CF+ houses.
    So, why doesn’t everybody recognise this as the time to buy? Because providing inflation is still pumping things along, that ‘fair value’ range, along with the over-valued and undervalued ranges are RISING CONSTANTLY. It’s a bit like shooting at a moving target. I guess one way of testing where the market is at is to see how easily you come across CF+ deals…
    What? I’ve made a circular argument? True, but think about it – that fair-value range is NOT CF+. It is probably slightly CF- to CF= at best. So where are the markets at this point? Off-the-shelf CF+ houses are next to non-existant, therefore, the residential real-estate market MUST be either fully-priced or OVERPRICED in relation to rents and wages.

    Rant, rant rant. Rant over.
    Cheers, F.[cowboy2]

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