Wow … Have they??!
I call it hte buy and hope strategy …. just my opinion and no offence to all you successful Neg Gearers out there [biggrin]
I can’t see the logic in throwing money at something … then when I go to buy another one the figures look worse .. .and then the 3rd one … the lenders say “Sorry Sir you have servicability issues due to being overstretched” … also what if you lose your job ….. = Storm Coming… just a matter of time.
I am happy to help those out that are negatively geared and are not enjoying the “strapped to the grindstone” feeling. The ones that are successfull can probably afford to have some things go wrong … however I would not suggest it to a new starter (unless there are adicted to gambling)..
Any hoow …. just my thoughts and that is that. [strum]Why Rent? Rent 2 own!
http://www.rent2ownaus.comThis argument exists as long as this site has.
I certainly wouldn’t knock you nor your strategy of buying cheaper homes with high yield.
Unfortunately at this stage of the cycle they are few and far between. I get calls every week from someone excited to discover a cashflow positive place in the cheaper end of Broken Hill, Mt Isa or elsewhere. Places that have enjoyed some growth during the last boom – the biggest boom on record I believe. Historically they don’t do quite so well year in year out growth wise.
Me – I am happy to negative gear and enjoy capital growth on my well located middle class homes rented to middle class people. Of course I wont be buying dozens of these. But I just have a few tenants to manage, a few kitchens and HWS to maintain and certainly less dramas than my friends with their cheapies.
I am happy that both strategies have their positives and their negatives and that both work well if implemented properly. Certainly if someone would want to see how a negative gearing strategy can work then I would recomen any of Jan Somers book on the subject. Written in the 80’s they have certainly held up over time and through several cycles of the market.
Most cashflow positive adherents have yet to test their strategy through several booms – not that I am suggesting it wont work.
What would worry me more is getting advice from someone so one eyed that he believes there is only one true path out there to follow.
All the best to you and your friends,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Mortgage Hunter:This argument exists as long as this site has.
Certainly if someone would want to see how a negative gearing strategy can work then I would recomen any of Jan Somers book on the subject. Written in the 80’s they have certainly held up over time and through several cycles of the market.
Most cashflow positive adherents have yet to test their strategy through several booms – not that I am suggesting it wont work.
What would worry me more is getting advice from someone so one eyed that he believes there is only one true path out there to follow.
Simon Macks
Hey There all,
I too recommend Jans boooks … they are sitting on my shelf of learning materials and were definately a big inspiring contribution to my path.
I know at least 5 investors that have definatley made it (millionaires) through primarily positive cashflow properties… although once they were financially strong enough they balanced out some of hte port folio and did some capital gain timing solutions. All I am saying is that when you are starting out … and you wnat ot get there… the logical approach to begin is to look at positive cashflow strategies and when you are financially tough enough to weather any knocks … you can them move into the wonderful world of capital gains. If I have one eye then so be it [crying]People need to just look at thier goals and aspirations and before comitting to the next deal…. just aske themselves ” is this deal moving us toward our goals or taking us away from it?” SIMPLE!!
[strum]Why Rent? Rent 2 own!
http://www.rent2ownaus.comI know people who have used IC and have been happy, but I do feel that the people at the Clubs you talk to don’t know much about investing.
I do know of another family company that seems to offer excellent service for buying negatively geared properties. They give you all the due dilligence on the areas, they give you a financial sheet showing you exactly how much a property will cost you weekly, and they complete your tax form to claim your deductions weekly (used to be called a 1515 or 221D). They do make some money from the developers of course but seems you get excellent value. Check out Ready Realty if you want to… http://www.readyrealty.com.auJohn
Adelaide ph 0414 602903
We have purchased through the Investors Club in the past and have been happy with the unit we have purchased. But as is the case in anything that you purchase, do your own homework. Pick the area you are interested in and look at properties listed with agents, as well as those that the club might be selling. Look up the internet on different sites for as much information that you can obtain. Of course the IC gets paid for the selling of properties, as do real estate agents. Who works for nothing. For your first time purchase through the club can be really helpful as you get to see everything the normal agents do not do e.g floor plans of the property, location to nearest shops, schools and sporting venues, forecast of a rental return as well as working out for you, how much the property purchase is going to cost you out of your take home pay each week. In purchasing our property I had our own independent valuation done before purchasing, as well as using our own solictors and bank for the finance of the property.
Attend any meetings for free and access sites like Property Investing to learn as much as possible before taking the big step. You can only make the final decision yourself, but always be prepared with knowledge first.[grad]Buying through the investors club or any other organization similar is often a good way to start out or to implement a lazy method of investing (just keep buying from them when you can and let it slowly accumulate).
The big question you need to pose is “what do they look for” then you can find these investments on your own and work much faster and much better with a lot more knowledge about what you are actually buying.
If you’re just starting out and going alone, keep attending the meetings just to talk to fellow investors afterwards, read some books (heck just borrow them from the library to begin with) and naturally find sites like this one to discuss or read about investing. Feel free to spend 6 months doing this. It’s 6 months lost investment time but it could be 6 months well spent if you get off to a smart and educated start.
I have used The Investors Club with very good results as a first time investor. Very good with information and all fees and commissions are openly disclosed.
I definitely think the best way for investors to get started is to research research research, then find people who are successful, learn from them…research some more…then go out and do the best you can.
learn from your mistakes but if you did your hw and spend time around those who are successful chances are you’ll be well on your way to success.
if you want me to pass along some resources that really helped me out email me:
good luck to everyone!
Hi Guys,
I have been to several meetings and still receive IC newsletters.
I looked at the deals and decided not to go with them.
Look at the ASIC web site FIDO and do a search on IC.
IC members rely on the equity they have built up in the properties to fund the next one. No problem with that, but the price is set by what everyone else has paid for similar properties, usualy in the same building or complex. The builder normaly buys the first few properties in another company name at an inflated cost. Sometimes by 10-20% more. The so called independant agent comes in to value the property and the developer shows him how much he sold the last lot of properties and the market value is set, although not acurate.He then rents it himself for an over inflated rent and sets the yield with a guarantee for 12 months to himself. He sub leases it for a bit less, takes his money and runs. After 12 months the tenant leaves, you try to replace him fror the same rent but can’t. All of a sudden a good yielding property has turned to vinigar.
I bought a property 12 months ago that was sold to the previous owner this way. He had the property for 12 months and was told it would yield 10+%. It did’nt even yield 5%. I bought it off him because he could not afford to keep it for market value which was 60% less. Yes 60% less. My suggestuion is that if a 2 bedroom property is selling for $300,000 from the developer and renting for $350 per week, have a look at an older 2 bedroom building close by and look at the rent. Also remember that your property will be old one day. The depreciation lure will be spent.
Regards
Insider synicI have been dealing with The Investors Club for about 2 years, they seem lagit, i have looked for the catch, but as yet i can't find one. On all accounts they seen to be on the up & up, a good place to find out information & how to invest in property with the right structure. And most important of all, "Never Never any hard sell" If your interested you hang around at one of there meetings, i not then leave, no strings. Hope this helps you.
What I often do before joining a club is to search on Google to see if there are any scams related to it. So if you put the phrase "Investor Club scam" in Google, you will find a few stories there.
95% of their club members are selling or advising on real estate with a license …
I have been to several club meetings and they are very funny and well versed … we don't sell property we are here to guide you cough …
D …
I've been to their meetings. totally waste of my time.
the presenter just keep repeating the advantages of negative gearing. she said she was really happy with her 8 heavily negative geared properties, instead of paying 40% tax, she is only paying 9% tax and can live off from withdrawing equity from existing properties. when we asked what happens if the market goes down, she replied, in long term the market keep going up.
they only promotes negative gear, long term buy and hold, didn't mention anything about other strategies and had no idea about asset protection.
and the people attending the meeting seems know very very little about properties too, some of them don't even know what negative gear is……..
I won't go back to their meeting again, that's just my experience.
They have a strategy that worked well for them back in the 90's when they started and finance was easier to get.
I had a client who I introduced to TIC and he purchased a property from them, but it was a second hand unit on Gold Coast (which is not their normal property type). He would not use them again. I am not a big fan of large house developments which they seem to specialise in, mainly in SE Qld.The commission issues is sometimes glossed over and they act as it is a volunteer association.They get paid by the developer. It may depend on how good the area manager is and who he has speaking at the meetings.
As was said before, it is an easy first time purchase and they do have their preferred professionals but do accept some buyers have their own team. They seem to have used some of the MLM industry tactics in building their following. The one size fits all approach is an issue that I have trouble with.
Good luck with it.
GregHi all.
My humble dealings with TIC have been attending a few meetings, receiving their regular newsletter and getting a financial evaluation a couple of times. We also used one of their loans brokers to borrow money for an independent development project. (Wish we hadn't actually as Challenge Bank not that competitive at the moment).
I have a few thoughts which probably echo those of other contributors so far, and they are:
. The 'Club' promotes the image of people altruistically helping each other, but in actual fact there is a chain of command. I think there are limited volunteers working without reward.
. They heavily promote specific locations, in particular QLD, based on population projections. This has actually meant many growth areas have been overlooked by them, possibly because they don't have suitable developers there. I met a guy at one meeting who had TIC property, but had made a lot more money from property bought around Adelaide before the last price hike.
. They are great for motivating new investors and explaining the benefits of property investment, but as Dazzling notes, once you get the idea, you can find things yourself. As he/she rightly points out, it is the opportunity cost you must evaluate.
. Their newsletter is not aimed at a particularly sophisticated audience.
. The retirement scheme, which sounded great when I first heard about it, focuses on owning enough properties with equity in them that you can borrow from them in turn to live on, and capital gain and rental rises should cover the non-taxable redraw against the loan. However, I'm not sure the banks are very keen on this any more.
. Kevin Y. is held up as a cult-like, all knowing guru which I personally find a bit offensive. I think this appeals to people who don't want to put in much research themselves, and obviously you would expect to pay a bit more if you take this approach.
My friends are in the club and speak very highly of it and the help they have received. I've been turned off by my google search coming up on ASIC and Neil Jenman doesn't support it. Make sure you're not paying too much for the property with independant research not theirs.
Hey Mortgage Hunter,
Are these rates for real that you are quoting. I'm assuming non bank lenders of course. But they seem too cheap.
What are the exit fees like ?
I have heard some very mixed feedback from the IC. In the 90's an acquaintance of mine purchase 3 properties through them with in a year then the market took a downturn. They found the properties were very over priced to start with so they couldn't sell them. As the property market does over time, it turned the other way and after a few years they haven't looked back.
You could consider joining a mentoring and buyers agency like Positive Real Estate or just employ a buyers agent to work for you. You may be time poor however you don't want to be poor because you allowed someone else to make your choices for you. Hopefully this won't be your last property either so you can learn along the way by working with a professional who doesn't have a vested interest apart from the commission they receive.
Do an ASIC search on Kevin Young. 'Let the buyer beware!'
I have been to a few meetings and understand and agree with the investment principles outlined. Unfortunately I was dating a member of the millionaires club who introduced me and she turned out to be of very dubious moral standards and definately dodgy in other aspects of life so it makes me a bit leery I recognise that I cant tar the club for the actions of one bad apple but its made me very cautious. Not sure what to do now as I was kind of keen on the idea of TIC as a start into property. Any advice?
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