Forums / Property Investing / Help Needed! / Share some learnings

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  • Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 175

    Over the weekend, I attended a training session. (paid over $1000 for that). While this is not a training with nuts and bolts details, but it actually gave me some pause and make in to realize some mindset differences that I was not aware before. So… thought I’d like to share some of those topics here. The training is property investment, but there are also a lot of mindset concepts too. So here goes:

    1. You pay for your property, but you don’t control it. Basically, your property title has your name on it, not the bank’s name. You pay for any repairs that goes on in your property, you pay for the expenses, you pay for the maintenance, but at the end of the day, unless you buy property with 100% cash, otherwise you don’t control it. Banks have written all the paperwork in their favour and banks will pretty much come out as the winner every time if something goes wrong.

    2. Be the bank. Thank like a bank, and behave like a bank. When you put your cash into the bank, they give you something like 2%? or maybe 3% interest? When you borrow money from the bank, they charge you like 5% interest? When bank lends you money, do you think it is bank’s money that they are lending you? No, it is someone else’s money. Likewise, when you put $5000 into the bank and the bank lends money to someone else, maybe your $5000 is part of of that load the bank is providing to someone else. In other words, the bank is using our money to make money from us. Bank’s investment: 0. Bank’s ROI: Infinite. No wonder the banks have the tallest and nicest building in every city.

    3. Money is literally everywhere when you can find a good deal. If you find a good deal, money will come to you. For those of us who do not know how to raise enough cash for the deposit for our next investment property: Find a good deal first. Once a good deal is presented, money will come to us. There are plenty of people who are cash rich but time poor and they are sick and tired of their cash sitting in their home doing nothing. People like Doctors, Lawyers, Tax Agents, etc… they just need to see a good deal and see that the numbers make sense in that good deal and they will be happy to lend us the money.

    For example, my investment property, I paid $11000 for the initial deposit, and I get $360 rental return, so that’s $1560 per month, so my monthly ROI against the cash (we haven’t even though of stamp duty and the rest of the crap yet) I put in is 1.4%, that’s crap. If someone can present me with a deal that makes 5% ROI, I might just be happy to lend that money, and if someone can present me with a deal that gives me 10% monthly ROI, I’d go invest with that person.

    4. Your equity is not your money unless you either sell your property or you pull them out. Otherwise they are bank’s money sleeping in your property doing nothing. But don’t pull your equity out of your property to buy junk, instead make it a worth while investment.

    5. Real Estate is not “get rich quick”. If anybody thinks Real Estate is about I buy a property and I become rich, then they are missing the point. Even if Real Estate is being done correctly, it can still take a minimum of 2-5 years before we can start to become financially free. There will be bumps along the way, so for some people, having an experienced mentor (and pay that mentor well in the process) is well worth the investment than spending years learning everything ourselves and making costly mistakes in between.

    6. Real Estate is a “Team Game”. We don’t want to do everything on our own and micro-manage everything. We need a team. For example, the amount of the money we spend to pay our sourcing agent to source the best under market value property deals is well worth it, because that’s the sourcing agent’s job and they are the experts in the field. Otherwise the amount of time and effort (and by extension the amount of money) we need to spend to find the best under market value deals is just too much, and we are not expert at that and we will 90% likely to screw up on our own. So don’t do Real Estate on our own. Get a team of experts together to do it as a team.

    7. Of all the people, don’t try to make bargain and reduce the cost of our team members. For example, if my sourcing agent finds me an excellent deal, then pay the sourcing agent well. If my tax accountant finds you ways to save thousands of dollars of tax, then pay him/her well. Don’t be greedy, my team members are there to do my job and it is better to pay them well to make sure I can do repeat business rather than be greedy with your team members and result in them doing a crappy job for me. At the other hand, I want to bargain hard with the seller who is trying to sell me the property because I want the best deal available.

    • This topic was modified 2 years, 1 month ago by Profile photo of Steven Steven. Reason: spelling
    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,376

    Hi Steven,
    Interesting points made there, and so many of them make sense. I wanted to comment on this bit though:-

    For example, my investment property, I paid $11000 for the initial deposit, and I get $360 rental return, so that’s $1560 per month, so my monthly ROI against the cash (we haven’t even though of stamp duty and the rest of the crap yet) I put in is 1.4%, that’s crap.

    I might be missing something here – I see you get $1560 a month on $11k? That is $18.7k yearly – so that is nowhere near 1.4% – it is nearer 170% or 14% in a month, not 1.4%.

    if someone can present me with a deal that gives me 10% monthly ROI, I’d go invest with that person.

    Usually the only ones promising that kind of return are PONZI schemes. I’d suggest “Stay the hell away from anyone who is offering you 10% per month – and keep your money in your pocket!” But make it for yourself? Absolutely !!

    Benny

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Who was the seminar with?

    My hunch is that they offer buyers agent services

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 175

    Hi Benny

    Sorry, my mistake.

    110K for deposit. So 1560 / 110000 = 1.4% per month, multiple that by 12, and that is 17% per year. However, what was not taken into consideration is this is 360 per week of rental income, but the property itself is not positive cash flow.

    I am getting 1560 per month, but my repayment is over 1600, which makes this a negatively geared property.

    So my apologize for messing up the numbers.

    As for an example of good cash flow:
    The lecturer brought some of his students over, and one of the students shared a purchase she made in New Zealand (she’s Kiwi herself).

    Numbers look like this:

    House at Palmerston North (Palmy as they call it)
    Purchase Price: 250K
    Initial Deposit 50K
    Home loan 200K (80% LVR)
    It was a distressed property so needed some renovation work. Renovation cost 30K.
    So basically cash in = 80K

    Rental return = 2362 per month
    home loan repayment = 989 per month
    monthly expense (water, rates, insurance, etc…) = 523
    property management fee 217 per month

    That is positive cash flow of over 600 per month, which is 9% ROI

    600 / 80K (50K deposit + 30k renovation cost) = 9% positive cash flow.

    Missing from the scenario is the sourcing agent fee as this property was found by a sourcing agent, but that’s negligible compare to other costs.

    Add on top of that, there is no stamp duty in New Zealand and no Capital Gain Tax either, so if that person is to sell the property rather than rent it out, it is can be sold for quite a hefty profit without having to pay 25% CGT. (of course, since this is a good investment, she said she will never sell it)

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 175

    My hunch is that they offer buyers agent services

    Yes and No to that.

    They know some sourcing agents, but they are not in a “employer and employee relationship” with the sourcing agent.

    Kind of like the real estate agent who sold my property, he knows some good conveyances, but he doesn’t pay the conveyance and neither does the conveyance pay him. They both charge me instead.

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 175

    Yes and No to that.

    They know some sourcing agents, but they are not in a “employer and employee relationship” with the sourcing agent.

    Kind of like the real estate agent who sold my property, he knows some good conveyances, but he doesn’t pay the conveyance and neither does the conveyance pay him. They both charge me instead.

    Kind of like how Robert Kyosaki writes in his Rich Dad and Poor Dad book, he doesn’t “hire” his lawyers, accountants, etc… but he “pays” them as they do business together. So essentially Robert’s accountants, lawyers, etc… are part of his team, but they are not his employees…

    Hope this explains.

    Profile photo of AlbertoAlberto
    Participant
    @alberto82
    Join Date: 2017
    Post Count: 2

    Hi Steve,

    my partner and myself attended the same course two weeks ago in Melbourne. I had your same doubts. The course is good but we did not go on for 35k….

    So at the moment we are continuing searching and studying by ourselves. We are very interested in investing in UK and NZ, at the moment we are looking for good Sourcing agents in both countries.

    Target PP $ 100,000, Buy-to-let or flip strategy.

    If you have any suggestion…I will keep you updated.

    Because as Benoit said: Time is everything! :-)

    Cheers,

    Alberto

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 175

    my partner and myself attended the same course two weeks ago in Melbourne. I had your same doubts. The course is good but we did not go on for 35k….

    So at the moment we are continuing searching and studying by ourselves. We are very interested in investing in UK and NZ, at the moment we are looking for good Sourcing agents in both countries.

    Ahhh OK, we were in the same class then.

    A googling on the Internet actually shows a lot of comments, both positive and negative, about them. However, not sure if you noticed, but I see a “trend” in those negative comments. Basically, the way how I signed up the training is:

    1. I saw my friends “liked” their free intro course on FaceBook, so I attended.
    2. I think the information presented in the free intro course is good, so I decided to attend the 3 day training.
    3. I did debate with myself and my family a bit as whether to attend the expensive mentor program, but in the end I decided to attend.

    Now, the negative criticisms on the Internet (mostly saying this is a SCAM), the trend I see is that all the negative criticisms are directed at point 2 above. Even then, mostly the negative criticisms are NOT directed at the content of the training, but rather directed at the way how they marketed their mentoring program and how they sounded a bit pushy to get students to sign up.

    And I am yet to see any negative criticism complaining the mentoring program itself is a “SCAM” or “a waste of time”. I am yet to see any comments stating “I paid my 35K AUD and I learned nothing from it” or “I paid my 35K AUD and only to find myself got into a SCAM” or something like that.

    This to me, is an indication that students to paid for the expensive mentoring, they actually put effort into learning and practicing, and then subsequently got results they wanted in the end. Otherwise in the company’s 20 years of public trading, somebody’s bound to call out and say “the mentoring itself is a SCAM”.

    I personally think a fee up there serves as a way to whit out those who are really serious from those who are just trying to make a quick buck.

    My wife was initially against me signing up any further.. however after a few days of discussion, she admits the reason she was against me initially is not because she disagrees with the mode of operation, but rather, she didn’t like the way how they market their mentoring program and tried to push the students in a hurry, but once she sees past that, she actually agrees with how the model which the students will be used to run their businesses.

    I also agree that there are less expensive mentoring programs out there, and there are free mentoring programs out there too. And some of those less expensive and free options can get us into where we want as well.

    I definitely do not think signing up with an expensive mentoring program is the way to do property investing for everybody. Everybody’s circumstance is different, so we all use different approaches.

    So yea, I guess it just goes back to where I started: whether people think it is worth it or not, it is entirely up to each individual. Just like how Ben quoted Henry Ford in class: Whether you think you can do it or not, either way you are right.

    Profile photo of MaineMaine
    Participant
    @mainecollinz
    Join Date: 2017
    Post Count: 6

    1. You pay for your property, but you don’t control it.

    Your money, your dream house, your investment and your expenses/maintainance.

    2. Be the bank. Thank like a bank, and behave like a bank.

    Like the idea of this one. Your money is gaining only 2% or 3% interest and the bank is earning 5% in your borrowed money. So, better think wisely on how the you make calculations and spend wisely also.

    Thanks for sharing your thoughts here!

    Cheers

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