Spann "Property Update"

[geoffw]

Peter Spann is presenting a "Property Update" evening which will be reviewing his view of growth rates, where to buy, etc. And also he covers what he calls the "Non-conforming lending revolution"- which appears to me to be targeting the same target market as the wrappers- people with good credit history who for various reasons don't conform with traditional lenders' criteria.

I'm not selling this- just making a comment. It's a one-off- but probably closely associated with something else he's promoting, about which I want to post separately.

He is saying that he is going to get out of seminars- not enough profit any more.

[BUNDY]

Peter seems to have changed his focus frominvestment properties to shares and options in the past few years. It would be interesting to hear his present views on the property industry. Do you have details on where and when he is conducting these seminars?

BUNDY:)

[geoffw]

Brisbane Mon 11 Nov
Sydney Thursday 14 November
Melbourne Wednesday 13 November

All at 7PM. $48 if you have not been to a Spann course before, $28 if you have.

Details on www.freemanfox.com.au click on "Seminar Schedule".

Edited to correct link

[Jacque]

I am going so will give you all an update on what I think :)

[geoffw]

Jacque,

I'll be going to the Sydney one- will you be going to an earlier one?

[Jacque]

Hi Geoff :)
Yes, was planning to attend the Sydney one but it looks like hubby will be going instead, due to clashing schedules. :(
Don't worry, though- he will be getting a grilling when he gets home and he's taking notes for me.

[geoffw]

Jacque,

I'll look for a name tag which sayes "Jacque's hubby".

[bbruham]

G'day all,
I bought the Peter Spann video tape for forty eight dollars.
In the tape he proudly announces he is now a qualified financial
adviser. So now he can hand out all the advice he wishes to.
I bought the tape as I couldn't make it to his seminar.
Bruce G.

[geoffw]

Bruce,

I bought the Peter Spann video tape for forty eight dollars. That will propbably be the "Welcome to Wealth" weminar. The one which gives a lot of fairly good info- but which leaves a lot more teasers for the rest of the seminar circuit.

The "Property Update" evening is a one-off- giving his overview of the market as of now- and which apparently is his teaser for his new product- http://www.somersoft.com/forums/showthread.php?s=&threadid=745

[TrevorG]

Hi guys;
I too will be attending the Property Update in Melbourne next week and will be especially intersted to hear what he ahd to say about his new property investment syndicates.

[geoffw]

I will be driving up to Sydney from Canberra this Thursday to attend the event.

1. Is there a Canberr person who would like a lift? I intend leaving about lunchtime, and returning the same night.

2. The venue is the Canberra ANA Ballroom. Can a Sydney person tell me what the easiest (not too expensive) parking arrangement might be please? What sort of costs?

Thanks

Geoff

[BUNDY]

I attended the Brisbane Seminar last night. Peter had some good information relating to the the present market situation, figures on Top 10 growth suburbs for Brisbane for the last 10 yrs,
details on growth and rental yields for top 10 areas for the past 12 months and also possible hotspots for the next 12mths.

He also discussed topics such as interest rates, decreasing returns, vacancy rates, that banks are presently dicounting rates so negotiate with them, changes in legislation.

He also handed out a prospectus for a property syndicate for those who were interested. It was not a hard sell, flog a new scheme seminar. Quite interesting. In short he is forming a syndicate through a prospectus to purchase a block of older style flats under a trust, with the view to obtaining quotes for rennovations, then obtaining bank valuations on this and on selling the units (Prior to the rennovations with abuilder contracted to carry it out) with targets of 40% return on investment. No need to tell you all, he stressed that this type of return cannot be guaranteed, but that is what the board is aiming for. These units will be posted for sale on his web site under property fox, so investors/anyone can purchase them. He has already completed two with 20 people in the syndicate and has had good returns in a matter of weeks. Minimum investment $20k

Not for everybody, but check it out for yourself

I think it is well worth $28 to attend. Even if you only pick up a few tips.

BUNDY:)

[geoffw]

Bundy,

Thanks for the info.

It certainly sounds worthwhile to go.

I'm maxed out just at the moment, so I'm not in any state to do anything. But I certainly am keen to continue learning.

And it's good to know there's stuff which is good value.

[roughana]

Originally posted by BUNDY
I attended the Brisbane Seminar last night. Peter had some ... possible hotspots for the next 12mths.


Hmmm, lucky you! I attended the Sydney seminar last night. He didnt give any hotspot predictions to us.

It was a good review of the basics of his Property Magic seminar for me.

Other topics discussed were non-conforming lending (no-doc, lo-doc) products and how Peter is currently using a 7 digit LOC (!) to help him with his wealth creation strategy at the moment.

He also gave us an overview of how he's generating cash flow at the moment using property syndicates. This model is the basis for how Property Fox No1 will operate.

Cheers,
Andrew

[geoffw]

OK, been and returned.

There were no responses to my post about parking. A pity about that. I arrived in Sydney 5:30PM. I found a parking spot- "$13 flat rate after 6PM". OK- half hour parking to 6PM, plus $13.

WRONG!

Parking bill was $49. The flat rate only applies if you arrive after 6PM. If I'd known, I would have driven out after 6PM and driven back in again immediately.

City slickers 1. Country (capital) bumpkins 0.

OK. Here's my summary of a brief part of Peter Span's presentation- "Top ten mistakes". Note-this is only from my quick notes. It is probably not accurate. I'm only posting this to promote someideas anddiscussion.

1. Over committing. In the current environment, a 5% deposit is too high of a risk in an environment where prices may drop.

2. Under committing. If you wait for growth to show again, it might be two years before the figures show growth again. By that time, because of the time lag, growth figures might be up to two years out of date. You might have missed out on perhaps 40% of the growth.

3. Buying outside your area. Buy within 10 km of where you live. (But, as a result of questions- you need to do the research where you live to ensure it is a sound place to invest)

4. Overvaluing the opinion of non-experts (newspapers, media, friends, taxi drivers. Peter no longer tells people he is a property investor, as he too often gets a lecture. He tells them he is an insurance salesman).

5. Relying on hearsay instead of quality research.

6. Buying property from property marketers and developers. There’s nothing wrong per se from buying from a developer, as long as you negotiate hard.

7. Not sticking to a pre-set price at auction

8. Overdoing renovations. You should spend a maximum of 12-13% on renovations.

9. Trying to find the “bargain of a lifetime”. Peter has only ever found two of these in his career. He turned them both down, because he thought there must have been something wrong with them.

10. Not finding the finance appropriate to needs. Many people just go for the cheapest interest rates-but this can be at the expense of flexibility- for instance, a Line ofCredit.

Peter is looking for IP stories for his new book on property. Any story would be good- disaster or success. Any story published will get a copy ofhis book. Email sales@freemanfox.com.au

[geoffw]

Some more from Peter's viewof the market

Factors influencing property investment
. The First Home Owners Grant, which has taken many owners out of the rental market, and made them buyers. This has had a particularly strong affect in Sydney.
. Increasing vacancy
. Decreasing returns
These two factors are a bad formula for property in the future. But good property value is holding up. Clients have been reporting a 10 to 14 day vacancy for good quality property, which is a normal rental vacancy.
. Interest rates. Over the next two years, this will depend very much on the state of the US economy. Peter’s wild guess is that interest rates will reach 7-8% in the next two years- but it could go anywhere.
. Share market instability. There are some extraordinary values out there at the moment- but there is a lot of money going out of shares and into property.
. Oversupply. There were 87,000 approvals for new “units” in Sydney for the last 12 months (ended ??)- but the population growth in Sydney was only 41,000. Sydney gets hit first.
Unit market slowdown has always preceded general slowdown. Some lending markets are asking for 70% deposit for inner city apartments (My note: from the reaction, that sounded like a mistake-it was hard to tell)
. Changing finance requirements.
. The number of mortgage insurers has dropped from five to two in recent years. This has led tofewer loan approvals, but more funds available. Banks are starting to use depositors’ funds much more. (If your total borrowings are over $1M, and your combined household income is $80K+, banks are discounting. If you’re not getting discounts, upscale who you’re dealing with. For many,banks areprobably the best source for finance. Negotiate heavily.
. Non-conforming lending (lo doc/no doc). Perhaps 8 to 9% of loans are coming from non-conforming lenders now. These are for people who do not fit normal bank requirements. (GE Capital acted as an early “credit impaired” lender?)
. Tax Office crackdown. Property investors have been flagged for audits. They are looking for dodgy schemes- but make sure that all documentation is intact, and make sure that quantity surveys are in place to back depreciation claims.


What to look for in Sydney
Peter’s criteria has been a pattern of 10 year’s growth, and a rental return of at least f5% (he did not mention previous criteria of suburbs being close to fast growing suburbs).

He showed Residex figures to show the highest growth suburbs for houses and for units for the last ten years, and for the last 12 months, along with rental yields.

Figures are available from Residex, but something which is very evident is that Eastern Suburbs, Inner West, and North Shore do not rate. Lesson- don’t listen to hearsay, do your own research.

Houses show the best growth. But if you can’t afford a house, buy a unit- but buy it in an area where there’s not a lot of units.

[bundy1964]

Originally posted by geoffw
Some more from Peter's viewof the market

Factors influencing property investment
.
Houses show the best growth. But if you can’t afford a house, buy a unit- but buy it in an area where there’s not a lot of units.

Interestingly well located units in Adelaide have had the best gain in the last year..........the ones with a nice address regardless of size and older units seem to have done well as the density that there were built at in the past is a no no now with councils.

North Adelaide led the 4 year average at 101% increase.

Areas that are being renovated in near city locations are going strong as well, my own suburb has had 50% growth in the last year and a sale next weekend may push the limit even further as the previous highs were for what I would describe as renovators delights.

[BUNDY]

Just wondering if anyone has joined or know's of anyone who has joined Peter Spann's wealth Club - either Saphire, Gold or Platinum.

Just interested to find out whether Freeman Fox is in fact assisting people to financial freedom ie assistance with shares, options trading, investment properties - Or is he just charging exhorbidant fees to feather his own investments?

Interested in any feedback.

BUNDY:cool:

[Jacque]

Hey Geoff! Thanks for all the info that I don't now need to type- you seem to have more time than me anyway, when it comes to posts! You covered Peter's content well, according to hubby.

Pity about your parking fiasco :( You live and learn, after all.

One interesting fact that Peter mentioned was the no. of houses that have been bought using the FHOG soley. Apparently it was 51! Isn't that amazing?

[geoffw]

Jacque-

You thought that it was complete ebfore I even finished!

First, some question and answer stuff


Q & A
. Off the Plan. Peter has little enthusiasm for OTP. If you do but OTP, buy where there’s very little development.
. Professional packages from banks are good. But you can do better. You are in a good position to negotiate- perhaps several points off your rate, or perhaps better terms. “Everyone” is eligible to take up a ”professional” package-which offer reduced rates and fees, in exchange for an annual fee. There is no definition of a professional.
. There is always a good time to buy property. Yesterday was best, today is good, tomorrow is too late. But don’t be too enthusiastic.
. Prestige property is good. But wait until it comes off the boil. Wait until prices drop and yield get back up to 5%
. On Cashflow positive property. There have been some articles on this recently.
1. Magazines and newspapers scratch for articles
2. There’s a three way trade off between high growth, high yield, and high risk. Pick any two, and ignore the third. But, if for example, if one property had 10% yield and no growth, after 10 years, your property would have been worth the same, and you would have (say on $500K property) $50K by 10 = $500K. But if you had a $500K property appreciating by 105 PA, after 10 years the capital gain would have been worth lots more than the $500K because of the compounding.
. If you are selling your PPOR to buy a new one, and reatining the old one, spend 20 minutes with your accountant to determine the implications

[geoffw]

Non conforming lenders
 Until 10 years ago, the only sources of these were solicitors and the Anglican and Catholic churches. There’s now a lot of new finance providers- eg, Freeman Fox Finance, GE, Peppers, Bluestone.
 Upsides:
.Easy to get (with 25% deposit)
.Suits business owners and self employed
.Suits people with credit problems or no provability.
 Downsides:
.Usually higher interest rates
.They’re quick and difficult to deal with if you default, Banks are “sooks” to deal with in comparisoj.\\n.
 Ideal for:
. Self employed people with less than two years figures who can’t (or won’t) provide figures
. people who have reached a limit with traditional finance sources but KNOW they can service more
.Sort term finances until longer term finances can be arranged
.People who intend to pay debt out of capital
.People with sources of income not recognised by the bank.
 Conditions:
. Usually 25% deposit for lower interest rates
. Interest rates are 0.5% to 3% higher than standard variable.
. No mortgage insurance
. Commercial lending terms (you MUST be aware of what you are signing)
. A statutory declaration is usually required to the effect that you understand all the terms (this bypasses consumer protection legislation),and that you can afford topay.
. A $2M maximum usually applies- perhapsless
 Freeman Fox loans (Spann’s company):
. 20% deposit
. Max $500K per property.
. 7.57%
. (LOC similar numbers but 7.7%)

[geoffw]

Buy, Sell and Renovate
Peter’s strategy for cashflow when he is not allowed to trade in options (as he owns a brokerage firm, which does not trade options- he is not allowed to trade with any other firm)
 This is a higher risk strategy
 Freeman Fox acquires a “consolidated” block of apartments- usually in the range of $1.5M to 3M. This is above the range of the ordinary investor, but below the range of a professional investor.
 They use options or low deposits, and long settlements
 They convert to unrestricted company title (there are much fewer impediments to this than strata title-but banks are more reluctant)
 Renovations are quoted and a builder is contracted
 Sale price to buyers includes renovation costs and aprofit margins
 Buyers benefit because they are buying an older unit at cost & reno price- valuation price will probably be much higher
 Units are sold at or below bank valuation
 Renovation funds are transferred to the Body Corporate, who perform the renovation
 Body Corporate now does strata title
 Profits are in the range 10% to 20%- so if 10% deposits are used, profits can be 100% to 200%
 The main risk, apart from normal property risks, is that if the apartments do not sell, we have to settle

The Freeman Fox prospectus is based on funding properties based on the above model. I was not able to attend this portion of the seminar.

[geoffw]

OK, that's my summary of 2 1/2 hours of a wealth of information.

I did not get the last session on the new Freeman Fox prospectus- although I did get the prospectus.

So I'd like to ask a favour.

If there's anybody who has actually read this far,and who attended the seminar, could they please send me a PM of their impressions of the prospectus?

I'm much too late to put something in, but would be intersted to know if
1.The seminar was useful/helpful/ (if you went)
2.The summary of the evening was useful/helpful/common knowledge
3.Ignored it

I could not find the poll option. But perhaps better to keep it confidential!

[JumJones]

Question:

"2. There’s a three way trade off between high growth, high yield, and high risk. Pick any two, and ignore the third. "

I flicked through peters book in borders one night ages ago, and recall a similar analogy he used with a sign in a shop: Pick two of the following - Quality, Price, Speed.

SO:
1. You could pick quality and price, but have to wait a long time
2. You could pick Quality and SPeed, but pay through the nose
3. You could pick Price and speed, but get crap quality.


Not sure how or what your example spanns out (hehehe i amuse myself)


What your notes should probably say is:

"2. There’s a three way trade off between high growth, high yield, and LOW risk. Pick any two, and ignore the third. "

[geoffw]

Hi JumJones,

Good to see that people do read old posts. It's a great part of the value of this forum- information is available for a long time after.

I think you're right. Sorry.

High growth is good. High yield is good. Low risk is good. But you probably could not achieve all three.

Thanks for the response!