STRATEGIES on the road ahead

evening all,

thought I might start a new thread, something I have not seen much of is different peoples thoughts and methods which they are undertaking, seeing as the property cycle appears to be moving along.

I mean are we buy and hold?

are we going wrap mad?

looking mainly in capital cities for opportunities for more assurance of capital growth?

searching high and low for those tasmanian tiger like +ve cf properties?

long term capital growth?

go searching, investigating for deals in this "buyers market" as some would call it?

flippin crazy?

turning sods in the development game?

commercial property anyone?

or are some of us sell sell sell and head for the ASX?

or finally do we just sit and take stock?

just thought Id put the question out there

care to comment or just tell me to sod off!

Hi Bicko,

Good thread!

I've looked to the Wrapping, QuickCashers, Positive Cashflow Guru's who've emerged over the last 3-4 years, we all know who they are. I cant help but feel they've deliberately sought out a niche in order to market their products, this isnt in itself a bad thing, but they I feel they border on being Snake Oil Merchants. The desire to market investment products drove them to find a niche to do it in. It didnt matter what as long as they were differentiated and could sell it.

Jan Somers approach however wasnt an attempt to seek out a niche, it's a documentation of her proven approach of MANY years. Its simple, straightforward and full of integrity. There's no hype of $5000 Bootcamps, Tapesets, Seminars etc.

It doesnt have the allure and sex appeal of "Wrapping!" and "Flipping!", "QuickCash!" etc. but Jan's approach has stood the test of time, and it will continue to deliver wealth in the coming decades to whomever applies it.

Thats my take on the road ahead!

Duncan.


{EDIT}
I googled the definition of Snake Oil and found at:


Snake Oil Link


Snake oil is historically a patent medicine beverage or ointment concocted from various inert ingredients (commonly including alcohol or stimulants) and sold as a cure for various (if not all) diseases and ailments. The essence of "snake oil" is that the ingredients are unidentified, mysteriously alluded to, or mis-characterized, and generally the product has an unusually wide application as a cure-all or panacea. References to currently fashionable pseudoscience may bolster the product's claims. Often sold with boisterous marketing hype and promoted by travelling "doctors" with dubious credentials, and perhaps an accomplice in the crowd who will attest to the value of the product. Sometimes seen in films depicting the United States of the 19th and early 20th centuries: often the snake-oil salesperson has to leave town in a hurry when the inhabitants start to realize they've been conned.

Hi all,

Excellent reply Duncan, or maybe it is just that I agree with you 100%

The only thing that I would add is that for us it is a separate house on a block of land, not units,or townhouses,or apartments.

bye

I'm taking stock.
Not sure what or where would constitute a good step forward at the moment.

MJK

Good points Duncan.

I think it will be interesting to see how many of these "Guru's" survive the non-boom time ahead (whenever that occurs. The timings a question, but it has to happen at some point - always does...)

Cheerio

Simon.

Bicko,
i have looked at real estate conditions over the past 3 years
and they are unlikely to be repeated over the next 3 .
The main question is to ask yourself is will it be a messsy collapse
in current prices,or just a small downturn in property,or as some people ,a full blown property crash,personally i dont think any of the above will happen maybe to some who have paid top dollar in the tail end of the boom they may be the investors with the greatest risk of default.
just remenber one simple rule the long term value of any asset,property shares is only based on the cash flows it produces
and the time frame.i intend to still buy property, never underestimate the power of long term property investment..
good luck
willair..

market

Your points are interesting

I find as an investor that you must continually assess the market
The problem with many of the gurus is that they generally only preach one type of investment whether that be positive wraps ect.

You must be prepared to take advantage of market conditions.

My company property know how pth ltd mainly deals with accountants recently I have also become involved with the property advisory.

Gill Williams who runs the company has been involved in the property industry for the last 30 years and has a wealth of knowledge.

The property Advisory also known as buyers advocates Australia are based in Melbourne and Brisbane with other states to follow.

It is important to note that we do not take commissions from developers or vendors.

Our view is that most major cities in Australia have now peaked.
There may well be some great buys ahead in the next 12 months, however if you are recieving a 3% return and your funding is 7% you need to make great capital growth to justify the loss.

We have been buying properties in Perth, Hobart, Launceston and next week we are going to Christchurch Wellington and Queenstown. We believe that there are some great opportunities in new zealand at present.

Regards

Nigel Kibel

We have no cash flow and do not believe the market will move substantially for at least 12 months so our strategy is to wait, pick the brains of people who know more than us and spend weekends doing normal things instead of carting children from house to house.

Will look at buying again toward the end of the year but due to cash flow issues will have to be positive cash flow or close to it and we will also will have to seek out some institution brave enough to loan us the money.

Robyne

G'Day all,

I am doing the same as Robyne and researching both people's minds and my own reading/investigation.
I will be looking for another property in May/June where there is a strong rental return (and if the Capital growth is good is would be a bonus). I have identifed a couple of areas and hope that the prices do not increase over the next three - five months.
Reading threads on this site has been invaluable.
Will be attending an ACT got-together when the next one is on to ask as many questions to further gain knowledge.

Cheers,
kidders

I'm saving all my change in a BIG moneybox for the upcoming land tax bills.......

DON'T FOLD YOUR CARDS

I guess this post has me wanting to reply a little due to the soft attitude it gives out..

Just don't fold the cards to early guys. In the last 30 yrs property has always boomed somewhere in this wide country. It continues in hidden pockets spread out.

Growth of 40% p/a will still be available to the ones that sit down & research areas will a bit of common sense & not to much here say.

The gurus (so called) hit & miss as well.. we can all be that guru..or you can just simply sit down ,,read posts , collect data which all will help you choose that correct purchase.. There are people out there today loving the market at the moment. (me is one)!!!!!!!!

Robyne as for draging the kids around looking at houses, some of us have not stepped in a home for years , used maps, pictures & data to select them. I get asked so many times how did you find that home for that price?. As it was 2.5 thousand kms away, my answer is always the internet, Hot properties are usually only on the net for 1 or 2 days so there is no time to race up & see it. But this technique again must be used together with knowledge,, but knowledge is from reading,,

best advice I either got was to MOCK BUY... NOW it sounds stupid but it is rewarding . Buy 10 homes at a time ..follow the growths of them & rents for 3-6 mths. You them pick up the feel of what is important in buying & making the most of the situation.

So for all the watches & waiters this comming quarter study a bit more & make the journey continue is a positive way

ov

For more years than I care to remember I have played the 'wait and see' approach.

Fortune favours the brave. This doesn't mean that I will take undue risk, but, at this time I am still looking at potential re-juves every week, and, looking at other means like "Wrap" or whatever it takes.

Real Estate is relatively new to me. My income source is usually share trading. "oooh - ahhh" I hear many go, but, liek any "BUSINESS" if you approach it in the right manner and apply teh right risk management there are opportunities all the time. Sure in a bullish market most f my trades are long (buy and sell higher) but when the market goes bearish then a majority of my trades are shorting (sell and buy back cheaper).

Adapt to the market, whichever market you're in, follow the market - don't try to be the leader!

For me, I see this current market a time of great opportunity. Many 'investors' are starting to offload property to try and get top $$$ before the impending downward spiral. Whether it happens or not, it is how you approach each particular purchase. Before you buy the property have a clear plan in place. What is the intended term. What is your 'out' in case of a worse case scenario.

Just my thoughts......

Cheers

Thanks Ocean View,

I am sure your are right. Also the mock buying sounds like an excellent idea, sort of like paper trading with properties.

We still have the cash flow issue and the unmentioned stressed husband issue( re cash flow). I am hoping that by the end of this year rents will have gone up a little with the further interest rate adjustment and also there will be more of the "offloading" you mentioned. Also I hope to be contributing more to our cash flow by that time. It may sound "soft" and it certainly is a "proceed with caution" approach but sometimes that is appropriate.

Of course we are always aware of the market and learning about new strategies and different markets etc.

Comments taken on board, especially buying over the net. Need to look into this more.

My experience with real estate agents is that they are usually a bit slow at putting properties on the net and have always doubted that any really good deals could be found in that way, as all the good ones get snapped up prior.

Robyne

OV,

What does mock buying mean to the novice?

Cheers,
kidders

I assume it means going out and making bids for properties, and then not going ahead with the purchase if they say yes.

Like all things you need to practice. When I first out about how some people go around Low balling, Imt Instinctive reaction was, " Sure , like someones going to sell a house for 30-50% below value "

The reality, it does happen and like all things the more you practice the better you get.

While I havn't got that sort of deal myself yet, I know several memebers who have got that sort of deal in recent times.

I have got deals at what I think is 20% below market , and considering the state of the market , where I'm buying and the time I have available I'm more than happy with that.

When I first started low balling , I did it in relation to our PPOR. We went around looking for our perfect house, but any thing that would have been ok if the price was right , we made a low offers on. We were suprised at the reaction we had and how much some vendors were prepared to drop their asking price.

In the current market , we will be looking for bargains in better areas, that we think are long term cap growth areas. If we didn't already have anything in Rocky I'd still be happy to buy there , though you have to look hard to get good deals, while six months ago they were all around.

We are buying in townsville, which I think has good long term growth prospects.

After that we will be concentrating on improving the cash flow on our current IP's , renoing our PPOR, and ( when we finally get approval through ) starting on doing a dual occ next to our PPOR ( can fit another house next to current one ) which was not advertised as a potential development site when we bought it.

In fact they didn't even advertise that it was on 3000m2 when we bought in on sydneys north shore ....

See Change

Hi See Change,

Sydney's North Shore - you must be laughing.

kidders

I have mock bought several homes in the last year which have all done well - shame I did not really buy them!!
Examples:
Goodna (outer Brissie), October 2002 could have bought a 4 bed highset for 85k - and rental of around 150pw. Now would be worth around 160k.
Burnie - March 2003, 3 bed house for 40k, rent 100pw. Now worth approx 100k.
At least it makes me feel a little better about decisions that I will take in the future if I can get it fairly right in the past

Ocean View,
good post,everyday someone says to me ,%Yields are almost none.existent in most parts of australia,so investors in my eyes
are purely buying on the expectation that property will continue
to rise ,but i look at things diferent if the banks lend 80% of the face value of any property without insurance,and most large banks are well positioned to handle a drop of 20% in property prices,then the only pain remains with the borrower.
what i am starting to see is one thing, i have looked at 4 properties this week 3 private sales ,one with a real estate company all the properties where purchased in early to late
1999,i always try to ask sensible questions but everyone i talked too have a sence of urgency in value and saleability,i dont look at the doomday scenario in real estate we have sidesteepped this issue everytime so far and will again this time.but over the next 16 weeks there will be some well priced property on the market..
good luck
willair..

Kidders

the thing I'd really like to know is what the people who sold the place to us think. They are best friends with one of our neighbours, so I know they will be aware of what we are doing....

Apparently he had tried to develop the block himself, but was told it couldn't be done.

In this situation it came down to getting the right advise , and even then I had to suggest the way to develop it in such a way that we didn't have to demolish the existing house. Our advisor suggested the standard way , but it was me thinking laterally , that will cut the development costs significantly , and enable us to develop it with out having to move into rental accomodation for a year or so.

See Change

I too think that teh internet, at least in WA, or at least the areas I look in, are not heavily supported by agents. I have realestate.com.au send me an email whenver a new property is listed in my area. The ratio of actual new properties to those that get onto the web is pretty low. Most properties I find in the paper. Many agents actually seem surprised that I have rung them as a result of the net listing.

'low balling' - sounds like a nasty term, like you're trying to rip someone off. Don't get me wrong, I do it. But I don't pick a magical figure. My offers are based on what I think the property would sell for in comparitive condition (good/clean/liveable) to others that have sold, minus the costs for fixing it up.

Many people will want more than that of course. IS it because that's what the agent told them its worth, or is it because they have just seen others sell at that price and their house must be just as nice if not better.

As such I haven't found the need to 'mock buy'. 99% of my offers in the last six months have been knoocked back. Some of those properties are still sitting there, others have sold. Do I think I should have offered more - heck no - it would have been financial suicide, and, the vendor is happy because they got near what they were hoping for. Everyone's a winner.