2009 was a good year..where to now?

1st ip settles in december

Goal for 2010 is to rebuild my cash buffer after having to use half of it to finance the deposit on 1st ip. When I am back up to $35 K buffer I will buy another one! Bring on 2012!

:)

Kim i have discovered , that by buying other peoples time creates amazing results, the work on your IPs whilst it saves you some money when you clean them up etc , it slows the process, keep alook out for some young fella's to strip and build bathrooms , and paint gardens etc, the results whilst may cost you , are all positive,
I discovered that i can't be a big player with just me in the team, exploit many others that can/will do the work for you! its very hard when you get started , but things start going under the bridge so quickly , you should be back on track in no time.;)
 
Kim i have discovered , that by buying other peoples time creates amazing results, the work on your IPs whilst it saves you some money when you clean them up etc , it slows the process, keep alook out for some young fella's to strip and build bathrooms , and paint gardens etc, the results whilst may cost you , are all positive,
I discovered that i can't be a big player with just me in the team, exploit many others that can/will do the work for you! its very hard when you get started , but things start going under the bridge so quickly , you should be back on track in no time.;)

Second that Mate!
 
Kim i have discovered , that by buying other peoples time creates amazing results, the work on your IPs whilst it saves you some money when you clean them up etc , it slows the process, keep alook out for some young fella's to strip and build bathrooms , and paint gardens etc, the results whilst may cost you , are all positive,
I discovered that i can't be a big player with just me in the team, exploit many others that can/will do the work for you! its very hard when you get started , but things start going under the bridge so quickly , you should be back on track in no time.;)

3rd that ;)

Yep this is my strategy as I dont have the skills, time or energy to do it myself.

Yes I think the first 2 or 3 are the hardest and then with time things start to snowball I've heard! :D I will keep perservering. Thanks for the encouraging words.

:)
 
Yep....I call it the leveraged model....get other people to do the renos.....have completed 2 this year for 6-7K and what a change it has by just a little comestic uplift!


Kim i have discovered , that by buying other peoples time creates amazing results, the work on your IPs whilst it saves you some money when you clean them up etc , it slows the process, keep alook out for some young fella's to strip and build bathrooms , and paint gardens etc, the results whilst may cost you , are all positive,
I discovered that i can't be a big player with just me in the team, exploit many others that can/will do the work for you! its very hard when you get started , but things start going under the bridge so quickly , you should be back on track in no time.;)
 
A punishing year that is not over yet. My business went ahead leaps and bounds but the year was trying to say the least. Seems to get harder as you get older.....
 
My Sydney IP portfolio chugged away nicely all year with some rental increases and good capital growth thrown in for good measure. This was the year I achieved the $2MM net equity milestone.

I also exceeded my annual savings goal of 100K which I drip fed monthly into my managed fund which has grown as well.

I also continued to work out but unfortunately took up smoking..

no perfection here..:(
 
As for next couple years I aim to put away around 300K in managed fund/savings and just let the IP portfolio chug away. I love the idea of more liquid funds to complement the illiquid stuff.
 
And I can say not a dollar of cash down as it was all from a LOC.
I'm glad you've found a great deal, but may I take this opportunity to be pedantic and correct a common misconception... this isn't a true "no money down" deal. I've seen a few people refer to no money down in this context, but cash from a LOC is still cash. You've just withdrawn cash from your LOC and used that.

Put it this way: if you withdrew the $500K from the LOC first, you have $500K cash in your hand. After you purchase this property, you don't have $500K cash. So you've put $500K cash into the deal.

A true "no money down" deal would be if you could borrow 100% secured only against the deal you're purchasing. ie It has to be self-sufficient and requiring no cash injection from outside the deal to be a true "no money down" deal. :) If you could borrow 80% from the bank, and the vendor gave you 20% vendor finance, that would be a true "no money down" deal. :cool:

/pedantry

Congratulations - it still sounds like a great deal, even if you did need $500K to get into it. ;)
 
:mad: Even though I agree with you, you have just shattered my dreams of being a speaker on the seminar circuit with a written best seller (using a ghost writer of course!) series of books.
I swear it's not real money! You can;t touch it it, feel it or smell it nor stash it.
So if it looks like no money, it must be no money.
Your such a brute.
If you could borrow 80% from the bank, and the vendor gave you 20% vendor finance, that would be a true "no money down" deal. :cool:
Hang on! what's the diff?
The only difference is which assets are used as security. So the bought ones in my case are unencumbered, instead of the other way round.
And considering it was a 60% lo-doc, then I used less borrowings and less cash than your "no money down" deal which needs an 100% lend.
Thanks for correcting me on my less than "no money down" deal of the decade! :cool: your my fav!

Congratulations - it still sounds like a great deal, even if you did need $500K to get into it. ;)
It's a case of gross mismanagement of believing a bull market will fix everything and borrowing more is the solution to other debt. I'm very conservative in my calcs, but I reckon income will considerably rise in the next 6mths, but 25% is good start.
 
LOL @ Piston for his inconspicious digs towards me every day.


One should only refer to a NMD deal when it really is no money into the property.

I would consider a NMD deal to be Vendor financing with a large chunk payable in a much later date, however it is still money down just at a later stage, only legal way of this is where you buy an extremely positive cf+ to pay off the principal back to the vendor.

Recent purchase at an undisclosed location.

10 x unit / villas

Ask price $550k

PURCHASE PRICE $400k

Rent $100 x 10 = $1000pw

(rents raised now to $120pw) therefore $1200pw.

Vendor finance of 30% for 10 years @ 5% interest.

$280k payable now $120k payable in 10 years

Rent = $62,400pa
Interest = $22400pa 280k @ 8% interest
Management fees $4800pa
Insurance $2000pa
Rates $2000pa
= $31200pa cf+

$31200 x 10 years = $312,000

120000 * 5% = $6000 vendor interest pa or $30000 over 10 years + principal repaid of $120000 = net return of $162,000 for this period. no money down.

Also this isnt taking into consideration we can sell the property tomorrow on a 10% yeild of $624,000 and walk away with $224,000 gross profit.

Thats how a real no money down deal should look. If any misinterpratation with my figures please advise me and I will carefully make it clearer.

Have a great day! :)

Oh if its not possible to do this in this market i dont know when it would be possible. This property settles next week and I am about to exchange on another one similar this week with very similar numbers.
 
Hang on! what's the diff?
The only difference is which assets are used as security.
You're a crack-up, PB.

Yes, the difference is which assets are used as security, that's precisely the point. :) If, when purchasing an asset, you need to inject cash/security from another asset, then it's not "no money down", because the deal doesn't stand on its own merit. If it's was a true NMD deal, then you'd be able to purchase it even if you had zero assets or cash. You couldn't have purchased this property without your $500K LOC, so the deal didn't stand alone. I'm not saying that makes it a better or worse deal; I'm just saying it wasn't a "no money down" deal, that's all.
Piston Broke said:
And considering it was a 60% lo-doc, then I used less borrowings and less cash than your "no money down" deal which needs an 100% lend.
Thanks for correcting me on my less than "no money down" deal of the decade! :cool: your my fav!
I have no idea whether you're taking the **** out of yourself, me, or somebody else, because this makes no sense to me. But I'm sure it's funny. ;)
Piston Broke said:
It's a case of gross mismanagement of believing a bull market will fix everything and borrowing more is the solution to other debt.
If you're taking $500K from a LOC (which is debt), and borrowing the rest (more debt), then you've still borrowed 100% - you've just risked two titles on the deal instead of one. I can't see how it's a less risky strategy to offer the lender two titles instead of one, for the same borrowings.
 
One should only refer to a NMD deal when it really is no money into the property.
Agreed.

Nathan, I managed to negotiate similar deals to what you are proposing a few years ago, but had difficulty financing it once the lenders became aware that there was a vendor finance component. Commercial as in "true" commercial ie office/retail/warehouse etc - yes, but not multiple resi-type commercial, ie blocks of apartments, or any kind of regular residential.

I'm assuming the vendor finance is disclosed to the financier. If so, is your financier a mainstream lender?
 
LOL @ Piston for his inconspicious digs towards me every day.
:confused: and I thought I was paranoid. I also have a picture of you under a pentagram (upside down of course) that i cast spells over lol.
But really I make those comments all the time and if that dig is aimed at sum dude it's probly the one that claims he had 2 dads. If you post sumthin I don't agree with, I answer straight back with not much room for doubt on what I think.
btw What you got there is a good deal in std terms of buying RE.
And it's interesting to see how over the last few years you went from "only paying XXX to own" to "only buy CF+", maybe you are learning :)
---

In reality I agree ozperp, to me borrowed money is cash, so there's no such thing as "no money down" imo. I see no difference between cash, equity and wealth (as posted previously somewhere). To me Wealth=Equity(you can borrow on)=Cash.
If the asset your purchasing is left unencumbered, and an asset you own is used as security, then what is the the difference in the end result? None.
And btw in my case stamp duty is 0.06% and no LMI :cool: ie Less money used.
The beauty of having available equity (from 4yrs of reducing debt) is the ability to move fast.
Doing it any other way would've been tedious & slow (banks hate complicated), that's not good for biz.
Putting a 500k offer on the table without any regard to what the banks think of deal or the purchased assets is darn good for the biz of buying cheap.
This asset was paying net income of >500K which dropped to <150k (a bit GFC and a bit bad decisions).
But the recipient believed that the boom would last forever and spent up based on an income of >500. You know, economy never stops growing, this time is different, Australia is better, immigrants, gov grants, money thrown outa choppers etc etc.
Just like Citigroup paying billions in bonuses for losing billions, then asking for a bailout.
In this case I'm the "bailout", but unlike a gov. I pay way below market value and nobody but me is left.
As GR would say "it's not a forced sale, it's a kicking & screaming sale" where it got so bad that there was no longer the ability to think & make rational decisions.
So Piston Broke Private Equity bails out the Flying Pig Corp for a fraction of asset values taking all shares and now calmly decides what to keep, sell, fix or borrow on. And in the meantime the income keeps coming in.
Gotta admit I think I took a little inspiration from GR and his crazy bargain buys on this one to look at it from an unconventional angle. Thnx!
 
In reality I agree ozperp, to me borrowed money is cash, so there's no such thing as "no money down" imo. I see no difference between cash, equity and wealth (as posted previously somewhere). To me Wealth=Equity(you can borrow on)=Cash.
True, if you have plenty of each! ;) But, if you're at max LVR on your existing assets, then you have no available equity, and that's when it makes a BIG difference whether the asset "stands on its own". In such a situation, you can only do "no money down" deals, and the only true "no money down" deal, is one where the borrowings required to purchase the asset can be secured entirely by that asset. ie via some mechanism, you get 100%+ LVR.

If you have heaps of available equity and/or cash, then that's terrific, and I acknowledge that one can get a better deal in such circumstances. That wasn't the point, I was simply saying that the deal you outlined wasn't a "no money down" deal. :)
Piston Broke said:
If the asset your purchasing is left unencumbered, and an asset you own is used as security, then what is the the difference in the end result? None.
If the assets are of similar value, true. If the asset you're purchasing is less valuable, then you've given the lender more security than you had to - heaven forbid! ;)
Piston Broke said:
And btw in my case stamp duty is 0.06% and no LMI :cool: ie Less money used.
The beauty of having available equity (from 4yrs of reducing debt) is the ability to move fast.
Absolutely; an enviable position to be in. :cool:
 
whilst we all pat each other on the bank and smoke stogies let's spare a thought that for those that lost it all. It was an incredibly tough year and fortunes and families were lost.
 
Me? no mate! but many business associates/friends and just clients of people I know etc have crashed and burned spectacularly, or at the least had very strained marriages and banks threatening (and still are) to take their house and anythign else they can find. not many banks are in a caring mood and will sell you up at the bat of an eye lid. i spoke to a guy mid year whose best mate had just lost his $20m fortune and was so gobsmacked the guy could barely function any more. a neighbour of my mates did his dough and topped himself. a builder i was using in Qld went belly up and did a runner and left a bunch of uninsured smucks like me with half built houses. another guy has an apartment development ready to go, got his 10% deposits in from the buyers, blew them, now cant get fundign and cant pay back his buyers. another guy i know traded insolvent all year as creditors hounded him and his family suffered (think he has managed to pull thru actually which is great). or the old biddy who had the apartment OTP and dropped a $1m on it. come to think of it i could go on all day about stories of misery this year.
 
whilst we all pat each other on the bank and smoke stogies let's spare a thought that for those that lost it all. It was an incredibly tough year and fortunes and families were lost.
Many round here confuse my paranoid conservative investment style with doom, gloom and naysayer. And don't think for a second that my deal is without risk or downside, there's plenty.
Nobody gives it away, it has to be earned first, and then kept (which is harder).
What I did'nt mention was that the evaluation I got was considerably below what I thought it would be. I could still make my deal, but at that moment my first thought was "holy ****! how the **** did he come up with that number!?"
And then "Geez, what about all those other people trying to refinance, they're in for a rude shock".
There's a reason many hate banks, and it's now going to become obvious, again.
The worst part of the scenario is that many of those people thought it was "good debt", well again ftr there is no such thing as good debt. Debt is on the liability side of the P&L.
I too have seen many come & most of them go through the years.
But that's just how a market system works. While the economic numbers & data may stabilize, it'll be a while before the effect filters through.

"those that say it's easy are those selling you something." me

If it was easy there'd be nobody digging streets.
It's not that there aint any secrets, it's that nobody is willing to listen regardless of how loud they are shouted or boldly printed.
 
Thanks Forumite.

I am looking at Sydney units up to 300K anything on a train line.

I also like the Central coast houses up to 300K and Newcastle houses up to 300k.

The first home buyers have decimated this market....but will be interesting to see what happens with interest rate rises.

Hope this helps. PM me for specific areas I am looking at.



Congratulations, Sash! Wish that I can be one day be like you :)

Which areas will be you be looking?
 
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