Any see the Nathan Birch interview with Kochie on Sunrise?

Interesting watching, the situation definitely seemed a bit tense. Saying that it was interesting hearing about her portfolio and knowing nothing it seems ok at the moment. You would have to assume a minimum gross yield of 5% in all those areas so 300k a year. Interest repayments at 5% is about 200k. Say 50k a year in costs. Leaves a 50k buffer, not huge by any means at 3 months worth of interest costs. Though it does get interesting if rates start to rise and get above about 7%.

One advantage is at around 20 properties in different areas you are diversified. You would have to be unlucky to have multiple empty at the same time. Better than holding 2 x 3 million properties in that sense.

Realistically if she had 20 properties the cost would be more like 100k so no buffer. I havnt even watched the segment but from what I've read here it sound like her yields might be a lot higher than 5% (people didn't like the areas)

People talk about the regional markets crashing, I can understand what your saying with interest rates but realistically if a property is under 200k and its in a location where people want to live (yes some people do like the country) then how can it go down much further?
You can't build a house for much less than 150k. Anyone who has a job can pay off a 200k mortgage, especially if the other option is renting for 300 a week

But seriously 10k for a property listing. You could make $1 million bucks in an hour if you get a cult following !
Luckily for him there's enough people out their who are unable to think for themselves
 
People talk about the regional markets crashing, I can understand what your saying with interest rates but realistically if a property is under 200k and its in a location where people want to live (yes some people do like the country) then how can it go down much further?
You can't build a house for much less than 150k. Anyone who has a job can pay off a 200k mortgage, especially if the other option is renting for 300 a week

Hi Ben

You raise a valid point and I, for one, have to disagree with the so-called "gurus" who claim that only buying in capital cities brings growth. A small example personally- many moons ago (13 yrs to be exact :)) I bought a Sydney property and regional one (Hunter Valley area) in the same year. Both cost under $220K. During that period, with similar maintenance/minor improvement costs to both properties, the regional one has increased by 311% whilst the Sydney property (within 10km ring) has grown by 153% in the same period.

Regionals continue to get a poor name when we need to remember that, with strong economies and infrastructure/solid employment to support them, they have the ability to (and can continue to) perform better than cap cities in some cases. There's always exceptions obviously (in every market) but I get a little tired of the sweeping generalisations when it's forgotten that country centres also experience supply and demand in property markets.
 
Regionals continue to get a poor name when we need to remember that, with strong economies and infrastructure/solid employment to support them, they have the ability to (and can continue to) perform better than cap cities in some cases. There's always exceptions obviously (in every market) but I get a little tired of the sweeping generalisations when it's forgotten that country centres also experience supply and demand in property markets.

also you have to remember that regionals in general follow a more subdued pattern of growth and decline compared to metro areas, and they generally move either way a step behind the major cities
 
As a very broad and general observation, I'd say that capital growth in regional or major cities is not dissimilar. One of the biggest differences tends to be the timing of the different markets.

Capital cities tend to grow in value a bit more predictably. There's certainly market cycles where there's sharp growth, corrections, moving sideways, etc. Overall though the growth will be a fairly predicable line over about 10-15 years.

Regional cities will often have similar long term growth, but it tends to be more sporadic. Some smaller regional towns have had years of going nowhere, then they'll double in value within a couple of years, then it will be flat again for many years. These areas are often yield driven and it's pretty clear that regionals lag metro. The capital cities will reach values where the yields are below the investors tolerance, then everyone will suddenly chase better rental returns. Middleofnowhere will get 'discovered' and the prices will shoot up almost overnight.

This forum is a great example of this sentiment. There was a time where forumites were heavily focused on capital growth. These days the main criteria appears to be 'cash-flow neutral or positive'. Somersoft is a very different place now to what it was a decade ago.

Some regional can be a great capital gains opportunity if you can time the market but they can be a dog if you get it wrong. Metropolitan cities tend to be more steady and thus more comfortable for many.

...and then there's almost as many exceptions to all this as there are postcodes. Allow me to put my fire proof suit on and flame away! :cool:
 
PT Bear: "Come at me Bro !"

...Allow me to put my fire proof suit on and flame away! :cool:

PT Bear: "Come at me Bro !"

 
...and then there's almost as many exceptions to all this as there are postcodes. Allow me to put my fire proof suit on and flame away! :cool:

Can you explain this with lots of examples please? :D

As a kid we I lived on a farm and my friends and I would burn off the highly flammable gorse bushes every winter (Dad wouldn't let us do it during summer). We had a blast trying to burn each other alive. One or two weekends every year we'd all turn into a complete bunch of savages. :p
 
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Can you explain this with lots of examples please? :D

Just about every mining town. Doesn't get a look in for decades. An external event (the mine) brings people and money, the investors chasing yields follow, property increases faster than the valuers can drive out there. They then have a correction and prices stabilize for a long time because the yield is gone.

Most of Tassie. Went nowhere for years. 2002-2005 had a serious growth spurt following the investor frenzies in capital cities from 1999 - 2003. Had a long time with only nominal cap gains but is looking good again (timing could be good now, or it could already be too late, hard to say). Over the long term the cap gains have actually been fairly similar to many other metro areas.

Plenty of VIC and NSW regionals have shown this behavior over the last 20 years.
 
MTR, what type of negatives are we talking about here?

I've the seen the cash-flow sheets of some of the properties presented by Binvested. The cash-flow was calculated excluding a 20% cash deposit. Even then it was barely positively cash-flowed. Is this a common methodology?
 
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I didn't see the interview on the day, but I did hear Kochie's comments earlier on the show- to the effect that you know it's at the top of the cycle when we start to do stories about a housewife buying 20 properties.
 
I've the seen the cash-flow sheets of some of the properties presented by Binvested. The cash-flow was calculated excluding a 20% cash deposit. i.e. annual rent/80% of the purchase price of the property. Even then it was barely positively cash-flowed. Is this a common methodology?

By some, makes no sense to me. Using that logic almost any house is cash flow positive, just increase the deposit. If 100% deposit is not enough, add even more!

Did the calculations you saw only look at rent and interest and not other holding costs?
 
If this is true...it also shows how gullible some people are and ....this is seriously spruiker territory.

By the way this may cross over to financial advice...would be interesting to see if ASIC would take this to task...if there are enought complaints.

I have held the view some of the buyers agents are walking on a thin line...

By some, makes no sense to me. Using that logic almost any house is cash flow positive, just increase the deposit. If 100% deposit is not enough, add even more!

Did the calculations you saw only look at rent and interest and not other holding costs?
 
By some, makes no sense to me. Using that logic almost any house is cash flow positive, just increase the deposit. If 100% deposit is not enough, add even more!

Did the calculations you saw only look at rent and interest and not other holding costs?

Pretty sure the cash-flow sheet included all the other holding costs ie. landlords insurance and rental manager. Don't think the stamp duty or BA was factored in though, assuming these are coming from an LOC, i'd imagine one should include these?
 
Pretty sure the cash-flow sheet included all the other holding costs ie. landlords insurance and rental manager. Don't think the stamp duty or BA was factored in though, assuming these are coming from an LOC, i'd imagine one should include these?

I would think BA fees would be capital like stamp duty. The 105% figure is what I would use to calculate the return, along with an interest rate buffer of say 1 to 2% and 2 weeks a year vacany. I have a house in that area and easy to rent, but you can get some trouble makers (anywhere I guess) so facture in some additional repair costs. My rule of thumb for cash flow positive is approximately weekly rent x 2 x 1000 being maximum purchase price (ie 10.4%), hard to get, I only even found 1 :(
 
The woman in the interview is a binvested employee, too: https://www.youtube.com/watch?v=w1Y9kkAvz4c

To be fair this is mentioned at 0:45 in the Sunrise segment.

Points for disclosure but surely it would have been possible to find someone who wasn't an employee?

Being on the stage along with her boss would have been quite stressful and not necessarily allowed one to say what one really thought.

Sunrise should have insisted on someone who was not an employee.
 
Didn't really view it but i would thought with too much publicity, it can have drawbacks for e.g in my opinion i have once got a ruling from the ATO this question in regards to buying, and selling properties as an investor as to someone who does it on a day to day and the basis were the magnitude of the sales, intention, the level of sophiscation etc and i would presume the same would apply with having so many properties, and although you harvest the deductions as an investor but the magnitude could always lead the ATO to deciding that due to the nature of the operations and scale of it, they may decide that whatever you earn is assessable income and thereby the deductions could ultimately change etc. just something to be wary about
 
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