DOOM GLOOM and the END of LIFE as we KNOW it

[Witzl]

GR - excellent post.
The kinds of things you are doing is what i am trying to do in this current sydney market - find desperate sellers, and use vendor finance to buy property with no money down, or even with some money back, at 15-20% below the market price.
Of course, as you said you will get knocked back 95% of the time, but like you rightly said, you are only looking for that ONE person to say yes!

Recently, someone i know bought a property out west for $190K, with $100K vendor finance interest free for 3 years. Of course it doesnt take a rocket surgeon to work out that doing that has just given them a great wad of cash to cover the shortfall on that property for several years, and buy/service several others.

... thats the sort of thing I would be trying to do, however im not as experienced as my friend so im not expecting to get such a good deal. My aim is to buy a property at 20% below market price, with a further 20% off in vendor finance or other such mechanisms to help me get through this "gloomy time".

I'm still learning about this sort of buying strategy, so i havent bought a deal like this yet - just getting my research and legwork done first.

 

[grossreal]

hi Witzl
that great wad of cash is about 35k each
so no great wad but they are neutral from day one
so its in a loc.
and to me is a good investment as I think the area will do a 20 to 25% growth within this 12 months
now that a big crystal ball call
but they are there you just have to look.
and thats not look on the net
as everyone looks there
go look in the shop windows and the local paper and talk to the local agents
and when they say
we have nothing to rent rents going thru the roof
the market is so depressed and they give you the sad story of
this person can't sell and that person can't sell
and this developer is about to liquidate and that ones just gone
thats the time to say lets sit down and have a coffee because I'm your fairy godmother and I'm here to take a couple of problems away.

keep going you may wear out those shoes but you will get one.
noone catchs a fish without a rod and no lines in the water

 

[House_Keeper]

Great post grossreal. Inspiring story about what to do when the market is depressed.

For me, the doom&gloom hasn't prevented me from investing. On the contrary, it suits my share strategy well. Over the last few years I have developed an "accumulator" strategy towards shares. I basically buy quality companies when they are cheap. I believe that there is far too much gloom at the moment and that some of the companies are oversold. So I buy when I am happy with the price and comfortable holding it over the next 5 years. Some of these stocks are CF+ but not all of them. The market may go down further, you never know. As long as I am happy about the price as a long-term strategy, I do not need to worry or panic about what might happen next week or next month.

I am also watching the property market in Sydney inner west, but I find myself very reluctant to take a commitment on a property that would have a negative CF of about 4%. I don't see the point of doing that in the current market. Maybe I should try some of your techniques grossreal and make lots of low offers. I'm thinking it might be easier in a few months though as more and more sellers are likely to accept a lower price. I'm basically watching and waiting to grab the opportunities when they will arise.

To me doom&gloom is a time to grab bargains, but you need to manage your risk and keep your LVR reasonable and manage your cash flow conservatively so that you do not put yourself in a position where you are forced to sell.

Cheers,

 

[grossreal]

hi House_Keeper
you are correct in places
I don't do lots of low ball offers
I find lots of people that are hurting
find the one I like and low ball that one a bit different
then work on the vendor knowing that they need to get out and then getting a deal that works for me.
now as I have posted on this board and made no secret about it I am mitigating my risk with a yen loan.
if I get a yen loan at 55% and the vendor is giving me 45% vendor finance back then I am secure and tennant pays the loan fulling plus some
so I can then go in in a stronger position.
now it only works if the vendor is going to leave a chunk in the deal and they are so its good for me.
not into shares as I don't have the control I like yes you can sell out but that not the idea of my investing.

 

[willair]

Now you will be kicked out by 90% of them.
But remember you are only looking for 1 that’s says yes.
Now the areas above have already corrected and the rents are in the 6 to 7% net returns so good returns .
Again do want to add the 3 pages of disclaimer so do use as investment advice

Grossreal,thanks for that post interesting way to find property well done..
willair..

 

[grossreal]

hi scamp
interesting post
beggers have been around for years even centuries and yes they are very effective and why because they meet a need.
people want to feel good and by giving someone money
even 20 cents people think thats made me feel good
and the beggers work on that plan.
and for me good on them
they have found there level I just hope not to get to that level but thats me.
the casino works on the same principle by the way and they can allow a few winners but the house always wins.
hedge funds do the same as well they spread across a few areas now one may go wrong but 100% can't
caveat lending does the same
5% per month gives you a 60% return
now if you spread across 10 borrowers
9 are going to be good and the one thats bad well chase him and see if you get your money back but you are infront.
insurance companies are the same
thats why one company auto does not accept claims
its always your fault and most people say fine lets pay it and the one that says no the company pays it.
even the red light camera's work on the same.
and I can give you a list if required
this system works.
why
because its a matrix system
start with 10 down to 3 down to 1 the same as
the beggers get 10 people in a group and one will give you some money maybe try it and see if I am right.
its human nature we are conditioned by our enviroment
so if you have 10 developers just like your 10 people infront of the begger and they are all hurting
1 will break ranks
the lions in africa do the same with the zebra's they herd them together in every degressing circles until one breaks ranks and thats ones a gon'er sorry but true.
so is this something that I have devised.
no not that good?
as for worth, have a look at the post under value.
and you will see value is a very moveable item and worth is not the same as value I work on value not worth
worth is a project value not a true value and just as you have networth value its not true net value and can be along way short.
and for me the properties I am buying to me are below value and as for worth well thats depends what I am projecting against and have not done that as I don't usually work on worth.
and by the way I am not begging the vendors they are begging for help so not sure in your example if you asked a begger to give me money how I would go that would be very interesting if they gave me money.
but that what the vendor indirectly are doing

 

[ianvestor]

The herd has such an influence on the market it can completely distort it, causing wrong to be temporarily right. See the many examples of speculative bubbles through history.

The end of the boom is when it all falls apart and reveals the herd was wrong all along.

Moooooooo!

The trend is your friend, until the end when it bends.

(i.e. Go with the herd, just not for too long).

 

[DavidMc]

I find lots of people that are hurting

Hi GR. Some good posts in this thread.

How do you go about finding people that are hurting? Talk with Real Estate agents?

 

[grossreal]

hi DavidMc
go to an area that you are interested in and ask as many people as possible.
real estate, banks and brokers in that area
as brokers usually have clients that have bought in a particular building and they know who is hurting as they are usually there clients.
banks are the ones holding the sites and real estate usually nmay not have the listing but the know who is in trouble.
remember you are fishing so you have to throw a wide net and then once you have your fish sort out which are any good.
and just like a good fishaman you use data to find the deals like a fishaman use a fish finder
the old way was to just go fishing and today they use fishfinder
well the same the old way was just buy property the new way is to research gain lots of data and use this data to decide and drive down price.
no rocket science here.
I just do it with different people and they bring me different data and then decide.
simple really

 

[stumunro]

remember you are fishing so you have to throw a wide net and then once you have your fish sort out which are any good.
and just like a good fishaman you use data to find the deals like a fishaman use a fish finder
the old way was to just go fishing and today they use fishfinder
well the same the old way was just buy property the new way is to research gain lots of data and use this data to decide and drive down price.

simple really

i loved this part GR