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From: Mike TheBloodyIdiot



http://www.smh.com.au/articles/2002/07/15/1026185160548.html

Fixed rates dropping can mean only one thing - RBA cash rate will start to drop in 2-5 months time. This is as sure as I am The Bloody Idiot.

Current boom is not exactly over. June auction clearance rate stands for Sydney at 71%. It is actually super amasing result for a winter. Rate drop will have exactly the same influence that bucket of petrol has on already raging fire.

BUT. Please remember - from the other side we have got troubled US share market. Last night bloody Dow Jones has tried to loose 439 points (which means it will loose it by the end of the week).

From one side it is good, because there will be more investors fleeing sharemarket into property. From another it is pretty scary, because if US goes over the edge of the cliff into depression, Australia will follow in no time.

Everyone has to review their position very carefully. This does not seem to be a good time to gear yourself to the teeth. Seems to be wise to maintain a buffer of available funds which will allow you to live for at least 6 months.

But. If you work for US owned company or in industry which is directly or indirectly relies on exports to US - build even greater buffer.

But. If you are in good position to buy - buy NOW. Catch the new wave. Even if in 6 month time everything goes down the drain, revalue your portfolio, redraw equity - and you well might be positioned to weather any storm with your pockets full of tax free money.

Of course, you should buy with cap growth in mind. There is no glory in buying something that will grow only 1.5% over the next boom.
In other words, out there is the worst time imaginable to waste your borrowing power on "cashflow positive", wraps and flips. If it comes to economic troubles, you will be stuck with a lemon which did not generate any cash, which is very hard to rent out/sell, with great possibility of rent/wrap defaults. Do not do it to yourself.

Hope this helps

Mike-TBI
 
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Reply: 1
From: Mike .


Hi Mike,

While you are at the SMH site type debt into the keyword search and after reviewing the results tell me whether it is responsible to encourage people to add to the mountain of consumer debt. If interest rates went up 2% in 12 months we could have a very hard landing.

If you must buy now don't negative gear!

Regards, Mike
 
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Reply: 1.1
From: Mike TheBloodyIdiot


Veery smart!

Mike,

Tell me what gives you more after tax money - property with 18% cap growth, 4% rental return or the one with 3% growth and 10% rental return?

After that search this forum and you will see my view on what impact debt level has on property investment.

I wil be back in a week and check your homework.

Cheers,

Mike
 
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Reply: 1.1.1
From: Mike .


Hi Mike,

There is only one correct answer to each of your scenarios so I only need a few seconds to answer.

"Tell me what gives you more after tax money - property with 18% cap growth, 4% rental return or the one with 3% growth and 10% rental return?"

Ans: Since I am holding the property the one with 10% rental return will put dollars in my pocket. Other one I will have to support from job income.

"After that search this forum and you will see my view on what impact debt level has on property investment."

Ans: Mike search function in "Property Investor Forum" doesn't work properly. Only throws up results to January. However, it is well understood that higher gearing improves your investment return.

Mike, what is your point? I was commenting on the impact of debt levels to the economy. As investors we can do without a recession which could be triggered if RBA's knee-jerk reaction to mounting debt is to lift interest rates too quickly.

Regards, Mike
 
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Reply: 1.1.1.1
From: Geoff Whitfield


"Tell me what gives you more after tax money - property with 18% cap growth, 4% rental return or the one with 3% growth and 10% rental return?"

If the answer is rental return, then that's a very short term answer (imho). The capital growth in this equation could FAR outstrip anything an income property could produce.

Income is good. RK is right. You can own a lot of properties with positive cash flow, not many with negative.

But if the cash flow is at the expense of capital return, then you are not going to get anywhere long term.

In the example given, if I had a property worth $100,000, at 18% growth, in 5 years, it would be worth nearly $230,000. If the average interest rate was 7%, and rental return 4%, I would have been paying 3% pa (on original price) for the 5 years. $35,000 out of pocket for close on $100,000 gain.

With 3% growth and 10% capital return, in 5 years, the property would be worth $112,000. On 7% interest, I would have pocketed $3,000 pa for 5 years- $15,000. Total profit- $27,000- vs $65,000 the other way.

Yes, 18% capital growth could not probably be achieved consistently.

But try 10% growth for 10 years, vs 10% income. Assume 7% interest.

The growth place is worth $235,000. I won't factor in rent rises. It will have cost me $30,000 after rent income. I'm $105,000 ahead.

The income place is worth $130,500. It's earned me $30,000 over 10 years. I'm $60,000 ahead.

Either way, I've won. In one, I win now, and in the other, I have to wait.

The difference is when I get the income. And it depends on my aims and my situation.

If I have a j.o.b., I'd prefer to go for the longer term solution. To work now for a bigger long term. Delayed gratification and all that. But that's the situation I'm in now. That may well change.
 
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Reply: 1.1.1.1.1
From: Stirling Reid


We assume that a property earning 13 to 14% has a neutral affect on your servicibility in the eyes of the bank. They assume P+I and repaying over 25 years, a buffer of 1% etc.

If the affect on the servicibility is neutral we can keep purchasing until we run out of equity.
If we buy a property returning 6% we need to wait for 7 years until the return is 13%, however if we purchase a property returning 10% we need only wait 3 years. The property returning 6% therefore slows down our rate which we can buy property.

Stirling
"Give a man a fish and he will eat for a day. Teach a man to fish and he will sit in a boat drinking beer forever"
 
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Brad Sugars = The wealth wheel...

Reply: 1.1.1.1.2
From: Ross Sondergeld


Hi Geoff,


Brad Sugars = The wealth wheel... (Growth & income?)


You said, "Tell me what gives you more after tax money - property with 18%
cap growth, 4% rental return or the one with 3% growth and 10% rental
return? If the answer is rental return, then that's a very short term answer
(imho)...."

I agree. Personally... i like the wealth wheel concept by Brad Sugars.

Buy a high growth property... and 4 cash flow positive properties.

(And repeat the process a few times !!! To get 4+ wealth wheels!)

Essentially, your growth property increases in value and when you're ready
to retire... you sell it to pay the cash flow positive debts.

SIMPLE concept!




Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


_________________________________________________________________
Send and receive Hotmail on your mobile device: http://mobile.msn.com
 
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Brad Sugars = The wealth wheel...

Reply: 1.1.1.1.2.1
From: Peter Boyce


Ross

Can you advise who Brad Sugars is and where you came across his 'wealth wheel' philosophy?

Peter
 
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Brad Sugars = The wealth wheel...

Reply: 1.1.1.1.2.1.1
From: Jye Walker


Peter,

The easiest way is to check out www.bradsugars.com. It has a pretty comprehensive explanation of Brad and his philosophies (but, like any other avenue of immediate wealth creation, I guess you have to fork out some cash somewhere down the line for the real secrets)

JW
 
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Brad Sugars = The wealth wheel...

Reply: 1.1.1.1.2.1.2
From: Ross Sondergeld


Hi Peter,


Subject: Brad Sugars = The wealth wheel...


You said, "Can you advise who Brad Sugars is and where you came across his
'wealth wheel' philosophy?"


Brad used to work for "Mr Rich Dad - Poor Dad" (aka RK) in the US.

He's based in brisbane and operates ???????. (I forgot the name!) And he's
profiled as being a multi-millionaire in less than 3 or so years.

Anyway... he operates a few business based consultancy franchises, etc.

And i suppose you could call him a money making "Guru".


I've never meet Brad, but he sure knows how to duplicate profitable ideas.
(i.e. the advertising franshise it operates. For example, he resells
"Scentific Advertising by John Hopkins", copyright 1934 for $30 bucks. When
you can get it for free after the lapse of the copyright.)


P.S. And i still can't think of the company name. (Help me, somebody!)





Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


_________________________________________________________________
Send and receive Hotmail on your mobile device: http://mobile.msn.com
 
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Brad Sugars = The wealth wheel...

Reply: 1.1.1.1.2.1.1.1
From: Ross Sondergeld


Hi Jye,


Subject: Brad Sugars = The wealth wheel...

YOU SAID, "The easiest way is to check out www.bradsugars.com. It has a
pretty comprehensive explanation of Brad and his philosophies (but, like any
other avenue of immediate wealth creation, I guess you have to fork out some
cash somewhere down the line for the real secrets)."

Thanks for the lead.


Secrets?

Well read "Tested Advertising Methods"... if you want to learn how to "bait
the trap". And "How to make your advertising make money"... both by John
Caples. Brilliant books by the grand master himself.

And if possible... get the original versions.


P.S. And i better give my good friend Ian Price in Brisbane a plug. He wrote
a real estate advertising book. It's called.... ???????.

(Ahhh... Beep, Beep, Beep... I've lost another book! I just wish people
would return books to the original owner when we kindly lend them.)



Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


_________________________________________________________________
MSN Photos is the easiest way to share and print your photos:
http://photos.msn.com/support/worldwide.aspx
 
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RE: Brad Sugars = The wealth wheel...

Reply: 1.1.1.1.2.1.2.1
From: Duncan M




> He's based in brisbane and operates ???????. (I forgot the

Action International.

Duncan.
 
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Reply: 2
From: Brett Burt


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We have just got an approval for a development loan in excess of 5 mill =for 5 years at 6.8% from a well known major bank. Interest rates like =negative gearing benefits are not the main game when it comes to =property.

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We have just gotan approval for a development =loan in
excess of 5 mill for 5 years at 6.8% from a well known major bank. =Interest
rates like negative gearing benefits are not the main game when it comes =to
property.

------=_NextPart_000_0067_01C22F1A.A357F160--
 
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