An alternative approach to wealth creation - from Jenman .. and should be available for viewing directly from his website shortly.
cheers
waverly
Picking
Real Estate
Winners
IMAGINE BACKING a horse in the Melbourne Cup. It runs last, but you still win.
Well, I can’t tell you the winner of the Melbourne Cup (although I hope, as an omen for the farmers, that Rain Gauge does well), but I can tell you how to back a winner in the real estate stakes. Even if your property drops in value, you still win.
This is no gimmick, there is no catch and, unlike shonky seminar gurus who line their pockets by placing their grubby hands in yours, there is no charge. It is a proven method that has worked for me for 25 years. I rarely mention it publicly; not because I don’t want to share it, but because I fear most people won’t believe it. It’s too simple. Generally, people don’t trust simplicity. They think real estate is complicated. This is a big mistake. Real estate does not have to be complicated.
Also, this method does take time. You won’t get rich quick, but you will get rich. And, as stated, you win even if the property goes down in value. It’s about as safe as real estate can ever be. In fact, I have never heard of anyone getting into trouble with it. With any investment you should always consider risk before you consider return. And what better method than one with no risk and a great return even if the property drops in value?
THE METHOD
In a nutshell, here’s how it works. Buy a property using a PRINCIPAL and interest loan. Make sure the rent covers the payments on the loan and the cost of maintaining the property. As the rent increases, pay it all back into the loan. Your only cash outlay, therefore, will be your purchase costs and the initial amount of your deposit which should be as low as possible to make sure the rental income covers the loan payments and the costs. In short, your deposit (and your purchase costs) is your ONLY cash investment. Once you have the property and you have paid the deposit and acquired the loan, you let the property pay itself off. It should take about 15 years. Too long? Well, if you don’t do it how old will you be in 15 years? The same as if you do it. Therefore you may as well do it.
AN EXAMPLE
Here is an example of how it works. But first, beware of that old trap, “If it’s so simple, why isn’t everyone doing it?” I don’t know why everyone is not doing it. All I know is that I have done it and have always recommended it to my friends. And we have all done very well from it. So can you.
The example: Buy a home for $100,000. Pay a deposit of $20,000. Borrow $80,000. The costs of the loan (and all the expenses) are covered by the rent. Therefore, each month, you pay nothing. As the loan is a principal and interest loan, eventually the property is paid off. Let’s say this takes 15 years. And let’s say the property drops in value. From the $100,000 you paid for it, it drops to $80,000. If you sell it, how much cash do you have? $80,000. And how much cash did you put in? $20,000. Therefore you have made $60,000 profit. Yes, read it again, more slowly if you like. Try and fault it. You can’t. It works. Oh sure, you may have some questions, such as: Where can you find a property for $100,000 these days? Plenty of places. In fact, there are properties for sale for as little as $50,000 which show a return of close to ten per cent.
THE MAIN POINT
The price and the location is not the main point of this method. The main point is that all you have to do is pay a deposit which is big enough (or small enough) so that your rental income covers your repayments and your expenses. The figures work at any price and in any area. The challenge is to keep the amount of the deposit small and to make sure that the rent covers the expenses. Sure, you have to be careful that you don’t have high on-going maintenance costs and that you don’t have a high vacancy factor. And yes, you have legal costs on purchase; but all this can be factored into your sums. If the sums don’t work, don’t buy. But if they do work, then buy as many properties as you can pay deposits. You can start with one and then, later, when you have saved enough for another deposit, you can buy another property. And so on. How many? Well, it depends on how much is enough for you.
ENOUGH
There is a philosophical principle called ‘The Doctrine of Enough’. What this doctrine says is that we know, in most things, what is our limit, when we have ‘got enough’. When we eat a meal, we know when we’ve had enough. When we fill our cars with petrol, the pump clicks off when the tank is full. But in our financial lives, very few of us work out what is enough. I suggest you do it. You’ll probably be pleasantly surprised that you don’t need dozens of homes. Just your own home (fully paid, for peace of mind’s sake) and half a dozen investment properties will make sure most people are rich enough. That’s the Doctrine of Enough.
THE BEST LAID PLANS
Oh, there is one thing I haven’t told you with this method. It has NEVER worked as planned. It has always shown me to be an over-cautious, ultra-conservative real-estate-pussy-cat who is hardly prepared to take ANY risks, least of all with negative gearing or borrowing on a family home.
With more courage I could have made more money. But I would never have been happy. I would have worried too much. I just can’t be happy with big debt and big payments that are not comfortably covered so that if the worst happens (such as my investment dropping in value) I would be in danger.
And so I have always planned for the worst and hoped for the best. The worst has never happened. You see, all the properties that my friends and I have bought with this method have NEVER dropped in value. Instead they have doubled and trebled in value, often in far less than 15 years. Ah well, even the best laid plans seldom work out as planned.
At least picking real estate winners is a safer bet than the Melbourne Cup.
cheers
waverly
Picking
Real Estate
Winners
IMAGINE BACKING a horse in the Melbourne Cup. It runs last, but you still win.
Well, I can’t tell you the winner of the Melbourne Cup (although I hope, as an omen for the farmers, that Rain Gauge does well), but I can tell you how to back a winner in the real estate stakes. Even if your property drops in value, you still win.
This is no gimmick, there is no catch and, unlike shonky seminar gurus who line their pockets by placing their grubby hands in yours, there is no charge. It is a proven method that has worked for me for 25 years. I rarely mention it publicly; not because I don’t want to share it, but because I fear most people won’t believe it. It’s too simple. Generally, people don’t trust simplicity. They think real estate is complicated. This is a big mistake. Real estate does not have to be complicated.
Also, this method does take time. You won’t get rich quick, but you will get rich. And, as stated, you win even if the property goes down in value. It’s about as safe as real estate can ever be. In fact, I have never heard of anyone getting into trouble with it. With any investment you should always consider risk before you consider return. And what better method than one with no risk and a great return even if the property drops in value?
THE METHOD
In a nutshell, here’s how it works. Buy a property using a PRINCIPAL and interest loan. Make sure the rent covers the payments on the loan and the cost of maintaining the property. As the rent increases, pay it all back into the loan. Your only cash outlay, therefore, will be your purchase costs and the initial amount of your deposit which should be as low as possible to make sure the rental income covers the loan payments and the costs. In short, your deposit (and your purchase costs) is your ONLY cash investment. Once you have the property and you have paid the deposit and acquired the loan, you let the property pay itself off. It should take about 15 years. Too long? Well, if you don’t do it how old will you be in 15 years? The same as if you do it. Therefore you may as well do it.
AN EXAMPLE
Here is an example of how it works. But first, beware of that old trap, “If it’s so simple, why isn’t everyone doing it?” I don’t know why everyone is not doing it. All I know is that I have done it and have always recommended it to my friends. And we have all done very well from it. So can you.
The example: Buy a home for $100,000. Pay a deposit of $20,000. Borrow $80,000. The costs of the loan (and all the expenses) are covered by the rent. Therefore, each month, you pay nothing. As the loan is a principal and interest loan, eventually the property is paid off. Let’s say this takes 15 years. And let’s say the property drops in value. From the $100,000 you paid for it, it drops to $80,000. If you sell it, how much cash do you have? $80,000. And how much cash did you put in? $20,000. Therefore you have made $60,000 profit. Yes, read it again, more slowly if you like. Try and fault it. You can’t. It works. Oh sure, you may have some questions, such as: Where can you find a property for $100,000 these days? Plenty of places. In fact, there are properties for sale for as little as $50,000 which show a return of close to ten per cent.
THE MAIN POINT
The price and the location is not the main point of this method. The main point is that all you have to do is pay a deposit which is big enough (or small enough) so that your rental income covers your repayments and your expenses. The figures work at any price and in any area. The challenge is to keep the amount of the deposit small and to make sure that the rent covers the expenses. Sure, you have to be careful that you don’t have high on-going maintenance costs and that you don’t have a high vacancy factor. And yes, you have legal costs on purchase; but all this can be factored into your sums. If the sums don’t work, don’t buy. But if they do work, then buy as many properties as you can pay deposits. You can start with one and then, later, when you have saved enough for another deposit, you can buy another property. And so on. How many? Well, it depends on how much is enough for you.
ENOUGH
There is a philosophical principle called ‘The Doctrine of Enough’. What this doctrine says is that we know, in most things, what is our limit, when we have ‘got enough’. When we eat a meal, we know when we’ve had enough. When we fill our cars with petrol, the pump clicks off when the tank is full. But in our financial lives, very few of us work out what is enough. I suggest you do it. You’ll probably be pleasantly surprised that you don’t need dozens of homes. Just your own home (fully paid, for peace of mind’s sake) and half a dozen investment properties will make sure most people are rich enough. That’s the Doctrine of Enough.
THE BEST LAID PLANS
Oh, there is one thing I haven’t told you with this method. It has NEVER worked as planned. It has always shown me to be an over-cautious, ultra-conservative real-estate-pussy-cat who is hardly prepared to take ANY risks, least of all with negative gearing or borrowing on a family home.
With more courage I could have made more money. But I would never have been happy. I would have worried too much. I just can’t be happy with big debt and big payments that are not comfortably covered so that if the worst happens (such as my investment dropping in value) I would be in danger.
And so I have always planned for the worst and hoped for the best. The worst has never happened. You see, all the properties that my friends and I have bought with this method have NEVER dropped in value. Instead they have doubled and trebled in value, often in far less than 15 years. Ah well, even the best laid plans seldom work out as planned.
At least picking real estate winners is a safer bet than the Melbourne Cup.