How to Achieve Property Success by Margaret Lomas

[Singo]

I bought a copy of the latest book by Margaret Lomas (How to Achieve Property Success) and skipped through the pages. This is a compilation of 3 of her earlier books and is fully revised and updated. Noel Whittaker has written the forward.

It is divided into three sections.
1. Starting out - the basics
2. Investing fundamentals
3. The Advanced investor

With 460 pages this book is packed with lots of information and I won't hesitate to recommend this book for newbies.

I should also point out that this book contains lots of marketing for the author's company Destiny and it is irritating. And she says that buy and renovate strategy won't work well and buying distressed/deceased estates is is hard. I should say that renovation strategy does work and one can buy deals if they master how to find them. So as any with book, the readers don't have to believe everything the author recommends.

(It is said in the book that the PPOR is not a financial asset. I just don't understand this. The PPOR does give the equivalent to the rent we will be paying to rent a similar property.)

 

[EN710]

(It is said in the book that the PPOR is not a financial asset. I just don't understand this. The PPOR does give the equivalent to the rent we will be paying to rent a similar property.)

That definition also appear in Rich Dad Poor Dad. PPOR is not an income generating asset (YOU are the income generating asset), cost you to maintain, and often not a investment grade asset.

 

[Singo]

That definition also appear in Rich Dad Poor Dad. PPOR is not an income generating asset (YOU are the income generating asset), cost you to maintain, and often not a investment grade asset.

Yep, I have read that in Rich Dad Poor Dad. Even though I have read a few Robert Kiyosaki books (and recommend them to others to read), I don't take all his writings too seriously And I reccon this 'whether PPOR is an asset or liability' question has been discussed before. But if one don't have a PPOR, they have to rent and to rent one have to pay. So when you own your PPOR you are paying rent to yourself. (And I agree that there are no tax benefits and one can easily over capitalize)

 

[EN710]

Yep, I have read that in Rich Dad Poor Dad. Even though I have read a few Robert Kiyosaki books (and recommend them to others to read), I don't take all his writings too seriously And I reccon this 'whether PPOR is an asset or liability' question has been discussed before. But if one don't have a PPOR, they have to rent and to rent one have to pay. So when you own your PPOR you are paying rent to yourself. (And I agree that there are no tax benefits and one can easily over capitalize)

There argument both sides I think? I don't pick sides with either. Though, if someone has the ability to use the money that's suppose to be for PPOR to generate passive income through building portfolio (which then more than cover the rent), PPOR can be seen as liability.

 

[SYD]

One thing I know is if I am renting I will be handing my hard earned cash to the landlord as rent. Living in a rental property is not an asset.

SYD

 

[nhg]

One thing I know is if I am renting I will be handing my hard earned cash to the landlord as rent. Living in a rental property is not an asset.

SYD

Depending on where you live, that rent will be less than thr interest repayments. Also there is no depreciation or gearing costs.

Margaret Lomas is my favorite property author. That said I would doubt she makes any substantial money from property and it all comes from her businesses. She has less than 20 cheap/average properties from memory (could have changed).

Like all authors, take what would work for you. I did buy-reno-hold. I personally find it gets you nowhere and slowly. Though it is an essential step to learning to deal with contractors networking and understanding the buying and selling process before walking down the development path.

Just my opinion. I'm certain others have had different experiences.

 

[devank]

(It is said in the book that the PPOR is not a financial asset. I just don't understand this. The PPOR does give the equivalent to the rent we will be paying to rent a similar property.)

I agree with you if the PPOR has good capital growth. Firstly, you don't need to pay the rent otherwise. Secondly you don't need to pay the CG tax on it. Thirdly, you can make use of the equity for further investing.

I did buy-reno-hold. I personally find it gets you nowhere and slowly. Though it is an essential step to learning to deal with contractors networking and understanding the buying and selling process before walking down the development path.

Just my opinion. I'm certain others have had different experiences.

I haven't done any reno projects. I always thought it for people who is already in the building industry where they can take advantage of their own labour and networks.

 

[nhg]

I haven't done any reno projects. I always thought it for people who is already in the building industry where they can take advantage of their own labour and networks.

I'm finding now that I have the contacts, know how and lower prices, renos just don't stack up $/time (thanks to fellow SS's, mentors and making a lot of mistakes). Better of building new, claiming depreciation and selling after a few years. Rinse and repeat.

This only works because I learnt via renos tho. I wouldn't recommend anyone jumps straight in. You WILL get burnt.

Renos have too many unknowns and smaller returns. I've personally never seen or heard of a recent buy-reno-sell that stacked up (accounting for ALL costs and ignoring what gains they made from CG that occured during the reno).

 

[Singo]

I'm finding now that I have the contacts, know how and lower prices, renos just don't stack up $/time (thanks to fellow SS's, mentors and making a lot of mistakes). Better of building new, claiming depreciation and selling after a few years. Rinse and repeat.

This only works because I learnt via renos tho. I wouldn't recommend anyone jumps straight in. You WILL get burnt.

Renos have too many unknowns and smaller returns. I've personally never seen or heard of a recent buy-reno-sell that stacked up (accounting for ALL costs and ignoring what gains they made from CG that occurred during the reno).

I agree with you. Especially I couldn't find any which will be quite profitable to sell after renovation. The selling costs will eat up any gains. But I strongly believe buying slightly run down properties and renovating them to keep. It works very well for low income earners. You can create the equity instead of waiting for the market to move.

1. Lower entry point. Thus lower deposits; lower stamp duty etc.
2. One can make 5-10% gain easily with renovations. Refinance and get the renovation costs and some of the deposit back for future purchases.
3. You get depreciation benefits after renovation.

 

[Singo]

Margaret Lomas is my favorite property author...

..Like all authors, take what would work for you....

I wouldn't have bothered to post about her book if it is not so good. It is a good book for newbies. And of course, take what work for you

 

[nhg]

ylYou can create the equity instead of waiting for the market to move.

1. Lower entry point. Thus lower deposits; lower stamp duty etc.
2. One can make 5-10% gain easily with renovations. Refinance and get the renovation costs and some of the deposit back for future purchases.
3. You get depreciation benefits after renovation.

Most people do the work themselves for a 'gain' yet you can also get a second job for the same gain with less risk.

It has its benefits, but if you don't move on from that strategy, financial freedom will be a pipe dream.

I used the increase in equity from hands on renos to help make my properties positive geared, and recently moved into granny flats. Recently started a reno business and bought into a small painting and gyprocking company. Suddenly everything has become cheaper. EVERYTHING. Materials, approvals, labour. Reno doesn't make sense when you can build at 70% of usual costs.

 

[Singo]

And renovations are very good learning process. You know what is there in a house. How much it costs to repair stuff and so on.

I have seen buyers (friends) walking away because the kitchen is old etc. One just cannot see the potential of properties if they don't know these costs. If you can buy a house which needs a 10k kitchen upgrade for 20k less than house with a new kitchen, it is a good deal. Do the renovations and learn from them. If the plan is to have 5+ properties, it is worth to do a few mistakes and loose money instead of loosing it to tradies who will rip you off over the years whenever you have maintenance issues.

One don't have to go for extensive renovation. Change the kitchen, paint the house, change the carpets, a couple of light fittings and may be a few plants for the garden! You spend 20k, increase the value by 50k and refinance and get 40k out. Of course you have to buy 30-40k below median of that area to add 50k value.

Is it worth all the trouble just to get 20k from the property? It is if that is what you make in 6 months in your PAYG job.

 

[Singo]

Most people do the work themselves for a 'gain' yet you can also get a second job for the same gain with less risk.

It has its benefits, but if you don't move on from that strategy, financial freedom will be a pipe dream.

I used the increase in equity from hands on renos to help make my properties positive geared, and recently moved into granny flats. Recently started a reno business and bought into a small painting and gyprocking company. Suddenly everything has become cheaper. EVERYTHING. Materials, approvals, labour. Reno doesn't make sense when you can build at 70% of usual costs.

Thanks Navid. What you said makes sense. Hopefully this will be an eye opener to me. Thanks for sharing your experience.

 

[nhg]

And renovations are very good learning process. You know what is there in a house. How much it costs to repair stuff and so on.

If the plan is to have 5+ properties, it is worth to do a few mistakes and loose money instead of loosing it to tradies who will rip you off over the years whenever you have maintenance issues.

Totally agree with this!

It also helps to suss out and learn to manage tradies. I went through 5 electricians before I found one I trusted. Lost a bit on small electrical jobs, yet worth it as I know I have a trusted partner for the bigger projects.

Definitely helps to walk into a job and know... ok, $7k kitchen reno, $3k for this and... maybe $2k due to unknowns there. Ok my offer is...

Oh and it takes time to learn where to purchase $500 vanities for $200, etc. Or little tricks to cut costs. That really makes a difference.

I once again will have to thank fellow SS's and my mentors for helping me out over the last two years. And still so so much more to learn from you all in the years to come. I can only hope to give back as much as I got.

 

[vaughan]

... I strongly believe buying slightly run down properties and renovating them to keep. It works very well for low income earners. You can create the equity instead of waiting for the market to move.

Problem is that, at some stage, everybody "invents" this strategy for themselves and starts bidding the easy-to-renovate places to unprofitable prices, so it ends up a mug's game.

The money is in the harder-to-renovate places, or those that LOOK harder to renovate. Even more money is in the places that need significant work (e.g., fire damage) and/or places that are so bad the lenders refuse to lend or want huge deposit to mitigate the risk.

 

[Singo]

Problem is that, at some stage, everybody "invents" this strategy for themselves and starts bidding the easy-to-renovate places to unprofitable prices, so it ends up a mug's game.

That's true! I have seen it happening. But I feel it is good to go after properties which are not dressed up for sale. Once the sellers have done the painting and cleaning, they are aiming for a premium. But a house which needs some paint and gardening is better for investors!

Well, each has their own way! I just shared ours.