Investor Direct - 4th of December 2011 <SYDNEY>

Hi David,


I want to give you some data you don’t normally find in investment books or seminars.

Over the last 10 years of running a mortgage business for property investors:

We have executed more than 7,000 individual investment mortgages with around 60 different lenders;
Myself and our mortgage team have reviewed the financial positions of approximately 6,000 individual property investors and developers;
I have enjoyed privileged access to vital data including the original purchase price, value of property improvements and the current valuation of close to 30,000 individual investment properties all around Australia from our considerable client base.
When you have such a large sample size to do your research on and make observations, you are bound to discover something unknown to most people.

I have discovered many things that may surprise you as much as they surprised me, some of which are against conventional wisdom:

Just about every property strategy works. It just depends on who does it, how it is done, when it is done and where it is done.
When I first started investing, I went and read many property investment books and attended many investment educational seminars. Just about every one of them was convincing and this confused the hell out of me. Just when I was about to form an opinion against a particular property strategy, someone would show up in one of my client consultations and prove that it worked for them!
After testing many of these strategies myself, I came to realize that it is not about the strategy, which is only a tool, but rather it is about whether the person is using the tool appropriately at the right time, in the right place and in the right way.

There is no such thing as the best suburb to invest in, forever.
If you randomly pick a particular property in what you think is the best suburb over a 30 year window, you will find that there are periods during which this property will outperform the market average, and there are periods when this property will underperform the market average.
Many property investors find themselves jumping into historically high growth suburbs at the end of the period when it is outperforming the average, and then stay there for 5-7 years during the underperforming period. (Naturally this can taint their view of property investing as a whole!)

There is no such thing as the worst suburb to invest in, forever.
If you pick a property in the worst suburb you can think of from 40 years ago, and pitch that against the best suburb you can think of over the same period of time, you will find they both grew at about 7-9% a year on average over the long term.
Hence in the 1960s, a median house in Melbourne and Sydney was valued at $10k. The worst property around that time may have been 30% of the median price for then, which was say about $3k. Today, the median house price in these cities is about $600k. The worst suburb you can find is still around 30% of that price which is say $200k a house. If you believe a bad suburb will never grow, then show me where you can find a house today in these cities, that is still worth around $3k.

Median Price growth is very misleading.
Many beginner property investors look at median price growth as the guidance for suburb selection. A few points worth mentioning on median price are:

We understand the way median price is calculated as the middle price point based on the number of sales during a period. We can talk about the median price for a particular suburb on a particular day, week, month, year, or even longer. So an influx of new stocks or low sales volume can severely distort the median price.
In an older suburb, median price growth tends to be higher than it really is. This is because it does not reflect the large sum of money people put into renovating their properties nor does it reflect the subdivision of large blocks of land into multiple dwellings which can be a substantial percentage of the entire suburb.
In a newer suburb, median price growth tend to be lower than it really is. This is because it does not reflect the fact that the land and buildings are both getting smaller. For example, you could buy a block of land of 650sqm for $120k in 2006 in a newer suburb of Melbourne, but 5 years later, half the size block (i.e.325sqm) will cost you $260k. That’s a whopping 34% annual growth rate per year for 5 years, but median price growth will never reflect that, as median prices today are calculated on much smaller properties.
Median price growth takes away people’s focus from looking at the cost of carrying the property. When you have a net 2-3% rental yield against interest rates of 7-8%, you are out of pocket by 5% a year. This is not including the money you have to put in to fix and maintain your property from time to time.

Buying and holding the same property forever doesn’t give you the best returns on your money.
The longer you hold a property, the more likely you will achieve an average growth of 7-9%. But you will be bound to hit periods where your property outperforms the 7-9% growth and periods where it underperforms the 7-9% growth.
The longer you hold a property, if its growth is at or above average, the lower its rental yields will become.
The longer you hold a property, the higher the capital gains tax you will need to pay when you sell, and the less likely you will be able to sell it.
The longer you hold a property, the more likely there will be a need for an expensive upgrade of the property.
The longer you hold a property, the more likely you will forget which part of the equity actually belongs to the tax man, AND the more likely you will be to try and leverage the equity that doesn’t belong to you. This can get you into a negative equity position with a negative cash flow forever, unless you have proper financial guidance.
Paying more tax can be financially good for you.
This one took me years to swallow, but I can’t deny the facts. The clients who have managed to get into a positive cash flow position have paid a lot of tax and will continue to pay a lot of tax, whether it is capital gains, income tax or stamp duty. They don’t have an issue with the tax man making some money as long as they continue to make more themselves! They regularly cash in the profits from their properties and reduce their debt, but always continue to invest and park their money where the return is best. In fact, I can almost say that the only people who enjoy positive cash flow from their investment properties are the people who have little concern about paying taxes as they treat them as the cost of doing business.
I can keep going to show you my findings, but some of them are harder to explain without proper graphs and live interaction. Hence I’ve put together a Wealth Acceleration Workshop to show you some of the more realistic and efficient ways to build your wealth and improve your cashflow from residential property investing.

You can quiz me on any questions and confusions you might have over all the conflicting data you get from the market. I will also cover in this 2.5 hour workshop the following material:

1) Where and what properties should you put your money into. The property market behaviours over the next 15 years will be almost the exact opposite to what you have seen in the last 15 years. You will find out:

The impact on property prices due to massive retirement of our large population of babyboomers. Where do they all live right now? How long before they will have to downsize?
Who will be replacing the babyboomers in the workforce? How many of them are needed? Can Australia reduce immigration intake over the next 10 years? If not, what will happen to property prices, to what type of properties, in what areas?
The full impact of the National Consumer Credit Protection Act which has been effective since 1st January 2011. This new law prevents borrowers over the age of 50 from obtaining a home loan (not an investment property loan) if they can’t pay off the entire mortgage before they retire, without having to sell the home!
We all know the importance of following the trend in investing, but what sets the trend? Home buyers? Investors? Governments? Migrants? Babyboomers? Gen X? Interest rates or the lenders? Understanding this can keep you ahead of 90% of property investors.
How many million tenants will be coming to Melbourne & Sydney alone over the next 30 years? Yes, millions! How much rent do they want to pay right now? And where do they want to live?
Will property prices go up, down or sideways over the next 2, 5 & 10 years? The same answer does not apply to different types of properties in different areas. Why your property strategy over the next 2 years will need to be very different to the years that come after that.
How can you add an average $30k cash flow to an $800k investment property in today’s market! This means that you can turn a very negative cash flow investment property to almost neutral if not positive. It’s easier than you think once someone points it out to you. It doesn’t really work in other times of the market but it can work now.
2) How you can beat the money supply increase to create real wealth. Your investment properties do not have sufficient return to beat the increase of money supply; hence 95% of the property investors are actually going backwards financially. You will find out:

Why most property investors have not enjoyed good cashflow or real money in the bank, even after investing for 10-20 years. In fact only 3% of the population manages to obtain a $50k positive cash flow or more on their retirement, so 97% of the population (including most property investors) have failed to make it to a comfortable retirement. What is the truth that you haven’t been told about?
Imagine someone is pumping 10% more money into the system, and you only get a pay rise of 3% a year. Wouldn’t you be 7% worse off each year? How long will it take before you lose 50% of your living standard? Try putting that into the context of property where the growth minus negative cash flow will put you pretty much at the same level as people who didn’t invest in property! Have you wondered why most property investors are not much better off regardless of how long they have been investing?
There is a way to get out of the trap of the force of money supply increase working against you. You can’t beat the money supply increase by simply sitting on a few good investment properties and hoping for the best. You need a system that can systematically move your cash flow from negative to positive at the fastest possible speed. A system that is repeatable and only requires you to buy normal investment properties (such those yielding 3-5% rent and 7-9% growth).
We will demonstrate to you that such a system exists and how you can apply it to your own situation. It can help many property investors to achieve a passive net income of $100k or more within a 7-10 year time frame from their investment properties! This is an almost impossible goal for most investors without using such a system. If you wonder whether this is true, just take a look around and see how many property investors you know who have managed to achieve $100k passive net income from their investment properties within 10 years of investing.
This workshop will be run on 4th December, 2011, this Sunday afternoon at our Sydney office at Edgecliff. We have the capacity to seat around 25 people, so it’s first in, first served. Please reply to this email or contact us on 1300 663 836 directly, we will give you the rest of the details over the phone.

I forward to seeing you at the workshop.


Kind regards,

Bill Zheng
Managing Director
Investors Direct Financial Group Pty Ltd
Level 2, 391 St Kilda Road
Melbourne, VIC 3004
Phone: 03 9868 7500
Website: www.investorsdirect.com.au

You will need to either call them or email them to book. Hurry! Looking forward to meeting Bill Zheng!
 
I have heard Bill before, but not recently. I have read his articles for some years and been more impressed with his level of thinking recently that the early days. IMO he built his initial business on the low doc and got lots of investors to refi into such loans generating a lot of business in a short time. Went very quiet for a time when the capital cities tanked and now seems to have more to say again. I am interested in knowing what the "system" he is talking about so someone take notes and tell the rest of us about it afterwards!
 
You will need to either call them or email them to book. Hurry! Looking forward to meeting Bill Zheng!

In summary this is the "strategy": sell part or your properties and to buy some more properties (periodically repeat this process). And by the way, the properties to buy would be home and land packages which I was told Bill has interest in or is the developer of. No any land package property will be good for you but, the recommended by your friendly adviser :cool:
Forgot to mention that you will have the information (plan) to buy their properties after you pay only $2,000
 
In summary this is the "strategy": sell part or your properties and to buy some more properties (periodically repeat this process). And by the way, the properties to buy would be home and land packages which I was told Bill has interest in or is the developer of. No any land package property will be good for you but, the recommended by your friendly adviser :cool:
Forgot to mention that you will have the information (plan) to buy their properties after you pay only $2,000

i hope its a little better than this but maybe ur right 007 - have you had involvement with them lately?
 
Can't go...but attended the last one.

I will be in Perth trying to buy an undervalued H&L package.

No sure about selling and buying...you lose a lot in tax! :D

In summary this is the "strategy": sell part or your properties and to buy some more properties (periodically repeat this process). And by the way, the properties to buy would be home and land packages which I was told Bill has interest in or is the developer of. No any land package property will be good for you but, the recommended by your friendly adviser :cool:
Forgot to mention that you will have the information (plan) to buy their properties after you pay only $2,000
 
i hope its a little better than this but maybe ur right 007 - have you had involvement with them lately?

Sorry to disappoint but, it is exactly like that though, with some more intelligent words and rhetoric. I went to the first chat and Know someone that went further and paid the $2,000.

It is a new and revolutionary concept that you buy and hold people will have trouble to understand :eek: The system will reduce your LVR very quickly and will put you on CF+ in approx 10 years. All it takes is for you to believe in it and to let the wealth come to the developer (sorry the buy-&-sale investor) :cool:
 
You will need to either call them or email them to book. Hurry! Looking forward to meeting Bill Zheng!

"Have you wondered why most property investors are not much better off regardless of how long they have been investing?"

I found this part of the sales pitch very paradoxical :confused: According to above statement no one should be working that hard and for so little specially after claiming to be a high income earner and a property investor with more than 30 IP's and with more than 10 years in the market . I'm certainly missing something. But, why is that someone will be working so hard including working Saturdays and Sundays? Specially if you have over a decade of successful investment and business in or around property? Nonetheless, it appears he's flying and living between SYD-MEL for quite a while now? I believe he has a family in MEL... It looks he is gathering small group of "investors" in rented offices for his weekend presentations. I remember that before the GFC you would have to pay him $5,000 for an hour of his time but, now that is no longer the case. By this time, I'd expect someone in his self proclaimed position to be dealing only with the high end of the town as oppose to the wannabe investors. As I mentioned, I must be missing something in this picture :confused:
 
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