The bubble gets bigger

[Robert]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.2
From: Robert Forward


Hehe

Mike, I remember the days from your posts in the Andrew Gray forum. You jumped up and down yelling your right and everyone is wrong with trying to brow beat everyone. Sorry, but everyone has their own strategy and your strategy won't suit everyone, especially me.

Sorry mate, but I invest in other ways that give me better returns. So, you think that a 6.6% return is what I'm going to get out of my latest deal. How do you know what I plan on doing this deal? Do you know my exit strategy? Damn I hope not, cause no-one other then my partner knows.

Let me see what some strategies may be.

I can sell it straight out for a $40k profit (before tax) right now. That would be about a 200% return from my outlaid cash within max 3 months. Should I be happy about this deal then??

I can wrap it at $250k and receive a cashflow of $560pw P&I with expenses of $236pw in an I/O mortgage, so what is my return there??

14.93% with no council rates or ongoing expenses. I can then be cashed out within say two years and walk away with $50k cash or so. Should I be happy about this deal then??

What I am saying is there are many ways to skin a cat. I just look at all of them for each property I buy, then work out my strategy from there as to what I'm going to do with the property.

Now we get back to the topic "Can we get positive gearing in capital cities" I will answer again, Yes you can.

Looking forward to your reply.

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au

 

[WebBoard]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.1.1
From: Mike TheBloodyIdiot


Tibor,

Perhaps I know why our perception of IT people is a bit different. I did not include in my survey "gold fish in aquariums" - i.e. middle and top management for obvious reason of poor approacheability.

I have noticed why all "mortals" were obviously competing in fields of choosing best restaurants for a lunch, going on the coolest holidays and "who is driving the best convertible" guys in aquariums were eating sandwiches brought from home and were driving company Commodores.

Ok, after all I did noty spend much time in finance industry, lets leave it aside.

I do not know, but you seem to agree that IT people do not do that much influence on property market directly.

I agree with you that IT crisis will spell troubles for the consumer market (no restaurants, no convertibles, no home theatres, no new shoes every day, no $2K suits, no nothing. Just bread, beans and mortgage.)

Is not that what property investor wants? Consumer market dies, economy in troubles, RBA lowers rates, property booms.

On positive cashflow: I confess, couple of years ago I committed a sin - I bought a house returning 12% in rent. 20 years before this the suburb was showing 3% average cap growth. After I bought it, first year it has grown 39%, last 12 months - 42%. It doubled in price in less than 2 years. Guess what? You can't buy cashflow positive property in that suburb anymore.

I was recommending that suburb last year on CREI forum, but I do not recommend it now. Most likely it will go back to 3% growth after all.

Trick in property selection is that capital growth must be consistent over the years, including bad years. I really hope you will be able to do well in Brisbane. Baby boomers are moving North and to the Coast, so there is a chance that QLD will start growing steady.

But if I were you, I would take closer look at Central Coast. The place is under double pressure: on the one side there are baby boomers and pensioners who want coastal lifestyle without moving too far away from the place they got used to, from another side commuters who can only afford to buy there. F3 widening, fast ferries still not off the agenda, superfast train scheduled for 2015 - infrastructure is improving.


Hope this helps.

 

[NigelW]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.1.1.1
From: Nigel W


Mike

It is good to be passionate about things. you obviously strongly believe you've got a great investment strategy. good for you. You also seem to vehemently disagree with some other forum members about the best approach to property investing. That's good too. We all benefit by the robust and vigorous debate and airing of different ideas.

BUT I'd urge you to play the ball and not the man!

Descending to personal attacks on other posters is really unwarranted and detracts from your message (altho I have to admit I'm still trying to figure out what it is you're trying to say).

Let's keep the debate lively but respect each other's views.

N.

 

[watto]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.2.1
From: .watto .


Gday Robert,

You said....

"I can wrap it at $250k and receive a cashflow of $560pw P&I with expenses of $236pw in an I/O mortgage, so what is my return there??

14.93% with no council rates or ongoing expenses. I can then be cashed out within say two years and walk away with $50k cash or so. Should I be happy about this deal then??"

The bit about I/O mortgage, it is my understanding of wraps that the wrappers loan also needs to be P&I to safe guard the wrappee.

Is my understanding incorrect or have i read your post wrong??


Cheers
watto
Melb Freestyler

 

[Tibor]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.1.1.1.1
From: Tibor Bode


Mike,

Currently I am concentrating on specific areas in QLD, but cap growth (meaning land tax issues) sooner or later will force me to look at other avenues as well. At this stage I did not look at or discarded any other area in OZ in any other states. I know the central cost already had a good run, but within 100K (take or leave another 50 or so)in any city could also be very good area for future retirees as it takes them into a village like area but still not too far from the city. So I have a very open mind about it, but at this stage I concentrate only on SE QLD. But thanks for the advice, I will come back to ask more from people as I am getting closer to the time to discover other areas to invest. Sydney, Melbourne and even some other areas are an absolute must to look at for any serious investor, but the prices and competition makes it a bit hard. It requires lots of effort which one day I know I have to do. Today is just not the day.

Tibor

 

[WebBoard]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.2.1.1
From: Darren B


Watto, if you are wrapping with the view to get the wrappee cashed out in a reasonably short term (1-3 years), their is no point paying of the principal, thus an interest only, variable loan. The wrappee pays me principal and interest, but this pays peanuts of the principal in the first few years. All this means is you getter greater cashflow each month. On a 100k loan, it is about $100 per month extra cash. I hope this helps.

 

[Robert]

There is no bubble in sight yet

Reply: 1.2.1.2.1.1.1.2.2.1.1.1
From: Robert Forward


Hi Watto

As what Darren said, he got it in one.

There are two ways to wrap, one is the long term wrappee where you hold the property for a 25 year mortgage (which I personally don't like) and you pay P&I on your mortgage to the bank. Then there is the Rick Otton approach with having the wrappees' finance you out within 1-3 years.

Doing the Rick Otton strategy leads to regular large 5 figure checks (if you have enough properties wrapped) monthly. This way you can continue investing and have an income to live on too.

I will at this stage be very open and admit I am promoting and organising Rick Ottons Wrap Around Australia Seminar and Boot Camp for the Freestyler Events company. I have read the Wrap Pack and am rather enthused about it's concepts and workability.

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au

 

[duncan_m]

Wraps

Reply: 1.2.1.2.1.1.1.2.2.1.1.1.1
From: Duncan M



Rob,

Just wondering why you'd buy a fairly premium house.. surely higher value
properties are harder to wrap.. Whats your experience in the wraps you've
done so far? What sort of houses are you targetting for your wraps?

Regards,

Duncan.

 

[Robert]

Wraps

Reply: 1.2.1.2.1.1.1.2.2.1.1.1.1.1
From: Robert Forward


Hi Dunc

I will be using Rick Ottons strategy on wrapping.

If potential wrappees have a decent enough deposit, but not enough for a bank to provide finance to, and they earn a decent wage then it makes sense to open up the market to them.

I won't go for the bottom of the barrel properties for wraps, but neither would I go for anything in the top either. Reasons being for the bottom end stuff is to many problems with potential wrappees, for the top end is there will be to much of my cash in the deal.

Cheers,
Robert

Get your Property Inspection Reports @
http://www.CreativeFinance.com.au