From: Mike .
Hi All,
Some records broken this week as there were 8 threads, 49 posts and the longest thread, started by Andrew G, had 24 posts. I try to give a snapshot of that remarkable discussion in the Quotable Quotes section.
Topics Included: 100% Loan, 1st IP, Stamp Duty, Positive Cashflow, Off The Plan, Quartile PN, Deposit Bonds.
Quotable Quotes:
From Jeff: "I am investing on behalf of my son who currently has a share and managed fund portfolio worth about $900,000. He is 19, lives at home paying some rent, and is currently studying. His investments return him an income of about $40,000pa. He has no commitments beside a $1000 Visa card. My view is that they (the bank) should be able to take some security against his equity portfolio, but they are not amenable to that."
Me: I'm dumbfounded. Can that be true? Banks won't take shares as security, not even a $900,000 portfolio as security for a $40,000 deposit. If that's true, why buy shares when trying to build a property portfolio? Sure, you can sell the shares to get a cash deposit but then CGT reduces your equity. That's not a recipe for wealth creation.
From Ian: "Now bankers are by their very nature conservative beasts. Most understandably regard shares as high risk and while many will take them as collateral, they will either require a much smaller LVR or charge you much higher interest."
From Andrew G: "Last week I found a block of 14 town houses, block of 6 flats and 3 houses all with a 12% rental yield. I know where my money is going.
From Les: "Andrew, I'd be really interested to hear more of those 12% yield properties. From what I've seen/heard in Sydney, the norm for Rental Yield seems to be around 5 - 5.5% (e.g. $240 per week on $220k property). For myself, Brisbane is the place - I am getting around 8.5 - 9% on my properties. But 12% is WILD!!! How can I get some???"
From Gee Cee: "Well, Les I am with you. I have been investing for years but never seen these type of returns."
From Andrew G: "Where are you prepared to look for a 12% yield? What size town or suburbs won't you invest in? I have found a property that was tenanted at 20% yield...would you invest in this property or would it depend?"
From David: "Hey man, Let us know where this 12% return is available, I have seeked, but not yet found such a return. I'd be the first to jump in if I could find it."
From Andrew G: "If you haven't found 10% then you are not searching hard enough. Have you considered buying in bulk to get a discount? Yes I am deliberately being cagey. But if I just give you the answer you will just decide yes/no and shut your mind. If you find it yourself then all the better."
From David: "Sure I need to find them myself, but at least point me in the right direction."
From Andrew G: "If you are after cashflow look in places where your family would never invest and your friends tell you are crazy or they are "really worried for you". If this happens then you are 90% of the way there."
From David: "Generally, the cheap and nasty places tend to be in areas away from everything, and thus tend to experience less growth than more central areas."
From DSS: "I know it's possible - I would just like to hear how YOU are doing it. Hope you don't mind giving away some of your secrets."
From Andrew G: "Start with no money and a HUGE desire to invest heavily. Be totally committed to NOT working for money but working for knowledge and assets. Decide to be rich and do something about it everyday. Think beyond what "everyone else" is doing but remember there is nothing new under the sun."
Me: Positive cashflow is very alluring isn't it? These guys sound like frustrated treasure-seekers ala Indianna Jones. Where's the treasure map? Or, better still, Humphrey Bogart in Treasure of the Sierra Madre.
Classic Post:
With so many posts to choose from it was hard to narrow it down to just one. So two gongs go to Kym and Andrew G.
Kym's reply is to this question by Wayne:
Hi all, I feel like I'm on a roller coaster and it's turning out to be rather unpleasant. My sister built an IP and then gave me Jan's white book for Christmas. I read this and tried to get my wife to do the same. She was finding it hard going so I bought the orange book (for me) and the video, (she went to sleep watching it). I then decided to take the bull by the horns and dragged her out to look at a median priced unit. Well I awoke a monster. While I was at work she went and looked at an upmarket unit fairly close to the beach. Then she dragged me back to look at it & also arranged for a mortgage broker to visit us in our home. Meanwhile I purchased the blue book and the PIA software. The next thing I know We are making an offer & receiving a counter offer. Finance hasn't been arranged. We accepted the counter offer and were advised by the agent that the contract was unconditional because the contracts would be signed within 3 days of an auction. We contact the mortgage man and he says to go ahead and sign unconditional. I check out several other sources for advise and am told that if my finance falls through I could lose EVERYTHING. I convince the mortgage man to get the loan approved before I sign & he now says he will have it ready to go (subject to my home's valuation). As for the finance, I was expecting him to give me some choice in lending institutions ( my sister is with a small regional bank IO fixed for 3 years). My current loan is with a large bank and I was surprised when he said he would set up a mortgage offset account with the same bank.
This all seems to be moving too fast for my liking, and I am wondering what other people think.
The details are as follows:
Price of IP 238000 3 B/R 2 story unit beach suburb Loan 252000 IO fixed for 12 months 5.9% housing loan 59000 PI variable (app.8 yrs left) house value 160000 - 180000 approx (I think) combined income before tax 75000 Our intention is to buy it in my wife's name. (highest wage earner) Does this all seem OK to you any ideas and suggestions will be greatly appreciated because we're only starting out on this roller coaster and want to do everything right now so we might be able to buy more tickets in the future
Finally allow me to thank both Jan & Ian for all they are doing for us with the books, video, PIA & now this forum. They're blood's worth bottling.
This is Andrew G's post that started that monster thread of 24 posts:
Anyone here read Robert Kyosaki's book "Rich Dad Poor Dad"? What did you think of it and how do you see what he is saying in relation to negative gearing? I think he would suggest a negative cash flow was a really bad idea.
Hi All,
Some records broken this week as there were 8 threads, 49 posts and the longest thread, started by Andrew G, had 24 posts. I try to give a snapshot of that remarkable discussion in the Quotable Quotes section.
Topics Included: 100% Loan, 1st IP, Stamp Duty, Positive Cashflow, Off The Plan, Quartile PN, Deposit Bonds.
Quotable Quotes:
From Jeff: "I am investing on behalf of my son who currently has a share and managed fund portfolio worth about $900,000. He is 19, lives at home paying some rent, and is currently studying. His investments return him an income of about $40,000pa. He has no commitments beside a $1000 Visa card. My view is that they (the bank) should be able to take some security against his equity portfolio, but they are not amenable to that."
Me: I'm dumbfounded. Can that be true? Banks won't take shares as security, not even a $900,000 portfolio as security for a $40,000 deposit. If that's true, why buy shares when trying to build a property portfolio? Sure, you can sell the shares to get a cash deposit but then CGT reduces your equity. That's not a recipe for wealth creation.
From Ian: "Now bankers are by their very nature conservative beasts. Most understandably regard shares as high risk and while many will take them as collateral, they will either require a much smaller LVR or charge you much higher interest."
From Andrew G: "Last week I found a block of 14 town houses, block of 6 flats and 3 houses all with a 12% rental yield. I know where my money is going.
From Les: "Andrew, I'd be really interested to hear more of those 12% yield properties. From what I've seen/heard in Sydney, the norm for Rental Yield seems to be around 5 - 5.5% (e.g. $240 per week on $220k property). For myself, Brisbane is the place - I am getting around 8.5 - 9% on my properties. But 12% is WILD!!! How can I get some???"
From Gee Cee: "Well, Les I am with you. I have been investing for years but never seen these type of returns."
From Andrew G: "Where are you prepared to look for a 12% yield? What size town or suburbs won't you invest in? I have found a property that was tenanted at 20% yield...would you invest in this property or would it depend?"
From David: "Hey man, Let us know where this 12% return is available, I have seeked, but not yet found such a return. I'd be the first to jump in if I could find it."
From Andrew G: "If you haven't found 10% then you are not searching hard enough. Have you considered buying in bulk to get a discount? Yes I am deliberately being cagey. But if I just give you the answer you will just decide yes/no and shut your mind. If you find it yourself then all the better."
From David: "Sure I need to find them myself, but at least point me in the right direction."
From Andrew G: "If you are after cashflow look in places where your family would never invest and your friends tell you are crazy or they are "really worried for you". If this happens then you are 90% of the way there."
From David: "Generally, the cheap and nasty places tend to be in areas away from everything, and thus tend to experience less growth than more central areas."
From DSS: "I know it's possible - I would just like to hear how YOU are doing it. Hope you don't mind giving away some of your secrets."
From Andrew G: "Start with no money and a HUGE desire to invest heavily. Be totally committed to NOT working for money but working for knowledge and assets. Decide to be rich and do something about it everyday. Think beyond what "everyone else" is doing but remember there is nothing new under the sun."
Me: Positive cashflow is very alluring isn't it? These guys sound like frustrated treasure-seekers ala Indianna Jones. Where's the treasure map? Or, better still, Humphrey Bogart in Treasure of the Sierra Madre.
Classic Post:
With so many posts to choose from it was hard to narrow it down to just one. So two gongs go to Kym and Andrew G.
Kym's reply is to this question by Wayne:
Hi all, I feel like I'm on a roller coaster and it's turning out to be rather unpleasant. My sister built an IP and then gave me Jan's white book for Christmas. I read this and tried to get my wife to do the same. She was finding it hard going so I bought the orange book (for me) and the video, (she went to sleep watching it). I then decided to take the bull by the horns and dragged her out to look at a median priced unit. Well I awoke a monster. While I was at work she went and looked at an upmarket unit fairly close to the beach. Then she dragged me back to look at it & also arranged for a mortgage broker to visit us in our home. Meanwhile I purchased the blue book and the PIA software. The next thing I know We are making an offer & receiving a counter offer. Finance hasn't been arranged. We accepted the counter offer and were advised by the agent that the contract was unconditional because the contracts would be signed within 3 days of an auction. We contact the mortgage man and he says to go ahead and sign unconditional. I check out several other sources for advise and am told that if my finance falls through I could lose EVERYTHING. I convince the mortgage man to get the loan approved before I sign & he now says he will have it ready to go (subject to my home's valuation). As for the finance, I was expecting him to give me some choice in lending institutions ( my sister is with a small regional bank IO fixed for 3 years). My current loan is with a large bank and I was surprised when he said he would set up a mortgage offset account with the same bank.
This all seems to be moving too fast for my liking, and I am wondering what other people think.
The details are as follows:
Price of IP 238000 3 B/R 2 story unit beach suburb Loan 252000 IO fixed for 12 months 5.9% housing loan 59000 PI variable (app.8 yrs left) house value 160000 - 180000 approx (I think) combined income before tax 75000 Our intention is to buy it in my wife's name. (highest wage earner) Does this all seem OK to you any ideas and suggestions will be greatly appreciated because we're only starting out on this roller coaster and want to do everything right now so we might be able to buy more tickets in the future
Finally allow me to thank both Jan & Ian for all they are doing for us with the books, video, PIA & now this forum. They're blood's worth bottling.
This is Andrew G's post that started that monster thread of 24 posts:
Anyone here read Robert Kyosaki's book "Rich Dad Poor Dad"? What did you think of it and how do you see what he is saying in relation to negative gearing? I think he would suggest a negative cash flow was a really bad idea.
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