Ha ha
Not telling has just piqued everyone’s interest James
I wasn't sure that I wanted to post this thread, but I've received enough PM's lately to bow to peer pressure.
Well, kinda.
I'm not going to outline exactly what I have or haven't done. But, will mention some of the things that I have done differently, or seen others do differently, to get some good results. This is by no means a comprehensive post but hopefully enough to generate discussion.
For those that didn't see the other thread (of which I apologise for taking slightly off-topic), this discussion is on the back of my comment that "two years is too long" to get my money plus profit back out of a deal. So, that means we're looking for >100% CCR (cash-on-cash return) with two years *max*.
We'll look more at property than shares or business for the moment. 'Tis a property forum, after all, but I have as much interest in those two asset classes as I do in property these days.
First thing is buying below valuation. This doesn't necessarily mean buying below 'market value', or below vendor's asking price. For the pedants amongst us, I acknowledge that purchase price *must* equal market value. What I mean is as stated, buying below valuation. I have seen people take this further and use a LOC to fund the entire purchase price, then refinance a few weeks later at the higher valuation to free up the difference.
At the very least, you have a cushion for if the market does fall a little.
On that note, waiting for the market to rise naturally, especially at the moment, doesn't make any sense to me. Simply holding property for the long-term is not necessarily a winning lotto ticket. Creating value, either by renovation, strata process or subdivision, can force the value higher even in a flat market. In a rising market, you get the best of both worlds.
I also have no aversion to selling property. It creates cashflow which can be reinvested without affecting serviceability like refinancing can. Refusing to do so just because it temporarily reduces the asset pool is forest for trees, IMO.
A number of people I deal with buy three or four properties a year. They only plan to keep one long term; the others are deliberately designed for resale at a profit, which keeps one - or both - partners at home and not having to work in order to fund their investments.
The way I see it, long term investments are simply ones that I plan to hold for longer periods of time than others - the same rules still apply. So, if I'm not getting my money back out of the deal with a decent profit within two years, then I'm not interested. The ones that I have held long term have been refinanced to get the deposit, plus profit, back out of the deal. They're also positively geared.
One commercial deal has seen the yield high enough to achieve that goal in rental receipts alone. Nice.
Using vendor finance can be another strategy. Either by asking the vendor to fund the deposit, or, flipping a property before settlement under a wrap-style arrangement.
Joint ventures to allow more people into the deal that each could not do alone can be worth looking at under the right circumstances. I think Dazz posted one such deal here recently where he's going to nett some pretty healthy profit despite not owning the whole thing.
Renting properties by the room instead of to one family can also achieve high yields. I know another investor who doesn't even buy those properties - she just leases from the agent then sublets by the room. She's got quite a few of these now and does that for a living.
Yes, any number of things can go wrong with any of these ideas. I can appreciate that. It's a risk / reward thing. Protect the downside, be aware of the potential upside and there is some good potential to make some good money out of real estate in a short amount of time. IMO, the only difference between gambling and investing is how much you know. I don't pretend to know it all - that's why I'm still here, to keep learning - but I know enough to say otherwise when someone tells me that gambling is the only way to make quick money.
I hope that helps to explain my stance a little. Basically all it comes down to is a little imagination and a little creativity. And, an open mind.
