I'm feeling a little insomnia tonight so , if you can be bothered, here's my humble and honest(yet long winded..hehe)opinion...for what it's worth. I don't claim to be an expert..hell, I only just started 3 years ago and am learning every day. But, I was in your shoes when I was 23 and know where you're coming from. Anyone else in the forum reading this....now is the time to stop reading if you can't be bothered reading for more than two minutes! *grins*
ok Steve, if you haven't picked up any meaningful and useful info by this stage of the seminar, you probably won't see any eighth wonder of the world on the final day. Get out, get your money back and put into practice what you know so far. I'm sure if you do just a little bit of research and have a strategy in place, you'll make better use of the $10,000 you'll spend on an extended course.
1. Look for suburbs that have/are experiencing substantial capital growth.
I don't mind being ridiculed and be a pioneer so I don't mind selecting suburbs that are yet to boom, but are next door to suburbs that are currently booming - such as Footscray (the forum may disagree with me here), and as I did three years ago with Ascot Vale.
2. Do your market research and buy well.
Henry Kaye will tell you to buy at between 10-20% below market price and give you his opinion on how to do that. The truth is, he fails at this himself. I have spoken to several large developers over recent weeks who told me their account of InvestmentSource Corporation, or New Life, or whatever they want to call themselves, approaching them with the offer of purchasing the whole development at 20% below asking price. You know what the developers told them? Pardon my French, but it was "piss off..we'll sell these anyway". Just make sure you're aware of similar properties values in the area and look for motivated sellers (no auctions, by the way). What I do as as general rule of thumb is make an offer 10-15% below asking price...and only if I'm convinced the property is:
* in a good suburb
* attractive to both potential tenant and landlord
* not one of too many similar properties in the general area (supply/demand)
Off the plan purchases need to be chosen carefully. H. Kaye will talk about using deposit bonds and none of your own money to secure a property. Deposit bonds are great, and they definately have their place in PI, but they aren't always the best option. For example, I recently signed a contract for a $330,000 apartment (off the plan) that is due to commence construction in two months and will be complete in about 18 months. If this property settled in 6 months, the bond would cost around $330. If 12 months, the cost would be $990. The cost of d/bonds really sky rockets for construction/settlement periods beyond 12 months. An 18 month D/B for a $330,000 property could cost you $2200 +, depending which insurance company sold it to you. So, given this, it'd probably make more sense to use the equity in your home as a deposit, finance the IP to 100%, and then replace the money you used from your equity back at settlement time. The extra interest payments you would have to make on your own mortgage, by using your own equity, would probably be less than the cost of paying a premium price for an extended deposit bond.
3. Have the property re-valued at settlement, refinanace, and release the equity to buy another one. If you've chosen the area well, and have bought well,you should generally be able to buy another one within a year of purchasing the original.
4. Utilise the services of a good Quantity Surveyor - these guys are paid to ensure you get the absolute best tax deductions on your IP. Apply to the ATO for a section 221d, and have less tax taken from your pay each week, rather than wait till the end of the financial year to claim what's owing to you. Even though my rental income on three properties is $16,000 short of my interest payments, I'm actually getting $2100 more take home (net) pay each month. Thats like an additional salary coming in each month..
5. Never sell...(hmm, I feel like I just heard a few "derrr!!.."s in the forum. lol
* your property will be worth atleast twice what you paid in 7-10 years time. If you do one a year, you'd be able to comfortably retire in 7 years - for good....I've spoken to people who have and explained how...I'm not quite there yet...but speak to me in 2004.
6. Speak to as many people as you possibly can! Many people in this forum (not me, yet)own multi million dollar IP portfolios and are passing on their advice free of charge - unlike Mr HHHHH Kaaayyyyeee...lol
..use this resource.
7. Do something now...beats sitting on the sidelines and procrastinating.
Sorry this took so long Steve (and the rest of you poor people who sat through it). Hopefully this post appears as an anonymous one...I know far too many people at NewLife or InvestmentSource and I don't really want to ruffle their feathers.
Read a lot(and I mean a lot) of investment realestate books. Have you read any to date?
These will teach you the basics of realestate investing.(There is a lot to learn!), but its all there in the books.
-Post any questions you might have on the Forum and your questions will be answered.
-The 2 most important elements for me are -The location of the property. Excellent Capital Growth are paramount in you obtaining more properties quickly.
-You need to know how to structure your finances, how to be able to access your equity etc. The banks do make it really hard for you but if you are firm and know what you are doing it is easy.
A seminar I went to (I go to lots of seminars but they have all been under $100, the most I have paid for one is $1000K)said to interview at least one bank every week so you get to know how they operate and also so you get comfortable in talking to them. Ask as many questions as you like! It is amazing how much info you pick Up.
Imagine how many properties you would be able to service with a big TEN THOUSAND DOLLARS.
I went to the introductory HK seminar, and then I went to the free interview thing where they try and sign you up on the night for the course! I went on my own without my partner, so I didn't want to sign anything without discussing it with him. I was told that I could go home and come back the next day to sign up at the special price. After thinking about things, I decided I could put the money to better use elsewhere. I found that I had a basic understanding of what they were going to teach us anyway, after reading, reading and more reading! I called up the next day, a couple of hours before my appointment to explain that I didn't want to take up the offer...WELL...the lady got really, really angry with me and was extremely rude and virtually hung up on me! Did I make the right decision?...I think so!
Thanks to all who have replied. I really appreciate your comments.
Interesting to note that all the replies are against paying up. I did receive one e-mail in favour, although this was from someone who has not yet completed the course.
From the stats, apparently 150 people have read the topic, and so far I have not heard from anyone who has pulled out part way through a HK seminar and requested their money back. Won't try to analyse statistics just yet.
Thanks for taking the time.
On your comment of never sell, (have seen/heard the same message many times) how do you recognise if you have a dud property?
I have a couple, and given that they may not have been bought with appropriate due diligence, is it really a case of NEVER sell? eg I have a property in Caloundra (Sunshine Coast - Qld) that after 4 years is still being valued at same money it was purchased for. Should I hang on, or cut my losses and try again?
Hi mate. You bought the property 4 years ago and, by your own admission, it's worth the same now as it was then. This can happen when you buy at the peak of the RE cycle...now is the more ideal time to be buying. When there's talk of a recession, even though interest rates are low, people are reluctant to get into debt. The causes property values to remain stagnant, even fall, for maybe a 6 or 12 month period. Buy well now, and the capital gains in three to four years should be fantastic.
Regarding your property, you'll actually continue to lose if you decide to sell and cut your losses. Fair enough, you may not have bought as well as you should have, but your property WILL increase in value over time. Depending on the type and location of your property on the Sunshine Coast, I'd be confident you'll be seeing a much different market value in about three years time.
p.s. What I would do, to create some equity, is spend maybe $3000 - $5000 on 'cosmetic' renovations. When the market doesn't create the equity, you'll need to sometimes take steps to do it yourself....only if you want to fast track your progress and borrow against it sooner to buy more properties.
Well Steve the only way you will find out if it is worth the money is to sign up. i have completed the course and found it very informative , but it's just like anything he tells you how to do it , but you have to be willing to have a go . Just like all those books people read to lose weight they only work if you do as it says, not do what you think! ( yes i know people who got their money back no questions asked ) what have you got to lose? if you are an investor already it's a tax deduction anyway. ps if your not convinced that property is the way to go yet i suggest the free seminars first .