Reply: 1
From: Anonymous
Steve,
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.
Happy Investing buddy.
Cheers,
DMT