where do i get IP bargains?

From: Whittaker Hamilton


What is the best way to go about getting a IP at a bargain price (Below it's actual value). I know they come up every now and again but the problem being they are usually gone by the time a agent advertises them.

How do you manage to pick them up?
 
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Reply: 1
From: Crispin Dobson


Try the answer proposed by Dolf De Roos, along the lines of the 100:10:3:1 rule.

Inspect 100 likely properties in your price range: make bargain offers on 10: have 3 offers accepted: purchase the best one. Then repeat.

In other words, there is no bargain basement shop. To find your bargain you have to do the hard yards.

Crispin
 
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Reply: 1.1
From: Simon and Julie M


Some things to be considered when selecting an IP are:
Position, Price, Timing, Finance, Local knowledge, good choice on managing agent, Building sound and free from pests and as much land value to purchase price as you can negotiate.
Looking at the above I would imagine that the ability to procure a bargain comes back to your own due diligence.
Kind regards
Simon (apprentice Guru)
 
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Reply: 1.1.1
From: Empy 555


you need to be able to negotiate direct with a vendor or developer

you need to know their motivation and reasons to sell

you need to know the true valuation of the property so you can purchase below valuation.


previously I posted some information about using professional negotiation services to assist you, whereby they get paid a fee based on their ability to negotiate a price well below valuation.

some other forum regulars rightly pointed out that this eliminates the individuals ability to "learn"

call me stupid and save me $30 000 below valuation I dont care LOL

good luck with your IP hunt
 
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Reply: 1.1.1.1
From: Mark Laszczuk


Empy,
I tried to look up negotiators in Melb. in the Yellow Pages, but no luck. Any tips on how to search for them?

Mark
'no hat, some cattle'
 
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Reply: 1.1.1.1.1
From: Always Learning


Try www.yellowpages.com.au, look for business with heading:
<p>
Real Estate Sales Advisory Services
<p>
When you find some IP bargains in Melbourne don't hesitate to contact me ;-)
<p>
Here is the top of the list of yellowpages results.
<p>
<code>
<pre>
Melbourne Buyer Advisers Pty Ltd
1250 Malvern Rd Malvern
VIC 3144 Real Estate Sales Advisory Services Ph: (03) 9822 8877


Real Estate Buying Services
310- 314 Whitehorse Rd Balwyn
VIC 3103 Real Estate Sales Advisory Services Ph: (03) 9888 6799


David McRae & Co
122 Balmain St Richmond
VIC 3121 Real Estate Sales Advisory Services Ph: (03) 9428 2451


inProfusion Buyers' Services
2/ 22 Grosvenor St Abbotsford
VIC 3067 Real Estate Sales Advisory Services Ph: (03) 8420 0400


Frank Valentic Property Consulting
497 Flinders La Melbourne
VIC 3000 Real Estate Sales Advisory Services Ph: (03) 9614 0229


Second Opinion Property Advisory Service
1/ 35 Through Rd Ringwood
VIC 3134 Real Estate Sales Advisory Services Ph: (03) 9879 0117
</pre>
</code>


<table border="0" cellpadding="0" cellspacing="0" >
<tr>
<td rowspan="4">

</td>
<td colspan="2" align="center">
<p align="left"> Investment Laws</td>
</tr>
<tr>
<td align="right" >1st Law:</td>
<td>"What ever you don't invest you forfeit."</td>
</tr>
<tr>
<td align="right">2nd Law:</td>
<td>"What ever you reap is what you've sown"</td>
</tr>
<tr>
<td> </td>
<td><p align="right">Jim Rohn;</td>
</tr>
</table>
 
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Reply: 1.1.1.1.1.1
From: Steve Navra


What is a bargain price??

Is this price a bargain, simply because it is less than comparatives at a particular point in the cycle?

The problem one faces is that if market sentiment is HIGH (As it definitely is now) then even a 'bargain' price could be TOO expensive in reality.

Valuation based on RENTAL REALITY, will answer the question:

Formula: Annual Rental Income / Yield % (in the particular suburb)

Buying at this price or less, constitutes what you might refer to as a 'real' bargain.

Regards,

Steve
 
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Reply: 1.1.1.1.1.1.1
From: Empy 555


what if a suburb has demonstrated consistent growth at 12-14% or higher for 2 years or more


what's the formula for that one ???
 
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Reply: 1.1.1.1.1.1.1.1
From: Paul Zagoridis


I get really nervous when an agent tells me it's gone up 12-14 for the last few years.

12-14% for more than 2 years is nice. However it is above the long term growth rate for property generally and that suburb in particular.

Therefore what explanation can you live with for the phenomena? Either it is playing catchup or is racing ahead of the pack.

Unless some additional reasons are added to the mix, the 12-14% must crash to a halt as it either catches up or gets overpriced. Once that happens capital gains are slow for a while until the next cycle.

Often the "12-14% over the last x years" is an argument to overpay.

Having said all that, millions have been made chasing runaway markets. e.g. momentum trading the stock market.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.1.1.1.1.1.1.1.1
From: Steve Navra


Hi Empy,

12% - 14% increase, is that a capital growth or a yield increase?

IF CAPITAL GROWTH:
This indicates that the price of the market has increased at a very rapid rate. (High Market Sentiment) The problem is that tenants can't afford to pay more rent to match such a quick increase. You would find that the rental reality then, is indicating that the price is too high.

IF YIELD:
It is rare for the yield to jump so much, as tenant affordability could never realistically cope. However if this was to occur, then it would indicate a great buying opportunity (Low Market Sentiment) because the huge demand that forced the yield up should surely translate into capital growth.

Regards,

Steve
 
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Reply: 1.1.1.1.1.1.1.1.1.1
From: Mark Laszczuk


Steve,
When you say rent for year/yield%, is that the yield for the property itself or for the suburb? How would you get the yield for the suburb if that was the case?

Mark
'no hat, some cattle'

P.S. Looking forward to meeting you in a few weeks in Melbourne!
 
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Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Always Learning


Steve,

<p>

Q1. When you "do the numbers" i.e. do you compare average rental yields in that suburb with like properties? Houses with houses, a certain land component with land component? In the extreme example a studio in Kirrabilli will have a different yield curve to a large house in Kirrabilli.

<p>

Q2. I have 2 IP's now, both have good yields compared to original purchase price, but terrible (3.5%) yields compared to current value. What would you do then? Any tricks to use to increase yields? (renovating over the tenants heads is a little difficult, selling is not part of the plan).

<p>

<table border="0" cellpadding="0" cellspacing="0" >

<tr>

<td rowspan="4">



</td>

<td colspan="2" align="center">

<p align="left"> Investment Laws</td>

</tr>

<tr>

<td align="right" >1st Law:</td>

<td>"What ever you don't invest you forfeit."</td>

</tr>

<tr>

<td align="right">2nd Law:</td>

<td>"What ever you reap is what you've sown"</td>

</tr>

<tr>

<td> </td>

<td><p align="right">Jim Rohn;</td>

</tr>

</table>
 
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Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Carlo Chiodo


If anyone wants my top 10 hints for finding a bargain property, which I posted on this forum ages ago and which was well received, email me at

cdchi1@ihug.com.au

Cheers

Carlo
 
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Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1
From: Steve Navra


Hi Mark and Always Learning,

Once again, this is a big topic with reams of info and examples to explain the methodology, so:

Perhaps I will do an article on the subject, similar to the Cashbond article from a few months back.

So stay tuned, and I will try to get a posting up within the next few weeks.

Alternatively, whoever wishes can e-mail me and I will send out a 'Jazzed up' (Pics and diagrams) version.
(Also in a few weeks!)

Regards,

Steve
 
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