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Hi Guys
I get a monthly newsletter from Michael Yardney in Australia. One of the topics from the newsletter is listed below. I feel that it has a lot of good information for prospective property investors.
The whole newsletter can be viewed at:
http://www.metropole.com.au%2Fnewsle...ter_online.htm
Regards
I get a monthly newsletter from Michael Yardney in Australia. One of the topics from the newsletter is listed below. I feel that it has a lot of good information for prospective property investors.
SECRETS OF PROPERTY INVESTMENT
The following is an extract from an e-book written by Geoff Doidge of the Reno Kings. At the end of the article I will explain how to download the whole e-book with our compliments.
Secret #1 Buy property 20% to 25% below market
Sounds good doesn't it? Especially as it would cost you about 8% to buy and sell a property, giving you 12% to 17% profit on each deal. That's $24,000 to $34,000 on a $200,000 property! Because you have bought below the market your gross rental yield increases…So if you hold your property long term, you'll increase your yield by about 1% to 1½% per annum. That can turn a negative geared property into one that puts $$ into your pocket.
Here is your guide to buying well.
Know your market!
The asking price is not necessarily the market price. It is almost certainly optimistic. Find out what has sold in the street and area. Be careful to compare like with like. Spend a minimum of 3 months, just comparing prices so that when a deal comes up you can act immediately – because a good deal won't last long.
We use databases that give you all the previous sales. All agents have them. All you have to do is ask! There are a number of online databases you can use too. Check these at our website http://www.renos.com.au/
Be Patient
Be prepared to wait for your offer to be accepted. In one of my deals the seller rejected my initial offer. Two months later the vendor accepted my initial offer without any negotiation. He had decided to travel around Australia and just wanted to get going. In retrospect I could have bought that house even cheaper! That house returned 8.5% in year 1.
Offer Cash
Cash Offers are very powerful. You don't have to have cash to make a cash offer. You could use a L.O.C. (line of credit) loan e.g. St George’s Portfolio, C.B.A.’s Viridian or equivalent. You could also request some banks or Finance Brokers to assess your borrowing potential before making offers. Ask for the assessment in writing.
Have an ‘escape’ clause in your contract
Always but always have a condition in the contract to let you pull out if you need to. This may be "subject to a structural inspection satisfactory to the purchaser…” or "subject to inspection by…” (ask your solicitor for an appropriate clause. Refer to Robert Balanda’s “Clauses Made Simple” for other clauses.
Buy in a Good Area
If you buy in an area that is in demand you'll find it easier to sell. Mind you, deals may be harder to come by. You will need to act quickly. You must know your value and be prepared when the deal appears.
Check out the Location. The attributes of a good rental property are:
* handy to transport, preferably bus/train; shops; schools etc;
* respected area / desirable suburb;
* near café society
* close enough for you to drive by regularly;
Watch out for property that is:
* too close to the train line;
* on a busy / main road;
* adjacent to schools; factories; sports centers; major shopping centers; public toilets; large blocks of units; hospitals; hostels; and hotel car parks.
These properties can give you great initial returns but often you find the tenants will ‘move on’ because of the noise or pollution or disruption. They will then be often harder to rent than a ‘well located’ property. The key with these properties is to negotiate hard and don’t pay too much.
Short Settlement Period
If your vendor really needs the money, the shorter the settlement period, the more attractive the offer. Give yourself time to do the necessary searches. Check with your solicitor how quickly you can get the clearance. I've offered 14 days but have found 21 days more practical. Make sure you have your finance set up if offering short settlement periods and cash offers. Banks might not be able to meet your contract time which could put your deposit ‘at risk’.
Establish a Relationship with a Number of Agents
If you are making offers through agents, establish a relationship with a number of agents. Call or fax them regularly. Let them know you are looking. When a deal comes up, look at it straight away. Give the agent feedback on what you are after.
What did the Seller pay? Find out how much the vendor paid. If the vendor has paid more than your offer, he is less likely to accept it. You can mostly find out this from a search on the State’s database.
If he still makes a substantial profit on his original buying price, he may be more likely to accept your offer. Especially if he can cover his costs and make a small profit. In the end, it will come down to whether he needs the money and how urgently.
What is the Motivation of the Seller? Keep asking questions. Find out why the property is being sold. Is the money needed in a hurry? Has the seller bought elsewhere?
Meet the seller’s needs (e.g. a quick settlement) and you will buy well.
If the price is very important to the seller you may be able to buy on terms favourable to yourself while still paying full price, e.g. Vendor finance at a low rate of interest on low deposit. I bought a block of flats this way from a real estate agent who owned them. He refused to negotiate on price but gave me a great deal by giving me vendor finance at a low interest rate. The cost saving was about the same as the price reduction I had been trying to negotiate. A ‘win win’ solution.
Make Offers
If you never make an offer, you will never know if the seller would have accepted.
Every time I've made a number of low offers, one of my offers is accepted or counter-offered within weeks. Don't be embarrassed. You can't force anyone to accept an offer if they don't want to.
Why not make offers 30% below market and see what happens. What do you have to lose? (First be sure of your market price. Some of these are highly inflated).
Make lots of offers. The likelihood is you will pick up one at least. If you buy only two of these in a whole year you will do well. You will also know the market very, very well.
Key Points to Buying Below the Market:
* Know your market
* Be patient
* Offer cash
* Use ‘escape’ clause
* Buy in a good area
* Check out the location
* Offer short settlement period
* Establish relationship with real estate agents
* Find out what the seller paid
* Meet the seller's needs
* Make lots of offers.
Isn’t that great information?
I really thank Geoff Doidge for offering this to my readers and he is offering you the balance of his e -book. If you would like to read the other 4 property tips the Reno Kings are offering the entire document for free. To request a copy simply email a blank email to [email protected] and they will send an electronic version to you.
Imagine how much you would learn if you spent a whole weekend with the Reno Kings and Australia’s top property experts. To find out more information about the Reno Kings and their ultimate “Property to the Max” seminar click here .
For readers of our newsletter they will throw in CD’ recordings of the whole event valued at $995, so please mention my name when booking. (By the way I get NO benefit from referring you.)
-----------------------------------------------------------------
YOUR REFERRAL WILL BE APPRECIATED
I'd like to ask a favor of you.
I ask it each month and most readers skip over this section but please help me this month.
As a reader of my E-newsletter, your subscription to Property Investment Update is absolutely free. If you like the value you receive in reading this publication, I'd really like you to recommend it to someone you know. This will help grow our subscriber base and in the long term help our business grow. A healthy business allows me the time to devote each month to producing this publication and will allow you to keep up to date with the latest in the property market. WE ALL WIN
The following is an extract from an e-book written by Geoff Doidge of the Reno Kings. At the end of the article I will explain how to download the whole e-book with our compliments.
Secret #1 Buy property 20% to 25% below market
Sounds good doesn't it? Especially as it would cost you about 8% to buy and sell a property, giving you 12% to 17% profit on each deal. That's $24,000 to $34,000 on a $200,000 property! Because you have bought below the market your gross rental yield increases…So if you hold your property long term, you'll increase your yield by about 1% to 1½% per annum. That can turn a negative geared property into one that puts $$ into your pocket.
Here is your guide to buying well.
Know your market!
The asking price is not necessarily the market price. It is almost certainly optimistic. Find out what has sold in the street and area. Be careful to compare like with like. Spend a minimum of 3 months, just comparing prices so that when a deal comes up you can act immediately – because a good deal won't last long.
We use databases that give you all the previous sales. All agents have them. All you have to do is ask! There are a number of online databases you can use too. Check these at our website http://www.renos.com.au/
Be Patient
Be prepared to wait for your offer to be accepted. In one of my deals the seller rejected my initial offer. Two months later the vendor accepted my initial offer without any negotiation. He had decided to travel around Australia and just wanted to get going. In retrospect I could have bought that house even cheaper! That house returned 8.5% in year 1.
Offer Cash
Cash Offers are very powerful. You don't have to have cash to make a cash offer. You could use a L.O.C. (line of credit) loan e.g. St George’s Portfolio, C.B.A.’s Viridian or equivalent. You could also request some banks or Finance Brokers to assess your borrowing potential before making offers. Ask for the assessment in writing.
Have an ‘escape’ clause in your contract
Always but always have a condition in the contract to let you pull out if you need to. This may be "subject to a structural inspection satisfactory to the purchaser…” or "subject to inspection by…” (ask your solicitor for an appropriate clause. Refer to Robert Balanda’s “Clauses Made Simple” for other clauses.
Buy in a Good Area
If you buy in an area that is in demand you'll find it easier to sell. Mind you, deals may be harder to come by. You will need to act quickly. You must know your value and be prepared when the deal appears.
Check out the Location. The attributes of a good rental property are:
* handy to transport, preferably bus/train; shops; schools etc;
* respected area / desirable suburb;
* near café society
* close enough for you to drive by regularly;
Watch out for property that is:
* too close to the train line;
* on a busy / main road;
* adjacent to schools; factories; sports centers; major shopping centers; public toilets; large blocks of units; hospitals; hostels; and hotel car parks.
These properties can give you great initial returns but often you find the tenants will ‘move on’ because of the noise or pollution or disruption. They will then be often harder to rent than a ‘well located’ property. The key with these properties is to negotiate hard and don’t pay too much.
Short Settlement Period
If your vendor really needs the money, the shorter the settlement period, the more attractive the offer. Give yourself time to do the necessary searches. Check with your solicitor how quickly you can get the clearance. I've offered 14 days but have found 21 days more practical. Make sure you have your finance set up if offering short settlement periods and cash offers. Banks might not be able to meet your contract time which could put your deposit ‘at risk’.
Establish a Relationship with a Number of Agents
If you are making offers through agents, establish a relationship with a number of agents. Call or fax them regularly. Let them know you are looking. When a deal comes up, look at it straight away. Give the agent feedback on what you are after.
What did the Seller pay? Find out how much the vendor paid. If the vendor has paid more than your offer, he is less likely to accept it. You can mostly find out this from a search on the State’s database.
If he still makes a substantial profit on his original buying price, he may be more likely to accept your offer. Especially if he can cover his costs and make a small profit. In the end, it will come down to whether he needs the money and how urgently.
What is the Motivation of the Seller? Keep asking questions. Find out why the property is being sold. Is the money needed in a hurry? Has the seller bought elsewhere?
Meet the seller’s needs (e.g. a quick settlement) and you will buy well.
If the price is very important to the seller you may be able to buy on terms favourable to yourself while still paying full price, e.g. Vendor finance at a low rate of interest on low deposit. I bought a block of flats this way from a real estate agent who owned them. He refused to negotiate on price but gave me a great deal by giving me vendor finance at a low interest rate. The cost saving was about the same as the price reduction I had been trying to negotiate. A ‘win win’ solution.
Make Offers
If you never make an offer, you will never know if the seller would have accepted.
Every time I've made a number of low offers, one of my offers is accepted or counter-offered within weeks. Don't be embarrassed. You can't force anyone to accept an offer if they don't want to.
Why not make offers 30% below market and see what happens. What do you have to lose? (First be sure of your market price. Some of these are highly inflated).
Make lots of offers. The likelihood is you will pick up one at least. If you buy only two of these in a whole year you will do well. You will also know the market very, very well.
Key Points to Buying Below the Market:
* Know your market
* Be patient
* Offer cash
* Use ‘escape’ clause
* Buy in a good area
* Check out the location
* Offer short settlement period
* Establish relationship with real estate agents
* Find out what the seller paid
* Meet the seller's needs
* Make lots of offers.
Isn’t that great information?
I really thank Geoff Doidge for offering this to my readers and he is offering you the balance of his e -book. If you would like to read the other 4 property tips the Reno Kings are offering the entire document for free. To request a copy simply email a blank email to [email protected] and they will send an electronic version to you.
Imagine how much you would learn if you spent a whole weekend with the Reno Kings and Australia’s top property experts. To find out more information about the Reno Kings and their ultimate “Property to the Max” seminar click here .
For readers of our newsletter they will throw in CD’ recordings of the whole event valued at $995, so please mention my name when booking. (By the way I get NO benefit from referring you.)
-----------------------------------------------------------------
YOUR REFERRAL WILL BE APPRECIATED
I'd like to ask a favor of you.
I ask it each month and most readers skip over this section but please help me this month.
As a reader of my E-newsletter, your subscription to Property Investment Update is absolutely free. If you like the value you receive in reading this publication, I'd really like you to recommend it to someone you know. This will help grow our subscriber base and in the long term help our business grow. A healthy business allows me the time to devote each month to producing this publication and will allow you to keep up to date with the latest in the property market. WE ALL WIN
http://www.metropole.com.au%2Fnewsle...ter_online.htm
Regards
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