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  • #16
    Changing the address

    My 5 cents worth on a cheap way to increase value. Buy a house on a corner in the worst street in the best area. Change the address to the other street for $250 at the council. Takes less than a week and and add a lot more value to the property without cosmetic improvements. Worked for me!


    • #17

      Tip: When property prices rise faster than their rental incomes, yields will decline.
      When property prices fall at a faster rate than rental incomes, yields will rise.
      Last edited by Wezz; 10-11-2005, 03:07 PM.
      "Measure Twice - Cut Once"


      • #18
        Feeling my way around PT I found this old thread from Muppet which said "If I didn't know the market (or was unsure or new the offers would be subject to a ratchet clause and if accepted (with or without negotiation) the onus was on the agent to get me the valuation that they told me they could get."
        Could someone please explain what a rachet clause is. Thanks


        • #19
          Hi eagle,

          Welcome to PT

          When I see the word "rachet" I always think of something going up. For example, when leasing a commerical property, a rachet clause allows the landlord to increase the rent above the existing level, but never below even if the market rent has dropped.

          I imagine this may be the case where the actual registered valuation must be more than the one promised. Anybody can correct me?


          • #20
            Here is my tip

            read my signature


            • #21
              Some that have served me well

              Buy wholesale from landlords

              Do not invest in property unless you have complete control over the entire property

              Fix for as long as you can to face far less uncertain times over the term of the mortgage

              Buy property that will still look good in years to come

              Your work starts and stops at tenant selection


              • #22
                I agree with Simple Simon - we dont buy cashflow we have to create them. And depending where the market's at depends on what we do.

                Areas that we consider are. (i)Always try and buy wholesale - hard in a hot market but with property longer on the market now there is better opportunity (ii)Add value in some way - paint/tidy up etc which will allow u to increase rent wihich will give better c/f and hopefully have the property valued at a higher price (iii)Develop by adding MDU on the back (iv)can we subdivide the back and either develop or flick - In Napier like most of provincial NZ there are still the good old 1/4 acre sections that are just opportunities waiting to be found

                Ron HF 's new book, Massive Profit in Real Estate (the big blue book) has heaps of tips in it too


                • #23
                  Liberated from Janesco on an early thread:
                  Originally posted by Janesco
                  Tip one

                  Real estate agents are not your friend. They are hard working, struggling people who are in a very competitive industry. Like most of us they have partners and kids to feed. They will tell you what you want to hear to make a deal happen. They need your money. Don't be rushed into anything by them.

                  Tip two

                  You don't need to spend thousands of dollars going to seminars where there will be a lot of motivational speakers who can get you blood racing through your veins, your head fill of dreams and your bank balance sooo much emptier.

                  There are a lot of good books available. Beg, borrow, buy or steal (who said that ) a wide variety of these books to read. Nobody has all the answers but somewhere amongst these books collectively you will be able to come up with a plan that will suit you and your risk tolerance levels.

                  Tip three

                  Talk to lots of other people who are already playing the game. Again their style may not suit you but you can learn things from everybody if you take the time to listen. Pit falls can be shared and avoided.

                  If they are not playing the game and they have what sounds like great. Why aren't they playing the game? How do they know what they are suggesting will work? personnally with these people I would ask what they are trying to sell and then treat them with scepticism from then on. A vested interest you see. trying to separate me from my hard earned cash.

                  And final tip

                  Constantly ask questions on the Property talk forum.

                  There are a lot of good members who actively give good suggestions free of charge on the site. Again what is suggested may not suit your proposal but consider them any way. Other people often think outside the square. Ideas forthcoming can be things you never thought of...
                  New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


                  • #24
                    Liberated originally by Muppet from Chris's thread:

                    Originally posted by Chris's Top Tips and Suggestions
                    Hi Guys

                    I have read through all of Chris's postings and have extracted what I think are his helpful hints and listed them here.

                    1. Taking people in the know who have DONE it out for a lunch/coffee will frequently be the one of the best investments you can make.

                    2. Dream VERY BIG, start small, break it into small steps and try and SYSTEMITIZE the whole thing so that it can grow itself.

                    3. Attend a Keith Cunningham seminar. http://www.keystothevault.com

                    4. I learnt a BUNCH about the power of leverage on other people's time, other peoples skill sets, and other peoples networks.

                    5. I have NEVER paid retail or anywhere near it for any prpoerty

                    6. I only buy a property that will boost my debt servicing ability.

                    7. The ability to take responsibility for your circumstances is very very powerful and also very enlightening.

                    8. buying well below market and taking care of debt servicing (I bought for cashflow and always aimed to boost my borrowing power with each purchase) and maintaining healthy LVR’s.

                    9. as part of my goal setting process I have PLANNED benchmarks where I am to stop and smell the roses, reassess, and decide if I am still doing what I want to be doing, for the right reasons.

                    10. gradually picked out the agents who were willing to work to my format.

                    11. a) Especially if I was a beginner, I would pick one market and get to know it very well, this gives you a performance advantage over 95% of the other buyers out there.
                    b) While you can buy well in any market if markets are hot where I am and I was a beginner I would move to where the going was comparatively easy, yes MOVE - or at least commute. This will make life a lot easier, there is no need to fight the herd.
                    c) I would go looking for agents and build my BRAND with the agents. For me it was I WILL SETTLE ON EVERYTHING THAT MEETS MY CRITERIA (this is great for agents) and especially now I CAN BUY HOUSES FOR CASH - IN THREE DAYS
                    d) Make written offers. Look at houses (either before or AFTER your offer, depending on you, but if you look at a house, MAKE AN OFFER). Repeat.

                    12. Banks look at when lending:
                    YOU, your history, your situation, their exposure to you, etc
                    LOAN TO VALUE RATIOS, both on the loan you are applying for and your entire position
                    DEBT SERVICING, your total existing income plus the expected income from the purchase. Most banks will look at around 75% of a residential property's gross income as being available for debt servicing. There are many interesting formulas that the different banks use but this is a general guide.

                    13. If you want a large portfolio make sure every property you buy to keep IMPROVES your debt servicing ability. Keep your LVR at 80% or lower where ever possible and move to different lenders early. Some lenders are much more conservative re your overall position than others. So if you want to be HUGE a good idea is to borrow from the conservative ones early while you can and move slowly towards to more aggressive lenders as you progress. Talk to a good mortgage broker and arrange financing before you NEED it.

                    14. My criteria...Any house, any condtion, any area...............my price

                    15. YOU MAKE YOUR MONEY WHEN YOU BUY

                    16. We know the market we play in very well.

                    17. Motivated vendors, ability to add value, ugly houses or houses a long time on the market.

                    18. The address of each property that had the potential to cashflow the way I wanted it (for me it was 3 bedrooom plus with garage on full site in a certain price BAND)
                    What it was (eg 4 bedroom plus sleepout on subdividable section)
                    Why the vendor was selling. (ask this verbally as you go over the houses with the agent)
                    The list price
                    What the agent THINKS you could own it for
                    What the property would be worth and/or would/could value to
                    Work to be done (general deferred maintenance and/or anywhere the agent thought value could be added)
                    What it would be worth DONE up and or would/could value to
                    What it would rent for (either as is or done up.)

                    19. It is also imerative that you have the ability to make decisions QUICKLY.

                    20. Be psychologically prepared to fail often and frequently and work on your sales and people skills (or do it in the process) and see how you go.

                    21. In any instance where the tenant has the right to buy or settle the property I use a P and I approach to ensure I am always reducing my debt in line with their slowly reducing purchase price.

                    22. 1) Either leave it interest only if I want to draw maximum cash for utilization other places AND/OR I am worried that I may not be able to refinance the property later (I subscribe to the belief that you should always try to have loans sorted before you need them)
                    2) Convert it to principal and interest and forget about it (when you get bigger most banks like to have a bunch of your loans being paid down anyway as it makes them feel all warm and fuzzy. Also I have found that being able to forget about things works well for me)
                    3) In any given entity, set up one or more of the loans as a revolving credit facility and park the spare cash there. Keep the other loans interest only. If/when you pay down one of the loans, leave the facility there and convert another one of the loans in that entity to revolving credit and continue until you need to redraw the funds or have paid down the lot and are left with a bunch of revolving credit facilities all waiting for action.

                    Option 3 is what I would normally recommend to most people with a small to medium sized "standard" buy and hold portfolio

                    23. I am a fan of both and believe that as long as you know and understand what your money is doing and why and that matches what you plan to have it doing, then there is no real right or wrong.

                    24. Disclosure and relationship building are very important and to this end I am happy to pay a higher interest rate and more fees and get my trading loans from elsewhere other than the main banks.

                    25. if someone offers me REALLY good money for a property – I will sell it.

                    26. if its costing you money and you can’t find a way to get out of it, cut your losses and move on.

                    27. I will buy any type of house that's under valued, tidy it up as required and flick it. I have done this in a range from a $35,000 property in Invercargill to a $700,000 property in Auckland and will happily go higher or lower if the deal stacks up.

                    28. Just keep the trades and the buy and holds in completely seperate entities.

                    29. over time you would have your own house and bach completely compartmentalized from the others and seperated by both entity AND ideally by LENDER.

                    30. What I would do starting again is:
                    ONE trust set up properly for buy and hold
                    ONE trust set up properly for trading properties
                    ONE trust set up properly for wealth retention (family house, batch, tons of cash and your favourite classic ferrari).

                    31. I won’t buy a house as a keeper unless it delivers me sufficient velocity on both my borrowings and capital. This means that I must buy it well under market and be able to refinance all my original capital out (without relying on capital gains) AND it must deliver a return on my end borrowings sufficient to not only BOOST my net borrowing power with lenders (on a debt servicing basis) but also deliver to me a REAL positive cashflow return before tax, proportional to the amount borrowed.

                    32. LAQCs http://www.propertytalk.co.nz/postxf3200-0-90.html

                    33. 1) I invest in real estate for PROFIT. CASH, CASHFLOW, and EQUITY. I want you to show me the money and I don’t care if there isn’t a single L for LOSS in there. I’m not interested in a system that is based on LOSSES and NOT DOING VERY WELL.

                    2) I do not want to HOLD, CREATE or GROW wealth in my own name. That is the number one point.

                    34. Accept the reality that if you ever want to be reasonably rich, you should try and do what rich entrepreneurs and investors DO. Think of the BIGGER picture. I want a set up that will let me play between my entities, as that is where the real money is always going to be and it is actually where I WANT it to be.

                    35. set yourself up in a structure that can accommodate the scenario where the bulk of your taxable revenue actually comes in from a different source other than your direct efforts (ie job).

                    36. In my opinion, and I am not alone, if the above don’t apply to you and you want to be rich faster than you want to be average, dump the LAQC.

                    37. Set up a buy and hold trust and start moving your equity across sooner rather than later.

                    38. If you wish to stay in control of your destiny and ramp up your wealth creation (as it relates to growth of an internally funded PI portfolio), NEVER buy a property for retail or you will have to join the rest of the masses and BUY, HOLD and PRAY the values go up. Great cashflow, but the velocity on capital in REI comes from MAKING MONEY WHEN YOU BUY. Period.

                    39. Trustees: I prefer trusts with a corporate trustee (instead of individuals). This gives a bunch of advantages and to put it bluntly, if your accountant looks at you with a blank face when you suggest it to him, move on.

                    Trust deed: The trust deed be flexible, give you all the powers and might need and should be up to date. By this last one I mean that deed should be reviewed and updated at least yearly by a legal professional (typically a specialist barrister) who is current with trust case law.

                    Beneficiaries: This will vary depending on your circumstances and whether or not you are also going to set up a trading trust (or be tainted in your own name).

                    I get the deeds reviewed by both my lawyer and a specialist barrister.

                    40. Assuming you have solid borrowing power nothing will give you greater direct velociy on your deposits than buying WELL below value and being able to refinance all of it (or more) out sooner rather than later.

                    41. Make sure you are set up right structurally so the wealth is growing where its hard for people to touch it. And don't forget to check out your own back yard over there for various investment options, not necessarily just REI either, when looking for velocity on your capital.

                    42. Money follows management - the better you are at what you do, the more specialised your skill set/resources and the better the track record, the less you will have to give away to do the deal. The more predictable and sustainable the investment, the lower the required return.
                    Put yourself on the other side of the table - if it seems fair and you (or nearly anyone) would do it if your circumstances were reversed then it is probably a fair deal.
                    But before you do any of these, find out what they want (so you can go and get it, and give it to them - part of KJC's three steps to being a billionaire).

                    43. Joint Ventures (JV)
                    For buy and hold, to do the deal try any or a mix of: a fee for finding and securing a GOOD deal, an ongoing management fee (this can be on the high side), a percentage share of any value increase above the purchase price (this should be on the very low side unless YOU are creating any added value)

                    For trading: look at a finders fee again, plus project management fee and split of the profits. OR, just a straight profit split, OR giving the financier a preferred return followed by a split of the profits OR and as the trader, this is my preference, give them a fixed GUARANTEED return (your nuts are on the line if you don't perform) and no profit split. If all goes to plan, this last one is the cheapest cost of capital for the trader and the most secure (and therefore probably lowest) return for the investor.

                    44. First rule, and it always is - Find out what they want.

                    45. Work on YOU first and foremost, but move to an easier market to get the most bang for your buck.

                    46. Clarity = Power.

                    47. When asking for their perception of market rent, make sure you word all questions along the lines of "What could YOU get this to rent for?" leave the responsibility in their court with the underlying hint that if you buy it, you would expect them to deliver just that. This normally results a more honest answer.

                    48. I personally would use a property manager when buying from afar anyway, so in reality this would merely be a part of the interview process anyway. If I was intending to buy and hold going into the new area then I would be at least as interested in the local demand for rental accomodation as I would be for the market rent on the property. You never know mate, if there is more demand for rental property than there is for rental accomodation then you might decide it would be more fun to TRADE in that market.

                    49. For determining the rent and rent market in a new area my other preferred option is phoning "for rent" adds, finding out how much they want for the rent, (and who is doing the renting, manager vs landlord), the conditiion of the house and of course, how long they have been trying to rent it and how many calls they are getting.

                    50. For the record if you are going pro (full-time, even for just a few weeks) then I would expect between 5 to 10 written offers to be the minimum average per "working" day. At the very least, ONE for EVERY house you physically look at. Even if you don't buy a house, you will learn a bunch and be well on your way with at least a couple of agents. (You will almost definitely buy a house.)
                    New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


                    • #25
                      Original post by Fritz an excellent breakdown of the process of subdivision.

                      Originally posted by Fritz
                      Hi there,

                      The least you want to do have a TOP surveyor AND accountant look over the subdivision plans to advise you on taxation and town planning and a simple feasibility study.

                      We have expertise in 1 into 2 subdivisions, and most people we see UNDERESTIMATE the costs. Reserve Contribution being a major, that is the cash you hand over to council in exchange for pieces of paper. As from the posts above Auckland seems to be around 80-100K, Taupo where we live is a more modest 45K upwards.

                      Simply understand HOW a subdivision works, your time frame on it and how much cash is required. I have seen many people lose their shirt. Here is a brief outline of the process:

                      1) Surveyor and planner prepare resource consent application to council and a scheme plan, nice drawing setting out HOW they are going to split the land making sure they comply with the criteria such as coverage, access, and a myriad of council conditions. Let's assume you are subdiving without a notified consent (notified is when you are outside the council regulations and need to notify neighbours/stakeholders and that is a different ballgame again.)

                      2) Council deliberates (up to 6 weeks), any questions come back in writing and changes may have to be made ( 6 w start over)

                      3) Council grants resource consent with special conditions (pertaining to your site) ie water, sewer, power, vehicle crossing, soakholes, easements etc


                      a bunch of small print the general conditions which can cover all sorts of things they may come back to you. (6w any query start over 6 w)

                      4) You have to go and fulfill all special and generic conditions, ie concrete a vehicle crossing, connect sewer, connect water to site boundary, build roads/driveway(however long that takes you)

                      5) You go back to council and say, hey, I just filled all these conditions, are you happy ? (6w)

                      6) They come back and say yep, we are happy or aaahh, no, we want you to build a 9m deep soakhole, or a retaining wall because your neighbour, or ......

                      7) You do that covered under 6).

                      In the meantime your solicitor liaises with your surveyor and prepares any easements or right of ways from your consent over your roads or accessways or sewer lines.

                      9) You go back to council and say, hey.. happy now ???

                      10) Yep we are, please pay 7.5% of the section value (Taupo) plus parks, roading and waste contribution, that makes 19.8K per section created and we will give you a shiny piece of paper that says 224C and which means you can now proceed to Step 11.

                      11) Your surveyor comes back and finalises the survey and bangs some shiny white pegs into the ground.

                      12) All paperwork gets send to LINZ (Land Info NZ) and they issue 2/3/6/20 new titles OR they come back and say, we have a few questions (6 w)

                      13) You are covered in sweat by now (or not) answer all the questions and BINGO .... new titles.

                      14) You break out the champagne

                      Time lapsed: 11 months
                      (This is Taupo, am sure similar elsewhere)

                      And this was a plain sailing one.

                      GET A GREAT TEAM.

                      Now I am sure a surveyor would have written this in a somehwat more eloquent way, but this is what you are buying.

                      Trust this helps. It is a bit of an epic, but I had fun writing it.


                      New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


                      • #26
                        Hi - has anyone answered yet? If not, this may help... When discussing signing a new lease for our proposed business, our lawyer told us a ratchet system meant that the cost of the lease could only go up, and never come down (even if the market crashed, and the true rental values decreased). It's there to protect the landlord. So when it comes to making offers on property, I suspect it means that the dollar value of the new offer must be higher than that of the previous offer. (not that you know what previous offers have been, ahem....). This might mean that an 80% mortgage offer of $500K subject to finance, would be preferred by the vendor than $495K cash. Sounds bloody balmy to me, and probably unenforcable too. I'd say ignore it... it's a big plot to get you to spend more money!!!!! The scoundrels.


                        • #27
                          Tips For A Smart Landlord During The Tribunal’s Busy Season

                          I took the liberty of copying these tips from the Nelson PIA Newsletter:


                          *Apply online with online attachments and get to the front of the queue.
                          *Help Swift phone mediation to work – include all phone, email details.
                          *If at all possible avoid applying in late January.
                          *Beat the rush – apply between Christmas and New Year. We are receiving applications!
                          *Use 10 day letter and same day application combo.
                          *Let us know your plans – don’t apply and then go on holiday without telling us.
                          *Help us to help you – send applications in bunches.
                          *Put your email address on your application. We will normally email you a receipt within 24 hours of receiving your application.
                          *Call us as soon as there is a problem, so that we can fix it.
                          Premium Villa Holidays in Turkey


                          • #28
                            I would not want anyone thinking these were my words or that I agreed with them all.
                            Some are a little simplistic.
                            Like sending off applications in bunches. Goodness gracious.
                            One of the things that catches a few people at this time of the year is the bit in the RTA about serving of 10 day notices. The RTA says that the tenants have 10 days to remedy the breach like missed rent. Sure but it also talks about "serving" So if you just stick the notice to the door you might be in trouble. (Section 136 of the RTA applies.) If you do that you have to allow 2 "working days" before it is served. However the days between and including 24th December to 3rd January are not working days. This means if you do not want your 10 day notice to be extended by say another 11 to 13 days (the 5th and 6th of January are not working days) you need to serve the notice into the hand of the tenant or someone there over 16 years old.