Poomba's Sat Seminar !!

[emmajane6]

great robyn, looking forward to seeing some email from you coming through! living in australia and working and studying makes it hard to look in NZ so its great when someone else does the hard yards!!

[tpr2]

I think I'd rather have the prospect of capital gain than $20pw in positive cashflow. You'll never get wealthy on $20pw. Over 2 or 5 or 10 years the capital gain is going to be 100 times more profitable than the cashflow. Even if your property increases in value by only 1%pa, then you've still made 3 times more money than you have in positive cashflow. That's without getting into all those unexpected expenses which will kill $20pw.

Anyway, cashflow is important, very important; but the real wealth is made through capital gains. Anyway $20pw barely constitutes "cashflow", more "centstrickle".?

Yay....some common sense in the "it must be cashflow positive mix" A investment of any kind that relies upon gearing to acquire it MUST have the potential for capital growth. If it doesn't then $20 per week for 10 years gives you about 10grand, you sell your house pay back the loan and you have 10 grand...wooopty doooo.
If you get the capital growth, that is where you make your money, so yes the cashflow makes it easy to hold but it is capital growth that makes you wealthy.

I'm negotiating on 12 properties currently. I bought my last one in August. I am buying more in Oz because I can borrow money there more easily. More focused on trading in NZ as it requires no money.

If I wasn't buying myself I certainly wouldn't be telling others to.

I agree with the wise old bed ridden one.

Last trade was today, next purchase is tomorrow.

I have a combination of 40 houses/units lined up, but this may drop down to 28 as might not take a few that are marginal.

I'm with waxhead on this one, those answers are all about what trades you have lined up. I think his question was what have you gone unconditional on that you will keep in your own portfolio.

My answer waxie is a 427m2 two whole floors penthouse in the CBD of Auckland, off the plan and not ready until 2011. Thats going into my portfolio.

[tpr2]

Sure Waxhead. Today, at 9.15am to be exact, the last time before that was last week but ended up selling to the tenant as was going to do a lease option so I don't know if you want to count that one. Also some family want to come in with me since the share market went south and they want to buy 4 - 6 before christmas so some of the ones I was going to purchase for lease options myself we will now look at purchasing for ourselves although you don't want to know about any future purchases do you.

What about you Waxhead

sorry tucker I hadnt seen this post when I posted earlier

[tpr2]

I disagree actually. I'm happy to listen to contrarian advice/comments, it helps keep everything in balance rather than having a big group hug with mutual back slapping.

It's the repetitive,700 word, no punctuation posts which have me clicking on the "ignore" button.

G

We agree again revdev.

I too like the contrarian view as it does make those of us who feel ten feet tall and bullet proof stop for a moment and just look around a bit.

I am as pro property as Dean, Steve, Tucker and MJ but I also acknowledge that my position is unique (we are all unique) and what may be good for me might not also be good for others, thats the way the world is.

It's also a habit that being a Financial Planner for 10 years has created, (in Oz at least) we have a fiduciary duty to our clients so we have to remove our ego and remove what we like investing in from our framwork and focus on what is appropriate for our client.

This makes a pretty big difference to how one views the world, after all some of my clients are pretty well off and can do or buy what ever they want, others are just starting out and don't even know what it is they want in life.

Listening to people rather than just hearing them really makes a difference.

Kind of got off the subject of Poomba's seminar didn't we?

If it is paying its way and all going well putting $20 in my pocket, If I am lucky it will be more than that, I will buy anyway, buy 6 and you have $120 in your pocket, there are plenty out there now I am hearing of some great deals being found.
Robyn

Hi Robyn.

I take it the $20 per week snippet is aimed at the earlier post from spurner.

The $20 thing assumes you are borrowing money because if you are only gettng $20 per week off a property that you aid cash for , well..... i think we know that might be a dud.

So assuming we are talking about the same think here, borrowing money and buying a property that gives you $20 per week after all expenses, I think you may find things have changed a little.

6 x $20 does equal $120 if the lenders will lend you the money to buy 6 properties of that description.

6 months ago it was probably still possible but unless you have huge income elsewhere I doubt any bank will fund that for you now.

If you do have huge cash flow then you are in a different position to others out there in which case they would not be able to buy 6 properties which takes us back to spurners comment that $20 per week will not make you rich.

[Propoholic]

So assuming we are talking about the same think here, borrowing money and buying a property that gives you $20 per week after all expenses, I think you may find things have changed a little.

Hi Robyn,

Is the $20pwk cashflow (after all expenses) created with a maintenance allowance of $500pa, $1000pa, $2000pa or $4000pa? Not a trick question, but your answer will assist a lot of investors to understand what a +ve cashflow property really is.

[NZGEMS]

I was using $20 as a start figure, I thought it would get a good response, someone, I think it was Poomba, not sure now and not looking back through the posts now, mentioned that figure, it is a figure of speach ok? What I ment, or how my mind works is perhaps a better way to put it, I buy for cashflow in these properties, if I get capital gain that is a bonus, I just don't count on it so yes it is not the $20 that makes me rich over time it is the number of $20 I do and when you do drop in capital gain that is a bonus, I just never like to rely on it, who knows how long before we see it again, yes I beleive it will happen one day, but I don't expect it for a while to come, some people analyze things too much there for never jump in, and that is fine if you don't feel comfortable with it, just sit back and watch others do it.

I do mean the $20 AFTER ALL EXPENSES INCLUDING MAINTENANCE OF COURSE it would not be $20 otherwise would it? Or that is how my mind thinks anyway. and even if I did only make $20 a week and all my other expenses were covered including the 100% borrow does it matter? NO, it is still money in my pocket at the end of the day, more than I get for doing nothing.

If I am keeping any of these I will also put in a deposit so the cashflow is more than $20 anyway, I just like to work my figures on 100% borrow then any extra is a bonus. time will tell how I go, usually if I feel the deals are coming they do though, have found this to be true in the past.

I am amazed on the subject of posative cashflow the people who only take into account the rent against the mortgage and call that their return, they dont take into account any other expenses like rates, insurance, maintenance, so good point Propoholic, I guess alot of us have a bit of a one eyed approach and think every one thinks like us. (we all interpret things differently I guess) My figures are based on return after all expenses including interest.

I recently had a call from an investor who had to bail out of a house, forget the figures but it was hugely negative, he had bought it off the plan to onsell, financing it against his own home, I hope he moved it but I fear he will have lost it and his own home, I suggested he sold his own home and moved into that house as it sounded like his own home was more saleable, he said his wife refused to sell it, I did quietly suggest would the wife like to live on the street, I dont think she knew what deep s..t they were in.

Sometimes we do have to take a hit and admit what we did was more of a learning experiance than a money making venture. Look for the gift in everything.

good luck
Robyn

[emmajane6]

sorry it was me who said $20, didnt mean to open a can of worms, was purely hypothetical, but i'd sure rather have positive $20 than negative anything, thats for sure.

[spurner]

And just to be clear, I wasn't saying positive cashflow is bad (duh!).

Just that I'd rather have a slightly negatively geared property in Mt Victoria or Ponsonby, as opposed to $20pw positive cashflow from a property in Murupara or Eketahuna. Kind of an extreme example, but I'm sure you get my drift.

[Keithw]

Are you sure you don't want a section in Eketahuna ?
There's been some interesting capital gain there over the years & you can get a section for just 48k & vendor financed !!

http://www.property.simnz.com/propertysecintl.htm

[tpr2]

I'm with spurner on this one.

Cashflow is important other wise how do you keep increasing your wealth over time.

I know the answer most will come up with is you buy another property because you current ones are cahsflow positive.

I'm sorry to burst any bubbles out there but that game is over.

Each borrower has a maximum capacity to service debt (there are the odd one or two exceptions due to either incredibly large equity positions or incredibly large income sources elsewhere) however the average mum and dad investor who go to the bank and show their tax returns to our nice bank manager will be told they hax xxx capacity to buy.

When they buy a cahsflow positive property that does not increase their capacity to buy the next one, it decreases it as a certain amount of equity would have been used and a certain amount of serviceability.

So the first time mum and dad investor front up to the bank and ask to borrow some money the bank will say you can borrow say 300k.

Mum and Dad go out and buy a 300k cashflow positive property and then go back to the bank and say hey we want to borrow another one.

In the scenario that has been perpetuated by the likes of many seminar and book writers the theory is that the bank will say well you can go and buy another one now for $350k

This is not true, well not anymore, it may have been possible before with lo-docs and no-docs but now we are getting back to good old fashioned 35% DSR and 80% LVR calculations so the bank will most likely say you can go get another one for $250k as an example.

This means you only have the capacity to buy maybe 4 or 5 properties and if you are only getting $20 positive on each one with capital gan just a bonus then why donesn't everyone pop on down to murupara and buy all those lovely cashflow properties?

At the end of ten years if you have had no capital growth you will repay all your loans and only have the $20 per week time 5 properties say which adds up to 50 grand.

That ain't rich in my books.

So tell me here, anybody at all, who has increased their wealth without any capital growth sufficiently to retire.

I bet there is not one single one.

I say this because each time you buy another property you are relying on the capital growth in the previous ones to give you the equity to buy the next one.

So yes cashflow is important but capital growth is just as important and possibly even more so because it is the mechanism wth which you increase your portfolios unless you are churning lots of dosh back into your mortgages to create the equity to buy the next one and at $20 per week that will take a long time.

[spurner]

I was just reading something mildly heartwarming about Eketahuna actually. I'll still pass though!

Are you sure you don't want a section in Eketahuna ?
There's been some interesting capital gain there over the years & you can get a section for just 48k & vendor financed !!
http://www.property.simnz.com/propertysecintl.htm

[NZGEMS]

That would be scary having that much bare land sitting around at the moment.


Robyn

[waxhead]

Reading another thread and was reminded of this one that was active 9 months ago.(not that long really)
Any participants have anything more to add?
Poomba . Any more seminars?
Anyone still promoting subdivisions or storage sheds ?
MJ and all where are you.Tuck you still dealing like no tomorrow
Waxhead has noted alot of previously passionate people are not posting much now or maybe they have changed their handle.

[Glen]

Reading another thread and was reminded of this one that was active 9 months ago.(not that long really)
Any participants have anything more to add?
Poomba . Any more seminars?
Anyone still promoting subdivisions or storage sheds ?
MJ and all where are you.Tuck you still dealing like no tomorrow
Waxhead has noted alot of previously passionate people are not posting much now or maybe they have changed their handle.

Hey, I've got a better idea 'Mr Negative',... Why not tell us all how good you're going aye????

Probably doing F all i guess, all talk!

Actions speak louder than words remember.

[waxhead]

Hey, I've got a better idea 'Mr Negative',... Why not tell us all how good you're going aye????

Probably doing F all i guess, all talk!

Actions speak louder than words remember.

Hi Glen
I am doing alright but do not feel I need to broadcast the fact to one and all
As far as property yes I am doing F all
But you need to understand there are times you make money by sitting tight and doing F all.