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  1. #11
    Join Date
    Jun 2005
    Location
    auckland New Zealand
    Posts
    5,236

    Default

    G'day Marcus. You're right that capital growth has a speculative aspect to it. I do believe however that the fundamentals don't change. Even in a slump there will be areas that do better than others. At the end of the day if you follow historic trends, Kieran Trass's specialty, then there are always areas that outperform the average and they can be prdeicted with a reasonable degree of success.
    For example at the moment with the announcement of the toll road through Puhoi, prices in Wellsford a re starting to move. YOu would have to be very unlucky to buy anything in Wellsford currently and not expect higher tahn average growth over the next 2 to 3 years. Now that may mean that Auckland is doing zero growth and Wellsford is doing 5%. But it could also mean that Wellsford might gain 10 or 15% a year while Auckland stands still.
    For me personally I try and keep things very simple. If it puts money in my pocket pre tax on the day I settle it was a good deal. But I keep up with all the other info to be better able to help others achieve theri investing goals.
    Glad to hear you're not yanking my chain.
    Your comment about areas is very valid. BEtter areas do not equal better gains. Look at Epsom, it's one of the worst capital growth areas in the last 10 yeasr but one of the "best" areas.
    I've got quite a bit of property in Papakura that has enjoyed huge capital growth and I only bought them for cashflow!!

  2. #12
    Join Date
    Jan 2005
    Location
    Auckland
    Posts
    1,530

    Default

    Poomba,

    Look at Epsom, it's one of the worst capital growth areas in the last 10 yeasr but one of the "best" areas.
    Your comments about Epsom would indicate that all areas have their cycles, yet the cycles are not aligned. Because Epsom has been in a relative trough for the last few years it could be the perfect time to invest there - but this is purely speculation.

    Your comment about waterfront being the prime capital gain area similarly may not take into account that waterfront land might operate on a different cycle which my make it comparitively valueless once again - particularly if there is a naval invasion (Sydney's exclusive Double Bay had a significant price drop when the Japanese subs paid them a visit in WW2), if private transport becomes prohibitively expensive, if global warming raises the sea level, or if we are hit by a Tsunami.

    Speculative purchases can pay huge dividends, but some people inevitably get burned.

    Positive cash flow deals, it must be added, are speculative to an extent as well. When we buy positive cashflow properties we are speculating that they will stay that way. Those that bought them in Chernobyl (assuming it was possible) might argue that they are not bullit proof.

    Hmmm... I've gone full circle. Therefore all investments are speculative. Where's that Lotto shop?

    Julian
    Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

  3. #13
    Join Date
    Jun 2005
    Location
    auckland New Zealand
    Posts
    5,236

    Default

    Exactly, if youwant no risk, stick your cash under the mattress and buy a smoke alarm. Life is speculative and risky. In fact no one gets out of life alive!!

    All I can tell you is that my speculative investing meant I could retire after 4 months and now I invest full time for fun and profit because I can!!!!!

  4. #14
    Join Date
    May 2005
    Location
    Bay of Plenty, New Zealand
    Posts
    9

    Default

    Hi. What interesting reading these postings have made! I'm now thinking that the idea of cashflow properties sounds like an idea for me to follow-up. I think I need to think much bigger than I have been as obviously a lot more is possible than I had dreamed of. It amazes me that some people can seem to buy so many properties quickly, but I'm getting the message that cashflow, cashflow and cashflow might be a key determinant. How do you convince banks you have the cashflow to be able to buy again (I used my salary last time to convince the bank)? Tenancy agreements? Evidence of payments from bank statements? Or, is showing that a property will make money (postively geared) not take money enough for some sway?

  5. #15
    Join Date
    Sep 2003
    Location
    High up above and deep down under
    Posts
    10,915

    Default

    Hi Erma

    You Said
    I think I need to think much bigger than I have been as obviously a lot more is possible than I had dreamed of. It amazes me that some people can seem to buy so many properties quickly, but I'm getting the message that cashflow, cashflow and cashflow might be a key determinant
    Well to quote Chris Ashenden in his last post:
    1. I invest in real estate for PROFIT. CASH, CASHFLOW, and EQUITY. I want you to show me the money and I donít care if there isnít a single L for LOSS in there. Iím 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.
    You seem to be getting the idea.

    Regards
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  6. #16
    Join Date
    Jun 2005
    Location
    auckland New Zealand
    Posts
    5,236

    Default

    Hi Erma

    How do you convince banks you have the cashflow to be able to buy again (I used my salary last time to convince the bank)?
    You need a good coach or a good broker to look at your current loan to value ratio (lvr) and debt servicing ability and then advise you what your next property deal needs to be to fit the banks criteria.

    There is some good software out there too to help with this. REVIQ is by far the best.

    But yes you can keep on borrowing if you do it right

  7. #17
    Join Date
    May 2005
    Location
    Bay of Plenty, New Zealand
    Posts
    9

    Default

    Can coaches and brokers advise beyond the next purchase or two? Does one need to be in NZ for this sort of assessment - I'm back in 7 weeks but curious now. I expect based on my financials that I could get one additional mortgage fairly easily based on salary, savings and I guess equity. Last time I got no real conditions set by the bank. I will have a good salary by my standards (an easy $20K left over after tax and all living related expenses including some travel entertainment), a deposit saved and I guess by now at least 50% equity in a property in TGA (may be more but hasn't been valued), so I think banks will, at least initially for one and maybe two properties, consider me a pretty good bet. But, now I'm thinking bigger - well beyond one; I might want 5, 10 or 20 properties since a lot of people on here seem to have developed the skills and knowledge to do it and I should be able to too. Hmmmmmm....

  8. #18
    Join Date
    Jun 2005
    Location
    auckland New Zealand
    Posts
    5,236

    Default

    Sounds like there is no reason why you couldn't start building a decent portfolio. Yes a good coach or broker will advise you what rules to set for yourself so you can keep buying.

  9. #19
    Join Date
    Aug 2004
    Location
    Auckland
    Posts
    15

    Default

    Hi Pooomba,

    Interested in your comments on Wellsford & Papakura as these are two areas I've been thinking of buying in. I have two IP's in Mangawahi but these are capital growth properties and I need to look for some cashflow positive ones.

    Do you think Wellsford properties can be cashflow positive or are you looking at it just from a growth point of view? Do you ever buy houses with large sections, say 4000 sqm and above with the hope of subdividing sometime in the future. A large section may not have good cashflow now but could be a huge goldmine at a later date.

    I'm enjoying reading your comments in this forum.

    Alex.

  10. #20
    Join Date
    Jun 2005
    Location
    auckland New Zealand
    Posts
    5,236

    Default

    Hi Alex
    Do you think Wellsford properties can be cashflow positive or are you looking at it just from a growth point of view?
    I ONLY ever look at cashflow. Growth for me is a pleasant bonus

    Do you ever buy houses with large sections, say 4000 sqm and above with the hope of subdividing sometime in the future.
    Only if they are positive cashflow pretax on the day I buy them.
    I sincerely believe that to really succeed in this game you must STICK TO YOUR RULES. My rules are $50 a week pos cashflow pretax. I never ever ever go outside that. As a result I never get into trouble and I achieve my goals quickly.


 

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