Strategies

[Dee]

With the changing times of the property market, Im wondering what change of strategies property investors are turning to, In particular how do Investors feel about trading/ flipping going into a slow market, any tips or tricks for keeping safe?
Thanks in advance, happy investing!!

[whitt]

*Keep borrowing levels low.
*Carry out maintenance on property to make them rent easy
*Spread your loans expirey across various years fixed term
*Dont fall into one bank trap

That is just a few. There are many more

[Stevegoodey]

Buy at least 20% below Valuation.

Buy cashflow properties or properties that can be made into cashflow properties.

Buy nasty homes in quality locations.

Be prepared to dump your favourite rental at a loss if need be.

If you are offered a quick profit on a deal take it.

Don't buy anything that doesn't have a return (No sections, No tips, No long lead time developments)

Invest don't speculate.

Fix any interest rate under 7.55% for as long as possible, for bigger loans split them into $200k lots.

When trading clear the deposit cheque and finders fee before signing the transfer documents.

Cheers

Steve

[Dean@Massiveaction]

Agree with most of Steves except
A: Now is a great time to be looking for subdivisibles and land banking IMHO. Building and developing is good in a slower market. Construction costs come down and everybody else is bailing out of developments so you can pick them up heavily discounted by being counter cyclical.
B: Unless you are trading buy quality and NEVER SELL!!

C: Most important thing is ensure you are buying 20% below. My rules currently are buy anything brick that is 20% below valuation regardless of yield. Create yield from trading profits.

[KevinR]

...Unless you are trading buy quality and NEVER SELL!!

Dean, a little off-topic here, but I'm curious...
In your website you say: " I was able to amass a portfolio of over three million dollars in property in 4 months."

Can you tell us how you did that? That's around $600k in 20% deposits which is a lot of hard money. If you used another method, I'd be very interested to know how I can escalate my own PI to that level as fast!

Kevin.

[Dean@Massiveaction]

HI Kevin. It's up to 7.5 million in 18 months now. Lots of hard work is the short answer. By buying very well I was creating sufficient equity to be able to keep borrowing. Knowing how to borrow money from where is important and learning how to generate deposits from trading is esential to turbocharge your acquisitions. I'l be covering in detail how to build a large portfolio with no money in my September newsletter.
But I started with 250K revolving credit equity in October 2004. I still only have the same R/C and have never refinanced a property. Thats kept my LVR down, currently at 61%.

[Rohb]

Buy at least 20% below Valuation.

IS that 20% market valuation??

Fix any interest rate under 7.55% for as long as possible, for bigger loans split them into $200k lots.

Why 200K lots??letsay you got 3 property worth 750K will you split it into 3/4 seperate loans??

[Stevegoodey]

Hi Robh,

I want to be able to recycle my deposit so I'm buying property at a purchase price that is 20%+ below the level of my Registered valuation at settlement.

This means I'm always buying at a discount and the original question was about lowering risk in a trading market so this also helps there.

My comment about $200k loans is because I would always try to keep any mortgage that was fixed for round the 7.5% level even if I sold the house.

So what I would do is swop the security that the mortgage is over with another.
This is easier in smaller lots, If I have a $400k mortgage I might want to sell that property for $500k and buy two $200k homes.

If I do this I want access to my $100k profit and I want the two $200k new investments to not have crossed security.

Does that answer your question?

Steve

[KevinR]

It's up to 7.5 million in 18 months now....I'l be covering in detail how to build a large portfolio with no money in my September newsletter...

Dean,

That's extraordinary growth - I'm hanging out for that issue!

By my rough calculations that's about 40 properties. Are you still essentially a one-man band, apart from contractors? Or do you have staff? The paperwork and administration must be frightening.

[Scott Miller]

Pooomba,
Do you get valuations done on all the houses you buy. Or do you rely on your knowledge of what a properties worth in a particular area?
It seems to me to be a large out-going cost to pay on so many properties bought!
Scott

[Dean@Massiveaction]

Kevin. My wife is full time with me now and Heg does a lot of stuff for me but that's about it. I have a great team of professionals who help me leverage mytime.

Scoob. I have to get valuations on every property for finance. I get about 5 to 10 QV valuations a week on properties that I don't buy and in the last year i would have had maybe 20 or 30 RV's done on properties I didn't proceed with. Better to invest $500 in a valuation than 500K in a lemon!!

[Rohb]

Does that answer your question?
Steve

Thanks Steve,made it much clearer.Iam in the process of refinancing my home loan and my first rental to purchase another rental property. I manage to find a property I like and have some potential to subdivide as it has a two dwellings. 3BR Brick house at the front and 2 bdr granny flat behind.Both are tenanted and currenly earnning 410/wk.Owner wants 330K but I purchased it for 295K.(maybe should have done a Reg Valuation)I'am only paying interest on that loan at the moment as I like to continue and concentrate paying off my first Home loan and IF i do it right I should be able to pay it in 5 years.

I get about 5 to 10 QV valuations a week on properties that I don't buy and in the last year

How accurate are those QV??

[Dean@Massiveaction]

Plenty about that on other threads. My experience in Auckland is that they are very accurate.

[Dee]

Wow Thats amazing results in such a short amount of time!! Will be eagerly awaiting the next newsletter as there always awesome! Are you being alittle more conservative on what youll pay for your trading stock? ie leaving some profit in it for the next guy, to ensure youll be able to sell it on quickly in this market..... excuse the greeness of the question, trading was something Ive not been interested in, however if it means we get to our goals quicker, we need to learn about it! Any other tips particularly to trading in a slowing market?
thanks Dee

[Dean@Massiveaction]

HI Dee. Truckloads of stuff in other threads and you'll get a hundred different answers but for me trading has to be very discounted. I turned down a deal just today. FMV of around 320K, could have bought it for 265K. Not enough profit. Needed it for 255. 20% minimum off market. Do a search on trading you'll find heaps of stuff from lots of traders.