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Discussion in 'Introductions' started by Snoop, 26th Oct, 2013.

  1. Snoop

    Snoop New Member

    Joined:
    26th Oct, 2013
    Posts:
    3
    Location:
    Sydney, NSW
    Hi there,

    I've been doing a LOT of research over the last 2 years to become more educated about property investment. We already have two investment units, but would like to move towards positive cashflow investments.

    We already got "burnt" buying off the plan and using a "mentoring" company. Even though this one was 'free', I would like to learn more on my own to avoid past mistakes.

    I don't believe one should pay thousands to mentoring groups who, for the most part, tell me a lot of what I already know. I do need, however, to educate myself regarding choosing good areas that yield capital growth without costing the earth.

    Any advice welcome.
    Snoop
     
  2. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Snoop,
    Welcome to a forum that does provide some good advice, but like anything else, you need to take it all with a grain of salt as some of it is very good, others may not be as sound. There are also contrary views presented which if well argued are well worth considering also.

    Mentoring companies that sell OTP and that is all they do, they can do a very slick presentation as to why OTP is so good but rarely mention the risks and often fail to mention how they get paid as a sales/marketing company. I don't have a problem of companies that present themselves as sales/marketing companies who get paid by a developer, but 'mentoring' companies are a concern to the whole industry.

    Reading, research and asking questions are all worth the time spent.
    Good luck with it
    Greg
     
  3. Snoop

    Snoop New Member

    Joined:
    26th Oct, 2013
    Posts:
    3
    Location:
    Sydney, NSW
    Mentoring concerns

    Thanks for your reply Greg.

    Glad to hear that mentoring companies might need to be considered with caution.

    I wonder how many people realise that most - if not all - of these mentoring people seem to make their money mostly through their presentations. Indeed, it could be argued that they do "make millions through property", but maybe not necessarily the way we are led to believe...

    Consider this: I recently attended a presentation to 'renovate for profit'; joining fee was over $5,000 (depending on whether one paid up front on the day). I then found out the workshops usually run at a maximum of 500 people, 3 to 4 times a year. Let's do the sums... sure, hiring premises, paying staff, running the business, it all costs money, but there would still be a lot left over out of 10 million dollars, wouldn't there? I'd be happy to be corrected if my perceptions are wrong.

    In the meantime, I'd love for someone to reveal these positive cash flow areas that (apparently) can also provide capital growth. Beyond mining towns, where exactly are they??

    Cheers
    Snoop
     
  4. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Snoop,
    There are areas and property types that can and do return positive cash flow with capital growth. If you take out the mining towns, then areas such as the associated port towns where the resources need to flow through yet also handle other commodities such as agriculture produce and tourism. Towns like Darwin and Gladstone can return rent yields 6% plus.
    They can also be a base for the fly in fly out mining workers.

    Property types where the purchase price is still low yet the rent yield is 6% or more, dual rental stream properties, even holiday rentals can all achieve positive cash flow, especially with interest rates at very low levels.

    As examples of my clients who have purchased:
    Gladstone - $480k furnished with a 2 year rent period of $700 a week.
    Rye holiday property - $381k, self managed rental using internet providers such as Stayz and Takeabreak, $41k gross rent in first year
    Cairns - 1 bed $105k, returns $210 a week

    The first was purchased via a buyers agent, the second was self sourced, the third was via internet search based on rent yield potential.

    For capital growth, look for areas where people want/need to live and land supply is limited and the demographic is one that they can afford to pay a decent rent. Areas where infrastructure is happening or governments are moving people to, like Townsville perhaps, or areas where there is a very good public school that will attract families into their catchment area and then the facilities of public transport, lifestyle amenities and close to work.

    Good luck with it.
    Greg