Keeping my diaries

from here on in; my diaries will be kept as testament to the fact that it took many small things and doing something positive everyday to become successful.

ON THE RIGHT TRACK

developments of the last few weeks;

- enrolled in an on-line website desgn course to be followed by e-commerce course... business building work for positive cash flow.... CHECK
- got the Secret of Female Entrepreneurs book.... to accompany study CHECK
(this is me trying to develop multiple streams of income)

i also finished Secrets of Property Millionaires Exposed written by Dale Beaumont; I LOVE THIS BOOK!!!! it was like getting to sit one on one with my favourite real estate mentors; asking them all of the questions i have ever wanted to ask!!

NOW i am in the process of trying to develop an actual invesitng strategy; figure there's no point in going at it blind and senslessly if theres people out there who have tried and tested hundreds of methods who I can pay for advce! Something about re-inventing the wheel?!....

I will be starting my book review blog in the next week or so to give you my honest opinion on the books i have read; as there's thousands out there and i may be able to help you figure out a good place to start :)

other than that just ordered DALE CARNEGIE HOW TO WIN FRIENDS & INFLUENCE PEOPLE; am really looking forward to getting stuck in to that and downloaded 'Think and Grow Rich' by Napolitan Hill (have the paperback but we're about to do our annual 15 hour drive home) our last trip we listenend to Dolf De Roos - Real Estate Riches; and the trip FLEW by. I listened to the audio and read the book and can honestly say that Dolf De Roos is MY FAVOURITE author; although; Dale Beaumont is now coming in a close second; tied with Robert Kiyosaki.... hmmm my FAVOURITE book though is ONE MINUTE MILLIONAIRE!!! LOVE IT LOVE IT LOVE IT!@!! My fiance is reading it at the moment; he has the same problem; CANT PUT IT DOWN!!

Will write more on them on blog which i will link and also pardon my slackness; i still haven't restored all the missing links from when my blog template reset itself! JOBS for me to do :)

IT's OURS

Well it's official; property #1 is signed sealed and delivered! I thought it would be more exciting.... it was more exciting signing the contract; the settlement just felt...hmm i don't know like closure.

So following this i am in the process of choosing a Quantity Surveyor to compile my property depreciation schedule; drew up my own rental contracts as i am managing this property myself (would not normally do this; however we're in the same town and it's the owners renting it back; so figured it would be pointless paying a Property Manager 10% for something I can do myself). I am also on the hunt for an accountant specialising in property; will be organising a meeting with Chan Naylor firm whilst i'm in Perth; they look exceptionally professional; i'm just wanting to get my foundation set firmly so that as we build our portfolio i'm not setting it up to tumble down!

Finding good advise and assistance can be a task; I don't mind spending the money if it will save me money or make me money; but i do find it frustrating trying to narrow down the value for money legitimate businesses from the dodgey brothers.

I also have my sub-divsion quotes in from the surveyors..... so will be contracting someone to do that in the New Year (when everyone goes back to work!) i tell ya; can't wait to be one of those people that take the 2 weeks off between christmas and new years!

On a final note; i just bought a program called POSH it's a program for managing properties; i really like it's simplicity and functionality. If you click on the link it will take you to a page where you can download a demo.

Giving Back

Since losing my nan a couple of weeks ago, learning of how she passed and how little the hospital cared, how my family was treated and learning of how miserable her final days were I have decided to give one day a week of my time to going and visitng oldies at the local nursing home.

I am feeling that i really need to start giving; have been so happy to take, but don't feel that i give in enough ways. I know that so many of our elderly are so lonely and really really enjoy visitors; so i thought maybe i could take my beauty therapy skills out with me and maybe do some manicures, have chats, coffees etc and get to know some of our elderly locals. Im going to re-buy all my manicure stuff when i get back home (am still away on holidays) have another funeral to attend tomorrow sheesh.... i feel that the only valuable thing i can take away from all of this is learning to give more time to others; and heck.. we all know how much you can learn off the old crew!

Tomorrow i will write of a real life angel i encountered on the weekend.... made me feel that great people still exist!

Evaluations Esmaluations

bla bla blah i am not seeing the fair side to property evaluators..... they've really shat me this month..... more on that later.

I tell ya... St George had 21 days to sort my finance for the unit and the approval only got through to the seller with 2 minutes to spare and me having a hissy fit on the side lines. The seller had another buyer lined up who was prepared to pay more than what u paid; no suprises there; its a vicious market in Exmouth.

The evaluation on my block has come in at significantly less as well as on the unit. The sucky things with units is that there is so little you can do to increase the value yourself; well in the case of this unit anyway.

So it seems that the sub-division is now a must and not just a maybe; because unless i can increase the value the banks wont lend mwa any more money! Not happy jan! Anyway; I'm going to see what I can do about challenging the evaluations - dammit SHOW ME THE MONEY!
I just wish i could magic my way to my millions right now. Alas the journeys most of the fun!

On the hunt again

I can’t believe it’s already been 16 days since the last post! Since then:
All paperwork has been finalized;
Pet inspection completed with a glowing report; the pest inspector actually called and congratulated me!
Building inspection happening today
Property Evaluated yesterday

In the meantime a few other things have happened.

Property Secrets
I purchased the recent addition of My Property Investment – which is a magazine I absolutely LOVE! I read an article about a guy named Paul from a company called Property Secrets. I had actually spoken to Paul in August regarding the system his company uses in regards to RE investing and was impressed with what I discovered and I decided there and then that I would be working witht hem at some stage. I was however still attracted to the Destiny financial system due to my lack of confidence with figures. I saw Destiny as an opportunity to learn whilst I invested; because I had come to realize that the best way of learning is infact by doing. I just didn’t want to rush in to the doing part and make very costly mistakes. So Daniel and I decided to join Destiny and have used them to purchase this 1st property. In the meantime I have decided that I want to be as aggressive as possible with our investing as I really do not want to have to sit back and wait 15 years to start enjoying the fruits of my labour.

I see Destiny as a steady and safe way to accumulate a property portfolio with a long term approach to your investments. They say you can’t have your cake and eat it too…. High capital growth plus a positive cash flow; generally speaking positive cash flow properties aren’t in high capital growth areas. Margaret Lomas (founder of Destiny) doesn’t advocate renovating either; which is not something I agree with. The important thing to remember is some systems work better for different people.

I tend to agree with Dolf DeRoos’s approach. Dolf DeRoos to date is my favourite Real Estate guru. I have found his products to be easy to understand and very realistic and they make sense! I definitely recommend his books and products!

So, back to Property Secrets. Basically once I decided I wanted to take a more aggressive approach to Real Estate investing there were a few things I knew I would have to do.
find a property significantly either undervalue or one I could negotiate to a purchase price significantly under value; looking for properties where I can see potential to increase the value
do some renovating to the property to increase it’s value and
also be able to rent this property for a neutral to positive cashflow.

Even when I re-read my criteria I ask myself “what are you thinking??” “How are you going to find those properties??”

My answer; a lot of time, phone calls, studying and waiting for the right deal to present itself! So in short; I discovered that property secrets do all of the above for you. Of course there are fees involved – who’s going to do something for nothing?
The fees are:
$5000 – when you buy a property off them
$5000 – to oversee renovations

Now you don’t have to be a rocket scientist to know that for a $10,000 investment (which is fully tax deductible) if they assist you in 1. getting a property significantly under value and 2. assisting you to significantly increase the value – you’re going to end up in a pretty good position.I have decided on this method due to one word LEVERAGE! Property Secrets have a large data base of clients; they already have the contacts with Real Estate agents and trades people; they have already used the tradespeople for other projects and they know thy will get a quality job done. Now for little old me sitting 1200km’s north of the closest major City with zilcho knowledge of renovating; this seems like a pretty darn good option! Plus; they use their own property managers which ensures you’re going to get pretty good tenants and they have negotiated management fees down to 5% due to volume.

Can you see how my work load is lessened? I still get to earn an income and focus on other projects whilst being assisted towards other goals.

Your own back yard

This takes me to the other thing that has happened. Over the passed few months I have been looking for properties which have the ability to be developed – subdivided etc. I looked all over the country and have found out that theblock we already own is SUB-DIVIDABLE! (yeah I know…. Should have gone there sooner; I just took the word of Daniel who told me it wasn’t!) After talking to the town planner who doesn’t see any dramas arising with sub-dividing; we stand to increase the properties vale from 1 block worth $160k to 2 blocks worth $130k each for a total maximum cost of $30k! If we then build 2 houses on these blocks the value is through the roof! It stuns me that I had this sitting under my nose the entire time; we could have already had this sub-division done using the equity in it to pay for the costs!

The day before I found out I read a story in One Minute Millionaire about a guy that goes searching for diamonds far and wide – he ends up old, lonely and dying far from home with no diamonds and yet there were a field of diamonds in his own farm. So I suppose the moral of the story is there is always a diamond close to home; sometimes it just takes a change in perception to see it!

What Now

So I guess I’ve had quite a few developments in 16 days! One thing I am more sure about than ever is that Daniel and I have to increase our cash flow to assist with our Real Estate ventures. This has lead me to look at franchises and also try and get my own act together learning about website design and e-commerce as I believe this is a great way to build a buisiness that requires limited outlay of capital. It will be time consuming getting these projects off the groun; but I believe once they’re up and running they will eventually provide a cashflow with minimal effort. Back to the diamond theory – Daniel has been offered the opportunity to purchase the business he is currently running. I am very keen for a break from the town which we’re currently living; but figure if we can double our current incomes by him doing that and myself possibly staying where I am – but negotiating some kind of a deal where I can go to ABN and subby to my boss or get a partnership in the business I run we can get ourselves in to a pretty darn nice position over the next 5 years.

I cant help but think maybe with this opportunity the diamonds are in fact in our own back yard – yet we’re contemplating running off and starting something new somewhere new. We’ll know what we’re doing in the bnext few weeks. When I get back from holidays im going to be working with Dan in his shop 2 Saturday mornings and for 2 hours in the afternoon on the counter to see how I feel about it. It was a chance to help him out as they’re so short staffed as well as an opportunity for us to work together!

Deal 1

Well, I just negotiated my first SUCCESSFUL real estate deal!! It’s only a little unit, but it will be ours! I’ve wanted to get my hands on my own piece of real estate for almost 5 years…… from trying to buy Dans partner out of his house at 20 to seeing little opportunities present themselves along the way; which might I add would have made me a gold mine. BUT everything happens for a reason. Had I have purchased that unit out the front for 90k could have I progressed; or as it is; obviously I wasn’t gutsy enough to go it on my own; and I do believe the outcome is meant to be as being behind the 8 ball has made me look and learn. I have desperately looked for a ‘smarter and better’ way to exist on this planet.

Deal 1: Unit 29 Exmouth Villas, Exmouth Western Australia
Purchase Price: $260,000 Rental Return: $350 per week Outcome: WIN WIN

I am in the process of reading “One minute Millionaire’ and this deal has given me absolute faith in the teaching of the book.

Firstly; I didn’t believe it would be possible to find a positive cash flow property in Exmouth. My investing strategy is positive, positive, positive; however I thought I would be breaking all of my own rules for this deal; paying too much as it is a sellers market, having it as a negatively geared property etc etc. However, I was prepared for this as I initially began to look at the property as a home for Daniel and I. With skyrocketing rents and a housing market that seems to climb ferociously defying the trend of the southern WA market; I sought out this property so that Daniel and I could remain in town, rationalizing that if we were going to be paying upwards of $300 a week rent we would be better off pouring that money in to our own mortgage.

Now, I will elaborate on this; because it doesn’t always work out better to rent. In many cases you are probably better off renting rather that incur the enormous expenses of home ownership ONLY if you are disciplined enough to re-invest the savings you’re building through renting.

I had to equate the cost of the interest of the loan vs the annual cost of renting.
I knew roughly what my purchase price would be; so I used the following formula.

To determine interest only payments:
Purchase price x interest rate = annual interest; divide this payment by weeks of the year, months or whatever suits to show the cost. In my case:

$260 000 x 7.85% = $20, 410.00 / 52 weeks of the year: $392.50 per week.
In my scenario I also added on the fixed costs of this property; in this case strata fees, shire and water rates which is $90 per week GRAND TOTAL of $482.50 per week.

To rent would cost us $18,200 per year and it is increasing rapidly. To own our own home would cost us $25,090 per year - $6,890 more per year. In my opinion it was better for us in our circumstance to wear the extra expense for the sake of
paying off our own mortgage and
I know the capital growth on the property will far surpass the holding costs.

So, I decided to buy a home! However what next unraveled changed the entire scenario!

I had been put in contact with the owners of this property via a friend; so we were basically negotiating this deal privately. I went and inspected it and they showed me through; we chatted about what they wanted and what I wanted and then I went away to go over the figures and discuss it with Dan. I already knew it was mine; I liked what I saw. They asked that we discuss the rent they would pay (as they wanted to rent it back off us for a period of 6 months) the next time we spoke should we decide to buy the property; so I left it at that.

I didn’t contact them until late the next day; although I wanted to do it 6am in the morning. They invited me around to discuss my offer in person. My business deal turned in to a 2 and a half hour lesson on finances, investing and the sorts; which I am thrilled to add that after 75 years of their investing and buying houses; they didn’t tell me anything I didn’t already know; so that reassurance was great in itself. But I sat and listened and didn’t let on that I knew anything. I felt that my being there was an investment of my time as I think they just liked to chat to someone who has enthusiasm and could make them feel good to be able to pass on some of their knowledge; so I stayed and felt good about staying and listening (it did drag on a bit in the end).

I asked for a purchase price of $250 – 255k and a rent of $250; they counter offered with $260 and $350 per week rent. I nearly fell off the seat. I probably could have haggled regarding the purchase price, but didn’t bother because I felt I was getting a great deal. They were happy I was happy and the meeting ended with us all having a hug me thanking them for imparting their wisdom upon me and them thanking me for my time.

In the course of this transaction i:
Didn’t forsake any of my own values and I tried to look after theirs too.
I knew they wanted answers reasonably quickly; otherwise they would list it on the Monday. Not only did I know that if it had been listed it would have sold within a day, but I felt I owed them to make a quick decision.

Over the passed month I have never felt so thankful that I have poured so many hours in to researching real estate, reading books, making offers, having offers knocked back etc because it is all invaluable knowledge and experience.

In the last fortnight; I made an offer on a property, but walked away because I had done my figures and I knew what I wanted to pay for it. Just dealing with the real estate agents and applying my knowledge was fantastic.

For example; I asked for all the standard expenses of the property; to which the agent replied she didn’t have them. The agents had told me that this particular property had been under offer 3 times! To which I had to wonder; why didn’t they have the figures I had asked for? Any serious investor will want to know these figures for their diligence; which made me think there wasn’t nearly as much interest in the property as what they were saying and might I add this particular property has sat on the market for longer than any other property in town. It’s brand new and is actually a really good buy for the right person; so it does leave me scratching my head. Another thing I caught out; due to making the rates enquiries is that the agent was struggling to get in contact with the owner. When I went in to the office to submit my offer the agents husband (also an agent and co-owner of the business) walks in saying ‘Tim just got off the phone from the owner – we’re trying to talk him in to selling! This offer would have to be right on the money to get him to accept’ WHATEVER – she has just told me you cant get hold of the owner and you’ve come in saying this – which might I add he had also told me the same thing a week earlier (one must have a great memory if they’re going to lie) because I picked up on it straight away. My offer remained the same; the owner they said counter offered at full asking price; to which I asked the agent to have him sign the refusal and I would counter offer on paper – because I wouldn’t stand for them verbally pushing up the price; I wanted to be sure that my offer had in fact been presented.

All in all it’s been a busy month. I will conclude this post by saying; if you’re serious about getting your portfolio started; just get out there and get involved; even if it takes 6 months to get the deal you want (which I doubt it will) dip your toes in the water then start swimming; because as the old adage goes; you learn more by doing!

DO STUDY
DO YOUR DILLIGENCE
DO FIND ADVISORS – No one has to go it alone these days; why try and re-invent the wheel? (I use Destiny Financial Solutions – my advisor James is a gem and has helped me learn the formulas etc www.destiny.net.au )
DO MAKE A START!

(that sounded like a Dilmah tea ad; DO TRY IT) J lol

Xxx Kat