City House Price Growth To May (Source: RPData/Rismark July 2011) Median House Qtr Chg Year Chg Yield Sydney $580,000 I0.7% 50.1% 4.4% Melbourne $520,000 I1.8% 53.2% 3.7% Brisbane $440,000 I1.5% 56.1% 4.7% Adelaide $400,000 I1.7% 53.3% 4.2% Perth $475,000 I2.2% 55.7% 4.3% Hobart $336,000 I1.9% 53.5% 5.1% Canberra $555,000 I2.1% 0.4% 5.0% Darwin $460,000 4.8% 0.9% 5.2% All Capitals $487,000 51.3% 52.8% 4.2% Highs & Lows (Lows & Lowers???) (Source: RPData/Rismark July 2011) Median House Qtr Chg Year Chg Yield Sydney $580,000 50.7% 50.1% 4.4% Melbourne $520,000 I1.8% I3.2% 3.7% Brisbane $440,000 51.5% 56.1% 4.7% Adelaide $400,000 I1.7% I3.3% 4.2% Perth $475,000 52.2% 55.7% 4.3% Hobart $336,000 I1.9% I3.5% 5.1% Canberra $555,000 52.1% 0.4% 5.0% Darwin $460,000 4.8% 0.9% 5.2% All Capitals $487,000 I1.3% I2.8% 4.2% 33
Regional Areas • 40% of housing is outside capital cities • Values down 2.8% overall so far this year* • Main falls in coastal and floodIaffected areas • Mining areas holding up relatively well * Source: RPData/Rismark, July 2011 Short Term Trends Are Driven By SENTIMENT 34
At Your Tables* • Discuss the RISKS & OPPORTUNITIES you see in the market today • What’s happening in your local area7 Are prices going up, down or sideways? Reading The Market* 35
Buyers vs Sellers Markets • Buyers Market: – More sellers than buyers; Properties sit on the market; Prices fall • Sellers Market: – More buyers than sellers; Properties sell quickly; Prices rise • Balanced Market: – Moderate sell times; Slow growth ������� vs �������� Markets Darwin Brisbane Sydney Canberra Perth Adelaide Melbourne Hobart New Zealand 36
Your Turn! • Work in pairs or 3’s • Rate each centre as: – Strong Seller’s Market: ( S ) – Moderate Seller’s Market: (s) – Balanced Market: (b) – Buyer’s Market ( B ) • Circle & rate your own area too! House Price Growth To May (Sources: RPData/Rismark July 2011; REINZ) Median House Qtr Chg Year Chg Sydney $580,000 I0.7% 50.1% Melbourne $520,000 I1.8% 53.2% Brisbane $440,000 I1.5% 56.1% Adelaide $400,000 I1.7% 53.3% Perth $475,000 I2.2% 55.7% Hobart $336,000 I1.9% 53.5% Canberra $555,000 I2.1% 0.4% Darwin $460,000 4.8% 0.9% �* +,-"�"""� ,�./ ���� 37
������� vs �������� Markets Darwin b B Brisbane B b Sydney b b Canberra Perth b b/B Adelaide Melbourne b Hobart New Zealand Strategies For Sellers Markets Existing Look For* Properties Strong ‘Add Value’ Deals: S Sellers Hold Reno, Subdivide, Market Develop Moderate Sell Marginal s Sellers ‘Add Value’ Deals Deals Market 38
Strategies For Buyers Markets Existing Look For* Properties Balanced Sell Marginal b ‘Add Value’ Deals Market Deals Strong Cash Flow Deals B Hold ( 0������� Buyers ��������� ) ‘Scarcity’ Deals Market The Power of Networking 39
Why Is Networking Critical? • Get on agents’ hot lists get wholesale prices • Leverage other people’s contacts vs. Yellow pages and 3 quotes • Leverage other people’s time from lessons they’ve learnt • Leverage other people’s money share expenses and risk Why Is Networking Critical? Success in property investing is not about bricks ‘n’ mortar 7it’s about people and relationships 40
Networking Opportunities Make the most of: • RESULTS Get Togethers • Forums • Accountability Buddies • Local investor support groups Support Groups Property Meetings In each State of Australia www.propertymeeting.com.au 41
Support Groups Sue Owen Adelaide, South Australia www.propertymeeting.com.au Support Groups Sue Owen 0409 847 775 adelaide@propertymeeting.com.au 42
Support Groups Sue Owen 82B Prospect Rd, Prospect adelaide@propertymeeting.com.au Support Groups Tracey Bell Launceston, Tasmania www.propertymeeting.com.au 43
Support Groups Tracey Bell 0417 337 942 Devonport: This Wednesday Support Groups Coming Soon Melbourne, Victoria www.propertymeeting.com.au 44
Another Support Group Active Property Network www.activepropertynetwork.com.au Blackburn, Melbourne Support Groups Jane and Dale Sydney, New South Wales www.propertymeeting.com.au 45
Support Groups Jane and Dale Parramatta RSL 7.30pm on Monday! (15/8/2011) Support Groups Jane Lees 0408 222 578 Jane_lees2003@yahoo.com.au 46
Support Groups Darren Hastie Brisbane, Queensland www.propertymeeting.com.au Support Groups Darren Hastie Ice Works 5 Paddington Monday 29 th August, 5.30pm 47
Support Groups Darren Hastie 0412 719 511 brisbane@propertymeeting.com.au Support Groups Craig Medley Perth, W.A. www.propertymeeting.com.au 48
Support Groups Craig Medley Perth, W.A. craigmedley@iinet.net.au Networking Exercise 49
7and now7 a Networking Exercise! Networking Exercise Networking Questions (4 times) 1. Name 2. Suburb 3. Phone # / Email Address 4. Investing Strategy 5. Meeting within 7 days 50
Speed Networking... The Rules • You have 45 seconds each. – Introduce yourself – Swap Details – Make Agreement for next 7 days • Change person! • Repeat 4 times! Morning Tea 51
Sophisticated Sophisticated Property Investing Property Investing Your Approach To Date? ������������������ Hands On Investor Hands Off Investor ����������������� Lump Sum Cash Cash Flow ���������������� MarketIDriven Profits Created Profits 52
Which Investing Approach? 1. Find Property Which Investing Approach? 1. Find Property 2. Negotiate 53
Which Investing Approach? 1. Find Property 2. Negotiate 3. Buy Which Investing Approach? 1. Find Property 2. Negotiate 3. Buy 4. Apply Strategy 54
Which Investing Approach? 1. Find Property 2. Negotiate 3. Buy 4. Apply Strategy 5. Profit Wise? Which Investing Approach? 1. Find Property 2. Negotiate 3. Buy 4. Apply Strategy 5. Profit Wise? 55
Which Investing Approach? 1. Identify Profit Which Investing Approach? 1. Identify Profit 2. Apply Strategy 56
Which Investing Approach? 1. Identify Profit 2. Apply Strategy 3. Find Property Which Investing Approach? 1. Identify Profit 2. Apply Strategy 3. Find Property 4. Negotiate 57
Which Investing Approach? 1. Identify Profit 2. Apply Strategy 3. Find Property 4. Negotiate 5. Buy Wise! Sophisticated Investing • Determine Your Profit Before You Buy • Everything Comes Back To: – Preparation – Due Diligence – The Numbers! 58
The SIAIFIE System The Property Investing Process A S F E Follow Search Acquire Exit Through 59
Sophistication Make Bank See Access the profit the profit the profit the profit S A F E Follow Search Acquire Exit Through Searching 60
Search Sophistication • Determine your goals • Identify your available finance • Choose your strategy • Apply your numbers • Become an area expert • Define your ideal property • Find your ideal property Acquiring 61
Buying the Property 1. Building Your Team 2. Write Your Offer 3. Negotiate 4. Contract of Sale 1. Build Your Team • Mentors • You have a Property Coach! • Accountant • Mark Unwin • Bonus Materials: Website • RESULTS Community 62
1. Build Your Team • Financier • Acceptance Finance – Colin McIlfatrick • Perry Finance – Alistair Perry • RESULTS Community • Solicitor • Lewis O’Brien • RESULTS Community 1. Build Your Team • Real Estate Agents • RESULTS Vol 1: 29 Questions • One Per Office in Your Area • Trades • Builder, Chippy, Plumber, Electrician • RESULTS Community 63
2. Write Your Offer • Writing Offers –RESULTS Website • Bonus Materials • Template 14 2. Write Your Offer • Writing Offers –RESULTS Website –Includes • Price, Holding Deposit, Balance of Deposit • Settlement Period and Conditions 64
3. Negotiate • Negotiation: – Various Webinars in the Archive RESULTS Program 3 5 Webinar #6 Simon Buckingham, Leon Madigan & Cheyanne Brae I Irresistible Offers and Negotiating Secrets �������&�$���1�"#1"'1#.� 3. Negotiate • Negotiation: – Various Webinars in the Archive – Tactics: – She who says the number first, loses! – Uncover the vendor’s needs (eg easy exit?) – Negotiate on price or terms, not both – Know your ‘walkIaway’ figure 7 and stick to it! 65
4. Sale Agreements • The Contract of Sale – Various Webinars in the Archives – Sale Agreement particulars • Clauses, terms and conditions – Additional Information Required • Property Particulars • Titles, Zoning, Permits etc Follow Through 66
Following Through on the Deal • Here your money is made or lost – Budget control – Time management – People management • Systems of control • Within the Project • For Multiple Projects Exiting 67
Exiting the Deal • Selling Your Property • Targeting your Market: Template 18 • Writing Great Sales Copy • Staging your Property When to Sell* • It’s time to think about selling if you wouldn’t buy back at the same price. • The best way to grow your portfolio is with realised profits. 68
The Message: • Don’t sell just for the sake of it • Don’t hold just for the sake of it, either • Be prepared to sell if you can get a better return elsewhere Successful Property Investing Is all about the PreIPurchase Analysis The Search! 69
Search Sophistication • Determine your goals • Identify your available finance • Choose your strategy • Apply your numbers • Become an area expert • Define your ideal property • Find your ideal property Write down* 3 Things You Have Learned7 • How you’ve been investing? • What you might need to change? • What is your very next step? 70
4 min. ‘Stretch Break!’ • Stand –up! • Find some one from a different table • Discuss what you have learnt with them! Be back in your seats in 4 min. Real Deals Real Deals 71
Real Deal Kat & Alan Jarman “Off to visit the Kiwi’s!” *And Found A Great Deal (or 2) *And Found A Great Deal (or 2) 72
• • 3br/2ba 3br/2ba ex ex5State home State home • • 600sqm 600sqm ‘cross ‘cross5lease’ lease’ section section • Long term tenant • Long term tenant (6 years) (6 years) • • Renting $210pw Renting $210pw • • First First impressions*? impressions*? Basic* But Solid Basic* But Solid 73
A Bit Rough Around The Edges A Bit Rough Around The Edges Patchy walls Plumbing issues Due Diligence • BuyerIfriendly REA revealed: – Vendor was a property manager!!! – Needed to offload something from portfolio 74
Due Diligence • Limited time, so bought time with due diligence conditions in contract: – Building inspection – Rental appraisal, review of lease docs • Known maintenance issues: – Leaky taps, holes in wall – Contract condition for vendor to fix Negotiating The Deal • Asking NZ$ 125,000 • Offered NZ$ 95,000 • Bought for NZ$ 100,000 • A 20% discount! 75
The Numbers: $ 100,000 Purchase Price Closing Costs $ 1,600 Initial Repairs (done by vendor) $ 0 Total Purchase Costs $ 101,600 Cash Flow Rental Income @ $210 per week $ 10,920 ÷ Purchase Price $ 100,000 = Gross Rental Yield 10.9% $ 10,920 Rental Income 5 Annual Holding Costs $ 8,500 = Annual Cash Flow $ 2,400 76
Hidden Value • 10.9% is a high yield – even in current NZ market • If sell back into the market in more ‘confident’ times at say 7% yield... $ 10,920 Rental Income @ $210 per week 7% ÷ ‘Normal Market’ Yield, say* $ 156,000 = Estimated ‘Normal Market’ Value $ 56,000 Estimated Future Capital Gain Words of Wisdom • Watch out for how agents behave in buyers market • Value of relationship with agent • Persistence is the key – KEEP GOING! 77
Goal Achievement Goal Achievement Back to basics! Why are you investing? Passive Income! 78
Back to basics! • Your current family income? $_____p.a. • Plus some7 $_____p.a. Investing for Income for Life* There Are Two Different Approaches • Investing for Income from Day 1 • Cash Flow and Hold • Investing for Cash to Buy Income Later • Add Value and Sell • Then Buy Income Properties 79
Investing For Cash* How Much Capital Do You Need? Annual Income sought 8% = Required Capital Base Investing For Cash* • What Capital do you require? $_______ • By when? __/__/__ Work backward from this to your 12Imonth goal 80
Half Life, Third Value Half5Life, Third Value Goals $ Capital Goal? Cash Flow Cash Gain Income? By When? 81
What is* Add Value • Your 12Imonth goal? $_______ But How do you know if this is Realistic? ‘Volunteer’ 82
Remember This? ? • Determine your goals • Identify your available finance • Choose your strategy • Apply your numbers • Become an area expert • Define your ideal property • Find your ideal property Remember This? • Determine your goals – Done! • Identify your available finance ? • Choose your strategy • Apply your numbers • Become an area expert • Define your ideal property • Find your ideal property 83
Remember This? • Determine your goals – Done! • Identify your available finance – Done! • Choose your strategy ? • Apply your numbers • Become an area expert • Define your ideal property • Find your ideal property Remember This? • Determine your goals – Done! • Identify your available finance – Done! • Choose your strategy – Done! ? • Apply your numbers • Become an area expert • Define your ideal property • Find your ideal property 84
How*? Your 12Imonth goal? $_______ What’s Your Strategy? What is Your Target Profit Per Deal? How Many Deals Do I Need To Do? How Long Will a Deal Take? What is Your Target Purchase Price? Do I have the Cash for it? It’s all in the Numbers! 85
More to come*! Write down* 3 Things You Have Learned7 • How you’ve been investing? • What you might need to change? • What is your very next step? 86
RESULTS Calendar RESULTS Calendar RESULTS Calendar* We wanted to let you know: • Ultimate Cash Flow Program • New Zealand Investing Program 87
Ultimate Cash Flow Program Turning Vendor Finance Into A Complete Business • Program delivered by Vendor Finance experts Dave & Julie Siacci • Opening to the public this week • RESULTS discount! • More info at the back NZ Investing Program Accelerated Overseas Investing • Field trip to NZ in Dec 2011 to find positive cash flow deals • Opportunity to tap into the NZ market with on the ground coaching • RESULTS members only • 6 places left! 88
Lunch Lunch (nearly) (nearly) During Lunch Keep Going! Networking Questions 1. Name 2. Suburb 3. Phone # / Email Address 4. Investing Strategy 5. Meeting within 7 days 89
Lunch Numbers Numbers 90
The Numbers! • You must learn to crunch numbers • Know your profit / income expectations • Know your buy and sell / rental prices • Know all of the associated costs to achieve your objective for the property Numbers: The Basic Model • Buy–Add Value–Sell : Profit – Reno – Subdivision – Development • Buy and Hold: Income / Capital Growth – Residential – Commercial / Industrial • Combinations 91
Example: The Deal Knowing your Numbers* Chapter 6 Page 105 Deal Analysis eg. 92
Knowing your Numbers* ��������� ��������� �������� �������� ��������� ��������� ������� ������� ! ! "��#������ "��#������ �$���� �$���� %! %! &##�'���� &##�'���� ������� ������� ��! ��! ������ ������ ������� ������� ��! ��! (��������� (��������� �$���� �$���� %! %! (��������� (��������� ��))���� ��))���� ��� ��� Example: The Deal As Seen In Template 10 93
What is Template 10? Template 10: Number Crunching ! • Built on Same Model • Built to Support SIAIFIE Investing. • Covers Income and AddIValue Strategies Our Money Bank/Money Partner Total Step 1 % % Purchase Price $200,000.00 Purchase Costs + Closing Costs $10,000.00 = Total Purchase Costs $210,000.00 Step 2 Other Costs Reno Costs $20,000.00 (Reno, Holding, etc) Reno Loan Costs $0.00 + Holding Costs Loan Costs $6,400.00 Council $1,000.00 Insurance $600.00 Other $20.00 = Total Reno & Holding $28,020.00 Step 3 Total Costs Total Purchase plus Other Costs $238,020.00 Step 4 Sale Proceeds $266,000.00 Sale Proceeds I Sale Costs at 3.0% $7,980.00 = Net Sales Proceeds $258,020.00 94
Example: The Cash Knowing your Numbers* Now Determine Your Cash Needed! *�+���� *�+���� �%����� �%����� ��! ��! ��������� ��������� ������� ������� ! ! "��#������ "��#������ �$���� �$���� %! %! &##�'���� &##�'���� ������� ������� ��! ��! ����� ���������� ����� ������� ������� ��� ��� 95
Example: The Cash As Seen In Template 10 Our Money Bank/Money Partner Total Step 1 % % Purchase Price $160,000.00 80% $200,000.00 $40,000.00 20% Purchase Costs $10,000.00 + Closing Costs $0.00 $10,000.00 $50,000.00 = Total Purchase Costs $160,000.00 $210,000.00 Step 2 $20,000.00 Other Costs Reno Costs $20,000.00 (Reno, Holding, etc) Reno Loan Costs $0.00 + Holding Costs $6,400.00 Loan Costs $6,400.00 $1,000.00 Council $1,000.00 $600.00 Insurance $600.00 $20.00 Other $20.00 $28,020.00 = Total Reno & Holding $0.00 $28,020.00 Step 3 Total Costs Total Purchase plus $78,020.00 Other Costs $160,000.00 $238,020.00 Step 4 Sale Proceeds $266,000.00 Sale Proceeds I Sale Costs at 3.0% $7,980.00 = Net Sales Proceeds $258,020.00 96
Buy Reno Sell* You will need7. • Approx 40% of the buy price in cash • Enough income to service 80% in debt • And be able to sell it for 33% more than you bought it for7 In Order to Profit by 10% of the Buy Price Knowing your Numbers* Back to Our Investing Goals! 97
Knowing your Numbers* If I want $45K in profit this year • 1 Reno at $450K – Available Cash $180K (40%) – Borrowing capacity of $360K • 2 Reno’s at $225K – Available Cash $90K twice – Borrowing Capacity of $180K Remember This? $90K Your 12Imonth goal? $_______ What’s Your Strategy? Cosmetic Reno $45K What is Your Target Profit Per Deal? 2 How Many Deals Do I Need To Do? 6 Months Each How Long Will it Take? $450K What is Your Target Purchase Price? Do I have the Cash for it? $180K Twice Is My Goal Realistic? Yes!!! 98
Remember This? • Determine your goals – Done! • Identify your available finance – Done! • Choose your strategy – Done! • Apply your numbers – Done! • Become an area expert *Not for Today • Define your ideal property • Find your ideal property More On Template 10 99
Real Deals Real Deals Real Deal Jeremy Jacka “A Big Deal!” 100
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