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Thread: Property rocks

  1. #41
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    Hi Halebop,

    You hit the nail on the head - my partner has done very well out of it. Its his business, its what he does. He doesn't put up any money. I put up the money, he puts the deal together and we go halves in the profit. If by chance there is a negative cash flow one month, then that is halved as well.

    For me its passive. I just sign a few bits of paper and the cash starts coming in. I'm busy doing other things, I don't want to spend all my time 'in the market', but I do want my money working for me.

    My partner supplies the expertise, the contacts, the systems and the time. He puts it all together and manages it and earns multiple recurring income streams.

    With buy and hold, the cash flow usually isn't decent until you have paid off the mortgage, which usually takes many years. With vendor financing the cash flow is good from the start.

  2. #42
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    TSK, TSK we are getting touchy. For the second time i did say i got it wrong. I dont have to like it or take the moral high ground i merely implied that i would never do it. To be so touchy you must have ideas along those lines yourself why else would you be jumping up and down. BEST OF LUCK ANYWAY. macdunk

  3. #43
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    Macdunk,

    I'm comfortable with the vendor finance concept, the guy I deal with and how we do business. If I wasn't comfortable I wouldn't do it.

    Best of luck to you too.

    Regards,
    Warwick

  4. #44
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    Bob Jones in Herald on Sunday - Talk of real estate crash 'bollocks'

    Sir Bob Jones blames doomsayists for scaring two-thirds of Kiwis who own their own homes.Just look at Australia he urges...the much-vaunted crash failed to eventuate.

    Property still rocks. High-fives with MacDunk

  5. #45
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    Property crashes do not happen, unlike share market crashes. The reason being excluding forced sales, that people wont sell at a loss unless it is forced upon them. Let us presume you had a home in Auckland and shifted to wellingon. Let us presume that the house in auckland was worth $500000 and the house you wanted to buy was $500000. Let us be quite silly and say your house in Auckland sold at the bottom of the market at $400000 then i put it to you in the same market the house in Wellington you will buy at $400000. Where is the loss?. If you have a few rental properties you know that the market goes in cycles,and your portfolio goes up 10pc pa on average plus rent, so there is no where you will sell at the bottom of a cycle. The rich people understand the concept the dummies argue against it, look into the rich list and how they got there. macdunk

  6. #46
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    Property crashes do happen and one happened quite recently. In the 70's over a period that incurred some 30%+ in inflation property values remained static. That's a thirty percent "crash" for the mathematically challenged. Given the stagflation of the day though it was more a dull thud shrouded by the thuds of all the other dulls. Most people were more concerned working out which day of the week they were allowed to drive to the travel agent to book the one way ticket to Oz. ...Hang on, that sounds familiar...?

    Confusing absense with avoidance is a common failing of those with a vested interest. Bob Jones would not be immune to vested interests. Hang on, that sounds familiar too!

  7. #47
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    There was quite a significant one in 1990-91 as well. I was buying Auckland property in 1991 at $20,000.00 under Govt Valuation.

  8. #48
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    "the market goes in cycles,and your portfolio goes up 10pc pa on average plus rent"

    hey macdunk I've heard you quote this many times... I'm wondering where you get that sort of stat from...?

    I've done plenty of research on historical house prices and i calculate long term average price increases at around 6% per annum... thats nominal i mean, not real...

    so where do you get your 10% and which price data are you using here? thats a very bullish expectation of a long term average...

  9. #49
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    MICK, I only can quote reality mick, and reality begins at home. I have never built bought or sold a property that didnt exceed 10pc.
    Blocks of bare land in my area have gone up 500pc in ten years coastal blocks leave those figures for dead. Stick a house on it, let some smart financial wizard pay it off in rent, then tell them how clever they are for renting. The idea with property is to borrow let some other mug pay it off. macdunk

  10. #50
    Senior Member Halebop's Avatar
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    quote:Originally posted by duncan macgregor

    The idea with property is to borrow let some other mug pay it off. macdunk
    I keep hearing this. At 4% yields (or negative yields for a residential coastal section) how does the mortgage interest get serviced, let alone paying off the loan? How would this even happen at 8% yields? I think most property stats live in a fantasy world where cashflow, capex and tenanting problems don't exisit. I have plenty of friends crowing about they $x00,000's gain they made on this or that property, conveniently forgetting the costs of purchasing and deposits, x000's in improvements, x years of negative cashflow and uncounted hours of personal labour. Rent is dead money? What is interest, labour and capex?

    I don't discount the benefit of a smart property purchase and in any market that great "self financing" deal can be found. But talking "property gains 10% per annum" is pure salesman's rubbish - not investors analysis. I could say shares gain 100% per annum on my last 2 and half years. I could say shares gain 25%+ per annum on the basis of my 20+ years of personal share investing experience. ...But they don't, do they?

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