RESULTS Hotline! 1 The RESULTS Team Simon Buckingham - - PDF document

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Write this Down!

• RESULTS Hotline!

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The RESULTS Team Simon Buckingham

RESULTS Coach

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The RESULTS Team Brendan Kelly

RESULTS Coach

The RESULTS Team Tony Lambrianos

RESULTS Coach

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The RESULTS Team Lynn Buckingham

RESULTS Coach

The RESULTS Team Leon Madigan

RESULTS Consultant

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The RESULTS Team Paula York

Event and Program Management

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Today is About

• 1. Education:

– Today’s Property Market! – Building Skills!

• Number Crunching
• Goal Achievement

Today is About

• 1. Education:

– Grads

• Winning the Money Game
• Advanced Negotiation Strategies

(And other dirty tricks!)

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Today is About

• 2. Networking:

– Meet other investors – Create peer support

The Challenge*

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Last 4 Years* Last Program*

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Already In This Program* What will it be on June 30, 2012*

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The

• Competition
• Competition

Guess closest to the total amount

• f property purchased (at cost)

during the 2011 RESULTS Program and win7

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Gold Pass Competition

A VIP

• into the

2012 RESULTS Graduate Program valued at over $4,000!

• Competition 5 Rules
• Only unconditional deals
• Only contract dates between 1 July 2011

and 30 June 2012

• Lodge your guess before 31 August 2011 at:

www.resultsmentoring.com/goldpass

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Property Bingo!

Today’s Property Market

Part One: Are You Nervous?

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FEAR5O5METER

Greedy

Panic Selling! Panic Selling!

(Crash) (Crash)

Bidding War! Bidding War!

(Boom) (Boom)

FEAR5O5METER

Greedy

Panic Selling! Panic Selling!

(Crash) (Crash)

Bidding War! Bidding War!

(Boom) (Boom)

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Why So Gloomy*?

Global Economy...

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Chaos On Global Sharemarkets US Economic Woes

“Oops... we’ve run out of money!”

• Emergency austerity bill to

increase US gov’t debt limit: US$14.3 TRILLION

• US$16.7 TRILLION

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US Debt Deal Implications*

• Default averted
• Conditional on cutting $US2.5 trillion in

government spending over 10 years

• Likely to slow US economic growth further

– JPMorgan predicting 1.5% reduction next year

Not Good Enough For S&P!

• US ‘AAA’ credit rating downgraded to AA+

by Standard & Poor’s (first time in history)

• ‘AAA’ rating retained with Moody’s & Fitch
• Ironically, investors fleeing the sharemarket

7bought more US debt (Treasury Bonds)

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What Else Can The US Do?

• A. Keep US nearIzero base

rate on hold until 2013

• B. Print money!

–‘Quantitative Easing’ 7essentially buying own bonds to expand money supply and provide stimulus

• C. Raise taxes
• D. Cut spending further

US Risks Remain*

• Problems are not quick to fix
• Signs of contraction in US manufacturing
• A long hard road ahead for US recovery
• Further downgrade of US credit rating

could have serious implications:

– Higher interest rates for US consumers – Higher risk of ‘double dip’ recession

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European Debt Woes

• Greece bailed out again:

109 billion euros (A$143B) ...on top of 110 billion euro (A$144B) deal in 2010

• Debt restructuring plan:

– Banks, pension funds and private institutions holding Greek debt to accept lower interest rates

• r writeIoff part of the debt

European Debt Woes

• Italy & Spain bailed out:

– European Central Bank to buy up to 850 billion euros (A$1.2T)

• f Italian & Spanish debt
• Cost cutting measures:

– Italy aiming to balance budget by 2013 – Spanish reforms to cut budget deficit to 6% of GDP

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Euro Debt Deals: Implications

• Buys time for Greece, Italy, Spain to

implement necessary ‘austerity measures’

• Risks remain:

– Much work needed to get back on track – Other European sovereign debt issues: e.g. Portugal, Ireland – Short term funding for some European banks may become tighter – CostIcutting impacts growth

and

• – not facts – about France and

French banks’ creditworthiness sent global sharemarkets into a spin last week

• All 3 credit agencies

French AAA credit rating

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Who Holds The Purse Strings?

• China

China

– – World’s largest World’s largest forex forex reserves: reserves: ~$US3.2 TRILLION ~$US3.2 TRILLION – – Largest holder of US Treasury Bonds Largest holder of US Treasury Bonds ~$US1.2 TRILLION ~$US1.2 TRILLION – – Australia’s largest trading partner Australia’s largest trading partner for resources for resources

Who Holds The Purse Strings?

• China Risks:

– Slowing growth in China's manufacturing sector may lead to falling demand for Australian resources over time – World’s biggest exporter – Exposure to US bonds

China is not immune from fate of US economy

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Who Holds The Purse Strings?

• China Upside:

– Strong internal consumer spending – Demand from other developing nations – Large investment in infrastructure projects – GDP currently projected to grow 9% this year*

* !"##

Local Economy...

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• Equity Market Volatility!

Equity Market Volatility!

“Sharemarket Sheds $53bn”

“Wall Street Roars Back!”

“Global Stocks Dive Again”

Jobs

Latest ABS Stats:

• Not really all that ‘()&’

Jobless rate up 0.1% to 5.1% Full time jobs lost = 22,200 Part time jobs gained = 22,100

• Net change:

7100 fewer people in work

“Jobless rate's shock jump

Australia's unemployment rate rises to 5.1 per cent as the economy sheds 22,200 full time jobs.”

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Australian 25Speed Economy

Resources sector: Jobs growth Income growth Strong investment

Australian 25Speed Economy

Retail sector: Low sales growth (1.9%) for year to June ‘Discretionary’ retail just 0.1% growth Small retailers (e.g. independent grocers, clothing shops) suffering Risk to retail commercial property rents / vacancies

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Worries About Carbon Tax

Detail of proposed carbon tax poorly understood by consumers May impact cost of building:

• e.g. brickmakers not exempt

But many tradeIexposed industries to get up to 94.5% shielding from the tax

• e.g. cement, steel, glass,

aluminium

Housing Finance

Finance becoming more competitive Signs of some increasing flexibility in lending policies (7and the banks are making record profits too)

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Housing Finance

Responsible Lending Regs introduced in January have made nonIconforming / low doc loans harder to get Credit growth remains subdued

Housing Finance

Source: RPData / RBA

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House Price Trends Melbourne Median House Prices

Source: REIA

14 years of flat, low or negative growth 7 years of modI strong growth

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Sydney Median House Prices

Source: REIA

13 years of flat, low or negative growth 8 years of modI strong growth

Perth Median House Prices

Source: REIA, RPData/Rismark

14 years of flat, low or negative growth 7 years of modIstrong growth

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Brisbane Median House Prices

Source: REIA

14 years of flat, low or negative growth 7 years of modIstrong growth

How Have You Been Investing?

• Are you using a strategy that
• nly works 1/3 of the time?

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Canberra Median House Prices

Source: REIA

Adelaide Median House Prices

Source: REIA

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Hobart Median House Prices

Source: REIA

Darwin Median House Prices

Source: REIA

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NZ Median House Prices

Source: REINZ

Recent Trends...

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Rates of Growth in 2010*

Sydney Melbourne Brisbane Adelaide Perth Hobart Canberra Darwin % Change % Change 54 4 53 3 52 2 51 1 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8

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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%

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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

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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*

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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 Perth Adelaide Hobart New Zealand Melbourne Sydney Canberra Brisbane

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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
• wn 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% * +,-"""" ,./

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vs Markets

b b B b B b

b/B

b b

Darwin Perth Adelaide Hobart New Zealand Melbourne Sydney Canberra Brisbane

Strategies For Sellers Markets

Existing Properties Look For*

S

Strong Sellers Market Hold ‘Add Value’ Deals:

Reno, Subdivide, Develop

s

Moderate Sellers Market Sell Marginal Deals ‘Add Value’ Deals

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Strategies For Buyers Markets

Existing Properties Look For*

b

Balanced Market Sell Marginal Deals ‘Add Value’ Deals

B

Strong Buyers Market Hold (0

)

Cash Flow Deals ‘Scarcity’ Deals

The Power of Networking

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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

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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

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Support Groups

Sue Owen

Adelaide, South Australia www.propertymeeting.com.au Support Groups

Sue Owen

0409 847 775 adelaide@propertymeeting.com.au

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Support Groups

Sue Owen

82B Prospect Rd, Prospect adelaide@propertymeeting.com.au Support Groups

Tracey Bell

Launceston, Tasmania www.propertymeeting.com.au

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Support Groups

Tracey Bell

0417 337 942 Devonport: This Wednesday Support Groups

Coming Soon

Melbourne, Victoria www.propertymeeting.com.au

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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

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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

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Support Groups

Darren Hastie

Brisbane, Queensland www.propertymeeting.com.au Support Groups

Darren Hastie

Ice Works 5 Paddington Monday 29th August, 5.30pm

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Support Groups

Darren Hastie

0412 719 511 brisbane@propertymeeting.com.au Support Groups

Craig Medley

Perth, W.A. www.propertymeeting.com.au

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Support Groups

Craig Medley

Perth, W.A. craigmedley@iinet.net.au

Networking Exercise

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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

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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

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Sophisticated Sophisticated Property Investing Property Investing

Hands Off Investor Hands On Investor

Your Approach To Date?

MarketIDriven Profits Created Profits Lump Sum Cash Cash Flow

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Which Investing Approach?

• 1. Find Property

Which Investing Approach?

• 1. Find Property
• 2. Negotiate

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Which Investing Approach?

• 1. Find Property
• 2. Negotiate
• 3. Buy

Which Investing Approach?

• 1. Find Property
• 2. Negotiate
• 3. Buy
• 4. Apply Strategy

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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?

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Which Investing Approach?

• 1. Identify Profit

Which Investing Approach?

• 1. Identify Profit
• 2. Apply Strategy

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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

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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!

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The SIAIFIE System

The Property Investing Process

S A F E

Search Acquire Follow Through Exit

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Sophistication

See the profit Access the profit Make the profit Bank the profit

S A F E

Search Acquire Follow Through Exit

Searching

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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

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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

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• 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

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• 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

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• 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!

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• 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

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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

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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.

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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!

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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?

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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

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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)

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• 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

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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

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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!

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The Numbers:

Purchase Price

$ 100,000

Closing Costs $ 1,600 Initial Repairs (done by vendor) $ 0

Total Purchase Costs $ 101,600

= Annual Cash Flow $ 2,400

Cash Flow

Rental Income

$ 10,920

5 Annual Holding Costs $ 8,500 ÷ Purchase Price $ 100,000 Rental Income @ $210 per week

$ 10,920

= Gross Rental Yield 10.9%

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Hidden Value

Rental Income @ $210 per week

$ 10,920

÷ ‘Normal Market’ Yield, say*

7%

= Estimated ‘Normal Market’ Value

$ 156,000

Estimated Future Capital Gain

$ 56,000

• 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...

Words of Wisdom

• Watch out for how agents behave in

buyers market

• Value of relationship with agent
• Persistence is the key – KEEP GOING!

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Goal Achievement Goal Achievement

Back to basics!

Why are you investing?

Passive Income!

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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

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Investing For Cash*

Annual Income sought 8% Required Capital Base

=

How Much Capital Do You Need?

Investing For Cash*

• What Capital do you require? $_______
• By when?

__/__/__ Work backward from this to your 12Imonth goal

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Half Life, Third Value

Half5Life, Third Value Goals

$

Capital Goal? Income? By When? Cash Gain Cash Flow

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What is* Add Value

• Your 12Imonth goal?

$_______ But How do you know if this is Realistic?

‘Volunteer’

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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

?

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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

?

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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!

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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?

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RESULTS Calendar RESULTS Calendar

RESULTS Calendar*

We wanted to let you know:

• Ultimate Cash Flow Program
• New Zealand Investing Program

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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!

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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

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Lunch Numbers Numbers

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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

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Example: The Deal

Knowing your Numbers*

Chapter 6 Page 105 Deal Analysis eg.

93

• !

! "# "# $ $ %! %! &##' &##'

• !

!

• !

! ( ( $ $ %! %! ( ( )) ))

• Knowing your Numbers*

Example: The Deal

As Seen In Template 10

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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 Costs

Purchase Price

$200,000.00

+ 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

Sale Proceeds

$266,000.00

I Sale Costs at 3.0% $7,980.00 = Net Sales Proceeds $258,020.00

95

Example: The Cash

Now Determine Your Cash Needed!

*+ *+ % % ! !

• !

! "# "# $ $ %! %! &##' &##'

• !

!

• Knowing your Numbers*

96

Example: The Cash

As Seen In Template 10

Our Money Bank/Money Partner Total

Step 1

% % Purchase Costs

Purchase Price

$40,000.00 20%

$160,000.00 80% $200,000.00 + Closing Costs

$10,000.00

$0.00 $10,000.00 = Total Purchase Costs

$50,000.00

$160,000.00 $210,000.00

Step 2

Other Costs Reno Costs

$20,000.00

$20,000.00 (Reno, Holding, etc) Reno Loan Costs $0.00 + Holding Costs Loan Costs

$6,400.00

$6,400.00 Council

$1,000.00

$1,000.00 Insurance

$600.00

$600.00 Other

$20.00

$20.00 = Total Reno & Holding

$28,020.00

$0.00 $28,020.00

Step 3

Total Costs Total Purchase plus Other Costs

$78,020.00

$160,000.00 $238,020.00

Step 4

Sale Proceeds

Sale Proceeds

$266,000.00

I Sale Costs at 3.0% $7,980.00 = Net Sales Proceeds $258,020.00

97

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%

• f the Buy Price

Buy Reno Sell*

Back to Our Investing Goals!

Knowing your Numbers*

98

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

Knowing your Numbers* Remember This?

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 it Take? What is Your Target Purchase Price? Do I have the Cash for it? Is My Goal Realistic?

$90K Cosmetic Reno $45K 6 Months Each 2 $450K $180K Twice Yes!!!

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Remember This?

• Determine your goals – Done!
• Identify your available finance – Done!
• Choose your strategy – Done!
• Apply your numbers – Done!
• Become an area expert
• Define your ideal property
• Find your ideal property

*Not for Today

More On

Template 10

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Real Deals Real Deals

Real Deal Jeremy Jacka

“A Big Deal!”

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The Property An Ugly Ducking*

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An Ugly Ducking* The Opportunity*

• 4 x One Bed Units
• 6 x Two Bed Units
• Built over 2 titles totalling 1364sqm
• Not currently strata
• Fully Tenanted

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A Problem*

• Asking over $2.5M
• Don’t have $2.5M
• Walk away or7
• Find Joint Venture Partners!

What’s Better* All of nothing,

• r a share of something?

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Negotiations*

• Asking $2,550,000
• 4 weeks later, asking price dropped

to $2,150,000

• Formed JV team & offered $2,050,000
• n long settlement
• Accepted without any counter!

Many Options*

• Buy, StrataISubdivide & Sell
• Buy, Reno, StrataISubdivide & Sell
• Buy &Hold (minor reno to improve

current 5.5% Yield)

• Demo and subdivide land
• Combinations

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Chosen Strategy*

• Buy, StrataISubdivide & Sell
• Buy, Reno, Strata5Subdivide & Sell
• Buy &Hold (minor reno to improve

current 5.5% Yield)

• Demo and subdivide land
• Combinations

Before*

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Now* Now* Work In Progress Work In Progress

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Work In Progress Next Steps*

• Complete internal works:

– Kitchens – Building Compliance e.g. Firewalls between upstairs units

• Complete landscaping & external works
• Sell the end products!

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Purchase Costs

Purchase Price

$ 2,050,000

Closing Costs $ 112,000

Project Costs

Purchase Price

$ 2,050,000

Closing Costs $ 112,000 Renovation Budget 5 Internal $ 221,000 Renovation Budget 5 External $ 100,000 Planning & Subdivision Costs $ 35,000 Holding Costs (net of rent) $ 197,000

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Projected Sales!

Purchase Price

$ 2,050,000

Closing Costs $ 112,000 Renovation Budget 5 Internal $ 221,000 Renovation Budget 5 External $ 100,000 Planning & Subdivision Costs $ 35,000 Holding Costs (net of rent) $ 197,000 Anticipated Gross Sales

(6 x 2br @ $345k ea. + 4 x 1br @ $270k ea.)

$ 3,150,000

Selling Costs $ 32,000 Mate’s rates!

Anticipated Profit!

Purchase Price

$ 2,050,000

Closing Costs $ 112,000 Renovation Budget 5 Internal $ 221,000 Renovation Budget 5 External $ 100,000 Planning & Subdivision Costs $ 35,000 Holding Costs (net of rent) $ 197,000 Anticipated Gross Sales

(6 x 2br @ $345k ea. + 4 x 1br @ $270k ea.)

$ 3,150,000

Selling Costs $ 32,000

Anticipated Profit $ 403,000

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Lessons & Words of Wisdom

• Clearly define JV partner responsibilities
• Learn to ask the right questions of

Council and Authorities

Lessons & Words of Wisdom

• Clearly define JV partner responsibilities
• Bigger deal doesn’t mean more effort
• Bigger numbers mean cost overruns

amplified – Maintain tight budget control

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Lessons & Words of Wisdom

• Back yourself!

If a deal is good enough, you’ll probably find a way to fund it (But make sure you always have an escape clause7 just in case!)

Common Roadblocks Common Roadblocks

To Success To Success

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S5A5F5E Investing is not easy!

• 1. Opinions of others
• 2. Emotion
• 3. ‘Gut feel’ investing
• 4. Life Pushing Back

Enemies of Effective Analysis

Enemy #1: Opinion

• Vested interests

(e.g. REA)

• Failing to distil FACT

from OPINION

• Uninformed or subjective
• pinions

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Enemy #2: Emotion

• Fear & Greed
• Emotion at auctions,

pressure selling

• Pressure to do a deal,

just for the sake of doing a deal

– Doing a bad deal is a worse outcome than doing No Deal! – Share the Frustration

Enemy #3: ‘Gut Feel’

• Ignorance of the numbers
• Lack of due diligence
• “She’ll be right, mate!”

It’s all “Hope and Pray”

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Enemy #4: Life

• Impact on Relationships
• Frustration & Resistance
• Life ‘getting in the way’
• OverICommitment

Defeating Your Enemies

Sacrifices will be required.

Persistence is the key!

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Remember This? Remember This?

Hands Off Investor Hands On Investor

In the future...

MarketIDriven Profits Created Profits Lump Sum Cash Cash Flow

,

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Stretch Break Stretch Break

Today’s Property Market

Part Two: Looking Forward7

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Overall Summary

• Ongoing global economic uncertainties
• Extreme volatility in equity markets
• Property market 0 and
• Housing shortage remains; rising rents
• 2( leading to (

Economic Outlook*

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Global Growth Forecasts Australian Economic Growth

• RBA 2011 growth estimate revised

downward last week:

May forecast: 4.25%; Current forecast: 3.25%

“7largely reflects the slowerIthanIexpected recovery in coal exports, as well as slower forecast growth in consumption”

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Outlook for Interest Rates

• Traders & speculators (early August):

– Betting on a 75 basis point cut by December

• Premature?

RBA: “...the Board remains concerned about the mediumIterm outlook for inflation.”

Outlook for Interest Rates

• Our take:

–Cut in interest rates becoming more of a , but don’t bank on it yet –RBA will be ( to cut rates while concerns about inflation persist –Rate increase this year now )

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Property Market Outlook* Sentiment Will Inhibit Growth

• Expect poor market growth in 2011
• Negative sentiment, uncertainty and fear

will keep a lid on prices

Panic Selling! Panic Selling!

(Crash) (Crash)

Bidding War! Bidding War!

(Boom) (Boom)

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Principle

When people don’t know what to do7. They do nothing!

Aussie Property Crash

• Vacancy rates low; Rents rising
• Unemployment low

– 3 increase expected

• Defaults low
• Structural undersupply
• f housing

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Population Still Increasing

Source: ABS/RBA

But Building Approvals Falling

Source: ABS/RBA

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Fundamentals Are Encouraging

• Finance becoming more competitive
• Wages rising

Fundamentals Are Encouraging

• Affordability improving

– Especially if rates actually fall

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Housing ‘Affordability’ Housing ‘Affordability’

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What Now*? Strategy

In a buyers market you want to be a7?

• Great negotiating opportunities:

– Conditional offers – Discounted price – Extended settlement terms (3+ months) – Access prior to settlement – Creative terms

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Strategy

When prices are flat or trending down7

• Minimise ‘time in the market’

– ‘QuickIturn’ deals7 < 18 month timeframe

• 4( growth:

– Renovation – Subdivision – Development

Strategy

When prices are flat or trending down7

• Be conservative on endIvalue
• Buffer against risk

– Increase target margin on costs by +5% – Negotiate entry price for additional margin – Reduce holding costs (long settlement / early access) – Know numbers to hold the property (worst case)

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Strategy

If Renovating7

• Be mindful of ‘austerity’ mindset

– % over highest quality – ‘Less is more’7 Don’t overIcapitalise! – Avoid ‘subjective’ inclusions – Repurpose internal areas for maximum gain: e.g. Extra bedroom or 2nd bathroom – Know your target market!

Strategy

If Subdividing / Developing7

• Test For Demand First

– Know your target market! – What is actually selling? – Avoid pioneering – Beware the ‘Field of Dreams’ – Consider over inclusions – PreIsales before committing development costs

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Strategy

Buy for Cash Flow7

• Seek positive cash flow rentals in:

– Mining areas – Regional towns (multiIdwelling properties) – Overseas countries (e.g. NZ, USA)

Strategy

Cash Flow7

• Make your own positive cash flow:

– Renting by the room (e.g. student accommodation) – Create furnished / corporate rentals – Vendor Finance / RentItoIOwn

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Strategy

If &Property7

• Anticipate low growth or slight fall in value
• Seek to improve value outside

general market forces

• Look for ways to improve rent income
• Variable interest rate may

have advantages

Strategy

If &Property7

• Allow longer to sell
• Don’t be greedy
• Avoid auctions
• Stand out from the crowd:

– Optimise advertising copy – Consider ‘staging’ – Offer creative terms

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Principle

Don’t wait for the market to change7 Adapt your strategies to fit the market!

Wrap Up

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Feedback Forms

RESULTS Resources

Your Folder

• Volume 4 is Underway!
• Keep Going on Volume 1

Website

• Post Frequently
• Listen to Webinars
• Download Templates

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RESULTS Resources

Your Coach

• Call them!

Get Togethers

• Network!
• Specialised Workshops!

Coming Up*

Next Webinar

• Wednesday September 7th, 1pm

Next Get Together

• Saturday November 26th, in Melbourne

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Coming Up*

Ultimate Cash Flow Program

• Bootcamp: September 17thI18th in Melb

2011 New Zealand Program

• Starts October 4th
• Fly to NZ, Nov 30th

Coming Up*

Your Investment Property

• Saturday 5th November in Sydney
• Details: www.investing.yipmag.com.au
• Grab a brochure from the back!

Melbourne Home Expo

• October 7th I 9th

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Stay Connected With RESULTS

Facebook & Twitter

• Links on RESULTS Home Page!

Your Investment Property Magazine

• Articles by the RESULTS team

7And keep in touch with your Coach!

Afternoon Tea & Networking!