The amounts will vary by lender, and these amounts have changed over time, therefore you need to make an enquiry via your mortgage broker. A mortgage broker that has helped many of my students is Investor Finance.
Hans :: Jun.06.2007 :: Real Estate Investing :: No Comments »
Generally you need to use the bank’s panel valuers to get your finance through the bank. The best strategy is to ask the bank if you can use someone else, and if they will accept someone else’s valuation, before you organise it.
Bank panel valuers are ones that are acceptable to the banks, and will generally be conservative in their valuations. When the bank values a property it looks at what price it can sell a property at, in order to sell it quickly.
The bank’s intention is to give itself the greatest security for the loan and therefore it will tend to be conservative.
Hans :: May.22.2007 :: Real Estate Investing :: No Comments »
I’m so excited about writing this post today, because it’s all about something I don’t do very often… I’m holding a live event.
It’s called “Dinner With Hans” and it will take place in Sydney this May. I’m inviting along around 200 property investors and experts and we’re all going to enjoy a luxurious cruise around Sydney harbour.
I’m also going to put myself in the hot-seat and take questions from the audience LIVE on the night.
PLUS leading finance expert John Chapman from Investor Finance will be sharing his extensive property financing knowledge.
I’ll also be giving away free prizes on the night, as well as a stack of other gifts. I can promise you it will truly be a night to remember.
If you’d like to find out more about the event or book a ticket to come along, simply visit the Dinner With Hans website by clicking here.
It will be an incredible property investing event that’s completely unmissable. See you there!
Technorati Tags: Hans Jakobi, Live Property Investment Event, Property Investing Seminar, Real Estate Course, real estate investing
Hans :: Apr.11.2007 :: Real Estate Investing, Other Resources, General, Seminars :: No Comments »
Last night Channel 10 broadcast an important programme both for us as individuals and as property investors. Cool Aid highlighted how our day-to-day activities generate greenhouse gases and contribute to global warming.
I hope you saw it and decided to make some changes to your lifestyle to help save the planet.
I must admit, I’ve been a “greenie” for more than 25 years and one of our objectives in moving to the farm was to live a more sustainable lifestyle. Even though we’ve tried to minimise our impact on the environment and grow our own vegetables, there is still more that we can do and we found the suggested action steps suggested at the end of the program very helpful.
One of the guests on the program was Al Gore who has become a champion for the environment with his book, movie and DVD called “An Inconvenient Truth.” If you haven’t already seen the movie, I suggest you get hold of the DVD and watch it. It could save your life!
Another guest on the program was scientist, Dr. Karl Kruszelnicki.
He made two important points that property investors need to keep in mind.
The first one was the issue of some scientists who argue that climate change is just a normal phenomenon and is nothing to worry about. Dr Karl pointed out that there are many different types of scientists and that scientists generally focus on specific areas until they become specialists in that area.
He argued that the only scientists you should listen to on the issue of climate change are those who specialise in climatology.
While the others may still be scientists, it doesn’t mean they have any particular knowledge of the subject area and may be just voicing their opinion without having researched the matter fully.
This is a very good point and one that is just as relevant to property investors as it is to the issue of climate change.
You see, many would be property investors seek guidance from people who are not successful property investors in their own right (but who nevertheless have an opinion about the benefits or otherwise of property investment). These are people such as work colleagues, professional advisers who are not property investors themselves or friends and family.
That is a very dumb strategy!
It’s the same as asking your motor mechanic for a second opinion after your doctor has told you that you need brain surgery to remove a malignant tumour. You wouldn’t do it, would you?
So therefore, whenever you seek guidance from someone, make sure they have the credibility and experience to advise you intelligently and that they are not simply giving you their opinion. Make sure they walk their talk!
Smart investors base their investment decisions on facts, not on peoples’ opinions.
Dr Karl made another important point which will have an impact on property investors around the world. While I can’t remember the exact statistics, he pointed out that a significant percentage of the world’s population lives close to the coastline and no higher than 20 metres above sea level.
He actually stated, with the high probability that sea levels will rise in the future, there will be a significant drop in real estate values of properties which we now consider to be highly desirable and very valuable.
Can you conceive the possibility of the multi-million dollar harbourside mansions around Sydney harbour becoming next to worthless?
Ouch!
Just think of all the infrastructure that could be underwater!
How will some people catch the train to work?
Al Gore pointed out that even the World Towers memorial site could be underwater in Manhattan.
I have been saying this for about 10 years now and some people have said I’m crazy.
Now I know I’m ahead of my time a bit on this one, but I actually had a waterfront property in Sydney and sold it, so I’ve put my money where my mouth is.
As far as I can see, it is very unlikely that global warming is not a reality and that the human race has not contributed to the rising temperatures.
Just the massive population explosion over the last 100 years and the industrial revolution, should be enough to make most thinking people realise that all of this can’t simply take place without having an impact on our environment.
Fortunately we can still do something about the current situation. The changes will not occur overnight, so there is no need for despair. However, inaction will not save us either.
Here are some action steps you can take as a result of reading this post:
1. Examine your current lifestyle and make some decisions to reduce your contribution to carbon emissions in your home or business. Visit: www.coolaid.com.au for ideas.
2. Learn more about climate change and the environment and support leaders who take active measures to reduce carbon emissions and support sustainable energy and lifestyle policies. The time for talk is over. We need to take action now.
3. Consider where you live now and how rising sea levels and rising fuel prices will affect your wealth, your lifestyle and your ability to earn an income. Think about what changes you can make ahead of time.
4. Consider where your investment properties are located and how their values may change in the future. Consider not only the issue of rising sea levels, but also that some areas are receiving far less rainfall, that some areas may turn to desert while other areas may become wetter. Consider also that some businesses may collapse because they are based around certain landmarks, or natural features which may be inaccessible or destroyed in the future.
5. Ask yourself what you can do to help reverse the trend towards increased global warming, to educate others and to re-allocate your money to areas that are likely to prosper with the changing conditions. Let me warn you: it will take courage to venture into unchartered waters and some people will criticise you for it, however those investors that ignore the crowd and do what they consider to be right, often end up making the most money.
To comment on this post, please click on the comments link below.
Technorati Tags: climate change, cool aid, Dr. Karl Kruszelnicki, property investors, real estate investing
Hans :: Mar.05.2007 :: Personal, Real Estate Investing, General :: 1 Comment »
This was the headline on the front page of the investor section in one of last weekend’s Sunday newspapers and as you 
can imagine, I just had to read the article to find out what they had to say.
The article claimed that property was no longer an attractive investment because:
1. for the next 4 months, people over 50 years of age could sell their high value properties and put the proceeds into their superannuation funds to minimise their tax. The article also pointed out that at the moment there were a lot of such types of properties on the market.
2. there was a possibility of an interest rate rise,
3. at the moment, because we are in a post-boom period, property values are high while rental returns are quite low in many areas. The article pointed out that some property investors were struggling with rental returns of 2 and 3 per cent a year, while sharemarket returns were potentially higher.
4. property investors often have to pay stamp duty and land tax while no equivalent tax is levied on equities.
Towards the end of the article there was a small paragraph which pointed out that rents were expected to rise “significantly” and that the Reserve Bank of Australia had stated this was necessary to make property investment viable. (I definitely agree with that statement and that is already happening in the market place right now, so you don’t have to be a genius to work that one out.)
The article also featured a picture of the pretty young journalist who had apparently penned this “well informed” assessment of the property market and without doing any research, it is my guess that she would be in her late twenties or early thirties and is basing her statements on what will catch a reader’s eyes rather than on her experience as an investor.
While everything she says in the article is true, the headline is designed to cause the reader concern if they are already a property investor or are thinking of becoming one.
The factors which the article uses to argue that there is a “property exodus” at the moment, are all short term variations in an economic cycle and which repeat themselves again and again. (except for the superannuation issue.)
A smart property investor realises that real estate is a long-term investment and that as we go through various economic cycles, market conditions will change and that is not a good reason to panic and sell out. It is also not a good reason to shun property as an investment vehicle.
Smart investors, use this doom and gloom talk to help the “scaredy cats” (who believe these types of articles) to unload their properties and snap up some good deals.
If you focus on short term “blips” in the market, you will find yourself well and truly confused and you will spend your time chasing “the latest great idea.”
Do you see Warren Buffett rearranging his massive share portfolio every time an article appears with a critical comment about the stockmarket in general or one of the companies he invests in? No way!
Does Donald Trump sell his property portfolio because of media articles proclaiming doom and gloom? Not at all! Quite to the contrary, he takes advantage of the market situation to buy more.
To be a successful investor, you have to lake a long term view of things.
Around the time when my youngest daughter was born, there was a lot of turmoil in the world and Colonel Gadaffi from Libya was a thorn in the side of the USA and other western countries. It seemed as if we were headed for World War 3.
Even though I was overjoyed about the birth of Stephanie, I was going through a difficult time emotionally because I wasn’t fulfilled at work and the whole world looked like it was ‘turning to custard’.
The news was always focused on the latest crisis and the ongoing talk of doom and gloom made me feel like giving up hope. I felt despondent and often asked myself: “what’s the use of striving to get ahead and build wealth, when the world is headed into a downward spiral?”
That was more than 20 years ago.
Since then we’ve had stockmarket crashes, property corrections, oil crises, two invasions of Iraq, numerous terrorist attacks, threats of nuclear war, Y2K, global warming and countless other dramas and threats to our existence and/or prosperity.
How did the property market react?
Did it care?
Not really. Sure it had a few minor ups and downs along the way, but on average it increased threefold along the way.
Fortunately I overcame my personal despondency by participating in a series of personal development programmes. I changed the many attitudes and beliefs which were not serving me and moved on to tremendous success and fulfilment in business and wealth.
As I look back over this period of time with the benefit of hindsight, I have to say that the biggest lesson I learnt was: always keep your eye on the long-term direction of your investments and don’t be distracted by short-term variations.
I often hear people say things like: “but its different this time”.
While there will be situations that have a long term impact on your investment strategies, be sure not to be blown off course by short-term crises which have very little impact on the long term direction of the investment property market.
Technorati Tags: interest rate rise, investment properties, long term investment, post boom, property investments, property value, rental return
Hans :: Mar.02.2007 :: Real Estate Investing :: No Comments »
With the growing number of baby boomers approaching retirement, more and more retirement units are being offered as investment opportunities within large retirement villages.
Do you consider such retirement units a good investment for an individual investor?
It’s a good question and one I’m asked about quite often. Just before I give you my opinion on these types of properties as investments, let’s just look “behind the scene” to see how it all works.
The reason why the developers of such retirement unit complexes sell the units rather than keep them as investments for themselves is that they want to realise their profits and recover their investment so they can develop the next building project.
For them, these complexes are not investments which they want to keep because it ties up their capital and they can make more money by developing and selling new projects.
When they develop such a retirement village they have two important objectives:
Often they will sell part of the project “off the plan” because this is generally a requirement to obtain the necessary funding for the whole project.
As well as managing and operating the complex, the manager of the site will generally be responsible for maintaining a high level of occupancy by either renting the units out or re-selling those that come back onto the market.
Here’s where the problems start for you as an individual investor.
Remember that your goal as a property investor is to chase BOTH a positive cash flow AND capital growth.
These units will often show a good cash flow on paper however you need to be aware of some potential pitfalls for unwary players.
First of all there may be a requirement for you to refurbish or renovate the units at the direction of the complex manager. While this will be tax deductible for you as an investor (partially outright and partly by way of depreciation), the timing may not suit you and you will need to have the necessary funds available to meet this requirement. Remember also that the manager may stipulate how the units are to be renovated.
In other words, someone else may be telling you how you are to spend your money. (Personally I don’t like that type of deal!)
Secondly when it comes to resales, the manager wants to ensure the highest possible occupancy rate rather than the best capital gain for the investor. Even though they will earn a commission on the resale, there will generally be a formula as to how much an individual unit can be sold for because they want to move the units as quickly as possible and retain a certain price level throughout the complex.
Once again this means that someone else (other than free market forces) determines how much profit you can make from your investment.
I don’t know about you, but this doesn’t particularly appeal to me.
Lets look at the rental side of things.
In a free market, you can choose your property manager and you can decide the amount of rent you want.
In a retirement unit complex, you do not usually have a choice because the onsite manager will be the only one who can rent your property out. Remember that they would have bought the management rights to the complex at some stage, so they are not going to allow their asset to depreciate by letting other agents rent out the units in the complex.
That same property manager will also want to maintain a uniform market rental across the complex and therefore will not let you charge more for your property than is being charged for similar units in the complex.
Once again, someone has control over your investment rather than you.
In conclusion therefore, I don’t particularly like to invest in projects where I cannot influence my returns. Yes you may get a good cash flow from such retirement units, but you may not enjoy the capital gain you would on other investments and I suggest you read “the fine” print carefully and think about the implications for yourself as an investor, before you jump in.
If you’d like to share your thoughts on this topic, please click on the comments link below.
Technorati Tags: Capital Growth, Investing in Retiremement Units, positive cash flow, real estate investment, residential real estate
Hans :: Feb.27.2007 :: Real Estate Investing :: No Comments »
The short answer is: NO!
I’m often asked to convince someone’s “better half” that they really need to be more supportive of their partner and encourage and support them in their investing objectives.
Usually one person considers themself to be more courageous, while their partner is “holding them back or is too scared of losing everything in case they make a mistake”.
Another common complaint I hear is that “my partner is happy for me to invest, as long as I don’t use our family home as collateral to borrow against.”
These are very valid concerns, however the issue here is not one of property investing, but one of a lack of common goals.
If you find yourself in a situation where one of you wants to move forward and the other party is holding back, you need to sit down and discuss the situation rationally and find out what the true concerns are.
Remember that even if you see things differently, your partner’s concerns are true for them and need to be addressed before you can move forward together.
One strategy you could try is to take a sheet of paper and draw a line down the middle. On the left hand side write down the benefits you could enjoy by investing in property and on the right hand side identify the things you would miss out on by not investing.
Take this exercise seriously and think carefully about it and discuss it with your partner.
Then, take a second sheet of paper and once again draw a line down the middle. On the left hand side write down all the risks you see as being involved in property investing and on the right hand side make a list of how you might be able to manage those risks or who you could consult to help you deal with those risks.
As you do this exercise, you will come to realise that the biggest key to your success will be to learn to become a smart property investor. The more you educate yourself, the less daunting the risks will become and the more confident you will be about moving forward.
Probably the worst thing you can do is ask someone’s opinion who is not a successful property investor. They will be more than willing to share horror stories with you and they will know at least a dozen people who encountered problems with tenants or some other dramas in their unsuccessful property investing career.
Asking a failure for advice is a total waste of time and energy! It’s also not very intelligent.
Learn from people who are successful property investors and they will more than likely tell you how to deal with the challenges along the way.
Yes you will encounter some challenges and yes you will make some mistakes. That comes with the territory and you should be prepared for that!
What you need to do is to learn how to deal with those challenges successfully. If you want to know how I can teach you to become a more successful property investor, click here.
Technorati Tags: Investing Safely, Investment Risks, Real Estate Education, real estate investment
Hans :: Feb.21.2007 :: Personal, Real Estate Investing :: No Comments »
This is a fair question and one that you should probably ask yourself (not only about me, but everyone) BEFORE you part with your hard earned money. If you’ve been burnt before, you’re not alone. I’ve also made some poor decisions where I’ve lost quite a bit of money.
Some years ago I was a speaker at an international conference and there was a person promoting an investment offering what I considered to be unrealistic rates of returns. Because quite a number of people asked me what I thought of the investment and the promoter of this scheme, I started doing some research.
The first thing I did was to look at the information the promoter was providing to prospective investors. The documentation consisted of a number of photocopied pages, no address details and a mobile phone number as a means of contact.
The promoter was inviting people to invest upwards of $100,000 and claimed to be a millionaire in his own right. He didn’t even have a business card.
When questioned about the poor quality of information he was providing to prospective investors, he explained that his luggage had been stolen or lost on the way to the hotel and he had to quickly put something together at the hotel’s business centre so he could tell people about his wonderful investment opportunity.
Now misfortune can happen to anyone and I’m at least willing to give someone the opportunity to give me a credible explanation before I dismiss what I hear.
Sadly in this case, Allan was a total shyster. It turned out that he had borrowed the money for the airfare, that he had been sharing a house with a few other people and that he was nothing more than a conman and a penniless bum!
When he spoke, he was very convincing and sounded quite credible. So much so, that he managed to extract several million dollars from naive investors at that conference.
I was so incensed by what I heard and saw from this conman that I wrote the book, Due Diligence Made Simple.
In this book I explain how you can research an investment opportunity so you don’t get burnt.
So why should you trust me?
The first reason is that I walk my talk and that I’ve been around for a long time. I only teach things that I’ve personally done and can prove.
Secondly, my business operates from established premises (which we own) with a proper street address and a good track record. Our ABN is 081 878 499.
Thirdly, you can see from the many testimonials on my websites, that I have a large number of successful students who have learnt and benefited from what I teach.
From time to time we are asked if it is possible to speak to these testimonial providers directly. Unfortunately this is not possible, because we respect our students’ privacy and never give out their contact details. I’m sure you will understand and respect this. So you can see that these testimonials are genuine however, we often provide pictures of the people giving the testimonial and/or audio or videos as well.
Finally, I acknowledge that we cannot please all people, all of the time and that some people may have different expectations of what we provide. That’s why we back up everything we sell with a money back guarantee so you truly have nothing to lose.
I don’t know how I can be any fairer than that and what else I can do to assure you that you will be well served with the information and products we provide.
In closing this post, let me address one more comment that I sometimes hear people make. Some people say: “I’ve been burnt too many times before to trust anybody now.”
Once again, I sympathise and empathise with this sentiment, however I’d also like to point out that it can be self destructive to you as well.
It’s not very productive for you to “tar everyone with the same brush.”
There will always be good and bad operators in every line of work and in every type of business that you come across. If you dismiss everyone as bad from the very beginning or allow your scepticism to overshadow every possible opportunity, you will be doing yourself a big disservice and become a distrusting, angry and bitter person. That will not benefit you and the only person you are hurting by that attitude is yourself.
My strongest suggestion to you is to accept that you are responsible for your financial future and that you have the power to change what is not working for you right now. Don’t blame anyone else for your situation and don’t beat yourself up over mistakes you have made in the past.
Recognise that we all make mistakes and that from time to time, you will make some more.
Remember that as a young toddler when you were learning to walk, you fell over many times and collected a lot of bruises and scrapes along the way. Nevertheless, the only reason you can walk today is that your parents continued to encourage you to get up and walk and because you persisted until you made it!
Always remember this, before you let a previous bad experience cloud your judgement for the future.
Technorati Tags: Investing Wisely, Investment Mistakes, real estate investing, Succeeding in Property
Hans :: Feb.15.2007 :: Personal, Real Estate Investing, Business :: No Comments »
One of the potential profit torpedos you may encounter as a real estate investor is the presence of asbestos in your investment property.
Now before you shy away from anything that may even look like asbestos, let me suggest you ‘hasten slowly’ because there could be substantial rewards waiting for you, if you are willing to do some legwork.
Asbestos, like many other challenges you may have to face in life and as a real estate investor can be solved. All it takes is money. And…
…if it could cost you money, and you are in the process of negotiating a property purchase, you need to take the opportunity to negotiate a better deal, which will not only cover the cost of dealing with the problem, but also your time and effort in taking care of it.
Because there are many potential purchasers who would shy away from a property containing asbestos, it puts you in a strong bargaining position if you are willing to take care of the problem.
In my Super Secrets To Real Estate Wealth course, I describe this type of situation as an ‘acute’ problem, which can lead to good profits for you. While a ‘chronic’ problem is one that hangs around for a long time, an acute problem is one that can be dealt with in the short term.
One thing I’ve learnt in life is that most problems can be solved if you are willing and able to throw enough money at them. Asbestos in a building is one of those types of problems.
In some cases you may even have to demolish the building to solve the problem, but it CAN be solved.
Probably the first thing you need to do if you suspect that a property may contain asbestos, is to ask the agent about it, (preferably in writing) and the second thing is to make a note to advise your solicitor that you will want a special condition included in the contract to cover you for costs of dealing with the asbestos issue.
I say make a note, because at this stage you still have a bit of work to do before you will want to proceed to calling for contracts.
The next thing you will want to do is to determine the extent of the problem and how much it is likely to cost to rectify it.
If you suspect that the building contains asbestos, or if you’ve been told that it does, it’s a good idea to talk to the real estate agent about it. He would have a duty to disclose this to any other potential purchaser and that would scare most people off the deal for a start. (I believe that’s called eliminating your competition! 
)
Having done that, you would want to consult an asbestos removal contractor and obtain a quote for the removal of the asbestos. Then you’ll need to consult a number of other tradespeople to determine the cost of replacing the asbestos with a benign material. If you can obtain these quotes for free, that’s great. If it will cost you money to obtain these quotes, then you’ll need to put your negotiating hat on before you seek out this information.
One strategy might be to go back to the real estate agent and tell him that you have identified a number of contractors and ask him to talk to the vendor about seeking a quote (at the vendor’s expense) to have the rectification work carried out.
If the vendor is not interested in doing that, you’ll need to decide if you can make an educated guess as to the cost of the work required (double it for good measure), add in a cost for you to take the risk, organise and supervise the work and then start negotiating a reduction in the asking price.
Any reduction negotiated can be subject to you being able to confirm the true costs of the work involved.
Basically, the person who is willing to solve people’s problems stands to make money by taking care of the issue. Just how much money you stand to make will depend upon how well you can negotiate.
Let me share with you, two of my own experiences in situations like this.
When I bought my farm and as we were about to exchange contracts, my lawyer asked me to have a look at the plan and description of the property and confirm that what I was buying was exactly what I was expecting to buy. On checking the plans, I saw some separately designated areas and asked what they were. It turned out that they were separate landholdings surrounded by my property. Some areas were designated as crown land while two areas were owned by outside parties.
Since the agent had not told me about this situation earlier, I asked the lawyer not to exchange contracts until I came back to him with instructions.
My next phone call was to the real estate agent.
Now most real estate agents are super keen for the contracts to exchange and are very nervous if their deals are in danger of falling over. (They’ve either allocated their commission to something or already spent it in anticipation of the deal going through )
This is how I started the conversation with the agent: “James, we have a problem….(pause)…..”
How do you think the agent was feeling now?
Worried! Right?
That’s exactly what I wanted him to be. (I was about to push for a reduction in the purchase price).
I pointed out to him that he had not told me about these areas of land that were excluded from the sale and he told me that he was not aware of them either. (Even better for me!)
I therefore asked him to go back to the vendor and ask for a reduction in the purchase price. This he did and we achieved a further $10,000 discount.
When I bought my office building in Portland, I discovered that the awning needed to be strengthened. I only discovered this about one and a half hours before we were about to exchange contracts on the building.
Not knowing how much this would cost to do, I had to make an educated guess and decided on a figure of $5,000. The actual cost to repair the awning came in at just over $300.
In my opinion, negotiating is one of the most important and most rewarding skills you can develop. What is even more fun, is that when it comes to real estate deals, you can get the real estate agent to do the wheeling and dealing for you.
Technorati Tags: asbestos, commercial real estate, negotiating real estate deals, real estate investing, residential real estate
Hans :: Feb.08.2007 :: Personal, Real Estate Investing :: No Comments »
Here’s a little tip that you might find helpful when you are looking to buy your next investment property…
They say that location, location, location is one of the golden rules of investing in real estate.
Even though I only partially agree with this statement, here’s an example of where the location of your property can have an effect on its value and its rental return.
A property located next to a reserve or a popular thoroughfare always attracts its share of undesirable behaviour.
If someone wants to break into a property located near a reserve, it is usually easier to escape without being noticed than if the property is surrounded by other occupied properties.
If people walk past your property on the way home from the hotel, you will find cigarette butts, half empty bottles, paper and other items of debri on your front lawn on a regular basis. Sometimes they will jump over the fence into the garden, urinate against the bushes or just make a lot of noise just as your tenants might be wanting to go to sleep in the front bedroom.
I’m sure if you lived there you’d find that rather annoying. In the same way, such a property will not be particularly attractive to most tenants. Those that would find it attractive, may not turn out to be YOUR most desirable tenants.
Thats why I suggest you think carefully about where your property is located and what effect that might have on your tenants.
You’ll find many more traps to avoid when you invest in real estate in my Super Secrets To Real Estate Wealth course. Many people say its the most comprehensive course on real estate investing they’ve come across.
Hans :: Feb.03.2007 :: Real Estate Investing :: No Comments »
- Next »