How I attained Short to Mid Term Capital Growth & out performed the market

Hi all

First post!

I agree 100% on all points Rixter mentioned. Especially point 2.

I used to work at Maccas Head-office and can say that they as as much in the business of real estate (purchase and hold) as they are in selling burgers. I was always amazed when I saw KFC, HJ and other fast food chains pay rent to Maccas.

The amount of research and planning that goes into every purchase is extensive and they plan for 5, 10, 20 years ahead. They have a large team of people who specifically deal just with real-estate purchase.

So when you see a new Maccas popping up around the corner, you can be sure that over the next 5-10 years that area will have growth (or at least population growth) .

Thanks for your insights Rixter I have been following your posts on SS and always found them educational and interesting.

 

Good post Rixter..

 

Just an FYI that I recently came across - Napoleon Hill's Think and Grow Rich is free (legitimately) and can be downloaded at various places on the interwebs.

eg. http://eventualmillionaire.com/Resources/ThinkandGrowRich.pdf

Enjoy.

 

Think & Grow Rich also available on You Tube video featuring Napolean Hill

Enjoy.

 

Hey Rixter

I'm just starting out, and all your posts are so valuable, thanks so much!!

I'm still trying to work out whether I want to go cf or cg, I have u in one ear and Skater in the other. Especially that both of you have done so well it really is hard to decide.

I am leaning towards your strategy more, but i have a couple of questions.

Growth properties are going to eat into your serviceability, how do you get around this? I'm thinking wait till rents rise, manufacture equity! Am I on the right path?

What sort of yeild do you look for and what types of properties did you buy. Ie house, unit or townhouses?

 

NeeMo, in the early days when I didnt have much equity I tried to maximise my rental returns/cash flows without effecting my CG as much as I could. Tried to work on a happy balance slight negative to neutrally geared.

Purchasing near new villas and townhouses allowed us to increase yields too whilst also allowing me to spread my CG exposure across multiple areas. Because we purchased near new this also allowed us to maximise & increase our non cash depreciations deductions.

The gentrification system I mention at the top of this thread play a big part early on in the journey as it allowed us exposure to short-mid term CG to leverage against faster. Not only did it increase our CG but it also increased rental yields due to the demand of people wanting to rent in these areas as well as purchase.

Over time as the portfolio grew the compounding effects of multiple properties all with non-cash tax depreciation deductions is astounding . This coupled with rent increases, wage increases and other forms of disposable income we put towards increasing our portfolio further.

We also increased our cash flow via the ATO's Income Tax Withholding application. Instead of waiting until the end of the financial year to claim our tax back, we got it back in our packet each pay day and working for us through out the year. With this increase in cash flow we put that towards the holding costs of additional IP which in turn increased our asset base and exposure to compounding CG further.

In the later years of our journey with the equity we had available the need for purchasing yield wasn't as crucial because we could use our existing equity to capitalise and cover any shortfall in holding costs at time of purchase.

Keep an eye out on the Introductions sub-forum section as I intend to post my property investment strategy shortly.

Anyway I hope I have answered your questions and provided you with some food for thought.

 

Yes you definately did, I was wondering how I was gonna to manage my serviceability buying houses in satellite cbd areas!! Makes more sense now that you mention townhouses/villas!

Thanks heaps Rixter!! Look forward to reading more of your posts!!

 

Great post Rixter.

What do you think of this guys views on positive thinking/Think and grow rich : ?
http://www.oshonews.com/2011/09/positive-thinking-osho/

cheers,

 

Rixter, thanks for summarising your strategy for CG. It is impressive if you really retired on gains from IPs alone. I hope you do not mind if I add some other points which are obvious but very important as well on sourcing the right properties for CG. These features often coincide with your nominated checklist of features:

1) near rail stations or bus stops of important routes
2) in catchment areas of important or popular schools or institutions
3) geographic desirables, such as views and not on main roads

As Sash mentioned, those who retired with the proceeds from IPs are not many, me included. But, I suppose it is not that difficult if you get the timing and buying right to soar on the tail winds of property demands in WA, Sydney or Melbourne.

 

so many opportunities in Perth to start with Rick's strategy.

CG is the only way to retire with a SANF.

 

Problem is Aaron the Perth market is still falling, jumping in now may be too early just my opinion.

My gut tells me to hold back, property will be on the nose in due course Australia wide and then we will see some screaming bargains.

MTR

 

Great starter Rix, the fundamentals are basic when you write them down but surprising how many don't follow them.

 

Glad to see those 3 sectors you mentioned Rixter.
I used these 3 core ingredients with 3 properties around Brisbane over the last 5 years.
Now I am just waiting for Brisbane to heat up so all these ingredients cook and bring some tasty reward.
Cheers

 

How do you find out where big multinationals are opening?

Using McDonalds as an example I could not find anything on their website and there was only vague information gained from various relevant key word searches.

Could look at where new job openings are being offered but McDonalds has a lengthy online application process to plough through to access that info.

Managed to find out that 8 Victorian restaurants were opened in Lucas (Ballarat), Carrum Downs, Craigieburn North, Traralgon East, Clayton South, Langwarrin, Officer and Lara by the end of 2014

 

Thanks for the link.

 

Maccas are secretive on where they plan opening restaurants as many communities don't want them. Unless you know someone who can give you the info the best way is to see where job offerings are. The other good place is where people are objecting to them. They tend to be vocal about it.

 

I know it's just being used as an example but I would use a multinational that's a bit more scarce than maccas as an indicator of anticipated population growth in an area. There are wayyyy too many maccas restaurants as is.

 

Good stuff, which suburbs in Brisbane did you go for?

 

Chermside....Reno and realesed equity
Carina heights....again another Reno (just had the asbestos roof replaced through insurance...happy days)
Moorooka.....LMR site. Currently has decent house so has holding income until I can develop.
Cheers