Lots of things happen in life, and often the outcome is determined by the way we approach them.

About five years ago I bought a little project. After being very successful in the same suburb for a number of years, and with one particular strategy, I anticipated a profit of $100,000, and a selling of time of six months. There wasn’t a lot of actual time involved in the project, less than 40 hours of work all up.

Things don’t always go according to plan, and this particular project was one of them. My first move was to deal with the current house, either by demolition or sale. Within days I had found someone who paid for it and moved it.

Next, I put the blocks on the market. There were two lots, already subdivided – the house had been built over both lots. The first lot sold quickly, to a builder. The amazing thing about this sale was that the same builder had bought a lot from me on a previous project where I had used the same strategy. Even better, the builder had built a good home on the previous lot, had now sold it for a very good profit, and was using the same strategy to make profit again.

I didn’t know that he was looking to repeat the process, otherwise I could have approached him and saved myself the agent’s selling fees.

Well, things were moving along quite well, wouldn’t you say … well, I thought so. But then something interesting happened. The market in that area went very quiet, and land was not selling.

What to do? Change strategies, of course. I went and had plans drawn up for a great house. Now I could sell a house and land package, or perhaps the plans with the land.

Regardless, we had more options for sale.

Meanwhile, my expected profit of $100,000 was looking very shaky … Months dragged by, holding costs blew out, and the market dropped.
Eventually, I sold the second lot. My anticipated profit of around $100,000 was now around $25,000.

A lot of people are in this situation right now. They’ve purchased a project, the market has changed, and profits are dropping or even becoming losses.

That’s why it’s so important to have contingencies. Here are some of the lessons I learnt from this experience …

• · Always plan for a much longer settlement time – the market can change overnight
• · Have financial contingencies in place – make sure you can hold it for longer than expected
• · Have a number of different options in mind so that you can change strategies if the market changes
• · Let previous buyers know what you are doing – they might be interested
• · Always look on the bright side … I made $25,000!! If I hadn’t told you about the expected profit you would be none the wiser. $25,000 is still a lot of money for very little time and effort. Five years ago it was more than the average annual salary, and I did it working less than a week all up.

If things in your life aren’t looking too good right now, find the lessons, find the positive and keep moving forward. It’s all about how you approach the problem.

Welcome to part 4, the final post of this series. This is where it gets more interesting! In this session you finally get to put the rubber to the road and by that I mean practice! First of all make sure you have read the previous post on research

Someone once said to me you need to look at 100 property deals, get serious about 10 of them, put offers on 3 and finally acquire 1.

Now that might sound daunting but it’s all part of the fun! So buy yourself a quality A4 scrapbook and start numbering the pages. Every deal you look at and crunch the numbers on, make a record of it by pasting it in your scrapbook along with notes, number crunching and potential strategies.

By keeping a record you really get to see the progress you are making and in doing so build the confidence to grow your skills further.

Now when I say practice I really do mean practice! Incorporate all the things you have learnt in the last 3 blogposts and really go out there and have a go.

It doesn’t matter at this point whether you can afford the deal or even if you think you have the expertise or not, just start becoming an area expert – attend the Open For Inspection’s, talk to the agents, make notes on past sales and above all, crunch the numbers!

You will be amazed at how quickly you become an expert in your area; in fact it should only be a couple of months before you start spotting a bargain.

Remember to have patience, don’t force the deal. Have faith in your preparation and a deal will present itself when you are ready.

Above all, have fun!

Keep an eye out for the next blogposts on….. there will be some video included as well!

Welcome to part three of this four part blog post series. If you missed the first two posts you can view parts 1 and parts 2 by clicking on their links

In this post I will be sharing with you some of the resources available to us to assist in researching our next property deal.

There are literally deals everywhere – seriously! That’s why I always say start in your own backyard. These days we have so many tools to assist us in our research, not the least of which is the internet.

The simplest tool you can use is the email alerts provided by www.realestate.com.au Setup a free account on their website and start building an array of alerts that suit your strategy.

Another website you can use as part of your online research is www.domain.com.au Setting up email alerts with Domain is similar to realestate.com.au and it has the added function of using a keyword as one of your search parameters which is very helpful.

If you want to go to the next level there are other resources that you can pay for that have more data about the particulars of a property. These include www.RPData.com.au www.Pricefinder.com.au and  www.realestateinvestar.com.au In these sites you can really drill down about previous sales in the area, block sizes, on the market history and much much more.

Let’s not forget the conventional resources we have such as the local and weekend papers. I don’t find a lot of deals in this medium but it certainly keeps you in touch with what is happening in your area.

Finally, the best resource is the real estate agent. They have the biggest databases and have their finger on the pulse with new deals as they come to market. Part of your initial research should be befriending a number of local agents and ensuring they know what you are after. Most of my deals have come on the back of a simple chat over a cup of coffee with an agent and being on an agents’ hotlist means you get first look at the deal. Don’t be afraid to go knocking on their doors!

Welcome back to the second part of Researching Your Deals. If you have not read the first post in this series you can go back and read it here

The next step in the process is to know your costs! There are so many associated costs with property investing and they are many and varied depending on what strategy you are using. The important step here is to gather all your known costs together so you can make fast decisions when evaluating a deal.

There are 4 main costing groups you need to focus on:

• 1. Purchase Costs – this includes stamp duty on the property, loan establishment fee, mortgage registration, transfer fees, solicitor’s fees, building and pest inspections. As a general rule you could budget these costs to be about 5% of the purchase price.

• 2. Holding Costs – This includes loan repayments, council rates, insurance for the property, rental management and maintenance

• 3. Adding value costs – These costs are wide and varied and may not actually apply to some deals. Some of the add value costs could be renovation, subdivision, strata titleling or development of the block.

• 4. Selling Costs – Yes there are exit costs to ensure you get out of the deal! These include your solicitor fees, agents’ commission and any marketing or staging costs to get your property sold. As a general rule you could budget about 3% of the projected sales price for these costs

This is a pretty broad overview of what your costs will be but once you find the right deal you will want to drill down on all of these items to ensure you have costed every possible item. The more diligent you are in this area the less risk you apply to the project.

Hi there

It’s been a while since I have posted!  I have been receiving a lot of questions from people wanting to know the best way to research the market to find profitable deals that make money. It really comes down to four key points and I am going to talk about the first one today.

The first point is to Know Your Area. The best place to start is in your own back yard – there are literally deals everywhere so start somewhere that you are familiar with.

The idea is to become an area expert. You want to know about every single property that comes on the market in your area and what it sold for.  This way you become more knowledgeable than the agents.  If you study the market long enough you will get to know what properties are worth and by default will see a bargain coming a mile off.

There are a few ways you can do this:

• Form relationships with agents and have them call you with new listings
• Newspapers and internet
• Attending open for inspections (OFI’s)
• Driving around and looking at for sale signs

Scouring the media is a pretty passive way of finding deals but has merit none the less. Attending OFI’s are great because you get up close and personal with both the property for sale and the agent selling it.

The fourth point in the above list is a favourite and is referred to as the “turn left” theory. Simply jump in your car and turn left at every crossroad or intersection. In no time at all you will have covered a large portion of your suburb and discovered what is for sale in your area

When completing these tasks make sure you are taking note of what is on the market and what it is selling for. Keep a scrapbook or a spreadsheet so all your data is collated neatly and can be referred to easily.

Do this for six weeks and I have no doubt you will become a genuine area expert!

If you have any tips or tricks you use to help research your area I would love to hear them, just make a note in the comments below.

Keep an eye out for the next installment on researching your deals!