Frequently Asked Questions

  1. Are positive cash flow properties hard to find?
  2. I’ve been told that positive cash flow properties don’t enjoy capital growth. Is that true?
  3. Why do you advocate units, town houses and villas? I’ve been told that it’s the land component of property that increases in value.
  4. I’ve heard horror stories of tenants destroying rental properties. What is your experience with this?
  5. I’ve been told that it is better to buy new properties because older properties require more maintenance. What do you think?
  6. I’ve been told it’s no good to buy cash flow positive properties because you miss out on all the tax deductions. Is that true?
  7. You advocate buying properties at the lower end of the market. Doesn’t this attract problem tenants?
  8. Do I need previous experience to apply the Super Secrets® to Real Estate Wealth teachings?
  9. The thought of managing tenants and rental properties scares me. Is there an easy way of dealing with this?
  10. Can you guarantee I’ll make money using your system?
  11. How soon after investing in your Super Secrets® to Real Estate Wealth course can I expect to make money?
  12. Can I use your techniques anywhere?
  13. Do I need a real estate licence?
  14. What makes Hans Jakobi different to others teaching real estate investing?
  15. Does Hans actually follow these ideas himself or is he just promoting someone else’s strategies?
  16. I’ve already invested in property before. Is there anything I can learn from this course?
  17. I know nothing about property investing at all. Is this course going to be too advanced for me?
  18. I take part in chat rooms and reads lots about investing. Do I really need to invest in this course?
  19. Should I buy properties in my own name or use an entity?
  20. Can I buy real estate in my self-managed super fund?
  21. What is a self-managed super fund?
  22. Does GST apply to the types of properties you invest in?
  23. What about land tax?
  24. I don’t have a lot of money to invest. Does it still make sense for me to invest in the course?
  25. What if too many people follow your strategies? Does that affect my chances of success?
  26. Is the real estate game over? Am I too late? Can I still make money in property today?
  27. Do you offer ongoing support?
  28. What is the success rate of people who have purchased this course?
  29. What is the difference between positive cash flow, negative gearing and positive gearing?
  30. How do I get the money to start investing?
  31. Is it always a good time to buy property?
  32. Does the RTP vary with interest rates?
  33. What if I can’t achieve your recommended RTP?
  34. Can I apply the formula to larger purchases or houses?
  35. Do property prices ever fall?
  36. What do you think of buying investment properties off the plan?

1. Are positive cash flow properties hard to find?

This is probably one of the biggest misconceptions in the market place and one which costs many potential investors big money in lost opportunities. Don’t you fall into this trap!

Positive cash flow properties are NOT hard to find if you know where to look and how to find them. However, some people give up after a few phone calls and when they can’t immediately find a property that meets the formula.

My response to this question is comprehensive so please take the time to read it carefully. It may be worth hundreds of thousands of dollars to you if you make the mental shift to understand how and where to find the gold nuggets. It will set you apart from the crowd.

The first thing to understand is that you need to know how to recognise an opportunity when you see one.

Some people have become millionaires simply by following my easy to follow strategies.

Let me give you an example:

"At first I thought your course didn’t work . . . but after buying 8 investment properties worth over $1,300,000 - I know it does!" Ray Wallis, Perth, WA

Ray Wallis from Perth bought the Super Secrets® to Wealth course in 1998 following a referral from a friend.

Here’s Ray: "Within five months of buying your course, I bought two properties in Perth and they were even better than your recommended formula.

In 11 months the value of those properties had increased by more than 30% and I was able to use the equity in them to buy more.

From those first tentative steps I’ve now built an investment property portfolio of 8 investment properties in Perth and Melbourne worth over $1,300,000.

The rental income from these properties is $1,260 a week.

Hans your course was different to anything I had done before. From personal experience I can say that your message is just as relevant today as when you first recorded the course. Even though I was sceptical at first, I know your principles work.

Your course has been invaluable. It really works! Thank you."

Ray Wallis – Public Servant, Perth, WA

Please understand that some of the biggest opportunities in life are not going to come chasing after you. You need to go looking for them AND you need to know what they look like when you find them. To do that you need to educate yourself.

As Casey Gollan from Melbourne said:

"If you are looking to increase your knowledge and get onto a very street smart, practical and proven way to increase your wealth. This is definitely the program you should get your hands onto."

 

2. I’ve been told that positive cash flow properties don’t enjoy capital growth. Is that true?

This is probably the second biggest misconception that many property investors buy into and it simply isn’t true!

Here’s what Mike Creed, one of my students from Melbourne said: "In the 2 ½ years, since
doing your course, I’ve accumulated 9 properties with a total value of $1,720,000. The capital
gain over that period is about $465,750."

Brett Dwyer from Victoria (original letter available for inspection in our offices) says that in only three years he has enjoyed $350,000 capital growth from the 5 properties he bought after having done the Super Secrets® to Wealth course.

"The No 1 lesson I’ve learnt from your home study course is that cash flow is king! I nearly went down the negative gearing path until I got your material as friends of mine have done and now they are way behind the results I have achieved.

Thank you Hans for your independent information. I recommend your material to anyone who wants to work smart today for a better tomorrow." Brett Dwyer, Ballarat, Victoria

There are basically two ways to make money in property.

One is through capital gains and the other is through rental returns.

Some of the capital gains enjoyed by property investors have been very substantial and create the impression that this is the major reason for holding property.

While I enjoy the capital gains of property investing, I think it is a safer strategy for the future to focus on positive cash flow rental returns.

The cash flows from your properties offer you a greater degree of certainty and security than the speculative opportunity of a capital gain.

For long periods of time, real estate appears to do nothing. Then all of a sudden it may increase dramatically and before you know it, the value of your properties seems to skyrocket as buyers scramble to buy up everything they can get their hands on.

Rents on the other hand, tend to be far more stable and predictable. During property booms, rents will have trouble keeping up with the escalation in property values, however they tend to climb steadily in small increments as the rental demand continues.

If you are investing in average properties, in average suburbs, you will generally find a tenant and the worst case scenario may be that you have to drop the rent by $5 a week.
This is hardly a major risk!

One of the biggest lies perpetrated by property marketeers is that positively geared properties do not enjoy capital growth.

This simply isn't true!

Often there may be a timing difference between when inner city properties enjoy massive growth and when this filters out to the outer areas. In my Super Secrets® to Real Estate Wealth course I explain this phenomenon with the pebble in the pond theory. For astute investors this represents a buying signal.

I and my students can demonstrate that we enjoy both positive cash flow AND capital growth.

So next time someone tells you that positive cash flow properties DO NOT enjoy the type of capital growth that negative geared real estate does, recognise it as a lie and ignore what you are being told.


3. Why do you advocate units, town houses and villas? I’ve been told that it’s the land component of property that increases in value.

The reason I advocate these types of properties is that I have found the rental returns per dollar invested to be GREATER than for other types of properties.

Units, town houses and villas typically take up less land area than houses and yes it is the land component that goes up in value because of the shortage of land closest to the CBD, the transport hub, the ocean, the river, the mountains or some other factor.

It is also true that buildings often depreciate and deteriorate over time whereas land becomes more expensive. Nevertheless, units still increase in value in line with the general escalation in property values.

Capital gains occur in spurts rather than consistently over time. They occur in cycles. If you rely mostly on the capital gain component, it may be ‘a long time between drinks.’ It’s great when it comes and it may come in large amounts.

Cash flow on the other hand is far more predictable and stable. Cash flow is what services your debt on a month-to-month basis. It’s the cash flow that will allow you to sleep well at night and keep your loan provider happy.

Your loan provider will not be interested in the capital gain you’ve had on your property if it is not producing a cash flow to service your debt each month. Your mortgagor wants his interest paid regardless of the value of your property. That's all they're interested in!

To me, CASH IS KING and the capital gain is a bonus!


4. I’ve heard horror stories of tenants destroying rental properties. What is your experience with this?

Yes I’ve heard these horror stories too but I can honestly say that they have never happened to me. I believe the key to stress free property management is good tenant selection, firm property management and insurance.

If you (or your property manager) check out your tenants past history, check up on their references and generally interview them, you will usually sort them out fairly quickly.

The next key to success in this area is to carry out regular property inspections as often as permitted by law. If your tenants do not look after your property properly, do not pay the rent on time or cause lots of complaints, it’s time to be firm and move them on.

Just to make sure that you have taken every other precaution, you need to insure the property and recognise that if things go wrong, you can always fall back on your insurance.


5. I’ve been told that it is better to buy new properties because older properties require more maintenance. What do you think?

When you buy a new property you would certainly expect to have fewer maintenance issues than with an older property and where issues arise, it is likely that they will be covered by the builder’s warranty for a number of years.

The question you need to ask yourself is, how much you are willing to pay for this benefit. In some cases you will pay between 100% - 150% more than the cost of an established property to buy something new.

Yes you will get the tax deduction on the depreciation, but how much of a premium are you paying for this privilege?

When you buy a new property, you generally end up paying the "retail" price of the property because in order to determine the selling price, the developer takes the cost of land, building and construction and his profit margin and works out a selling price.

Since he will have bought the land at recent land prices, paid for the building and construction costs at current costs, the developer must recover all of these costs and more in order to make a profit. This obviously limits his ability and willingness to negotiate cheaper deals for you as the buyer.

Once he has worked out his intended selling price, he considers the current market situation and asks himself: "What is the market willing to pay for this property in the current climate?"

When the market is strong, with lots of buyers looking for properties, the developer can stand firm and achieve top prices for the properties. In fact, this is the time when developers make really good profits because they may be able to charge considerably more than the selling price they had originally calculated.

On the other hand, when you are buying older properties, you are dealing with individual owners who probably bought the property many years prior. They are likely to be making a profit on their original investment and are often more negotiable as to price and terms. If you spot any defects to the property, these can help reduce your purchase price considerably.

My experience has been that the cost of repairs to older properties is not nearly as great as some people may imagine and does not warrant the extra investment for a new property. I find I can obtain more properties for the same dollar investment (therefore more tenants and more cash flow) than if I invest in new properties.


6. I’ve been told it’s no good to buy cash flow positive properties because you miss out on all the tax deductions. Is that true?

Depending on the age of the property, your depreciation deductions will be lower when you buy an older property. Nevertheless if you obtain a quantity survey for your property, you may be surprised at how much depreciation can still be claimed.

In addition to depreciation there are many other tax deductions available to you as a property investor, irrespective of whether you have bought new properties or older ones. You need to discuss these possibilities with your tax adviser.

When you are told things like this, it is a good idea if you ask yourself whether what you are being told is just sales talk, or whether it is fact. You also want to think about whether what you are being told is coming from someone who really knows what they are talking about or whether what they are saying is just their opinion.

Listening to opinions is a waste of time. Remember talk is cheap – especially from armchair experts.

It’s far wiser to make decisions based on facts.


7. You advocate buying properties at the lower end of the market. Doesn’t this attract problem tenants?

Not at all! I advocate buying average properties in average suburbs at average prices which can be rented out to average tenants at average rents.

While these properties are at the lower end of the market, they are not at the bottom of the market.

Typically the people that rent these properties are solid, hard working citizens on average wages. They have generally rented for a period of time and are long-term tenants. They usually have a stable work history.


8. Do I need previous experience to apply the Super Secrets® to Real Estate Wealth teachings?

Quite a few of my students have never invested in property before. Your desire to succeed is far more important than your previous experience. Your previous education, qualifications or financial skills are also unimportant. You can succeed with the Super Secrets® to Real Estate Wealth Course regardless of where you are right now. It also doesn’t matter whether you are young, old or middle-aged.

The Super Secrets® to Real Estate Wealth Course provides you with all of the necessary information, strategies and techniques to get started and build a property portfolio of whatever size you wish. Some of my students have purchased one or two properties while others have built million dollar portfolios. The choice is yours.

So no matter who you are, how old you are or how experienced you are, you can do this successfully. You just need to be willing to have a go.


9. The thought of managing tenants and rental properties scares me. Is there an easy way of dealing with this?

Absolutely! Find yourself a good property manager, tell them what you expect of them and keep a close eye on what they do.

Be willing to change your property manager if they do not perform to your expectations.

The Super Secrets® to Real Estate Wealth Course contains a Property Manager Evaluation Form which will help you in the selection of your property manager.

The package also contains Barry Black’s "Landlording by Checklist" book which shows you how to do your own property management, should you choose to do so.


10. Can you guarantee I’ll make money using your system?

No, and we can’t find the best deals for you either. You have to do that yourself. You need to have the personal motivation to get out of bed in the morning and want to be a successful property investor.

The Super Secrets® to Real Estate Wealth Course provides you with the information, strategies and techniques you need to build your property portfolio. It contains basic information as well as advanced strategies.

Even if you invest in properties that do not meet the recommended RTP formula you are still likely to make money over the long term. Real estate is the cornerstone of most investment success stories and we encourage you to have the courage to put the Super Secrets® to Real Estate Wealth teachings into practice.


11. How soon after investing in your Super Secrets® to Real Estate Wealth course can I expect to make money?

This depends entirely on you. Some of our students have gone out within weeks and bought multiple properties while others have taken longer to get started.

You also need to understand that property values vary on a cyclical basis. It could be that property prices in your area are high or increasing rapidly at the time you study the course. If so, you may need to go outside your immediate area to find the good deals during that part of the cycle.


12. Can I use your techniques anywhere?

You will find more units, townhouses and villas in higher density cities and towns than in country areas. Also the price differential between houses and units both in terms of purchase price and rental return is greater in cities and larger towns than in small country towns.

Accordingly, I suggest you focus on cities and larger towns.

Nevertheless, many of my students have successfully used the strategies in smaller country towns. While you will achieve the rental returns in these places it is possible that the capital growth may not be as strong and you may not be able to exit your investment properties as quickly as in larger towns and cities where the demand is stronger.

You can also apply the strategies internationally. The principles I teach in the Super Secrets® to Real Estate Wealth Course are universal and timeless. The work just as well in other countries as they do in Australia. Throughout Australia we have students in every State applying the principles successfully. We also have students in quite a few countries throughout the world.


13. Do I need a real estate licence?

No. There is no need for a real estate licence.


14. What makes Hans Jakobi different to others teaching real estate investing?

A very important question.

I have a long and respected reputation for independent, impartial financial education. I do not sell real estate or shares or any other investment product. I focus purely on education.

In other words I do not stand to profit from your investment decisions.

Another aspect that makes me stand out from the crowd is that I truly walk my talk. To me being wealthy is about having the time and money to do the things that you value most. It’s about living the life you choose and spending time with those you love.

It’s about being able to send your children overseas to gain new experiences and for you to travel and explore new horizons.

I live on a 330 acre farm with my family, three hours drive west of Sydney. I have achieved the balance between my personal and business life that most people only dream about.

Here’s something else that makes me and my Super Secrets® to Real Estate Wealth Course unique. You don’t need any other seminars or courses after you purchase the complete Super Secrets® to Real Estate Wealth Course. It’s not just some introductory programme which is the first step of a more comprehensive and expensive ongoing course.

It’s the whole box and dice. It’s everything you need to succeed with positive cash flow real estate investing. I hold absolutely nothing back. Not only do I share my own secrets and strategies with you, I take you out into the field so you can observe the process for yourself and I interview a range of experts such as real estate agents, lawyers, accountants, financiers, property managers, quantity surveyors and pest controllers; all people that you need in your success network.

You’ll also see some of my students sharing their ideas and experiences with you as well.

The Super Secrets® to Real Estate Wealth Course gives you everything you need to build your positive cash flow real estate portfolio now. You don’t need anything else.

Another factor that sets me apart from the others is that I teach strategies which you can apply consistently and with low risk to you. By following my suggestions, you won’t make huge profits in a boom only to lose out again in a bust.

They may not be as spectacular as the clever tricks of some promoters but at least you’ll be able to play the game for the long term.

I have personally experienced booms and busts, high and low interest rates, high and low vacancy levels and I know how to deal with them.

Some seminar presenters teaching you how to become a millionaire by next Wednesday have not been in the game long enough to know how to deal with the changes in the market. My strategies are proven, tested and have survived the test of time.

The Super Secrets® to Real Estate Wealth Course is presented in a home study kit format so you can listen, watch and study it over and over again. When you just rely on the information you retain from a seminar, you’ll lose much of it within a few days. This course is far more valuable to you than attending a seminar for a couple of days. It provides you with lasting value and educational impact.


15. Does Hans actually follow these ideas himself or is he just promoting someone else’s strategies?

I personally use the strategies and techniques I teach in building and managing my own investment portfolio.

When it comes to real estate, I’ve got more than 28 years of "in the trenches", hands on experience in both residential and commercial real estate.

I’ve owned a high rise apartment, land, warehouses, houses, town houses and villas in NSW, SA, WA and Queensland and I’ve researched the real estate market in Canada, the USA and New Zealand.

Because of the range of properties I’ve owned over the years, I know lots of the pitfalls and benefits of owning certain types of properties.

I know this from personal experience, - not because I learnt it at a seminar somewhere.

Even though I’m not a developer, I’ve been closely involved in building and renovating houses and factories. I’ve probably had a more diverse exposure to real estate both in Australia and overseas than many other property gurus around these days.

Some overseas experts teach techniques in Australia when they haven’t even performed a single transaction in our country. It’s crazy isn’t it?

Others want you to fly to the USA, Asia or Europe to attend their seminars. How does that help you here? The laws, market conditions and rules which apply overseas are totally different to those which apply here.

I’ve personally travelled overseas to learn from some of these overseas experts and tested everything locally before I teach anything. Everything I teach is as a result of my personal experience in Australia. If there is a challenge you are likely to encounter, I’ve already experienced it and solved it.


16. I’ve already invested in property before. Is there anything I can learn from this course?

Absolutely! Even though this course contains all the necessary information for beginners to get started it also contains many advanced strategies and techniques to:

  • Make you wealthier,
  • Increase your income,
  • Save you money and
  • Protect your assets

This Super Secrets® to Real Estate Wealth Course contains far more information than any other course I have seen so far.


17. I know nothing about property investing at all. Is this course going to be too advanced for me?

Not at all. The Super Secrets® to Real Estate Wealth Course contains everything you need to get started in a step by step fashion. It’s easy to follow and understand.

You will also learn advanced ideas and strategies to help you build and protect a large property portfolio if you choose that path.


18. I take part in chat rooms and reads lots about investing. Do I really need to invest in this course?

Quite a few experienced investors have commented that the Super Secrets® to Real Estate Wealth Course gave them a whole new perspective on property investing. Even though they had read and studied widely, they still learnt something new from this course.

You may be a successful property investor already and could be overlooking opportunities which I reveal to you in this course. I will show you how to achieve better rental returns from your investment properties through more astute property selection.

Not only that, the collective advice given by the many experts I have interviewed and grilled is sure to reveal something that you do not already know.

Students who could easily be considered to be well-educated property investors have discovered that the knowledge they gained from the Super Secrets® to Real Estate Wealth Course was far more valuable to them than their investment in the course.


19. Should I buy properties in my own name or use an entity?

That will depend on how many properties you want to own and your particular family and tax circumstances. In the Super Secrets® to Real Estate Wealth Course you will discover advanced strategies to structure your portfolio, minimise tax and pass on your wealth to your loved ones as effectively as possible.


20. Can I buy real estate in my self-managed super fund?

Yes, and the Super Secrets® to Real Estate Wealth Course reveals how to do this, and what to look out for.


21. What is a self-managed super fund?

A small or DIY (do it yourself) superannuation fund is an individual, family or small business based fund of one to four members.

The DIY fund is a separate legal entity. This is what makes having a DIY fund different to holding a member account within a larger superannuation master trust or retail superannuation product.

Because of their small size, and the closeness of the relationship between the fund members and the fund trustees, the fund members have a far greater say in how the funds operate.

DIY funds form the fastest growing segment of the Australian superannuation industry. Australian Prudential Regulation Authority Statistics of January 2003 show 246,000 small funds with a total of 430,000 member accounts holding total assets of $99 billion.

On average self-managed super funds have 1.75 members, with a member account average balance of $230,000. (Source: The Association of Superannuation Funds of Australia Limited).


22. Does GST apply to the types of properties you invest in?

GST does not apply to the types of residential rental properties I talk about in the Super Secrets® to Real Estate Wealth Course.


23. What about land tax?

Land Tax is a state tax which varies from state to state. Some states have an exemption threshold which applies before land tax is levied. Thresholds may be different depending upon whether you buy the properties in your own name or in an entity.

Larger portfolios will generally attract land tax and it is your responsibility to find out if you are liable for land tax.

It is best if you consult your accountant for specific advice regarding your particular circumstances.


24. I don’t have a lot of money to invest. Does it still make sense for me to invest in the course?

Regardless of how much money you have to invest, you still need to acquire the necessary knowledge before you invest. Once you have the knowledge you may find joint venture partners who have the money but not the time or the skills to seek out lucrative investment deals.

They may want to work with you and provide the money so you both can benefit.

Without investing in the Super Secrets® to Real Estate Wealth Course you neither the knowledge nor the money. Since you need the knowledge first it makes absolute sense to invest in the course now.


25. What if too many people follow your strategies? Does that affect my chances of success?

Absolutely not. There are plenty of opportunities in this world and there is a continuous supply of renters regardless of the economic circumstances or the prevailing interest rates.

Do not worry about other investors. They are no threat to your success whatsoever. Just focus on searching out the best deals for your own investment success.


26. Is the real estate game over? Am I too late? Can I still make money in property today?

Three things have got to happen for you to grow concerned about the future of real estate. You can start to worry when:

    1. People become addicted to sleeping without a roof over their heads,
    2. Young families stop making 'tricycle motors," (think about it)
    3. Someone invents a new way to manufacture vast quantities of cheap, vacant land near major cities.

Seriously, can you envision a time when people won't be buying and selling real estate?

Can you imagine a time when people won't want to be financially independent? Of course not.

That's why I am so confident about real estate. As long as people need roofs and families grow kids, real estate is a sure bet - barring, of course, another Great Depression. In which case, we'll just keep playing the game at lower prices, because even in a depression, people still need a roof over their heads and families still grow kids.


27. Do you offer ongoing support?

Yes. If you have any questions after you have studied the Super Secrets® to Real Estate Wealth Course please feel free to call our office on 02 63 555 800 during office hours or email us at wealth@supersecrets.com and we will be pleased to help you.

Please understand however, that we are not financial planners or investment advisers and therefore our comments will be of a general nature only.


28. What is the success rate of people who have purchased this course?

As you will see from the testimonials we provide, many of our students have had excellent success with the Super Secrets® to Real Estate Wealth strategies. Some have built million dollar portfolios while others have chosen a more modest path.

Your level of success will depend on your willingness and commitment to put these strategies into practice.

Since this course was first recorded we have offered a money back guarantee to anyone who thought it did not represent good value. Since that time we have only ever had a handful of requests for refunds. Therefore we are confident in the excellent value of this course.


29. What is the difference between positive cash flow, negative gearing and positive gearing?

Good question because these terms are very different.

To me positive cash flow means: that after all expenses of owning and managing your rental property have been met, you will have a cash surplus from your properties BEFORE any tax refunds are taken into consideration. At worst, you will be looking for a break-even situation.

Because Land Tax is an expense that only certain investors with larger property holdings incur, I do NOT allow for Land Tax in my positive cash flow calculations.

Most people are into negative gearing (whether they know it or not!).

As their property portfolio grows, many negatively geared investors eventually reach a point where they can no longer obtain finance to buy another property. With each property they buy, they need to put in more of their income.

Negative gearing is where the investor needs to contribute money out of their regular income to support their investments. Since they also need to meet their living and lifestyle expenses out of that regular income, there is clearly a limit to how many properties the negatively geared investor can purchase before the banks say stop!

The only way that such an investor can acquire more properties is if he or she gets a substantial pay rise or if the rental income from their existing properties increases dramatically. Even though the properties may be appreciating well, the negatively geared property portfolio still requires ongoing external cash resources to pay the bills and more particularly, to service borrowings.

I’ve heard more than one negatively geared property investor lament: "I invested in property so that I could eventually leave my job but now I find that the more properties I own, the more I need my job to keep paying for the investment properties."

Since I began teaching positive cash flow real estate investing in 1997, some negative gearing advocates have re-invented themselves as positive gearing gurus and marketers.

They pretend that they are talking about positive cash flow when in fact they are merely presenting negative gearing as something different. They say that you can achieve a positive cash flow from these loss making properties through the tax refunds arising from the depreciation allowance.

They talk about positively geared properties with a 6.5% rental return or an even lower return.

This is just negative gearing dressed up to sound like something different. This is definitely NOT positive cash flow.

Just think about it.

If your loan interest rate is 6.5%, how could your property possibly be achieving a positive cash flow when you still have to meet the cost of council rates, water rates, property management fees, insurance, repairs and possibly body corporate fees.

Ah, they say. You have to allow for the tax refund you get on your cash outgoings and non-cash items such as depreciation.

When they do the calculations, these people use the individual tax rate of 48.5% which may or may not apply to you. They also talk about paying the least amount of tax. Here’s the problem.

If you want to pay the least amount of tax, then your tax refund will also be lower and therefore, guess what? – You are looking at a real cash loss. Money out of your pocket! Isn’t that called negative gearing?

You can’t have it both ways!

The problem is that they play these smoke and mirrors tricks which you only discover later on down the track.

And there’s another problem. The depreciation allowances which these pseudo positive cash flow advocates rely on for their cash flow calculations, actually decrease over time.

Furniture and fittings are often fully depreciated somewhere between three and five years. Therefore, if you rely on these items for your cash flow, you may find yourself dipping into your pocket once these depreciation allowances run out unless your rental return increases sufficiently to cover the shortfall.

These people claim to be talking about positive cash flow but in reality they are not.

Beware of these imitators that are selling you down the negative gearing road!

Once again I say, to me positive cash flow means: that after all expenses of owning and managing your rental property have been met, you will have a cash surplus from your properties BEFORE any tax refunds are taken into consideration. At worst, you will be looking for a break-even situation. That’s what the Super Secrets® to Real Estate Wealth Course is all about.

It is your choice what type of properties you invest in. It is also your choice whether you invest or not. You alone will decide whether you are willing to lose money by following the negative gearing path or even the so-called positive gearing path, or whether you want to invest to make money. It is my strong hope that you will see the light and become another one of my true positive cash flow success stories.


30. How do I get the money to start investing?

Before you worry about the money, I suggest you invest in your education. You don’t really need the money until you know what it is you want to do and how to go about it.

Once you have the knowledge, you can go about finding the money. You may even be surprised to discover that once you invest in your education, sources of finance become apparent to you that you had not thought of previously.

It’s a bit like climbing a mountain.

When you are at the base of the mountain your perspective is rather limited and you cannot see what is beyond the mountain.

As your climb the mountain, your view changes. It is broader and you can see further into the distance.

Once you are on top of the mountain you will see where to go to from there. You have a broad perspective and can see many more possibilities that were obscured from the base.

When you are at the base of the mountain, it is irrelevant for you to worry about where to go from the top. The only thing that counts is to climb the mountain. You can sort out everything else later.

You just need to take one step after another and climb that mountain.

That’s why I suggest your first step is to invest in your education right now. Don’t worry about anything else. Just focus on learning and you will discover a whole new world opening up to you.

It’s important to realise however, that this world will not open up to you until you have made the commitment to learn. As I am known to say: "Your bank balance reflects your investment in your own education."

If you own your own home or any other piece of real estate, you may have equity in this property which you can use to purchase one or more investment properties.

If you don’t own any real estate and have a well paying job, you may be able to start on your investment portfolio straight away. It may depend on how much you have in savings or what type of loan you can get and the type of property you want to invest in.

These days there is a large variety of loan products available including "low-doc" and "no-doc" loans which can suit a variety of investors. These types of loan products are explained in the Super Secrets® to Real Estate Wealth Course.

You may also find some joint venture partners who are willing to work with you to invest in property for your mutual benefit.

Believe me when I say to you: investing in your education is more important than worrying about where the money will come from to invest.


31. Is it always a good time to buy property?

Some people say yes. I say it depends on the overall market trend, current interest rates and the particular property you are looking at. There are good times to buy property and there are even better times.

I prefer to buy during times when the sellers are more negotiable. This will be at times when demand is low and property prices are stable or falling and when it takes a long time to sell a property. It stands to reason that when the market is hot, your chances of negotiating a good deal are lower than when the vendor is struggling to sell his/her property, particularly if he/she is under pressure.

Good deals can still be found in a strong market but they can be harder to find and are more easily recognised by those people who have done their homework and who know what they are looking for and where they are most likely to find it.

Sometimes it just makes sense to learn, study, do your research and to invest when the time suits you. When the market is hot in your particular area it may make sense to check out other markets that may not yet be as buoyant.


32. Does the RTP vary with interest rates?

Yes. The RTP of 500 that I use in this course is a guideline for you to consider and one that will give you a ‘first indication’ of whether the property you are considering is likely to be cash flow positive. During times of high interest rates you will need to accept a higher RTP factor.

To be a successful investor you need to follow a formula that works for you. This is a formula and certainly not the only formula for success. It is one that will help you find cash flow positive properties.

If you apply this formula, it will help you cut down the legwork in looking for cash flow positive properties. You will still need to do some more research once you have narrowed down the field but it may save you a lot of time and energy in your search for a good deal and it may also give you confidence that you are following a particular strategy.


33. What if I can’t achieve your recommended RTP?

Depending on market conditions you may or may not achieve the recommended RTP of 500:1.

Please don’t get hung up on this. The RTP is just a guideline and a quick and easy way to determine whether the property you are looking at is likely to give you a positive cash flow.

Depending upon the market conditions and the prevailing interest rates you may be willing to accept RTP’s over 500, especially if you expect rents to increase in the short term.


34. Can I apply the formula to larger purchases or houses?

Yes absolutely! Some people have successfully applied the formula to buying a whole block of units and some have applied it to house purchases. Once again I want to point out that it is the principle that matters – not the particular example.

There is an abundance of opportunities out there if you are open to them. It’s only by doing your research and studying the market however, that you will get a good feel for an opportunity. It’s important to know what an opportunity looks like when you come across it.

If you want to become good at spotting good deals you need to be out in the marketplace negotiating deals. You may find yourself making lots of offers, many of which are declined. In the process however, you’ll also pick up some excellent deals that will make you a lot of money. The more you do it, the more finding good deals will become second nature to you.

I live by the motto: the opportunity of a lifetime comes by at least once a day.

What about you?


35. Do property prices ever fall?

Most certainly! Anyone who tells you otherwise doesn’t know what they are talking about. Property is no different to other markets that go up and down with supply and demand and the desire (or need) of particular vendors to sell quickly.

The good news is that property is not as volatile as some other markets and even though values may pull back a little for a while they often tend to stabilise rather quickly. The other point here is that if you don’t need to sell at that time, it won’t really affect you.

Here’s another important distinction to be aware of.

The types of properties I advocate are: average properties in average suburbs that you can rent to average tenants at average rents. This is the biggest sector of the market. This is the sector that experiences the smallest impact in an economic downturn.

It’s the top end of the market that gets hit first because tenants scale back their accommodation expenses in a financial squeeze and look for something cheaper. That means that the demand for average properties actually increases!

They may not be as glamorous as some of the higher priced properties but they are certainly more solid and predictable and you can own more average properties for the same investment that you would need at the top end of the market.

I would prefer to have 3 properties for $100,000 than one for $300,000 because with three properties I have split my risks three ways. If one of my tenants moves out, I still have another two to pay the mortgage. If the one tenant in the $300,000 property moves out, your cash flow stops. Which would you prefer?


36. What do you think of buying investment properties off the plan?

There are certainly people who have made money buying investment properties off the plan, especially in a rising market, so I’m not about to suggest to you that it cannot work.

However, it is not my chosen strategy. Let me explain why . . .

Off the plan sales are frequently promoted by so-called ‘educators’ who are nothing more than spruikers for real estate developers whether in their own right or as ‘hired guns’.

I am particularly concerned about people advocating buying off the plan . . . with deposit bonds and depending on a speculative rise in the market so that ‘investors’ can sell out at a profit in the future by the time they have to settle on their properties.

At the subtle urging of the seminar presenter, inexperienced investors are mortgaging their houses to speculate on the market. This is not property investment . . . this is gambling or punting! This is what happens when greed is fuelling your investment decisions!

Can you imagine what will happen when the market turns . . . as it inevitably will? I’m sure many people will be hurt. Have a guess where the promoter will be then. You won’t see him for dust! He’ll be far away enjoying his proceeds while the disillusioned punters will be selling out at a loss and under pressure in a falling market as their settlement date draws closer.

Off the plan sales are created so that before construction begins, the buildings are largely pre-sold. For the developer, this is certainly a good strategy and helps him get the finance to build the building. These types of sales are particularly successful in a strong and rising market when there is a shortage of supply. It can be a way to make money provided you sell out during the boom. However, every boom is followed by a downturn.

(DON"T EVER BELIEVE ANYONE WHO TELLS YOU THAT PROPERTY PRICES NEVER FALL! – that’s absolutely incorrect!)

When the market turns as a result of an oversupply of available properties, those properties still under construction will continue to be built, particularly when they have been pre-sold and will add to the over-supply in an already falling market.

The sellers who as a result of attending the marketeer’s seminars were hoping to make huge profits by the time of settlement, now find themselves becoming increasingly desperate to cut their losses and need to sell out at any price in order to avoid going bankrupt, particularly when they have purchased quite a few high value properties off the plan.

How do you think the banks react when the market is falling? Are they likely to lend just as freely as when prices are on the increase? Absolutely not!

Just imagine that you are an investor who has contracted to purchase 6 properties off the plan for $300,000 each and the building is scheduled for completion 18 months from now. Despite what the seminar marketeer told you about the huge profits you would enjoy by the time of settlement, you find that the market has peaked and that an oversupply of properties is forecast by the time you need to settle.

As you might imagine, your banker also reads the press and is aware of the oversupply situation. At the same time, other developers and investors find themselves in the same boat and are trying to cut their losses before it’s too late.

Whereas you thought your properties would be worth at least $350,000 each by the time of settlement, and that you would have plenty of equity in the properties by then, you now find that because of the oversupply situation, your banker is only prepared to value your properties at $260,000 each in this depressed market. This is despite the fact that at the time the properties were sold off the plan, a valuer stated that they were worth $300,000.

Where does that leave you if you are a highly leveraged ‘investor’?

How will you meet the shortfall in equity if the bank values the property at less than the contract price?

When properties are in oversupply, the tenants benefit too. They can now pick and choose and as a result, rents decline to meet the market. Landlords offer rent-free periods and inducements just to get a tenant, particularly if the property is at the high end of the market since these are always the first to suffer in a downturn.

As rents decrease, the investor’s cash flow is strained by interest costs and other outgoings affecting the investor’s ability to hang on to the investment (even if interest rates stay the same!)

With no short-term prospect of a capital gain, cash strapped and disillusioned novice investors generally end up selling out at a loss. This is when the professional investor has a field day by making silly offers and picking up the bargains.

Which type of investor are you?

Consider this . . .
To be a successful investor, you need to know the rules of the game. In general, the promoter will be playing by a different set of rules to you as the investor. You should expect that because your objective is to get the best deal for yourself and his objective is to get the best deal for himself and the vendor of the property. There’s nothing wrong with that. What is important however, is that you don’t get sucked into a situation where you are playing by someone else’s rules. The more you learn and think about what you are learning and the more homework you do, the more likely you will be to understand the rules of the money game.

That’s why Mike Creed from Melbourne says: "There are a lot of investment strategies and seminars around at the moment. Some of them may be good. Some them may not be good. You have to form your own opinion. My view is that the Super Secrets® to Real Estate Wealth Course is definitely the best one, especially for starting off. It’s a very easy, stress free way of going."



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