Monday, 17 February 2014

Little Money No problem ask TIM

Australia's Most Comprehensive
PROPERTY INVESTOR SYSTEM

I meet Tim at a conference last year and was impressed with his story, so this is a long story but worth a read through. It really shows what people can do with Not Much Money deals.
He has come up with a Program so have a look at this video on his website after you read story below.


Ok here is TIM
This is his story.
1. Getting Started

My name is Tim Hart and I’ve been a full time real estate investor for nearly 10 years now and the most common question I get asked by people starting out in real estate investing is “How did you get started?”. I got started in creative real estate when I was 20. 

After graduating university and starting a career with the Commonwealth Bank in Financial Planning I quickly learned that financial planning seems to be more about sell people products than actually helping people financially and knew I had to do something else. 

After doing some research I just couldn’t understand the idea of losing money every week on a property through negative gearing. 
I wanted a strategy that would give me positive cash flow from day 1 and allow me to quit my job. I stumbled across vendor finance and in particular Instalment Contracts. 
I liked the idea of positive cash flow, but also helping other people achieve their dream of home ownership. I decided that this was the strategy for me. 
I started doing my real estate investing in my free time. For me, Saturday was my “real estate day”. I committed to myself that no matter what was happening on a particular Saturday I had to be moving my real estate investing career forward. 
I knew in my heart that as soon as I said “I’ll go to the movies or a BBQ this Saturday and catch up next week” that I’d never actually catch up and I’d be forever saying “next week I’ll start”. I started by selecting a few suburbs where first home owners where buying as they were my main target market. 

It was about a 45 minute drive to get there, but I didn’t mind as it gave me time to listen to real estate trainings as I went. Also when you’ve just driven for 45 minutes you make sure you actually do something when you get there so it’s not a waste! For the first few weeks it was about getting to know the suburb and what the prices were. I went to all the open inspections and chatted to the real estate agents. I made sure I asked them all the same questions to ensure I was getting the correct information. I asked them where the good areas are and the bad areas. What prices houses were selling for etc. 
I needed to get to a stage where I could look at a house and know within $20,000 what it was worth. I quickly realised that the real estate agents asking price was usually a good 5% over market value. Another thing that worked well for me was to go to a garage sale in the area. If you’ve ever had a garage sale you know most people come first thing in the morning then you sit there doing nothing for the rest of the day. 
I went to a few garage sales at late morning and I took my street directory in with me and told the people I was looking to buy in the area and could they tell me a bit more about the suburb. I found most people extremely happy to talk to me and help me out. It’s amazing the information you find out from a local that the real estate agents won’t tell you.
Once I had a pretty good idea of what houses where worth in the area I then had to start making offers. Its fine to do some research in an area, but don’t kid yourself into thinking you are an investor until you are making offers to purchase. I knew that until I was putting in offers to actually purchase property all I was doing was being a glorified property inspector. Don’t get me wrong it was scary putting in offers. It all became very real for me when I was signing letters of offer, but I knew it was the only way to move forward.

Now at the time my strategy was to purchase the properties the traditional way through the real estate agents, but make sure I was getting a good 15+% discount off retail. Then I would on-sell the properties on vendor finance for full retail. From my research I knew roughly what the property was worth then I was putting my offer in around 15% below that.

Being the detail orientated person I am I wanted to make sure all my figures were correct before I purchased. I started creating a deal analyser in excel. Something to work out the stamp duty costs, land titles fees, my cash flow, upfront investment, return on investment, backend profit etc. 

I knew that it didn’t matter how pretty the house the numbers had to stack up. Like any business making an investment I had to do all the number crunching before I signed on the dotted line! I didn’t want to get into a property and suddenly get a nasty little surprise that I hadn’t considered. 

The deal analyser spreadsheet quickly got to the point where excel couldn’t handle the functionality that I needed and that’s when I decided to hire a team of programmers and create the Property Investor System (www.propertyinvestorsystem.com). 
The software has come a long way over the last 10 years and can now analyse all the different types of creative finance like instalment contracts, lease options, rent to buys, joint venture agreements, second mortgage carry backs, renovations, buy and holds, and every combination of them. This is what gave me the confidence to move forward.
The first offer I put in was around $50,000 under the asking price and I thought the agent was going to yell and scream at me and throw me out of his office. The reality was that the worst an agent would do is shake their head and say there is no way they are going to accept an offer that low. It’s funny the scenarios your mind comes up with and yet its never as bad as you think it might be.

 It took me 16 offers before I finally had an agent call me back and say “Tim I can’t believe it but they actually took you offer”. Fear and excitement hit me like a tonne of bricks! I was still living at home with my parents so I had never even rented a house before let alone bought one. The biggest thing for me that took the fear and emotion out of the purchase was knowing my numbers. I went straight back to my deal analyser and studied the numbers for the deal and could see in black and white that it was a great deal and I was going to make a lot of money out of it. This put my mind at ease. To help out people getting started in property investment we have just introduced a $1 for a 30 day trial of my software. You can go to www.propertyinvestorsystem.com for more information.
Until next time. Happy investing!
Tim Hart
Property Investor and Software Creator. The Property Investor System is Australia’s most comprehensive property investor system. The only Australian system that can analyse, track, and report on all types of property transactions. Visit www.propertyinvestorsystem.com for more information.