All posts by Fay McLean

Fay McLean is an experienced property investor who together with her husband, has accumulated a multi-million dollar property portfolio across Australia. To successfully invest and hold a property portfolio with the intention of creating long term wealth and passive income is not always easy. Fay can help you beat the overwhelm so you too can live a life of freedom and flexibility. Connect with here on Facebook, Twitter and Google +

Renovate For Profit: DIY Renovation Case Study

Let’s go behind the scenes of a recent DIY renovation Murray and I did on one of our properties.

This is a 3 x 2 townhouse that is currently part of our property portfolio. It is in Mandurah, Western Australia.

Property to renovate for profit return via increased equity

After receiving property management reports that were becoming less than favourable, we   decided to do a personal inspection of the property and could see immediately that there was a need for a light cosmetic renovation.  With a small break in between tenants, we jumped in to give the place a quick DIY renovation makeover.

These three videos take you through our process from when we first arrive at the property right through to when we leave.

At the end of Day 1.    You can see I’m tired and exhausted but got loads done 🙂

The finished project. Great results and happy!

Buying or owning a property is no different from the car you drive each day. It needs attention and maintenance to keep it in top condition. The occasional DIY renovation will help to keep your property in tip top condition.

Here’s to your success!
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P.S. If you decide a renovation is right for you, be sure to grab the FREE Chapter of Jane Slack-Smith’s new book “Your Property Success With Renovations“. I think you’ll love it!

What Is A Property Joint Venture Agreement? Property Joint Ventures – Simplified!

Property joint ventures can be a good way to fast-track your portfolio, but they can also be risky.

If someone had suggested to me to enter into a Joint Venture Agreement for any of my early investments, I would have run a mile. So I don’t blame you if you feel like skipping over this information as being too complex. But I want you to just stop a moment and really consider what I’m about to share.

There could be many occasions where you have the desire to invest in property, but for one reason or another, you don’t currently have either the funds or the equity to make it happen using the regular strategies often talked about.

This is the situation I’ve been in recently.

My existing portfolio has been acquired over the past years based on a negative gearing strategy. It had reached the stage where the banks in their wisdom, decided that I did not meet serviceability requirements. In other words, they wouldn’t loan me any more money. The thing is, I also knew that I needed to keep acquiring investments that would return me a good positive cash flow to balance out my property portfolio. Choosing future investments that return positive cash flow will also allow me to move more quickly towards my passive income goals.

So, with no money to invest but the knowledge and desire to continue forward – entering into a joint venture agreement made absolute sense. Just because it made sense, didn’t mean it didn’t scare me a little (ok, a lot) too.

What Is A Joint Venture Agreement?

The formal definition is this: A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets.

Let me simplify that for you a bit….

Creating a successful joint venture partnership is simply about marrying up two or more parties that have things each other needs.

Property Joint Venture Agreement – Why Would You Use One?

This type of agreement is great when two or more people want to come together to carry out a particular project or deal. The people who form the joint venture agreement generally come together because they have different skill sets to offer. Both parties are invested in the project in terms of time, money and effort. The level of commitment or responsibility does not have to be equal though.

Here’s how our property joint venture has worked….

My JV partner had a high income, but no savings or accessible cash funds.

I did not have an income to service a loan, but I had access a lump sum of money that could be used as a deposit.

Jointly, we had a deposit and serviceability to be able to obtain a bank loan. Voila! A perfect match.

The project we have undertaken is an existing block of land with house. The existing house will be demolished. The block of land will be sub-divided. Two new houses will be constructed. A granny flat will be built on one of the new blocks. Expected cost of the whole project is $1.8K. The profit split is 30/70 on equity increase and a 50/50 on rental income.

(I’ll keep you updated as the project progresses.)

Joint Venture Agreement Deals

A joint venture allows both parties to share the burden of the project, as well as the resulting profits.

What To Include In A Property Joint Venture Agreement

Golden Rule** Get a highly recommended legal team to create your agreement! This is money well spent and your legal advisors will make sure both parties are protected.

There is a long and essential checklist of inclusions for any JV agreement. Your legal team should take care of all of them. Some a few of these inclusions are:

  • The terms of the agreement – who is responsible and for what, during the term of the agreement?
  • The project goals or objectives clearly defined – the JV is generally dissolved when that goal is reached. If not, what is the exit strategy for either party?
  • How the profits will be distributed – after all, you ARE in this to make money – right?
  • The split of profits – profit splits don’t have to be 50/50.
  • Withdrawal of one party or disagreements: all sorts of contingencies can arise and these should be addressed within your joint venture agreement. The clearer your agreement is and the more risks it covers, the smoother the process and the happier the project outcome will be.

Property Joint Venture AgreementTake the time to have discussions with your potential JV partner and ensure you are both happy with the terms of the agreement. Better to have any disagreements or disputes before you enter into the formal agreement rather than spending time, money and energy to unwind something later on.

Is a Joint Venture Agreement Right For You?

While joint ventures are generally small projects, major corporations such as Sony Ericsson also use this method in order to diversify. I’ve used a buy and hold strategy for most of my investing. Investing into a development project is certainly diversification as well as stretching me out of my comfort zone!

A joint venture can ensure the success of small projects for those that are just starting out or for more established investors wanting to tackle bigger deals. Renovations, buy and hold and property development deals can all be accomplished using joint ventures.

Since money is involved in a joint venture, it is necessary to have a strategic plan in place even before you have the formal Joint Venture Agreement written up. Both parties must be committed to focusing on the future of the partnership, rather than just the immediate returns. After all, your first JV could be just the beginning of a long, beautiful business relationship that earns you big profits deal after deal. So you can achieve this success, honesty, integrity, and communication within the joint venture is necessary.

It’s Time To Move Forward!

There are so many strategies available for you to invest in property. I hope you are seeing now that you don’t have to be stuck, or ‘sit tight’ just because you don’t have equity, money or serviceability right now.

Do you have the time, money or expertise that could be matched up with someone else who is lacking in that area? Mentoring groups, forums and investment workshops are all great places to begin to make connections with potential JV partners.

I’m excited to be doing a property development with my joint venture partner. Perhaps its time to create your very own property joint venture agreement and create some more wealth!

Here’s to your success!

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p.s. Leave me a comment below…. I’d love to hear what your experience is with joint ventures (or what scares you most!).

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Retirement Age: Pension Age – Two Different Things Altogether!

I actually don’t particularly like either of these terms – retirement age: pension age.  Let me tell you why…

retirement age: pension ageI hear so many people refer to their retirement age as a time when they will finally get to relax, spend more time with the family, travel and do more of the things they enjoy.  Most people don’t get to this point, until they also reach pension age. Pension age is the age  when our Australian government will ascertain whether or not you qualify for some support to keep you in your old age.  And of course, with the handing down of the Australian Federal Budget for 2014, this pension age has been pushed out to the age of 70.

Here’s a quote from a letter to the editor in The West Australian this week:

Tired Over 60’s Carrying The Budget

I need to ask why this Government is so hell-bent on keeping us baby boomers in the workforce. I’m 60 and my husband is 62. I have worked since I was 15, my husband the same. We are both so tired and find it harder and harder to keep going.

At night I look across at my husband, only to see him asleep at 7.30pm. What sort of life do we have to look forward to? By the time we are allowed to retire we will be too tired to enjoy it or each other.

Unfortunately, these comments reflect the majority of our population.

Working Hard Just Doesn’t Work

As a teenager growing up I saw my own parents working day in day out with no time for holidays. And sad but true – they both have ended up at pension age living off a very limited income and waiting eagerly for the next deposit into their bank account of their aged pension.

After seeing my parents working so hard, I was dead set on creating a lifestyle that was easier and more fun for my own family.  I made the decision that property investing would be the vehicle to use.  I can’t say the journey has been all smooth sailing.  There are challenges and obstacles with anything that is worth doing.  For me, the things that have the biggest impact on achieving financial freedom are setting goals and continually investing in education.

“If you fail to plan, you plan to fail.”

No matter what age you are now – this is important!  Setting your goals and defining your time frame to achieve those goals is what is going to give you the opportunity to decide yourself when you are at ‘retirement age’.  Knowing how much income you want to live off per annum will keep you focused on seeking investment opportunities that will give you the returns you need.

The amount of passive income per annum (before tax) that you require to live off is:

$_____________  x 20 = $ ______________

This is the amount of net assets you require, earning a 5% per annum return.

So if you want $50,000 (a return of 5% on these assets), then you need $1,000,000 of assets at 5% yield to earn you $1,000,000 x 0.005 = $50,000.  These assets need to be debt free and do not include your family home (because your home does not earn you income).

It’s important to review your goals regularly and set time frames for when you want to achieve each milestone.

Because of a well developed property portfolio, even now at the age of 50, I can enjoy things like travel, family time and have the flexibility on how I spend my days. I don’t have to  wait until some magical ‘retirement age’.retirement age

Education = Deciding Your Own Retirement Age

Well educated and informed decisions can help you have more money available instead of ‘just getting by’ and waiting until you reach pension age.

Get good, sound guidance from experts (and that most likely excludes your family and close friends).

Sometimes people who are close to retirement age might think it’s too late to invest in property.  This is just not true!

What’s more likely is that you don’t know what you don’t know.  There are so many different investment strategies and options that it’s never too late to take control of your finances under your own rules.    I’ve used information from many educational seminars to decide which strategies suit me and will make good money on property no matter what age.  There is a strategy to suit you. All you  need is the desire….!

Do you long to plan and pack for an amazing trip or holiday?  Feel like spending any day of the week fishing?

Retirement Age: Pension Age  If you’re looking to choose your own retirement age … consider investing in property.

You might decide you’ll still sit it out until pension age, but, whatever you choose –remember retirement age:         pension age – they CAN be two different things.

Make your money work harder than you do!

Here’s to your success!

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P.S.  Leave me a comment below. I’d love to hear your plans for retirement and how you’d like to spend your time.

Investing In Property: Is It A Good Time To Invest In Property Today?

If you’re considering investing in property, “Is it a good time to invest in property today?” is a great question to ask.

Investing In Property: Is It A Good Time To Invest In Property Today?

Potential investors will often be thrown off track with reports they hear in the media about interest rates that might skyrocket, or that in 2 years time housing  prices will hit rock bottom, or  there will be a better opportunity to invest in property around the corner.   Let’s face it, the media loves (and needs) a good story!

Now don’t get me wrong – it’s a wise thing to keep your eyes and ears open as to what is going on in the economy.  But it’s more important is to use strong statistical data and research tools to find out for yourself what is going on, or is likely to happen.

Some of the key factors to look at, analyse and understand when investing in property are:

1.   What industry is going on in the area? Be sure to even delve into the management strength of large companies. You need to be sure there is employment prospects long term in any area you might want to place your investment dollars.

2.   Calculate your borrowings using a strong buffer for interest rates. Do your affordability figures based on todays interest rate, and also on a higher rate in case there is a rise.  Be sure you can afford to hold the property under both situations.

Below is an example calculation of the weekly holding cost of a property.  In other words – exactly how much you, as an investor, would have to find each week to keep this property.  It has taken into account fees such as stamp duty and settlement, ongoing property management fees, interest due, rent received etc.

Investing In Property: Costs to keep an investment propertyYou MUST know your numbers!

3.   Investing in property that you buy under market value will be a huge advantage. There is a saying that goes something like this “It’s not what you sell a property for but rather what you bought it for that determines your profit.”  Using a buyers agent or the power of group buying can pay off here.

4.   Understand the demographics of the area and what type of dwelling is ideal for prospective tenants or development.  Where are the main roads, any new council approvals in the system, new schools or shopping centres being developed?

So now, back to the question: Is it a good time to invest in property today?

Once you’ve considered these important indicators above as a starting point, you should have a much clearer pathway to being able to come up with your own answer.

Investing in Property With Your Head and Not Your Heart

Subscriptions to high quality magazines and data research such as RP Data are great places to begin doing your own research and obtaining this kind of information when you start looking for an area that will meet your investment needs. I suggest starting a spreadsheet to record all the information for different areas you  are considering.  After a while, you’ll start to see patterns emerging as to where high growth rates are, fast selling suburbs etc and before long, the information you have gathered will start to ‘speak back to you’.

Yes, this does seem like a lot of work.  But after all, your money is valuable (or should be!) and you want to invest it wisely.  Using statistics and numbers to make your decisions also takes the emotion out of your investing – making decisions with your head and not your heart.

If all of this seems too overwhelming for you to do on your own, another good idea is to associate with other people who have already had years experience investing in property.  Being part of a support community (like this blog) or mentoring group can  help put aside the nerves and fears that can be associated with making that investment decision.

Investing in property is about two things – education and action.

Do you remember when GST was first introduced?  People still invested in property and have made good money.  Do you remember the first stock market crash?  People still invested then in property and have made good money.  It was not the timing  their investment was made, but rather the decision around what, where and how much the investment was for. I started my investment journey when interest rates were up to 18% and was still investing in property through the stock market crash – yet I have never looked back!
There are always  going to be moving market indicators no matter when you decide to commence your investment journey.  You can use these moving indicators as an excuse to stay in your comfort zone and do nothing.  But I can assure you – sitting, wishing and waiting will not make you any money.  Action and implementation will!

Considering investing in property? Is it a good time to invest in property today?”    In my opinion…… if the numbers and statistics add up (as far as affordability,  holding costs, location, demographics etc), then the sooner you get on the gravy train, the sooner you’ll reap the rewards.

Here’s to your success!

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How to Choose An Investment Property?

residential propertyWhat sort of residential property should you buy when you want to consider property investing?

Not only should you consider the attributes of the property, but you must also consider your own financial personality.  When it comes to choosing an investment property, no two people are alike.  What’s perfect for you may not be perfect for someone else.  Your comfort level is important, and you should also consider how involved you want to be with the property.

Here are some of the questions you should ask yourself so that you understand your own profile as a property investor a little better.

  • Do you want to be involved with a body corporate? (Units and townhouses usually operate under a body corporate.)
  • How often do you want to be concerned with painting? (Timber properties need to be painted every few years.)
  • Do you enjoy organising tradesmen? (Newer properties require fewer repairs than older properties.)

There is no single type of investment property that is substantially better than others.  The economic performance of a low-set brick property in the outer suburbs may match that of an townhouse in the inner city. While some properties will cost you more along the way for better gains at the end, others cost very little along the way, for lower end gains.

Below is a list of property attributes to be considered.  Not all of these attributes will be found in any one property and sometimes it may be a case of trading off better attributes for the price.

  • Location
  • Price
  • Physical Attributes (Construction style, material, condition, size, car space etc)

I have chosen to have a selection of residential property types in my personal portfolio including townhouses, apartments and land and house packages.

WHAT WOULD YOUR IDEAL INVESTMENT PROPERTY PORTFOLIO LOOK LIKE?  LEAVE YOUR COMMENTS BELOW….

Money Doesn’t Show Any Discrimination

Money does not show any discrimination, it does not grow on trees, but it is made to flow freely around the world.

We actually all have the same opportunities in life.  It really bugs me when people remark, “Gee how come you can go on a holiday?”, or “gee how can you have an investment property?”
You might have had similar things said to you.

Don’t worry about what you did yesterday.  Today is a brand new day and as I said we all have the same rights and opportunities as everyone else to become wealthy. However, the vast majority, of people will never achieve freedom financially.

Take a long hard look at yourself and ask the question, “Where do I want to be financially, and when do I want to get there?”  If you are one of the majority that think other people are lucky, then stop. Take a deep breath and know that you can have the same kind of ‘luck’ too.

There is a small group of property investors in Australia that are becoming wealthy, and I am one of them.  I can help you to go down the same path as me…

I want to share with you a comment that is said often to me about property investing.  This one, I hear all the time…

YOU HAVE TO BE SMART TO INVEST

Stop now and don’t put yourself down any longer. Anyone can invest in property, and yes it can be challenging. It is not rocket science, and my best advice to you would be finding yourself a mentor, or someone that actually invests in property.

Many people have great ideas and think they know all about investing but when it comes to the nitty gritty they really are all huff and puff. When you are looking around for that person to help you, please make sure you ask the question “Have you invested in property and are you wealthy or at least on the track to financial freedom?”

Really the truth is you can do anything you want to do. Saying that you’re dumb or not smart enough is just an excuse.

If you know nothing about investing, be determined to learn all you can about property investing so that you can set yourself on the path to financial freedom.

Find someone that has done what you want to do, and is where you want to be. Use their knowledge to fast track your own success by avoiding the major mistakes most people make. The world is at your feet!

When people then say to you “Gee you are so lucky”, be humble and let them know we all have the same opportunities.  Grab yours, run with them and before you know it, you will be where you want to be!

WHAT ARE YOUR GOALS IN RELATION TO PROPERTY INVESTING? LEAVE ME YOUR COMMENTS BELOW. 

Take A Long Look At Where You Are At In Life…

bigproblem

I urge you all to take a long hard look at where you are in life.

You can have control of where you want to be in the future, nothing is going to be easy;  however, the concept of creating a passive income stream is something to think seriously about.

I will tell you how I did it….

I bought investment properties – a total of bought 10 properties over a period of  8 years.  I used the bank, the tenant  and the tax man;  other peoples’ money, to help me build my property portfolio. After about 4 to 6 years most of these properties became cash flow neutral.

Property investing is a long term prospect.  It does take time and patience to reach your goal. One investment property is better than none, and with the right education you too could be well on your way to building a property portfolio.

If you want to make quick money and have more risk, head off to the casino.

I have been through the hard knocks in life, and once found that a simple person in life could have such control of their future. I’m not on easy street yet.  I am a few years away from where I want to be, but boy am I looking forward to continuing to be able to live the lifestyle I want into the years to come.

It wasn’t easy, but it was simple.

I grabbed some opportunism and ran with it. In just a few short years I will be living completely off the passive income we have created from our property investing and the passive income it provides.

I can show and help you how to do it as well, how exciting would that be?

p.s. If you have questions about how to start your own investment journey, or maximize your current portfolio, leave a comment below. I’ll be happy to answer your questions, or direct you to a resource or free tutorial here on Property Investing Support to help you through the step you’re on. So ask away!

WHAT IS IT THAT YOU NEED TO KNOW MOST?  LEAVE ME YOUR COMMENTS BELOW.

Retirement: A lotto win or something more reliable?

lottowinAre you one of the majority of the population that will not have enough money for a comfortable retirement?

Yes, it’s such a very scary question that in fact, very few people will address the situation.

We all need to have plans and goals for our future, and I can tell you now they will not happen on their own accord. This is a true fact that for about 10% of our population, their  strategy for retirement is to win the lotto.  How sad is that?

We all need something better if we want to live in a comfortable retirement. For a couple, the pension only pays approx AUD $26,000 per year which is not very much at all.  And the average superannuation payout is around AUD $75,000.  My calculations are that although you would have enough to live for a couple of years from your superannuation.  But after that then bang, you are living on the pension.  That may not sound like  such a bad idea to you, but with a little planning now, you could well and truly set yourself up for a much more comfortable lifestyle in your later years.

You may well ask “How is that at all possible?” Well I can tell you that nothing is impossible, and let nothing beat you.

I was in that position. I was 36 and married, we had a little money put aside, owned our own home, and thought we was set for life.  My husband and I sat down, had a really good look at where we would be when I was 55.  Don’t forget, I did not have superannuation, but I did have some shares in a portfolio although they didn’t amount to much.

What we could foresee as our financial future was real scary.

That is when I decided to start investing in property and now, 12 years later I have a portfolio of ten properties which are nicely spread across   Australia. Yes, property will have its time when it goes a bit flat, but let’s not forget the 15% drop  that a share market can take at any unexpected time. Property has been great to me and my portfolio has doubled in about 9 years.

As an experienced property investor myself, I have huge experience which I can pass on to you and I am just waiting to help and educate you in property investing.  It is possible for you  to enjoy a really rewarding lifestyle in your later years.

Keep your dreams alive!

Here’s to your success!

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LEAVE ME A COMMENT BELOW AND TELL ME ABOUT YOUR EXPERIENCES….

Property Investing or Herd Mentality?

herdmentalityProperty Investors Have A Herd Mentality

Property investing is so much like handling livestock, that it is not funny. Property investors have a herd mentality – I will explain more.

Having been a farmer for a good part of my life, I was responsible for the welfare of my livestock. I would have to open the gate and let the cattle into the new paddock, some would move through the gate at quite speed, and others would meander through at a more sedate pace, and finally some would not move at all.

You would easily tell who the cattle were that took that little chance, grabbed the huge opportunity to better themselves and there family. That cow that moved first had more to give to her family and thus that little calf grew very well .Yes the others finally came out, but they did not grab that vital opportunity when it was created. Don’t forget it was my job to provide and educate my cattle that it was safe to move forward through that gate, and that they could do so safely. That is called the herd mentality.

It is exactly the same in real life when you consider property investing.  You have those that will take and grab an opportunity and run with it. As someone who mentors people in investing in property, I take great pride with those people and make sure, just like I did with my cattle, that they are guided through the process safely.

It is going to be the person that does decide to invest, that will have that little bit extra now and later in life to provide for their family, and have some left over.

Property investing is not hard. It is about being educated in the right way; just like I educated my cattle to reach their full potential.  I can help you to reach your potential with property investing as well.

ARE YOU WITH ME?  LEAVE YOUR COMMENTS BELOW AND LET ME KNOW HOW I CAN HELP YOU.

Welcome to Property Investing Support!

Welcome everybody to my new blog.  This is the place to find support and to help you find your way through the obstacles that can hold so many people back from successfully investing in property, and creating long term wealth.

When you first start to consider investing there are many options available to you and it is sometimes very hard to be sure you are making the right decision.

Throughout our journey here together I will give you my opinion on questions like:

  • Why should I choose property to invest in rather than shares?
  • How do I know where the best places to buy a property are?
  • I wonder if the bank will actually let me borrow money to buy a property?
  • Should I buy a property together with someone else like a friend or my parents?
  • I’m not sure I will be able to afford to keep a property for a long time. How do I know?
  • Finances confuse me so I’m not sure how to set up loan accounts properly.

The questions are never ending and finding reliable answers from people who have YOUR best interests at heart can sometimes be difficult.

My primary aim here is to support you and share my own experiences of 10 years of property investment with you. To help you accelerate your journey to financial independence in a way that you are comfortable with and understand.  Creating a diverse property portfolio that helps to reduce your tax, gives you good long term capital growth and provides you with good return on your investment is a sweet spot to be in.  If that is something that you aspire to, then I’m here to help you along the journey in whatever way I can.

INTRODUCE YOURSELF BELOW AND SHARE YOUR INVESTING EXPERIENCES WITH ME..