CONTENTS
1. Personal Update - NZ Trip
2. Steve McKnight's Book Launch & Why Chapter 28 Is The Best
3. HandyMan Magazine
4. Protect Your Profit! 5 Must Do Tips For Any Deal
5. Property Deal Of The Month
6. Funny Foto’s
7. Member Questions Of The Month
1. PERSONAL UPDATE
Doing A Full Circle To A Place Where It All Began? - Elise Parker
Greetings! It has been an adventure-filled month of book launches, magazine interviews, holidays and, of course, property investing. Before we elaborate, here is a quick personal update of our November.
Dean and I have just returned from a business / relaxing holiday in New Zealand. NZ is a significant place for us – not only are there many beautiful places to see, it has helped us get to where we are today. Before I tell you why, here are a few photos from our recent trip. Check out the scenery … amazing!!
The thing about these experiences and the reason I share them with you is because our property investing has allowed it all to happen. It was not that long ago, in 2004, that Dean and I realised that if we really wanted to create financial freedom for ourselves we had to take massive action and surround ourselves with the right people. When the opportunity arose to go to NZ with Steve McKnight and Dave Bradley, there was no hesitation – we were there!
But looking back on that initial trip, the focus was very different. Now when we go to NZ we can enjoy some of our favourite spots whereas, in 2004, our focus was on making money so that we could create the freedom of time. Now that we have achieved that, it is satisfying to go back and take in the beauty of the country knowing we can do this whenever we like.
Another recent fun day out for us was at the Ballarat races. Forget the crowds of the Melbourne Cup, this has just as much glamour but in a country setting where the town comes together for a great day of races and socialising. We were invited as guests of the real estate agency that sells our properties. We give them mountains of business and commission and so it is just another example of the benefits of building a team with people who want you to succeed! Don’t underestimate the members of your team – we certainly don’t!
The next edition of our newsletter will be released just prior to Christmas. If I can leave you with a valuable tip I heard from Steve McKnight at his latest book launch: "Don’t wait for New Years’ resolutions to make a change, take action now!"
Most people say that the year has gone so quickly and they start to wind down already. But one month is still 8% of the year and there is plenty you can do in that time, you just have to want to!
2. STEVE McKNIGHT'S BOOK LAUNCH & WHY CHAPTER 28 IS THE BEST!
Australia’s #1 property author does it again! – Dean Parker
Last week we attended the book launch of Steve McKnight’s fourth book, From 0 to 130 Properties in 3.5 Years, Revised Edition.
Amongst a packed room of nearly 400 people, Steve gave an update on the current state of the market and an insight into the inspiration that led him to update his book, which is the largest selling property book of all time in Australia.
We are doubly excited about the book as one of the 16 new chapters is dedicated to our story and one of our deals. One of the big reasons why we created the Property Systems website was to give back just as Steve did for us.
The book is set to hit stores in early December so pick up a copy and start with the best chapter – chapter 28! OK, we may be biased but, seriously, the whole book is a fantastic read.
3. HANDYMAN MAGAZINE
Professional investing special – Dean Parker
Not only did we appear in Steve McKnight’s latest book, but you can also read about Elise and me in the December issue of Handyman magazine. The article focuses on how we operate as a couple in our professional investing business.We won’t give away too much, so check it out for yourselves. Handyman magazine is available Australia wide in news agencies and Bunnings stores and hits the shelves on 2 December.
4. PROPERTY INVESTING TIPS
Protect Your Profit! 5 Must Do Tips For Any Deal – Elise Parker
If you want to be a professional property investor you want to be able to lock in your profit before you even purchase property. Most people buy and hope they will be able to add enough value to make a profit. If you consider that on the day you purchase you are already 5% behind because of stamp duty and legal fee payments, then you will agree that you need a system to ensure that you don’t spend time and money on a renovation, only to make a loss because you got it wrong. Here are 5 things you must do before you go unconditional on any property deal.
1. Invest within your means.
Many profitable deals have been lost as investors run out of money and can’t take their project to the next and most profitable stage. For example, a property will usually increase in value if you get plans and permits and sell the land. Then, once you build, more profit will be made from the completion of the home. A mistake rookie investors make is to do stage one and then discover the banks will not lend them enough to build due to their serviceability. Ensure you know what you can borrow and what you can do before you start, otherwise you might be giving away the largest chunk of profit. By knowing all your costs upfront, you eliminate the risk of running out of funds during your project.
2. Know your end value.
Don’t guess what a property will be worth after the improvements you will make; have solid evidence and get the bank to agree on that improved value to protect your profit. See more on this in the Member Questions of the Month section, below.
What does this mean? Whatever you want it to! When you are negotiating, submit your offer along with a clause stating that the purchase is conditional for a period of time for you to complete your due diligence investigations and research on the property to make sure you can do the works you want to. This will protect you from buying a property that is a lemon.
4. Do a full costing first.
The problem with most investing is that people tend to estimate. It can be tempting to think that the painting will cost about $1,000, the carpet about $700, the driveway crossover $3,500, all the little things about $1,000 and the agents fees $5,000. You may be shocked if you are out by $1,000 on each item and come across an unexpected problem costing $5,000. Not only will you have a better understanding with a full costing but you will give yourself a strong point of negotiation with an agent by saying ‘My offer is $x and this is why’.
5. The deal of a lifetime …
… happens once a week. Ever heard that before? Don’t worry if you miss out on a deal, because another one is just around the corner. Some investors just want to get in and are prepared to sacrifice their profit margin. That is the one thing you should not be prepared to sacrifice, so think of creative ways to make your offers.
An example of this is to negotiate longer settlement periods with early access to begin the renovation. This will reduce the length of time you are holding the property after it settles before you are ready to sell.
5. PROPERTY DEAL OF THE MONTH
Across the Tasman - Dean Parker
This month Elise and I spent a week evaluating our New Zealand property portfolio. As mentioned earlier, we made the decision back in Feb 2005 to head over to New Zealand with Steve and Dave on their Kiwi Adventure training. The trip was for one week and the objective was to learn about the New Zealand property market and conditions and then secure some positive cashflow properties. On that trip we made 4 purchases, totalling 8 positive cash flow properties:
A. Block of four x 2 bedroom units. Paid $112,000 returning $440/week.
B. 1 x 2 bedroom house. Paid $52,000 returning $150/week.
C. 1 x 2 bedroom house. Paid $66,000 returning $130/week.
D. Duplex of two x 2 bedroom units. Paid $83,000 returning $230/week.
We sold property A about 8 months after purchasing it for $182,000 and pocketed a great little cash profit and we still own the other 4 properties all which needed varying degrees of maintenance to improve the rents. Our objective of the trip was to determine how much work we would do and whether we would keep or sell the properties.
I had spent some time, in the weeks leading up to our trip, building a reno team that would be able to help us out while over there to ensure we could get as much as done as possible. I secured a fantastic handyman/builder and his three offsiders. You can see them working away replacing weatherboards in the photo (below). Securing these guys was paramount to our trips success.
Property C was in prime condition for a cosmetic renovation as well because it had only become vacant a week before our trip. The bonus with this property is that we were able to covert a sleepout to a legitimate third bedroom by removing a door and adding a new one in from the living room. So with a lick of paint on the inside (which Elise and I did over three evenings) and new floor coverings we could drastically increase this property's value too.
Property D was in the best condition and only really needed some maintenance on the external windows.
So as a result we decided to keep all four properties and improve them considerably to increase the rents and overall value. Our NZ reno team would continue work and upon our return in mid December we'd finalise each property and secure new tenants. We discovered that the NZ property market had struggled during the GEC and although this particular area in NZ had held up well, there were promising signs of good activity. We therefore would review the option of selling again in 6 months.
Have a laugh at our hire car...it was quickly transformed into a handy work horse!
6. FUNNY FOTOS!
Only in New Zealand - Gerry Giraffe
Whilst on our travels in New Zealand, we came across some pretty unique looking houses. 
How is this for an interesting combination? This house is massive and stands out a little more than usual – it is painted bright blue/purple!! Luckily it is only two stories; if you tipped it on its end it would be a hazard to low flying aircraft! The strangest thing about this house though, is that front door on the second level that leads to nowhere. Hmmm, any thoughts?!
This mobile home would not look out of place in the middle of the bush but in this case it is a mobile coffee shop! Pretty impressive!
We found this simple home interesting because the owner has personalised it only slightly but enough to make it look a little odd. The colour scheme for each window is different, the fence and gate almost look like a web with a spider, and on the left there is a 6-foot lady to greet you. Or is that just a very fancy scarecrow?
7. MEMBER QUESTIONS OF THE MONTH
A special thanks to Terry and Fred (owners of The Complete Renovation System) for taking the time to write to us with these questions. We thought we'd answer them here so that all owners could benefit. If you have questions you’d like us to answer, email us at
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and we will include some in our December newsletter, to be released prior to Christmas.
Q. Did you remove the tenants at the Lonsdale St units, renovate, and then sell one at a time?
A. In the case study of the Lonsdale St units, yes we did give notice to all of the tenants before settlement so all units were vacant at the same time. This meant we could leverage our tradespeople’s time – for example, all of our kitchens were installed on the same day, enabling us to get a better price. When marketing the property, we only advertised one unit in order to create scarcity of the product we were selling.
Q. At what stage does the bank give you that revaluation so you can pull some money out for the next deal?
A. We arrange bank valuations before we buy. This allows us to mitigate our risk by having a sworn bank value and confirms our estimated end selling price. It also allows us to set up the loan to the end value up front. This means that the minute we finish the reno, the bank will draw down the loan and deposit the newly created equity into our cheque account for our next project. This means we don’t have to wait until we sell before moving onto our next deal, allowing us to do more projects with the same amount of cash. Read more on pages 32 to 35 of our Step-By-Step Manual for a detailed explanation and example. We advise you to check whether and how your financial institution can do this for you, as different lenders have different rules.
Q. In The Complete Renovation System for Case Study 6, Regent Drive, you mention a ‘6-month turnaround in and out.’ Do you mean from the time of purchase and contract or from settlement?
A. ‘Six-month turnaround’ meant the time between settling the purchase and the last sale settlement. We purchased, renovated, sold and settled all 8 units within 6 months.
Q. How does one create a 99-year lease at $1 p.a. from the common area (i.e. agreement each unit owner has with the body corporate) instead of going through the expensive subdivision process?
A. When we purchased this block of units, they were already strata titled. We purchased all 8 and therefore had total control of the common land via the owners’ corporation. Our solicitors created leases between each unit and the owners’ corporation for the exclusive use of some of the land. Our land surveyor drew up a plan that identified the locations of each lease. This process had a very minimal cost of under $1,000.
Keep your questions coming.
Until next time, all the best with your renovations.