Masterclass Webinar For First Time Property Investors

Master Class:
Your first property
investment

We help investors
build and manage
their property
portfolios

In partnership with…
Take the 21 day free trial at www.realestateinvestar.com.au

Real Estate Investar’s tools

Portfolio Manager Membership
Managing, tracking and
accounting
From $49 p.m.

Portfolio Builder Membership
Searching, researching, buying,
managing, tracking and accounting
From $99 p.m.

1.75m
Australians
1 Property
2-4 Properties
5+ Properties
• Pays shortfall for
5 years+.
• Eventually sells
and pays down
personal debt.
• No retirement
income.
• Strategy &
numbers.
• Self funding
portfolio.
• $100-$250k+
passive income in
retirement.
• Has high income
or buys every few
years.
• Freehold in
retirement.
• Min. retirement
income.
Source ATO/ABS
3 levels of Property Investment

1.75m
Australians
1 Property
1.266m
73%
2-4 Properties
457,000
25%
5+ Properties
28,345
1.7%
• Pays shortfall for
5 years+.
• Eventually sells
and pays down
personal debt.
• No retirement
income.
• Strategy &
numbers.
• Self funding
portfolio.
• End up freehold
• $100-$250k+
passive income in
retirement.
• Has high income
or buys every few
years.
• Freehold in
retirement.
• Min. retirement
income.
Source ATO/ABS
What level are you aiming for?

• Owns 5.54 properties,
• At an average value of
$335,120 each,
• And a total portfolio value
of $1.85m.
The average Real Estate Investar
Member…

Time
Building a portfolio takes time

Portfolio
Builder
Portfolio
Manager
Portfolio
Builder
Portfolio Manager
Membership options to match your needs

Treat property investment as a business….
Maximise your results

Todays 13 topics
1. How do you balance buying for cashflow and capital
growth?
2. How to do a detailed investment property forecast in
just 2 minutes.
3. Finance: Making sense of LVR’s and DSR’s – what
do they mean?
4. 7 tips for increasing your borrowing ability.
5. How do you work out the maximum you should pay?
6. Why it's smart to buy at a $20k - $50k discount and
create immediate equity.
7. 11 things you can do to boost your rental income by
$1,000 to $10,000 per year.

Todays 13 topics
8. How to pick properties that generate both positive cashflow and
tax refunds.
9. Negotiation tips – how to deal with agents and compete with
other buyers and save thousands on every purchase.
10. Where do you invest first? It’s simpler than you realise to find
great investment locations.
11. The truth and traps with most “hotspots”.
12. Setting up your team of experts and who to avoid.
13. How to find an A Grade property manager in an industry of full of
average people.

Buying for cashflow and
capital growth

Only property pays you up to 5 ways
1. Immediate equity – Buy below market value
2. Add value – Renovate, Develop, Subdivide
3. Positive cashflow – Get paid weekly
4. Tax credits – Reduce your tax to zero
5. Capital growth – as the property increases in
value over time
When you’re getting paid 5 ways no one worries too
much if one of the five ways is a little slow sometimes

x
Cashflow vs. capital growth
Cashflow
Capital Growth
CBD Inner City Suburbs Country
10%+growth
10% yield
0%

The impact of capital growth
1. Purchase a $575k property
2. After 10 years at;
• 4% growth p.a. Value: $851k Equity: $276k
• 7% growth p.a. Value: $1.31m Equity: $735k
• 10% growth p.a. Value: $1.49m Equity: $915k
• 13%growth p.a. Value: $1.95m Equity: $1.37m
• Consider the impact of 3% extra growth p.a. over 10 years…

How do you compare apples with
pears?
$575,000 $405,000

Calculating a property’s total return:
Using Internal Rate of Return IRR
• We need to consider 5 factors;
• Funds employed (deposit)
• Initial purchase price
• Value at end of period (e.g. 10 years)
• Surplus pre-tax cashflow for period
• Tax refunds for period
• We then divide total gains for period by the initial deposit
to calculate the IRR.
• In plain english: On average, how much do we make
each year as a % of how much cash we have invested.

Using IRR as an example
Detail Property 1 Property 2
Dwelling type House Unit
Age 10 years New
Purchase price $575k $405k
Deposit $57,500 $80,000
Annual growth rate 4% 7%
Rental yield 5.67% 4.92%
Pre-tax cashflow year 1 -$709 $-5,137
After-tax cashflow $5,792 $1,426
Which investment will deliver the best IRR over 10 years?

Using IRR as an example
Detail Property 1 Property 2
Dwelling type House Unit
Age 10 years New
Purchase price $575k $405k
Deposit $57,500 $80,000
Annual growth rate 4% 7%
Rental yield 5.67% 4.92%
Pre-tax cashflow year 1 -$709 $-5,137
After-tax cashflow $5,792 $1,426
IRR 57.7% 49.8%
Average annual return on deposit $33,177 $39,840
Property 1 will deliver the best IRR over 10 years. Why?

Sound complicated?
We make it easy with Investar Search…

Making sense of
LVR’s and DSR’s

1. The property
2. Equity (LVR)
3. Cash flow (DSR)
4. Credit record
5. Your character
5 barriers to finance

• Equity;
• Up to 80% LVR is easier to finance.
• Above 80% LVR requires Lenders Mortgage
Insurance (LMI).
• *On $500k loan;
• 85% LVR - Add 1% ($5k)
• 90% LVR - Add 1.5% ($7.5k)
• 95% LVR – Add 3% ($15k)
• LMI adds leverage and cost and risk.
*Source: Genworth Financial
Never run out of borrowing power again

• Income
• Target a DSR (Debt Service
Ratio) of at least 1.3, e.g. $130
in rental income per $100 of
mortgage payments for a self
funding portfolio.
• Minimise consumer debt and
credit card balances.
Never run out of borrowing power again

Balancing equity (LVR) with income (DSR)
+$3,200pa
Capital
Growth
Positive Cash
flow
Capital growth deal
Cost $500k
Rent $525 week
After tax -$5,600 p.a.
Cash flow deal summary
Cost $430k
Rent $900 week
After tax +$8,800 p.a.
Cash flow deal #3
Cost $220k
Rent $420 week
After tax +$3,800p.a.
Cash flow deal #2
Cost $150k
Rent $330 week
Cash flow deal #1
Cost $60k
Rent $150 week

Your portfolio KPI dashboard keeps track

1. Get yourself finance ready.
2. Find a broker who understands
investors.
3. Structure your debt correctly.
4. Maximise cash flow, minimise
interest and consumer debt.
5. Don’t over-gear, plan for a rainy
day.
5 tips for investment finance

Tips for increasing your
borrowing ability.

Increase your income
• Take in boarders or language students
• Get a part time job
• Start a part time business
• Teach a subject at night school
• Ask for a pay rise
• Change jobs to get a pay rise
• Buy a house with a self contained unit that produces income
• Convert a room to rental/B&B accommodation
• Convert property debt to interest only
• Annualise your household costs, are you getting value?

Eliminate consumer debt
Eliminate non income producing and high interest debt (credit
cards, hire purchase, bank overdrafts, etc)
Credit Card
$5000 / $120
Student Loan
$3000 / $100
Fridge HP
$300 / $25
Car HP
$7000 / $180
Bank OD
$1000 / $75
Charge card
$700 / $80
Furniture
$1200 / $40
Personal $900
/ 50
Holiday Loan
$2700 / $125
1. Complete a budget
2. Put extra $50 a
week towards
reducing your debts
3. Every time you
eliminate a debt,
add the surplus
funds to the next
debt

How do you work out the
maximum you should pay?

Criteria for deciding purchase price
4 Options;
1. Minimum rental yield%
2. The net monthly cashflow
you can afford
3. % below an estimated
valuation
4. Analysing recent
comparable suburb sales

Investar Search
Option 1: Minimum rental yield%
Take the 21 day free trial at www.realestateinvestar.com.au/promo

Yields are pre-calculated when you search

Investar Search
Option 2: The net cashflow you can afford

Pre-tax cashflow is pre-calculated too

Create your watchlist as you search

Watchlist integrates with Analyser

Analyse investment
financials

Analyser opens and loads listing data

Enter Rent, Purchase Price & Valuation

My Valuer
Option 3: % below estimated valuation

Back to analysing
investment financials

1. Check mortgage & purchase costs

2. Check rent & expenses

3. Check depreciation & entity owner

4. Review investment forecast

Notes, documents and search data

Google Maps & Streetview integrated

Comprehensive 10-year analysis report

Long term performance graphs

My Research
Option 4: Analysing recent comparable
suburb sales

Set a radius around the property

Check comparable sales

Build a suburb sales profile

Review comparable sales

Check property history and photo’s

Check sales and advertised history

Why it's smart to buy at a
$20k - $50k discount and
create immediate equity.

Discounted Property
• Buying at a discount creates additional
profit at purchase.
• You can use this as equity later to buy
additional property.
• 3% of all properties for sale are by
motivated vendors with deadlines.
• You can easily find property $10k-$50k
under market value.
Why buy at a discount?

Finding discounted property
• Goal: negotiate the deal 10-20%
under market value.
• Find motivated sellers with
deadlines.
• Look for poorly presented
properties that need tidy up.
• You need access to sales and
valuation data.
• Be careful of slow moving suburbs
and declining populations.

A closer look at the same property

• Chainsaw
• Spade
• Paint
• Fence
• Pavers
• Plants
7 days to create this

Investar Search
Finding motivated vendors

• 900,000+ sales listings from
40+ Australian property sites.
• 34 filters.
• Advanced data and analytics.
• Watchlists, saved searches and
email alerts.
• Analyse 8,000 suburbs.
• Globally unique.
Investar Search

Combine postcodes, suburbs, regions & states

Automatic strategy & key word selection

Members focus on 8 key strategies
1. Capital growth
2. Discount
3. Renovation
4. Positive cash flow
5. Vendor finance
6. Strata titling
7. Subdividing
8. Development

38 extensive investment filters

Extensive
property &
suburb data

Boost your rental income
by $1,000 to $10,000 p.a.

1. Burglar alarms & other security
features.
2. Heating & cooling: relative to
climate.
3. Fully fenced for children & pets. If
you allow pets, charge a premium.
4. Car parking: especially in cities.
5. Low maintenance: exterior, gardens
& lawns.

6. Outdoor living areas.
7. Handy to schools, transport,
shops.
8. Handy to highways, employment,
higher education & hospitals.
9. Sleep outs, granny flats, dual
income, studios and bungalows.
10. Quiet private locations /
something unique and desirable.
11. TV aerial, telephone and network
points.

How to pick properties that
generate both positive
cashflow and tax refunds

Finding positive cashflow property
• Look in high yielding suburbs.
• Buy 20-40% under median.
• Multiple income properties.
• Regional areas.
• Reno to increase rents.
• Fix on low interest rates.

1. Buy newer dwellings.
2. Avoid pools/spas.
3. Avoid dampness.
4. Avoid gully’s.
5. Brick vs. timber.
6. Tiles vs. decking.
7. Tiles & drains in wet areas
8. Avoid large trees over gutters that
drop leaves.
9. Avoid animals.
10. Stone fences & retaining walls last.
11. Avoid older units and apartments
with deferred maintenance.
12. Thoroughly inspect older houses.
13. Select tenants carefully.
Buy to minimise ongoing repairs expenses

Buying rules
• Buy houses with 7%+ yields, to
generate positive cashflow pre-
tax
• Buy houses less than 10 years
old, to maximise depreciation
• The higher the marginal tax rate,
the better the after tax cashflow

Investar Search results: 7%+ suburb yields

Fine tune income & expenses
Year 1 results;
 Pre-tax cashflow positive: $7,856
 Depreciation: $14,000
 Negatively geared after-tax: -$6144
 Tax refund: $2,135
 Total cashflow after-tax: $9,991

10 year forecast
Lessons
• You make money
buying well, plus;
• You don’t have to
buy negative
cashflow to get tax
benefits.
• You don’t have to
subsidise your
investments.
• You can get both
capital growth and
cashflow.

x
Three crucial negotiation variables
In negotiating anything there are 3 key
variables.
1. Power
2. Time
3. Information
Whether it’s property, politics or poker, if
you understand how to apply these, you
can set yourself up to win each time

Power in Negotiation
• Power of competition
• When there is
competition for a
product, and limited
supply the power
shifts to the seller.
• No competition and
power shifts to the
purchaser
• Avoid overheated
markets.

• Power of legitimacy
• When you are well
informed and quote
official numbers or
use official looking
forms you are not
often challenged
• After all who can
argue with the facts
• Use Real Estate
Investar data to
support your case.

x
• Power of knowledge of needs
• The ability to research and
understand the other parties
needs, and structure a deal
that meets theirs and your
own is a valuable skill
• The more you see the world
as shades of grey instead of
black and white, the more
creative you’ll become

• Power of persistence
• Most people are not
persistent enough when
negotiating and give up
at the first sign of
resisitance
• No means no “today”
• It could become “yes”
tomorrow or next week if
you just stick around to
find out
• Remember the power of
competition or “lack of”

Time in Negotiation
• Time is your greatest asset in
a negotiation if the other party
has a deadline
• The biggest concessions on
terms, and discounts on price
usually occur close to or after
a deadline has passed.
• Be patient
• Never reveal your deadline,
and always find out the other
parties.
• Be slow and persistent
with your negotiating, to
ensure the other party
feels the pressure of the
clock ticking, if you rush,
you’ll apply no time
pressure

x
Information in negotiation
• Information is the heart of
the negotiation
• Find out as much as you
can from the agent, if he
declines your questions,
ask them again and again
• Ask the vendor directly if
you get the chance, often
they will open up to you
• Empathise with them
always
• Look for the visual and
verbal clues, body
language, unkept
property, bills piling up

Negotiating the deal
• Don’t get emotional.
Stick to your rules and
be prepared to walk
away
• Don’t be afraid to start
low, you can always
come up and you
never know how far a
vendor will drop

Negotiating the deal
Ignore Agent Comments like:
“I sold 2 up the road last week for
xyz price”
“Sales are booming we can’t get
enough listings”
“This one won’t last long”
“I cannot present this offer to the
vendor, you will have to increase it”
“I have another offer coming in
today”

Negotiating to Win
• First offer: Double the discount. E.g. If
the vendor is asking $240k and you want
to pay $210k, offer $180k to start with.
• Move up as the vendor moves down
• NEVER make 2 offers in a row
• Always make sure the agent gets you a
counter offer
• Use deposit amount, contract conditions
and settlement date as extra levers.
• If the negotiation takes 3 weeks and you
save 30k, it’s worth it – be patient, you
are under no pressure at all.

Where do you invest first?
1. Closer to capital city is better for
land appreciation
2. Population & income growth
3. Buy in established suburbs, not
greenfields
4. Ability to add value
5. Appeal to biggest rental
audience
6. Least amount of rental
competition
7. Do your research and buy on the
numbers

The truth and traps with
most “hotspots”.

• Some data published about future hotspots
is flawed.
• Check the source to avoid getting burned.
• Build a picture, don’t just use 1 source of
data.
• Greenfields with unlimited land: developers
control supply and suppress price growth.
• Boom & bust – Avoid 1 industry towns
• Speculation drives prices beyond
sensibility – e.g. Moranbah
• Blue chip real estate always wins long term
Not all hotspots are hotspots

• Be careful with boomtown
predictions;
• Top 100 growth predictions.
• Boom town data driven by
property developers.
• Land bankers selling on future
growth without control of land or
re-zoning in place.
• Get legal advice.
Reports: what are they really selling?

• Real Estate Investar
• APM
• RP Data
• Bis Shrapnel
• CBRE
• Major banks
• RBA
Use trusted data and research providers

National & State Top 50 suburb
performance reports
• Find out trends as
they emerge.
• Predict the growth
areas before they
occur.
• By the time the
results are in the
newspaper – it’s too
late.

performance reports

performance reports
• 33 top suburb performance
reports now available.
• Monthly top suburb reports retail
for $99 each.
Top Suburb Reports are included FREE for
Portfolio Builder members.

Setting up your team of
experts and who to avoid.

Experts you may have on your Team
• Lawyer/conveyancer
• Accountant
• Valuer
• Property Manager
• Mortgage Broker
• Quantity Surveyor
• Property Mentors
• Property Maintenance
Team
• Taxation Planner
• Architect
• Registered Surveyor
• Insurance Broker
• Research, data and
tools providers

x
Fire any one on your team that:
A. Is not an expert in the field of property investing
B. Does not meet deadlines or keep appointments
C. Is ethically questionable
D. Gives you bad advice that causes you to lose money
E. Is not moving forwards with their own investments
An accountant giving bad advice can be
costing you thousands of dollars a year

How to find an A Grade
property manager

How to find a professional manager
• Local Agent Finder is a unique
partnership for Real Estate Investar.
• Local Agent Finder provides a simple
and free service that helps our clients
find the best agent or property manager.
• Local Agent Finder is not a property
management company.

Exclusive portfolio submission option

You receive a comparison report

The benefits of Local Agent Finder
Local Agent Finder helps you:
• Understand what agents and
property managers charge, and
why
• Gets multiple agencies competing
for your business
• Enables you to easily compare the
costs and services of each

Portfolio solutions – Start your team here

Always treat your
investing
like a business

Treat your investments like a business
• Have a plan
• Have goals
• Businesses have costs
• Businesses manage risks
• Businesses are profitable
Create a business plan!

Use portfolio tracker

• Manages;
– Entities
– Properties
– Owners
• You can track and review
any combination.
• Monitors property and
suburb growth.
• Integrates with Xero.
Portfolio Tracker

Make changes as needed
• Review your goals and targets.
• Make adjustments to your plan as
needed.
• Don’t be afraid to make changes to
rents, management, the property or
method of renting it out.
• Monitor your investments closely, no
matter what your property management
strategy is.
• Don’t just wait for tax time to see how
much tax you made or lost.

Track property and suburb performance

10 year growth & equity forecasts

Your portfolio KPI dashboard

Automate your accounting

• Simplify accounting
• Reduces accounting fees for users.
• Track your investment entity cashflow.
• Better understand performance.
• Biggest reason investors fail:
cashflow management. Monitor your
bank balance daily in real time.
• Collaborate online with your
accountant.
• Your financial accounts are always
‘market ready’.
How Xero helps you

Bank
account
feeds
Xero
Portfolio
Tracker
How does it work?

• Xero have bank level security.
• Your first entity or organisation is included.
• We will set it up for you.
• We will integrate it with Portfolio Tracker.
• 1 x non-GST cashbook included free in membership.
• Can upgrade or add additional organisations for $20 p.m.
We provide our members with Xero

Xero has 15,000 bookkeepers & 9,500 accountants
in Australia alone!
What if your accountant is ‘old school?’

Your accountant is going to love it

• If you have existing property, consider how it is managed. Could you do
better?
• Take control of your investing and know your numbers. Use tools like
Property Analyser & Portfolio Tracker to stay on top of your business.
Things change.
• Build a team. Whether you are a new or experienced investor, you need
a team behind you to maximise your results.
• Get finance ready.
What can I do next?

Join Real Estate Investar today….
• Use the most advanced management
tools in real estate.
• Dramatically increase your results and
save hours every week.
• Build a profitable portfolio quickly and
easily.
• Plan & succeed.

Plenty of resources available

Search Analyse Track Account
Seamless integration

2 Membership Types
Tools & resources Portfolio
Manager
Suburb Performance Reports
Investar Search
Development Search
My Valuer
My Research
Property Analyser
Portfolio Tracker
Xero

Portfolio Manager Membership
Managing, tracking and accounting
From $49 p.m.
You save 12%-46% with contract
monthly and upfront membership
options

2 Membership Types
Tools & resources Portfolio
Manager
Portfolio Builder
Suburb Performance Reports
Investar Search
Development Search
My Valuer
My Research
Property Analyser
Portfolio Tracker
Xero

Portfolio Builder Membership
Searching, researching, buying, managing,
tracking and accounting
From $99 p.m.
You save 40%-67% with contract monthly
and upfront membership options

Start today and your
first 21 days are free
www.realestateinvestar.com.au/promo
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Masterclass Webinar For First Time Property Investors

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