All posts by Alistair Lattimore

About Alistair Lattimore

My name is Alistair Lattimore, I'm in my very early 30's and live on the sunny Gold Coast in Australia. I married my high school sweet heart & we've been together for longer than I can remember. Claire and I started our family in September 2008 when Hugo was born and added a gorgeous little girl named Evie in May 2010. You can find me online in the typical hangouts, Google+, Twitter & facebook. .

Property Investment How To According To John Fitzgerald

I recently attended a presentation by John Fitzgerald related to his Untold Wealth, Success From Scratch product. The Success From Scratch product provides information to help build wealth though property investment. Untold Wealth doesn’t seem to be geared towards anyone in particular, there was good representation from all age and income brackets at the presentation.

The following bullet point list is just some of the information that John covered and is not meant to be complete, accurate or financial advice – just a bunch of interesting points that I remembered from the presentation:

What type of investment options are available?

From an investment opportunity stand point, there are two basic options:

  • Income
  • Growth

If you were investing for income, you are positively gearing the asset; such that you expect to receive enough rent/income from the property to pay off your debts, hopefully with some to spare. At the end of the income based investment, you have gained an asset without having to outlay any money. The by product of that is that the possible returns against the investment are much lower.

If you are investing for growth, it typically involves negative gearing (ie, that it will require some additional money from the owner to meet the repayment requirements). Investing for growth is the strategy that John employs, which involves compound growth (see below) to earn you serious money.

What type of property should you buy?

There are essentially four types of real estate to invest in:

  1. High rise (10)
  2. Townhouse (20)
  3. Duplex (30)
  4. House (40)

they are listed above in least favorable to most favorable based on the land content ratio (see below).

Where should I buy my investment property?

John invests according to a really simple set of rules:

  • Short distance to schools, preferably good quality private schools if available
  • Short distance to public transport, especially a major piece of transport infrastructure like a bus interchange or railway station
  • Short to medium distance from recreational facilities
  • Short to medium distance from regular shopping destinations, such as groceries
  • Medium distance to the central business district

Since John invests in the standard family home, he wants to make sure that the location of that investment property suits his intended tenant; the average Australian family. From his experience, the most important items to someone tenanting an investment property relate to the children, not the parents. As such, it is more important to be close to schools than it is to be close to the parents work.

When should I invest in property?

A hard question to answer directly it seems but John pointed out that the market runs in a cycle. Generally speaking, most people consider the market to cycle about every 7-8 years or 9-10 years, depending on who you talk to. In an ideal world, you would want to buy when the market is low, not high.

The tricky problem is that for as long as statistics have been kept, the price of houses doubles approximately every 7-8 years. Knowing that the price of the property is only going to go up, there really isn’t a bad time to buy unless you happen to jump in while the market is burning hot.

How much should I pay for my investment?

This point was made very clear, when buying an investment property you want to be paying the mean/median price for it or below. There is no point spending the extra money on getting a ‘better house’. Remember that you’re investing as a wealth building exercise, so you need to stay emotionally detached from the investment property. There was concern in the audience about real estate market performance across time and how that’d effect the overall successfulness of the Success From Scratch strategy. John pointed out that he sticks to the mean/median price because in the event of a market slump (which will happen, so don’t kid yourself) – that the average property is effected the least, as everyone essentially needs an ‘average’ house to live in.

Land Value Ratio

Land Value Ratio is the price of the land your investment sits upon, compared to the total price of the investment. If you’re investment property cost $300,000 and the land component was $100,000 then you have a land value ratio of 33%.

Beside the four types of property listed above there were numbers. Each of these numbers represents a rough percentage for the land value ratio for that type of property. It should be of no surprise that the standard house offers the best possible land content ratio, as you actually own the land.

What makes a good investment?

Since everything that John went through was about investing for growth, one of the single most important points had to have been land content ratio. When you purchase an investment, he said it is safe to assume that after forty years that the above ground assets are completely written off. This comment was really two fold, not only does the physical asset need serious attention and might as well be knocked down but the Australian Tax Office will let you depreciate an investment property at about 2% per year.

Knowing that the above ground assets are going to be worth next to nothing after a forty year period is important, as if you don’t have the above ground asset – what do you have? Well you’ve still got the land, which illustrates the point John was making about land appreciating and bricks and mortar depreciating.

If you’re going to spend $x on an investment property, it makes sense that the largest possible percentage of x be made up of the land value and not the house itself. After all, the house itself is only going to cost you money over the course of time with maintenance and so forth – while the land just keeps appreciating in value!

Where should I get my money from?

There didn’t seem to be any real preference towards what lender to use for your loans. I did get the impression that he was not particularly interested in the main four, especially with respect to the property valuation documents.

One important point that came out of the discussion surrounding bank loans was that you should not place your investment loans with the same lender that you have your home mortgage with. John used a phrase I hadn’t heard before, which was “cross collaterisation”. My understanding of cross collateralisation was that the bank will use your mortgage and your home as some form of securities against the investment loan. He pointed out that this was a bad thing, as it is difficult to unlink going forward and if you look to invest again further down the road – it will probably reduce your lending capacity.

Property Valuation Documents

The property valuation document is apparently a very important thing that most people don’t know exists and even if they do, struggle to attain one. The property valuation document is something that your lender provides you, which outlines all sorts of important numbers about the property you’re about to invest in.

Throughout the presentation, John kept referring to the document as the foundation of which to build upon. According to John, the vast majority of lenders (especially the main ones) do not like giving out property valuation documents – in fact it is in their standard operating procedures not to.

It wasn’t covered in huge depth (just that they are very important and you need to get one), however I gathered that you can use the valuation document to take to another lender further down the road to help you get into the next investment property. Essentially, its a contact on paper that you can take to another lender and say ‘Lender X states property Y is worth Z dollars’. Without the document, the new lender will form their own opinions about the property and its worth – which might not be in your favour.

What is the compound growth thing all about?

Compound growth is the technique that John uses which allows him to keep on buying property. The word compound is important, as it implies that not only is something growing but that it is growing at an ever increasing rate.

Property prices double every 7-8 years on average, so every year that you hold an asset it is going to go up in price approximately 10% (just to keep it simple). For the sake of an example, lets assume for a moment you’ve just bought a $300,000 house. The first year you hold your home, the market price for your home has increased to approximately $330,000; so you’ve just gained $30,000 in equity. The second year you hold it, you’ve now gained another 10% or $33,000 (up from $30,000 the first year).

The presentation John gave was really useful, a fair amount of it I had previously read and there was a lot of stuff I hadn’t. I think I’ll enjoy reading the book which accompanies the Success From Scratch product, it’ll no doubt clarify some of the points which weren’t covered in great detail during the presentation because of time constraints.

Spiderman 3 Review

Spiderman 3 hit the big screens in Australia on Thursday May 3rd and it seemed like as good a reason as any to try out the new Birch Carroll & Coyle Gold Class cinemas at Australia Fair on the Gold Coast.

For the third installment of Spiderman, the big screen is graced with no less than three super villains:

  • Green Goblin
  • Sandman
  • Venom

It was good to see the Goblin return to the screen in Spiderman 3. You couldn’t call him a super villain if he didn’t come packing improvements to take the do-gooders down and he didn’t disappoint. The most significant change was the new flying wing which is similar to a hoverboard from Back To The Future. It was good to see that not only did it look different but it allowed the Goblin to move with far more agility than the first version. The Sandman was a cool inclusion after having his body blended with sand in some sort of a particle accelerator. My personal favourite though, had to go to Venom. The black organism really brings out the worst in people and he was portrayed very accurately compared to the animated cartoon I thought. Given the raging war between Spiderman and Venom, I would have preferred to see a little more one on one fighting between them but I guess there is a story to be built in between the fight scenes!

Overall, I really enjoyed the third Spiderman movie and it was made all the better by the brand new Gold Class cinema we were in.

Search Engine XML Sitemap Improvements

In December 2006, Google, Yahoo! & Microsoft collaborated and all agreed to support the new XML sitemap protocol that Google released as a beta in 2005.

Implementing an XML sitemap for a web site is a simple way for a webmaster to inform the search engines what content exists on their site that they absolutely want indexed. The XML sitemap does not necessarily need to include all content on a site you want indexed, however the content that exists within the XML sitemap is looked upon as a priority for indexing.

When the XML sitemap protocol was initially released by Google as a beta, webmasters needed to inform Google of its existence through the Google Webmasters Tools utility. When Yahoo! and Microsoft joined the party, all vendors accepted a standard HTTP request to a given URL as notification of the XML sitemaps location. These methods have worked fine, however required a little bit of extra work for each search engine. It was recently announced that you can now specify the location of the XML sitemap within a standard robots.txt file.

It’s a small change to the robots.txt file, however it’s an improvement that makes so much sense since the robots.txt file is specifically for the search engine crawlers. If you want to use this new notification method, simply add the following information into your existing robots.txt file:

  • Sitemap: <sitemap_location>

It is possible to list more than one sitemap using this mechanism, however if you’re already providing a sitemap index file – a single reference to the index file is all that is required. The sitemap_location should be the fully qualified location of the sitemap, such as http://www.mydomain.com/sitemap.xml.

Splogs, Splogs & More Splogs

Everyone wants to make a quick buck online, unfortunately the trend at the moment seems to revolve around not doing any work to actually make the dollars. If email spam wasn’t enough, now dirty dirty spammers have taken to producing splogs, or spam blogs.

The basic idea behind a splog is to generate lots and lots of content, throw on some sort of advertising – maybe Google Adsense and hopefully watch the money come in. Of course, since spammers are bottom feeding filth, it is far too much effort for them to produce the content they want to whore for a dollar themselves. The clear and obvious solution is to rip off other internet users content and republish it as their own, simply to produce content on their site and an opportunity for someone to click a piece of advertising.

My problem with splogs, is that the owners are aggregating and/or republishing other peoples work to make money for nothing. Reporting on the happenings online and around the world is fine, if you’re adding your own point of view and it’s in your own words; ripping someone else’s work is just plain rude.

Typically, if someones content is being republished without notification/permission and it’s attributed properly – most content authors don’t have a problem with it. Since sploggers are bottom feeders, not only do they not ask permission – they generally don’t provide a link back to the original content. It isn’t fair to tar all bottom feeding sploggers with the same brush, some do take the time to attribute the content, which is less of a slap in the face.

Personally, I’d prefer it if they’d write their own unique content; however in the absence of that I guess for the moment we’ll have to graciously accept the odd inbound link from the ‘nice’ spammers.

Search Engine Image Traffic Recovering

In January 2006, I posted about Chuck Norris and the amazing “Chuck Norris Facts” that were blazing around the internet in emails. A short period of time after that post was indexed, it started showing up within the search engine result pages for most things revolving around Chuck Norris and his amazing facts.

Traffic to your web site is generally a good thing, no matter how it gets to your site. Unfortunately, the cost of being prominently placed within the search engine results had a downside and my site exceeded its monthly bandwidth allocation. I contacted my web host and they graciously re-enabled my account for the rest of the month.

The table below shows the monthly image search referrals. As you can see, the search engine image referrals double between December 2005 and the following month. The referrals continued to increase steadily, until half way through April it started to jump again and by May it was completely out of control, saturating my monthly bandwidth allocation. In case you’re wondering what or who was the culprit, it was a whole swag of particularly lazy MySpace folk.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2005 1 258 199 76 72 507 988 1823
2006 4409 4447 5392 23733 53573 43600 22374 19730 27561 13362 57 40
2007 55 38 56 2141*
* Incomplete months worth of data

To make sure the bandwidth theft didn’t happen again, I took some pretty drastic measures by blocking all search engines from indexing my /images/ folder using the robots.txt file and implemented hot link protection via the .htaccess file. By half way through October 2006, the change had fully kicked in, dropping my monthly image search referrals from over 50000 to under 100 per month.

Since the mania surrounding Chuck Norris faqs has subsided, I decided that it was time to remove the heavy handed restriction placed over my /images/ folder. I’m currently allowing everyone to index everything once more and am even participating in the Google Image search beta, which can be enabled through the Google Webmasters Console.

The restrictions were removed at the end of March 2007 and half way through April, the search referrals are already on the increase again. Once this month is finished, I would expect to have approximately 4400 search referrals, which is back inline with where the site was in February/March 2006.

Onward and upward I say.