mGa KuRo-KuRo Ni Ka UrO

Monday, July 31, 2006

1-1+1 equals 1, but 1+1-1 equals more than 1

I’ld like to share the above formula. It’s a very simple formula for making money out of buying and selling houses. Especially applicable in NZ, where house prices are constantly rising and no capital gains tax is charged for selling a property. Let me explain.

1-1+1 equals 1
1-1+1 stands for Buy house, Sell house, then Buy House. For instance, you buy a 2BR house today say for $300k. Then wait for 3 years. The price of the house would have gone up by then. If you sell the house you'll most likely gain some profit. Let’s say $100k (just to exaggerate). But it is only profit if you don’t buy a new house. Because if you do, $300k won't be enough to buy another 2BR house anymore. Prices of all properties in the area would probably have gone up by $100k too. In short, you won't end up $100k richer at all because you would have used that too towards buying a new house. So 1-1+1 is still 1.

1+1-1 equals more than 1
This second approach is the one that will give you returns. It involves, Buy, Buy, then Sell. Here’s what you do. You buy a 2BR house say for $300k. After 3 years, you would have paid part of your original mortgage. That plus the increase in house prices would have increased the equity on your property. A higher equity puts you in a position to borrow more money for a second mortgage. So with a second mortgage you buy a second property. Rent out the property for a few months, years, whatever. It doesn’t matter. When the timing is right, sell either your house or the rental property. After you settle the mortgage for the sold property and after all expenses are accounted for you should end up with a profit. Let's say $100k (again to exaggerate). Therefore, 1+1-1 is greater than 1 because you end up with one house plus $100k more in your pocket.

Conclusion
Not all buying and selling of real estate properties is profitable. Use the right buy and sell technique. I tell you this is easier than winning Lotto. If you know how to play the property game, the profits alone could pay off your original mortgage...and maybe more.

Pahabol
(Done 1+1-1, once so far. In six months time between the +1-1 cycle, we made a profit of $35k, which we put in to pay off part of our existing mortgage. We are now in the +1 cycle again having bought another property last January. In a few months or years when we come to the -1 cycle, we're hoping to realize another profit. In short, if this formula worked for us, it should also for you.)

14 Comments:

  • Naks me mathematical equation pa tlga! hehe! galing!! i salute...

    By Blogger tutubing_karayom, at 10:42 AM, July 31, 2006  

  • TK, i'm sure naintindihan mo yung equation, kasi plus minus lang. walang taymis at dibayd. hehehe. peace!

    By Blogger Ka Uro, at 1:05 PM, July 31, 2006  

  • Ay opo kahit lagyan nyo pa yan ng, to the 3rd power degree o percentage o kahit na square root.. ok lang sakin..

    kahit 3 beses ko inulit nung college ung trigo na subject ko.. cguro nman kaya koparin yan ngayon.. heheh!! joke!

    By Blogger tutubing_karayom, at 1:08 PM, July 31, 2006  

  • Hi Ka Uro,

    Salamat po sa iyong walang-sawang pamamahagi (tagalog's really difficult for this poor cebuano, hehehe). Well, I just want to say that you are doing a great job in imparting your wisdom to us Kiwiwannabes. May God continue to shower His blessing upon you, and prosper you in whatever you do.

    Regards,
    Ambrocio

    By Blogger bdsd, at 5:29 PM, July 31, 2006  

  • ang ganda ng sharing mo KU!at least you gave us an idea bout it...sana di kayo mapagod ng katuturo sa'min titser KU..i've learned a lot from your blog.

    By Blogger ev, at 6:24 PM, July 31, 2006  

  • ang ganda ng sharing mo KU!at least you gave us an idea bout it...sana di kayo mapagod ng katuturo sa'min titser KU..i've learned a lot from your blog.

    By Blogger ev, at 6:24 PM, July 31, 2006  

  • ngek!nadoble po pindot ko!hehehe...mahina ako sa equation...takot ako sa number Ku!hehehehe

    By Blogger ev, at 6:25 PM, July 31, 2006  

  • 1+1-1 equals more than 1

    so pde na pala magbakasyon ang blogkada jan! may isa ka pa palang haybol fafa KU!

    ayos!!! nyahahaha

    By Blogger Mmy-Lei, at 10:50 PM, July 31, 2006  

  • pede ka ng maging finance minister fafs!

    aba eh yayaman ang mga pinoy jan pagdating ng araw, kawawa naman ang mga Kiwi :D

    By Blogger racky, at 4:40 AM, August 01, 2006  

  • bdsd,
    welcome. thanks for the kind words.

    ev,
    my wish is for all pinoys coming to nz to prosper and maximize their potential. hindi dapat ipagkait ang mga kaalamang makakatulong sa iba.

    mmy,
    ok na ok. sabihin niyo lang anytime.

    racky,
    hindi naman magiging kawawa ang mga kiwi kasi yung sine-share ko dito ginagawa din nila. so kung yayaman ang pinoy, ganun din sila. actually ang mga yumayaman yata dito sa business ang intsik at indian. sila ang karamihan may ari ng mga fatwoods at retails stores. ang mga kiwi naman marami sa housing/building/farming industry. tayong mga pinoy, makikigaya pa lang. marami pa tayong kakainin kanin bago siguro natin sila mapantayan sa larangan ng business.

    By Blogger Ka Uro, at 9:36 AM, August 01, 2006  

  • Wow, galing naman ng business mo. My friend's sister there is also in similar business, rental properties, i think.

    Personally, i think its a bit risky. But then again, I'm a bit conservative, i guess.

    Well, goodluck and all the best.

    By Blogger Leah, at 10:13 AM, August 01, 2006  

  • iba ka talaga KU, habang bumababa ang percentage ng mga kiwi na nag-mamayari ng bahay dahil sa hindi nila maafford ang sobrang taas ng halaga ikaw naman ay dalawa na.
    kahapon nga sa news kung ano-anong mga scheme ang binabalak ng gobyerno para mabigyan ng solusyon ang suliranin ng sobrang kamahalan ng mga bahay lalo na sa malalaking siyudad para naman makabili ng bahay ang mga walang sariling bahay.
    siguro kinakailangang turuan mo mga kiwi nang tamang pagbubudget at pagiging masinop. marami kasi sa kanila pag nakahagip ng pera takbo kaagad sa abroad para mamasyal.

    By Blogger atoy, at 9:04 AM, August 02, 2006  

  • okay sana yan kung may pambili ako ng bahay, he he

    By Blogger jairam, at 1:18 PM, August 02, 2006  

  • korek! ang galing!

    ang ginagawa rin po naming mag asawa...bili ng apartment then ibenta pag ayaw na...then lipat sa better one...

    di naman bumababa ang price ng property kahit naluluma...tumataas pa...

    By Blogger idealpinkrose, at 1:28 PM, August 02, 2006  

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