Peter Spann Strategy, anyone made it?

Hi Friends,

This is Peter Spanns '7 years to retirement' stratergie in a nutshell.

1/ Buy IP with basic renotation potential.
2/ Renovate property
3/ Draw down 'new instant equity'
4/ use as deposit on next IP
5/ Do it all again

6/ At some point, wait a year, draw down new equity and invest into '7 power performing selection critera shares' or now he pushes quality managed funds or write covered calls
7/ use income from these shares/covered calls to offset interest only loans on IP's
8/ increase rent
9/ once servicability allows, and equity is avaliable purchase another IP
10/ keep doing this till you develop enough income to replace your '9-5' job income or more.

On the surface this stratergie looks good, but in practice I can see flaws in it. Firstly the ability to pay the interest, your constantly re-drawing equity, increasing your debt. Sure you increase rents, but these increases never seem to be enough to cover these extra borrowings unless you wait years for the rents to catch up.

Has anyone attended his seminars in the early days and actually achieved financial independance? Prehaps you can share your story here with us?

Thanks

I've read a few of his books. I did mine in reverse a bit. Made money on the stock market for IP deposit, then did the buy and hold, take equity, buy and hold....etc

Thats my strategy.

But after 10-12 yrs - i have paid of the PPOR. Got 4 additional properties but am still working 9-5.

But i have increased equity and can draw upon that for a number of purposes eg. holidays, school fees etc.

The key to this strategy is having control over say $2m worth of property. If it goes up by 8% - you have made $160,000 by sitting on your Ar#%.

Thats why i am keen on this strategy. It also gives me choices down the track.

crc_error said:

Hi Friends,

This is Peter Spanns '7 years to retirement' stratergie in a nutshell.

1/ Buy IP with basic renotation potential.
2/ Renovate property
3/ Draw down 'new instant equity'
4/ use as deposit on next IP
5/ Do it all again

6/ At some point, wait a year, draw down new equity and invest into '7 power performing selection critera shares' or now he pushes quality managed funds or write covered calls
7/ use income from these shares/covered calls to offset interest only loans on IP's
8/ increase rent
9/ once servicability allows, and equity is avaliable purchase another IP
10/ keep doing this till you develop enough income to replace your '9-5' job income or more.

On the surface this stratergie looks good, but in practice I can see flaws in it. Firstly the ability to pay the interest, your constantly re-drawing equity, increasing your debt. Sure you increase rents, but these increases never seem to be enough to cover these extra borrowings unless you wait years for the rents to catch up.

Has anyone attended his seminars in the early days and actually achieved financial independance? Prehaps you can share your story here with us?

Thanks

Click to expand...

Attended in 2000.
Point 6 is the key and possibly the most difficult part to make work consistently, as this is what pays for the additional debt and also your living expenses. We have gone down the path of active share trading to supplement inome.

Cheers,

The Y-man

When I read Pete Spann back in about 2000, there was no mention of shares and what not.

It was all property, and the process was buy, renovate, rent out, draw down equity, go again ra, ra.

Interesting read, but I remember thinking at the time that there was a smidge of BS about the whole deal. He got from broke check-out-chic to financial freedom far too soon for mine.

My first impression was: tosser who had written a book that everyone believed in, but me. It's hard to be a cynical old ba$tard .

He kept rattling on about his "beautiful friend" at different stages which got annoying. The guy looked like Michelin Man with "geek" glasses on his bonce at the time; let's be fair dinkum.

I guess if you could do it all during a boom time it could work.

The problem is that in many cases, a basic reno on a cheapy property does nothing more than increase the value of the property by the cost of the reno. Just a dollar-swapping exercise unless you can buy it massively under market. Good luck doing that during a boom when every sheep is offering over asking.

But, like Steve McNight, it was all back in those halcyon days of sub-$100k properties with you-beaut yields and in a cap growth area, so; you know; it's a possibility back then I guess.

I seriously doubt his original theory would work too well currently, so the shares angle slips in.

Gotta keep the machine rolling and sell a few more seminars and books I guess.

Happy to be proven wrong of course.

L.AAussie said:

He kept rattling on about his "beautiful friend" at different stages which got annoying. The guy looked like Michelin Man with "geek" glasses on his bonce at the time; let's be fair dinkum.

Click to expand...

In his book he keeps talking about his "mentor" and his "beautiful friend". From memory neither was actually just one person but rather a series of people (real or imagined) merged into one to make a more compelling story. Kind of like Kiyosaki's Rich Dad I suspect.

When i read his book, i found that his strategy seemed to hinge on having IPs with almost neutral cashflow.

I sat there wondering how his strategy could work in a market that rarely sees a property that's cashflow neutral. I decided to put my own spin on it, by extending the time period, buying with a 90% LVR instead of 80%, and using some of the CG to capitalise the interest, instead of exclusively using the CG to capitalise the deposit on the next property.
When i looked at it that way... the strategy worked for me. But of course that's more my strategy, rather than his strategy!

The rest of his book i found filled with some good advice, and presented with a story-like step-by-step format that was easy to read.
But yeah, the actual strategy i thought didnt quite fit the current market where you'd need a sub 70% LVR to be cashflow neutral.

It's worth noting that he's from brisbane, and based his book on his experience in the brisbane property market, which has in the past usually had pretty high rental yields... AFAIK

L.AAussie said:

I seriously doubt his original theory would work too well currently, so the shares angle slips in.

Click to expand...

IMHO,I would the time and study the way the prices have gone on these two..FXI,CCP,


make up your own mind ..willair..
http://www.investordaily.com.au/cps...F579BCE-28026F9F&rdeCOQ=SID-3F579BCD-21E2E0E3
http://www.investordaily.com.au/results.htm?topic=appointments

now he isn't promoting the property side of things, but wonderful macquarie 100% finance capital protected products.

2 years ago he said 'mortguage the kitties' on this product http://www.macquarie.com.au/retail/acrobat/emg/mq_multi-strategy_sp_series1_report.pdf and its paid out a 0.2% PA return since Jan 06.. when your paying out 8% PA for the loan, it doesn't make a good mix!

Witzl said:

It's worth noting that he's from brisbane, and based his book on his experience in the brisbane property market, which has in the past usually had pretty high rental yields... AFAIK

Click to expand...

actually I believe most of his property was purchased in Sydney.

crc_error said:

now he isn't promoting the property side of things, but wonderful macquarie 100% finance capital protected products.

2 years ago he said 'mortguage the kitties' on this product http://www.macquarie.com.au/retail/acrobat/emg/mq_multi-strategy_sp_series1_report.pdf and its paid out a 0.2% PA return since Jan 06.. when your paying out 8% PA for the loan, it doesn't make a good mix!

Click to expand...

As I've said it before, the success of someone selling seminars or pushing products is not determined by how well your investment does, their success is based on how much money they can make for themselves.

My view after reading Peter's books was:

L.AAussie said:

<snip>

Interesting read, but I remember thinking at the time that there was a smidge of BS about the whole deal. He got from broke check-out-chic to financial freedom far too soon for mine.
And I think he had a few interesting "learning experiences" along the way too.

My first impression was: tosser who had written a book that everyone believed in, but me. It's hard to be a cynical old ba$tard .
My first impression was that if he could do it, then I could too. Rather than be cynical about him, I was inspired to be optimistic about me.

He kept rattling on about his "beautiful friend" at different stages which got annoying. The guy looked like Michelin Man with "geek" glasses on his bonce at the time; let's be fair dinkum.
I wasn't interested in how he looked on the cover of his books...that's just publicist's stuff anyway. I was more interested in what he wrote. As for his "beautiful friend" (whether they be one or many), I thought it sounded as though he was very respectful of women. That was a plus for him, in my book. Said a lot about his personal values.

I guess if you could do it all during a boom time it could work.
Tis so hard to give any credit where it just may be a tiny bit due, eh!

The problem is that in many cases, a basic reno on a cheapy property does nothing more than increase the value of the property by the cost of the reno. Just a dollar-swapping exercise unless you can buy it massively under market. Good luck doing that during a boom when every sheep is offering over asking.
If a reno is strategically planned, budgeted, and done right, every $ spent should increase the value of the property by at least $2. At least that's my rule of thumb.

But, like Steve McNight, it was all back in those halcyon days of sub-$100k properties with you-beaut yields and in a cap growth area, so; you know; it's a possibility back then I guess.
Gosh...I missed the boat of the halcyon days...ooops! Must admit tho, that I made up for it in the post-halcyon days with more expensive properties...and better yields and CG....so in my experience it's been possible in the past 4 years.

I seriously doubt his original theory would work too well currently, so the shares angle slips in.


Gotta keep the machine rolling and sell a few more seminars and books I guess.
Yep, takes risk and courage to do that too.

Happy to be proven wrong of course.

Click to expand...

Just wanted to present an alternative interpretation from my own experience.

Ethann said:

In his book he keeps talking about his "mentor" and his "beautiful friend". From memory neither was actually just one person but rather a series of people (real or imagined) merged into one to make a more compelling story. Kind of like Kiyosaki's Rich Dad I suspect.

Click to expand...

That was one part of Peter Spann's book that really got me thinking. When reading both his and Kyosaki's books, I was disappointed that I didn't have a "Rich Dad" or a Mentor. Then at the end of Peter's book where he explains that his mentor was a combination of different "experts", it gave me the momentum to go get my own team of experts, who are now my collective mentors. This enabled me to feel so much more comfortable with my risk taking, and I learned heaps more than if I'd just stayed being dissappointed.

I agree with you sailor. I like Peter Spann, his books and the seminar I heard him give. He's a great motivator and while not everything he says or does can or maybe even should be repeated he's another example of how things can work out with investing.

If you look at these seminars or books as a kind of religion where you have to follow the "guru's" lead every step then that's daft. If it's about picking up a few ideas and only invest in what you understand (with the seminars a way of turning on a few light bulbs) then you'll do well, at least that's what I think.

Cheers

kaf

There is no rich dad. Its a metaphor.

I'm not sure about this whole 'team of experts' thing. They are only a team of experts because you (when i say 'you', i mean ll investors) are paying them money for their services, no?

You know...$olicitor, accountant, depreciation guy, RE agent, building inspection, pest inspection, mortgage broker/bank..on and on...

I use all these people as well for business and investing but i don't call them my team of experts...if ones no good......pfhht...gone...next please.

I consider them people i pay for their services... if i'm risking my money, i like to consider myself the expert.

sailor said:

That was one part of Peter Spann's book that really got me thinking. When reading both his and Kyosaki's books, I was disappointed that I didn't have a "Rich Dad" or a Mentor. Then at the end of Peter's book where he explains that his mentor was a combination of different "experts", it gave me the momentum to go get my own team of experts, who are now my collective mentors. This enabled me to feel so much more comfortable with my risk taking, and I learned heaps more than if I'd just stayed being dissappointed.

Click to expand...

L.AAussie said:

When I read Pete Spann back in about 2000, there was no mention of shares and what not.

It was all property, and the process was buy, renovate, rent out, draw down equity, go again ra, ra.

I attended Money Magic in 2000 have just reopened my copy of the manual given out which talks in detail about buying shares, selection criteria, use of margin lending, using warrants, options etc - copyright mark at the bottom of the page says 1999. My receipt says it was for Brisbane course March 2000.

Happy to be proven wrong of course.

Click to expand...

Been using shares and advocating the use of shares since then, not sure what you read about him - maybe you attend any of his seminars.

OSS

crc_error said:

now he isn't promoting the property side of things, but wonderful macquarie 100% finance capital protected products.

2 years ago he said 'mortguage the kitties' on this product http://www.macquarie.com.au/retail/acrobat/emg/mq_multi-strategy_sp_series1_report.pdf and its paid out a 0.2% PA return since Jan 06.. when your paying out 8% PA for the loan, it doesn't make a good mix!

Click to expand...

Its capital protected i see ...sp its more like 18% interest...

Regards

Why this search for a mentor?

Let's get one thing straight: No one out there loves you. My wife and my dog I trust...............

Hi all,

Something is wrong. I am agreeing more and more with Thommo/sunfish/Richard C.

What is this, the Macquarie fund is not a success for investors Who would have ever guessed!

But then again when you do, you get threatened with legal action.

bye

Sunfish said:

Why this search for a mentor?

Click to expand...

For me, a mentor is someone who teaches me things I need to know and gives good advice. It wasn't until I read Peter Span, that I realised I didn't need this all in one person, or necessarily a person at all.

So my mentor is SS, books on IP investing, accountant, lawyer, MB, www etc. They all teach me things and are full of really good advice. Out of the plethora of information therefore available to me, I take out what fits for me and my goals, and what works in my lifestyle. Tis all good.