Calling all pre 1990 buy and hold property investors
- Thread starter natedog
- Start date
Fantastic post Bianca.
I am very interested in hearing from long term investors like yourself. People who have bought and invested through the last recession and during the 70's during difficult times.
Would you be willing to share some information on your investment properties. Where they are located, and when you bought them?
Thanks again Bianca,
Regards Jason.
I am very interested in hearing from long term investors like yourself. People who have bought and invested through the last recession and during the 70's during difficult times.
Would you be willing to share some information on your investment properties. Where they are located, and when you bought them?
Thanks again Bianca,
Regards Jason.
Hi Bianca,
We now own 15 properties,share portfolios, and quite a few luxury items, valued close to $10million dollars, and we are only 50 years old.
Hi Bianca,
Some questions if you don't mind.
I take it that 10 M is the whole portfolio not the net worth ? Is yourportfolio investment providing enough income for your current lifestyle or more of asset-rich low cashflow ? Did you have to "convert" any property into say share for income ?
Hi Chrisy,
I have sold down and intend to continue selling down as time goes on, if I eventually do retire, I would prefer to be out of property investment
May I ask how you invested the money solding out your IPs ?
Thanks.
We now own 15 properties,share portfolios, and quite a few luxury items, valued close to $10million dollars, and we are only 50 years old.
Hi Bianca,
Some questions if you don't mind.
I take it that 10 M is the whole portfolio not the net worth ? Is yourportfolio investment providing enough income for your current lifestyle or more of asset-rich low cashflow ? Did you have to "convert" any property into say share for income ?
Hi Chrisy,
I have sold down and intend to continue selling down as time goes on, if I eventually do retire, I would prefer to be out of property investment
May I ask how you invested the money solding out your IPs ?
Thanks.
I don't qualify technically;
we have been buying property since 1985 - all PPoR's - now in our 4th which was purchased in 2000, until our first IP in 2001.
We sold our first 2 IP's by 2005 - one in 2004 - the neg cashflow was a killer, even with decent depreciation. It did appreciate in value over the time, which eased the pain. The other just before we went over to the US in 2005, as we had not had a rent increase since day 1, and we were waiting on settlement of our block of land, and we were nervous about how the cashflow would be while in the US. It appreciated in value as well, so no harm done.
Before these two were sold we had bought 3 others, 2 of which were pos geared from day 1, the other pos geared after tax from day 1, which we still hold, as well as our current PPoR (which is a pos geared IP now) and our block of land.
Along the way, we renoed two of the PPoR's, built one from scratch, renoed 2 IP's and 2 IP's we've never seen yet.
So, all up around 23 years experience in different forms. Next experience will be a sub-div, and we are now leveraging our equity to purchase a good cashflow business which, along with the rents on the IP's, will replace our earned incomes within 2 years.
Our cap gain and good cashflow from the IP investments has in only 8 years allowed us to do things with that equity that if we hadn't done anything would see us still needing to work until retirement like every other schmo. It has bought my retirement forward by 20 years, my wife's by 30. Of course, we will always work - but the difference is CHOICE.
Looking back, I would say that if you are starting out, you wanna make sure your CASHFLOW is a premium and buy when you can afford to, in areas that show good signs of on-going growth.
If you hold on for more than 5 years you will have some cap growth - that is a proven historical fact.
Will it continue into the future? By my reckoning; absolutely - just the rate of the cap growth will vary from a little to very good. It's cyclic.
All the properties I've ever owned have only gone up in value, and we didn't buy in "postcode" or "blue chip" suburbs. However, the first 2 IP areas (Mentone and Highett) were selected primarily for their potential future cap growth, which did occur; but it was not stellar growth and have not to this day out-performed the other areas we have bought in. In fact, all the areas we have bought in since those first two IP's have way outperformed them. One of our PPoR's - in Red Hill, doubled in value in 2 years. Go figure. Lucky? I don't think so; we bit off a huge chunk, chewed hard, and had we not done it, I probably wouldn't be sitting here typing.
To me, "blue chip" areas are for the investors who want guaranteed safety, at the possible expense of better growth and rent returns elsewhere, without doing any hard work. Those areas don't require any digging. A bit like buying a couple of "top rated" mutual funds
or some BHP shares for the uneducated and/or lazy and/or time poor. Stock brokers love those types of investors.
I would only buy in those "postcode" areas now for a PPoR choice, and it would need to be at the bottom of the cycle, so I could enter cheaply and be able to afford the area so I could be a "Joneses collaborator" with a big non-tax deductible mortgage. No interest in that game.
As you get more experienced, you can then look at timing the market a bit more to accelerate the cap growth, but it's not critical to pick the bottom and/or the top unless you want to be a trader and sell for a profit in the short term.
My biggest regret; not starting buying IP's earlier.
we have been buying property since 1985 - all PPoR's - now in our 4th which was purchased in 2000, until our first IP in 2001.
We sold our first 2 IP's by 2005 - one in 2004 - the neg cashflow was a killer, even with decent depreciation. It did appreciate in value over the time, which eased the pain. The other just before we went over to the US in 2005, as we had not had a rent increase since day 1, and we were waiting on settlement of our block of land, and we were nervous about how the cashflow would be while in the US. It appreciated in value as well, so no harm done.
Before these two were sold we had bought 3 others, 2 of which were pos geared from day 1, the other pos geared after tax from day 1, which we still hold, as well as our current PPoR (which is a pos geared IP now) and our block of land.
Along the way, we renoed two of the PPoR's, built one from scratch, renoed 2 IP's and 2 IP's we've never seen yet.
So, all up around 23 years experience in different forms. Next experience will be a sub-div, and we are now leveraging our equity to purchase a good cashflow business which, along with the rents on the IP's, will replace our earned incomes within 2 years.
Our cap gain and good cashflow from the IP investments has in only 8 years allowed us to do things with that equity that if we hadn't done anything would see us still needing to work until retirement like every other schmo. It has bought my retirement forward by 20 years, my wife's by 30. Of course, we will always work - but the difference is CHOICE.
Looking back, I would say that if you are starting out, you wanna make sure your CASHFLOW is a premium and buy when you can afford to, in areas that show good signs of on-going growth.
If you hold on for more than 5 years you will have some cap growth - that is a proven historical fact.
Will it continue into the future? By my reckoning; absolutely - just the rate of the cap growth will vary from a little to very good. It's cyclic.
All the properties I've ever owned have only gone up in value, and we didn't buy in "postcode" or "blue chip" suburbs. However, the first 2 IP areas (Mentone and Highett) were selected primarily for their potential future cap growth, which did occur; but it was not stellar growth and have not to this day out-performed the other areas we have bought in. In fact, all the areas we have bought in since those first two IP's have way outperformed them. One of our PPoR's - in Red Hill, doubled in value in 2 years. Go figure. Lucky? I don't think so; we bit off a huge chunk, chewed hard, and had we not done it, I probably wouldn't be sitting here typing.
To me, "blue chip" areas are for the investors who want guaranteed safety, at the possible expense of better growth and rent returns elsewhere, without doing any hard work. Those areas don't require any digging. A bit like buying a couple of "top rated" mutual funds
or some BHP shares for the uneducated and/or lazy and/or time poor. Stock brokers love those types of investors.I would only buy in those "postcode" areas now for a PPoR choice, and it would need to be at the bottom of the cycle, so I could enter cheaply and be able to afford the area so I could be a "Joneses collaborator" with a big non-tax deductible mortgage.
No interest in that game. As you get more experienced, you can then look at timing the market a bit more to accelerate the cap growth, but it's not critical to pick the bottom and/or the top unless you want to be a trader and sell for a profit in the short term.
My biggest regret; not starting buying IP's earlier.
if we can do it, anyone can
Hi Jingo,
Most of our property is in Mackay.
We came from a very average background. My parents are still renting, because they thought it was all too hard, and his parents had the "we will work until retirement and own our own home" mentallity.
We bought the first one in 1977,for $26K after having been given a loan from a relative for $2000, for the deposit. The condition was that we would pay it back when we sold the house, and we did.
My husband was in the midst of an apprenticeship, 20 years old, and I was just out of school, planning on going to uni, but I didn't.
We weren't nerds or hermits , just 2 regular kids, who liked to party, go out, and do stuff.We bought the house as a house and land deal, and negotiated a lot of deductions so that we could complete a lot of things ourselves.
It was a great reason to stay home, and not waste money going out, and at that age just having your own space was fantastic.Plus the friends just came to our house.There weren't many times that we had nothing to do, and if we needed any extra money, we would complete private jobs under the house at night.If you have a trade, there is always a way to make extra money!
That is why I like to tell parents, unless your kids are super smart or have a lifelong desire to become a professional, get them into a trade! The uni can always come afterwards.If you start young enough, the ability for investing comes around a heck of a lot quicker with a trade under your belt.There is no surer way to make money on property by being able to do the majority of work yourself, or know others you "hang" with,who will help you out.
It also opens up the way to get your own business, and in the next decade, you probably wont ever be out of work.
All our other properties are also in Mackay.We like to buy 2 blocks of land close to each other, if not next to each other, so we can set " the standard" for the block. It has worked so far.We get a builder to complete the house upto a certain point and then we finish it.We prefer the Mt Pleasant, Greenfield, Glenella and Northern Beaches areas of Mackay, and East Mackay, and the Marina, although others have been very lucky in many other well positioned suburbs. Buy close to the beach and you virtually cant go wrong.
Over 30 years we have seen areas flourish and be classed as " well to do" and then crumble after 10 years.These areas have kept their values over the years.
We operate under a partnership, which owns all the properties , and a company which runs our business. The company and business provides us with a wage,and tops up any shortfalls in the partnership, by means of bonus.The company is only a small, family run operation.
Over the last few years I have become concerned about not having a trust, and have actually set one up, but is is dormant.
We have operated in this structure for 25 years, and have no problems, touch wood.As long as you pay your insurances, comply with all the safety issues, and are a little bit business savvy, I don't think the hype about trusts is warranted.
We rode out the reccession and the interest rate rises, simply because we started when the rates were at 17%. It was all we knew.Our money was allocated to meet that level.If it is all you know, you dont stress about it.
I must point out though, we are only as wealthy as we are due to the fact that we did a lot of the hard yards ourselves.
In 1993 we decided to build our own factory on some land that became available.We knew of a derelict old shed on a farm nearby , which was big enough to work with, and we, along with our 15 year old son and 4 of his mates, pulled down the shed, transported it, and rebuilt it ourselves. The land cost $55K, the shed $15K. It is now valued at $600k.
In 1996 we saw an add in the paper for a 1500 sqm block of land-divorce sale- and I pounced on that. It cost $40K. We subdivided that and built two houses on it, for $160k and $130K . Now valued at $900K
We bought a block of land at an exclusive suburb in 1998,for $180K with the view of subdividing it, and building 2 properties.That was the only scary investment, as the interest was huge for those days. But we owned our house, so it was just as if we had a mortgage. It took 9 years to get the subdivision through! Never give up! We built a home on the front block over a period of 10 years, whilst living in our other PPR, which we owned outright, and which had been built with the proceeds of the PPr which we paid out at the age of 30.
In 2004 we decided to stretch out a little and were at the Gold Coast on hollidays. We went out for an icecream and came back with a contract on a unit in Q1. Not the best investment by a long shot, but it is holding it's own in our portfolio.We also bought a unit in the Emporium in Brisbane, which has been fantastic.
However, none of the investments have done as well as our properties at home, simply because we can't value add, do the maintenance, and the control is out of our hands. You can't put a price on local knowledge.
Land tax is becoming an issue, but the plan is to hold for a few more years, and then get rid of the majority, pay out the IO loans and hold on to 6 or so for income.The rents will be aound $3000 per week, and if we rent out our shed, it could be an other $2000 per week.There will be no more loans, we will own the properties outright and still have our mansion at the beach.
All our toys are paid for, we will still have a share portfolio lurking in the background somewhere, and a super payout to keep us going for a while longer.We do not want to rely on any pensions or government handouts when we are old, although selling everything one day, gifting the money into the trust( after Cap gains, which should be minimal if we sell one at a time over a few years) and then still crying poor may seem an option, if the current government pisses us of too much.The Labour government makes things a hell of a lot harder for investors!!
I started buying shares in 1997, just because I thought it was the thing to. I did a bit of a study on them, but no major things. Over the years I have just bought some shares with spare cash, and haven't realy looked at them again, only so now and then. They are valued at $200K.I haven't sold any during this time.
I usually only take out IO loans, and fix for 3 years. I figure that 3 years is a good time, as it will take that long to either go up or down significantly. Some of the loans have been converted to P & I over time, which is not a great investment strategy, but more for my own comfort zone level.If I had to start today, i would go IO for all, even the PPR, fix for 3 and change the PPR to P&I pnly when I could afford the extra payments. Much better, in my opinion to use the equity whilst you are still building a portfolio. You can alway sell the other IP's later and pay out lump sums on your PPR.
Basically, looking back, I can say that if any extra income was needed, we just worked the business a little harder.But I guess the best advise i can give is to not fret about the interest rates to much. Just always think you can do it, because if you realy want to, you can, despite your circumstance.8.9% is a hell of a lot better then 17%.
And soyabean....... we are assett rich with high cashflow because we run a business based on a trade where there is skills shortage. Get your trade and get to work man. You will do just fine.
Hi Jingo,
Most of our property is in Mackay.
We came from a very average background. My parents are still renting, because they thought it was all too hard, and his parents had the "we will work until retirement and own our own home" mentallity.
We bought the first one in 1977,for $26K after having been given a loan from a relative for $2000, for the deposit. The condition was that we would pay it back when we sold the house, and we did.
My husband was in the midst of an apprenticeship, 20 years old, and I was just out of school, planning on going to uni, but I didn't.
We weren't nerds or hermits , just 2 regular kids, who liked to party, go out, and do stuff.We bought the house as a house and land deal, and negotiated a lot of deductions so that we could complete a lot of things ourselves.
It was a great reason to stay home, and not waste money going out, and at that age just having your own space was fantastic.Plus the friends just came to our house.There weren't many times that we had nothing to do, and if we needed any extra money, we would complete private jobs under the house at night.If you have a trade, there is always a way to make extra money!
That is why I like to tell parents, unless your kids are super smart or have a lifelong desire to become a professional, get them into a trade! The uni can always come afterwards.If you start young enough, the ability for investing comes around a heck of a lot quicker with a trade under your belt.There is no surer way to make money on property by being able to do the majority of work yourself, or know others you "hang" with,who will help you out.
It also opens up the way to get your own business, and in the next decade, you probably wont ever be out of work.
All our other properties are also in Mackay.We like to buy 2 blocks of land close to each other, if not next to each other, so we can set " the standard" for the block. It has worked so far.We get a builder to complete the house upto a certain point and then we finish it.We prefer the Mt Pleasant, Greenfield, Glenella and Northern Beaches areas of Mackay, and East Mackay, and the Marina, although others have been very lucky in many other well positioned suburbs. Buy close to the beach and you virtually cant go wrong.
Over 30 years we have seen areas flourish and be classed as " well to do" and then crumble after 10 years.These areas have kept their values over the years.
We operate under a partnership, which owns all the properties , and a company which runs our business. The company and business provides us with a wage,and tops up any shortfalls in the partnership, by means of bonus.The company is only a small, family run operation.
Over the last few years I have become concerned about not having a trust, and have actually set one up, but is is dormant.
We have operated in this structure for 25 years, and have no problems, touch wood.As long as you pay your insurances, comply with all the safety issues, and are a little bit business savvy, I don't think the hype about trusts is warranted.
We rode out the reccession and the interest rate rises, simply because we started when the rates were at 17%. It was all we knew.Our money was allocated to meet that level.If it is all you know, you dont stress about it.
I must point out though, we are only as wealthy as we are due to the fact that we did a lot of the hard yards ourselves.
In 1993 we decided to build our own factory on some land that became available.We knew of a derelict old shed on a farm nearby , which was big enough to work with, and we, along with our 15 year old son and 4 of his mates, pulled down the shed, transported it, and rebuilt it ourselves. The land cost $55K, the shed $15K. It is now valued at $600k.
In 1996 we saw an add in the paper for a 1500 sqm block of land-divorce sale- and I pounced on that. It cost $40K. We subdivided that and built two houses on it, for $160k and $130K . Now valued at $900K
We bought a block of land at an exclusive suburb in 1998,for $180K with the view of subdividing it, and building 2 properties.That was the only scary investment, as the interest was huge for those days. But we owned our house, so it was just as if we had a mortgage. It took 9 years to get the subdivision through! Never give up! We built a home on the front block over a period of 10 years, whilst living in our other PPR, which we owned outright, and which had been built with the proceeds of the PPr which we paid out at the age of 30.
In 2004 we decided to stretch out a little and were at the Gold Coast on hollidays. We went out for an icecream and came back with a contract on a unit in Q1. Not the best investment by a long shot, but it is holding it's own in our portfolio.We also bought a unit in the Emporium in Brisbane, which has been fantastic.
However, none of the investments have done as well as our properties at home, simply because we can't value add, do the maintenance, and the control is out of our hands. You can't put a price on local knowledge.
Land tax is becoming an issue, but the plan is to hold for a few more years, and then get rid of the majority, pay out the IO loans and hold on to 6 or so for income.The rents will be aound $3000 per week, and if we rent out our shed, it could be an other $2000 per week.There will be no more loans, we will own the properties outright and still have our mansion at the beach.
All our toys are paid for, we will still have a share portfolio lurking in the background somewhere, and a super payout to keep us going for a while longer.We do not want to rely on any pensions or government handouts when we are old, although selling everything one day, gifting the money into the trust( after Cap gains, which should be minimal if we sell one at a time over a few years) and then still crying poor may seem an option, if the current government pisses us of too much.The Labour government makes things a hell of a lot harder for investors!!
I started buying shares in 1997, just because I thought it was the thing to. I did a bit of a study on them, but no major things. Over the years I have just bought some shares with spare cash, and haven't realy looked at them again, only so now and then. They are valued at $200K.I haven't sold any during this time.
I usually only take out IO loans, and fix for 3 years. I figure that 3 years is a good time, as it will take that long to either go up or down significantly. Some of the loans have been converted to P & I over time, which is not a great investment strategy, but more for my own comfort zone level.If I had to start today, i would go IO for all, even the PPR, fix for 3 and change the PPR to P&I pnly when I could afford the extra payments. Much better, in my opinion to use the equity whilst you are still building a portfolio. You can alway sell the other IP's later and pay out lump sums on your PPR.
Basically, looking back, I can say that if any extra income was needed, we just worked the business a little harder.But I guess the best advise i can give is to not fret about the interest rates to much. Just always think you can do it, because if you realy want to, you can, despite your circumstance.8.9% is a hell of a lot better then 17%.
And soyabean....... we are assett rich with high cashflow because we run a business based on a trade where there is skills shortage. Get your trade and get to work man. You will do just fine.
Inspirational Bianca!!!
Thanks Bianca for taking the time to share your investment journey with us. Investing in value adding opportunities has really paid off for you.
I really enjoy your posts and am glad you have joined the forum.
Looking forward to learning more from you.
Regards Jason.
Thanks Bianca for taking the time to share your investment journey with us. Investing in value adding opportunities has really paid off for you.
I really enjoy your posts and am glad you have joined the forum.
Looking forward to learning more from you.
Regards Jason.
This is a great thread Natedog, thank-you!
I love to read about the success of these wonderful people. Truely inspiring.
Wylie, Bianca and LynnH, your story is another testimony for Gen Y to look at. They think they are doing it tough. Do you think it is all relative? That todays 300k was yesterdays 26k?
Keep the stories coming.
Bruce where are you?
Regards Jo
I love to read about the success of these wonderful people. Truely inspiring.
Wylie, Bianca and LynnH, your story is another testimony for Gen Y to look at. They think they are doing it tough. Do you think it is all relative? That todays 300k was yesterdays 26k?
Keep the stories coming.
Bruce where are you?
Regards Jo
Bianca,
We also operate under a company that runs our business. I have recently been sourcing more income to cover our shortfalls from the business through:
1. Sub-contracting my services to the business, so genuine employment.
2. Bonuses,
I do sometimes worry that we are too reliant on the business but like you we are in a business where there is a huge skills shortage. It is a small business with 4 F/T employees and 1 P/T. Your advice is comfort to me.
I have gone down the Trust avenue and now mostly regret it. Especially at tax time. I also recently signed off on a loan where my Solicitor advised me that the documents I was signing basically said that if the bank had to sue me they would attack anything that had my name on it, trust or no trust.
I also appreciate your advice on IR's. It took me a while to see it but I do like to think my 12% loan is not bad considering the rates of the 80's.
Thanks for sharing your story.
regards Jo
What a great read this thread has been. Loved Bianca's story, along with Lynn and Wylie.
Thank you for this, excellent motivational thread!!!
Back Again To Share The Years
Well, it is now 2011, and my story has just about finished. 12 months to go before we call it a day! The plan is getting executed now, over a 12 month period, despite all the gloomy forecasts we keep reading about. If you read all the investor's stories, I think the general idea is that it doesn't matter WHEN, as long as you DO! I have been very fortunate in MACKAY. the place has been a steady earner for over decades, with no end in sight. As the rest of you deal with doom and gloom, we just sit in the sunshine and watch the dollars roll out of the harbour. COAL, yessirrey. Coal boom 1 saw the prices soar, and the rents soar. The GFC and disasters along our coast adjusted our lives to a more sustainable level.Coal boom 2 is at our door, and even though we won't see such huge jumps as 5 years ago, the place is preparing for the next 20 years of prosperity.People are flocking in for work, from everywhere else where there is no work. Rentals are tight. There will be a severe shortage in the coming year.Perfect for the young guns to get into the market.
Barring global disasters, Mackay is a very safe bet. I haven't invested in the real mining towns, and probable kicking myself now. 5 years ago, there WAS a lot of money to be made out there. The risks for me were too great. COAL boom 2 is seeing a renewed interest, but I would still err on the side of caution. The big companies have had a lot more experience in the firt boom,and have quite a few alternatives up thier sleeves. I am now wanting to sell a few properties, during the year, which will see us end up with our own PPI, our commercial property, a marina birth,a unit at the Gold coast, a Unit on the beachfront, a unit in the middle of Brisbane, and 4 other properties we will own outright. Not bad for a retirement plan. If anyone is interested, check my current sale property at www.sharedproperty.infoOnly 4 to go.Yeeha!
Well, it is now 2011, and my story has just about finished. 12 months to go before we call it a day! The plan is getting executed now, over a 12 month period, despite all the gloomy forecasts we keep reading about. If you read all the investor's stories, I think the general idea is that it doesn't matter WHEN, as long as you DO! I have been very fortunate in MACKAY. the place has been a steady earner for over decades, with no end in sight. As the rest of you deal with doom and gloom, we just sit in the sunshine and watch the dollars roll out of the harbour. COAL, yessirrey. Coal boom 1 saw the prices soar, and the rents soar. The GFC and disasters along our coast adjusted our lives to a more sustainable level.Coal boom 2 is at our door, and even though we won't see such huge jumps as 5 years ago, the place is preparing for the next 20 years of prosperity.People are flocking in for work, from everywhere else where there is no work. Rentals are tight. There will be a severe shortage in the coming year.Perfect for the young guns to get into the market.
Barring global disasters, Mackay is a very safe bet. I haven't invested in the real mining towns, and probable kicking myself now. 5 years ago, there WAS a lot of money to be made out there. The risks for me were too great. COAL boom 2 is seeing a renewed interest, but I would still err on the side of caution. The big companies have had a lot more experience in the firt boom,and have quite a few alternatives up thier sleeves. I am now wanting to sell a few properties, during the year, which will see us end up with our own PPI, our commercial property, a marina birth,a unit at the Gold coast, a Unit on the beachfront, a unit in the middle of Brisbane, and 4 other properties we will own outright. Not bad for a retirement plan. If anyone is interested, check my current sale property at www.sharedproperty.infoOnly 4 to go.Yeeha!
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