I feel humble

[investor2009]

Hiya'!

I recently had a property on the market (first thing I've ever sold!) and the timing couldn't have been much worse.. The night we decided to place it on the market we called a REA friend of ours who's excellent and always straight up about things to us. He said 'why do you want to sell, you know this place has gone down a good $40-$50k since the beginning of the year, right?' I said, hmmm.. 'You aren't under any financial stress, right?' I said, no.. 'Then I strongly advice you to keep it' And we spoke for a good hour or so about life in general.

Anyhow, We did end up placing the property on the market for personal reasons and within 1 day we had an offer! Allthough because of my inexperience I turned it down right away because I assumed if there was already a serious buyer then there would be plenty more. Yea, right!I learned the hard way. The offer was only $2,000 less than what we ended up selling it for.

Anyhow, weeks later I'm on a trip with some friends and stop in for breakfast at Mcdonalds Katherine, first time for everything and there sat a copy of Saturdays newspaper. I spotted the property advertised and said ohhh look, here it is, the property I've been trying to sell! to a freind who is 55 years old now and always wanted to buy an investment property but is self confessed too lazy and scared. He does not think the bank would lend him more money, plus he doesn't think he could ever afford to do it. Plus, he's not intelligent enough to do this sort of thing, it's for the smart and already wealthy.

Mind you, this particular ad I was not prepared to pay for because we were ready to pull it off the market it was so bad, but the agent offered to pay for this one so we thanked him.

I show him the ad and he says: Can I buy it? And I said, No! We don't want to sell it anymore. Anway, I got back to work Monday and rethought. We did want to sell it. So I called him up and asked, Are you serious man, do you really want to buy this place? And he said. Yea.

I reccommended him a broker and told him that it would be easier than he thought and he would only have to understand the math and sign a few docs.
He is now the proud owner of 2 properties! I was at a bbq yesterday and he shook my hand and said, thank you. It was quite heartfelt actually. He followed, saying; Thanks so much for giving me the opportunity to get into the market, I never would have done it otherwise. That felt so good to hear. He then told me that he is going to pick up his third quickly, sit on them, and then sell them all to buy his dream bush property. All this from a guy who cannot read or write well. He turned down my offer of lending a few good property books because he cannot read them.

Most anyone can invest in property.

Thank you for listening to one of my humbling stories and I hope you've taken something from it

 

[wylie]

That's a nice story, and thank you for sharing it.

 

[alexlee]

You've given this guy a sharp knife. Used properly, it'll serve him well. If he doesn't have the discipline / understanding of risk / luck / finances to use it properly..........

 

[MathBoy]

You were not very specific with the numbers but I’m assuming you sold an illiterate friend a place up to $50k over market value....

I think humble is the wrong emotion.

Even at market price or below it’s like giving fireworks to a child. I hope it’s a friend you are willing to lose.

 

[investor2009]

Assume nothing. I sold this property at current market value. Slightly lower than my REA friend told me I'd achieve realistically. So I lost the $40k, does make you feel better? Have a little more faith, my friend I don't expect any more decline and believe I've sold in the lowest slump. My loss, although I still gained and he has purchased at a fantastic point in the cycle. Win/Win

And Alex, this guy is one of my best friends, he has suprised me by even giving up drinking most nights with his new inspiration! He will do well, and has lots of equity available in redraw if need be, which I doubt he will.

 

[alexlee]

And Alex, this guy is one of my best friends,

How is this relevant?

he has suprised me by even giving up drinking most nights with his new inspiration! He will do well, and has lots of equity available in redraw if need be, which I doubt he will.

He's 55 and hasn't done it before. He may well have 'lots of equity', but he doesn't have other safeguards like a rising income or (most importantly) time that younger investors have.

What if he now has the 'bug' and goes 'hey, I'll just buy up to whatever the bank will lend me!', ignorant of things like cashflow management and loan structuring (cross-colling without realising it, say, which ties up his equity).......

Look, this may turn out well, but it may not. There are risks, as there always are. Buying property is not the end of it. The key is surviving until it pays off.

 

[jaycee]

if you try hard enough, once you split a hair in 2, you can keep splitting it and splitting it and splitting it right down to the irrelevantly ridiculous

 

[weg]

Look, this may turn out well, but it may not. There are risks, as there always are. Buying property is not the end of it. The key is surviving until it pays off.

Very much agree there are risks, especially with newbies that tread ahead of themselves without really knowing what they're doing.

Urging people to buy and leading them to believe it's 'easy' when they're not able to be educated properly is risky.

"He then told me that he is going to pick up his third quickly" The word quickly would have me worried and rings alarm bells.

Does he assume property will keep going up as it has in the last few years, hence needing to get in quick?

He's 55 - how does he feel about the prospect of property not going up at all in the next 10 years, when is he planning to retire from his job and on what, is his job secure over the next few years, how's his health???

Have you discussed these things with him?

These are worst case scenarios but one must be aware that things can turn and situations change - being prepared and aware, and knowing what to do is essential if you are going to be successful.

 

[jaycee]

Very much agree there are risks, especially with newbies that tread ahead of themselves without really knowing what they're doing.

Urging people to buy and leading them to believe it's 'easy' when they're not able to be educated properly is risky.

"He then told me that he is going to pick up his third quickly" The word quickly would have me worried and rings alarm bells.

Does he assume property will keep going up as it has in the last few years, hence needing to get in quick?

He's 55 - how does he feel about the prospect of property not going up at all in the next 10 years, when is he planning to retire from his job and on what, is his job secure over the next few years, how's his health???

Have you discussed these things with him?

These are worst case scenarios but one must be aware that things can turn and situations change - being prepared and aware, and knowing what to do is essential if you are going to be successful.

Being that INVESTOR2009 told us it's a close friend of his, I betcha he discused nothing with him... why would he... why should he care about his own firend ?

Obviously, we as strangers would care much more about his friend than INVESTOR2009 would, hjence everyone's concern



Do you think that INVESTOR2009 has given none of the risks listed any thought at all and just taken his friend for a ride either on purpose or naively ?

 

[weg]

Do you think that INVESTOR2009 has given none of the risks listed any thought at all and just taken his friend for a ride either on purpose or naively ?

I think it's possible that investor 2009 hasn't outlined all the risks (I was thinking more naivity/being bullish than anything else), but there's also been some conflict of interest here too (less inclined to discuss risk perhaps - moreso than overtly/consciously trying to take his friend for a ride??).

So not branding Investor2009 a scammer Jaycee.

Chill .

 

[The Y-man]

Good on you Investor2009 - it's good to see people go from a "gunna" to "doer".

The Y-man

 

[hobo-jo]

I reccommended him a broker and told him that it would be easier than he thought and he would only have to understand the math and sign a few docs.

He then told me that he is going to pick up his third quickly, sit on them, and then sell them all to buy his dream bush property. All this from a guy who cannot read or write well. He turned down my offer of lending a few good property books because he cannot read them.

So you sold your property to a guy who can't read or write?
Sounds dangerous. How can he honestly have done his own due diligence?
If he can't read or write are we honestly to believe he understands the math?

I would think his time/energy would have been better spent investing in himself (learning to read and write) before buying up multiple properties...

Personally I would not sell a property to a friend/relative, it's too close and I would feel guilty if they ended up doing poorly with it or struggling to hold.

Most anyone can invest in property.

Most anyone can buy a property, only a few go on to become successful multi-property investors.

 

[shuggy]

he has suprised me by even giving up drinking most nights with his new inspiration!

ha , he sounds like he lives in darwin

 

[investor2009]

Geez... I'm really not sure what to say.

I can tell the real investors from the others quite easily here, I'm just not sure why these people are hanging around a forum dictated toward wealth when it's clear they have no idea how to achieve the mindset, let alone wealth itself.

Y-man I have respected for many years, as well as Wylie and conservative Alex, but these other newcomers just sound ridiculous. It's really no wonder the greats are all but gone. One PPOR and a small IP is really playschool kinda stuff people, and if you think this is a huge risk then I'm sorry but there really is no hope for you in this department, especially with the wealth of knowledge available here. This is what differentiates my good friend from yourselves. Please just try to think about that

 

[hobo-jo]

these other newcomers just sound ridiculous.

I have been registered 5 years and reading for 12-18 months prior... how long until I'm not a 'newcomer'

It's really no wonder the greats are all but gone.

I would suggest a few of the greats have gone because they've seen the writing on the wall for property and realise the best capital growth for a long time is likely behind us.

One PPOR and a small IP is really playschool kinda stuff people, and if you think this is a huge risk then I'm sorry but there really is no hope for you in this department, especially with the wealth of knowledge available here. This is what differentiates my good friend from yourselves. Please just try to think about that

Whether two properties (and by the sounds of it a third one not far off) is 'playschool' really depends on price, mortgage size, income of the owner. With no offense intended your friend isn't in a position to take advantage of the wealth of knowledge here given that he can't read.

 

[weg]

Geez... I'm really not sure what to say.

I can tell the real investors from the others quite easily here, I'm just not sure why these people are hanging around a forum dictated toward wealth when it's clear they have no idea how to achieve the mindset, let alone wealth itself.

Y-man I have respected for many years, as well as Wylie and conservative Alex, but these other newcomers just sound ridiculous. It's really no wonder the greats are all but gone. One PPOR and a small IP is really playschool kinda stuff people, and if you think this is a huge risk then I'm sorry but there really is no hope for you in this department, especially with the wealth of knowledge available here. This is what differentiates my good friend from yourselves. Please just try to think about that

investor2009, I think you've completely missed the point and are making some incorrect assumptions about the people who are raising some good points.

If you don't recognise there is any risk in investing (any kind) then you are a risk to yourself and NOT an experienced PI.

The risks pointed out are very real - 55yo illiterate newbie investor, has been told all he needs to understand is the maths and to sign a few docs (even though he can't even read the docs he's signing ).

If he has rejected your investment books because he can't read, how does he understanding yield, effects of interest rate hikes (wants 2 IP's), tax, buffers, structuring loans, how long can he hold if he loses his job? can he easily get another at his age? What if he get s sick? can he hold and for how long? what is his plan?

Many of these thing most of us learn along the way, but this guy being 55 and unable to read and write probably hasn't got much room for error, yet may be at bigger risk that the average newbie.

Are we inexperienced PI because we think these things are important to know?

I love property investing but only if it doesn't result in a loss. People do lose - mostly because they ignore or downplay risk.

 

[jaycee]

I have been registered 5 years and reading for 12-18 months prior... how long until I'm not a 'newcomer'


I would suggest a few of the greats have gone because they've seen the writing on the wall for property and realise the best capital growth for a long time is likely behind us.


Whether two properties (and by the sounds of it a third one not far off) is 'playschool' really depends on price, mortgage size, income of the owner. With no offense intended your friend isn't in a position to take advantage of the wealth of knowledge here given that he can't read.

You'll be remembered as a local when you move onto bigger & better things, but until then.....

 

[jingo]

I would suggest a few of the greats have gone because they've seen the writing on the wall for property and realise the best capital growth for a long time is likely behind us.

I wonder who the greats are that Investor 2009 is referring too? In my opinion, the ones who continue to stick around are probably successful in their investing. I've read many investment stories on here over the past few years that have worked in a bull market - but, as so many have discovered, they can fall down in times like now.

Back to the original post. I think that investing can be started at any age. An older investor needs to understand the risks involved and also, have worked out a clear and realistic investment plan/strategy. At 55, I am not sure that buying multiple -ve geared investment properties is a good idea?

Has your friend considered how these investments will help him in the future? Would he be more suited to paying them down over time?

Regards Jason.

 

[Dawn]

I would suggest a few of the greats have gone because they've seen the writing on the wall for property and realise the best capital growth for a long time is likely behind us.

.

How long do you think there will be no growth in property?

ps: some may not like it but I don't mind listening to an alternative view on property. Its all part of the game.

 

[sanj]

Geez... I'm really not sure what to say.

I can tell the real investors from the others quite easily here, I'm just not sure why these people are hanging around a forum dictated toward wealth when it's clear they have no idea how to achieve the mindset, let alone wealth itself.

Y-man I have respected for many years, as well as Wylie and conservative Alex, but these other newcomers just sound ridiculous. It's really no wonder the greats are all but gone. One PPOR and a small IP is really playschool kinda stuff people, and if you think this is a huge risk then I'm sorry but there really is no hope for you in this department, especially with the wealth of knowledge available here. This is what differentiates my good friend from yourselves. Please just try to think about that

good lord

if you didnt want any discussion or debate then what exactly was the point of the thread? for a pat on the back?

im surprised you dont see any risk whatsoever involved here, your friend obviously does not have a strategy and since you have referenced "real investors" then surely "real investors" tend to formulate a strategy first and then buy property to suit it?

i can see what you're saying in that you have helped him finally take some action but to claim there is no risk in someone who is 55, not financially astute and has a lot of equity to potentially lose buying properties in quick succession in a patchy market is crazy talk.

i hope for his sake he takes a step back and thinks carefully about his actions. im not a bear as ive bought 2 in the last 18 months ansd have another under offer at the moment but to say there is no risk is absolute madness imo.