I lost my shirt, I pawned my rings ...

[Alex P Keaton]

I made a lot ! of mistakes

1/ What did you buy or not buy?

I bought a tiny 1 bed unit in Perth at the wrong time of the market in 2009.


2/ What were you thinking? What influenced your thoughts?

I bought my ppor in 2008 and was itching to buy an ip. Mum and dad gave me a nice sized deposit for my ppor so I wanted to use the equity straight away. I wanted to buy my first one in my own city and close to home. I rushed in I guess and didnt do enough research. I thought i'd researched enough but looking back in hindsight I obviously hadn't.


3/ What was the result of this mistake?

In hindsight I see I made a lot of mistakes!

a. Used ANZ to cross col my ip with my ppor and could only get a $200,000 loan. In hindsight I should have tried other banks. If I had of got a loan for $250,000 which I might have been able to do (I dunno) I would have bought a 2 bed unit instead and would have had better CG over the past 4 years. I did not see much CG from 2009 - 2014 at all.

b. I used $10,000 of my own cash for the deposit and mum and dad gave me a $5000 loan for the stamp duty. This left me with only a $20 k buffer which obviously turned out not to be enough as I was NG. I also had unexpected expenses and costs.

c. Rental yield wasn't good enough to start with being only $220 for a $200 k loan and when IR went up I struggled big time! I didnt calculate the rental returns properly when I did my DD. Mum and dad ended up loaning me $1000 and then not too much longer after that I ended up having to move back in with my parents so I could rebuild my savings.

d. I should have interviewed and researched PM's and their fees too because I started off with an expensive rate.

e. Result, an underperforming property. Didnt capture any of Perth's growth over the course of the last 12 - 18 months.


4/ How did you get through it? What strategies did you use / are you using?
a. Moved in with mum and dad to rebuild my savings.


5/ What would you do differently?
a. I will be buying a house with development potential. Something that I can add value to.

b. I would get a pro to hold my hand through the whole process. I obviously need to do a lot of learning [still] and I am not too proud to admit this. If this means me paying someone to help me then i'm ok with that. I cannot afford to make more mistakes with the next ip I buy as I set myself back 4 years when I bought my first IP.

I dont see it as a total waste of time though. As a newbie investor you are going to make mistakes, it is how you react and move forward from it that matters and the next time around when you buy you wont make those same mistakes again. Like I said I'm getting someone to help me this time as I see I really need the help. I'm cool with that.

Also it was an excellent learning experience. I would have rather waste my money for 4 years on NG and in the process getting an education about all kinds of ip related stuff than **** it up on booze and material items like my friends have done. Next time I invest I'll get it right.


6/ What have you learned? What wisdom can you impart?

Hoping to sell my IP and make around a $35 - $45 k profit and re-invest into something with growth potential ! So it could be worse! I managed to save $35 k living here with mum and dad. I spent half of that on a 2nd hand 2 year old sportswagon. When I move back home i'll have about a $60 k cash savings buffer and I wont have that car upgrade expense to fork out for.

Wisdom I can impart for newbies. Get help if you dont have an idea what you are doing lol. Make sure you research and if your not sure you are doing the right thing pay someone to help you or find a mentor on here that would be happy to take you under their wing. Make sure you read heaps visit here for at least 6 months before buying.

I have made a heap of threads regarding this. Here are a couple:

Sell underpforming 1 bed IP and opportunity cost

Did you overextend yourself buying your first ip - Importance of buffer

Savings is being eaten away - Need to take back control

hmmm after looking at these threads it appears I should've been on a stricter budget. Looks like I spent too much on things including food along with the NG.

 

[Alex P Keaton]

Not looking for advice or consolation, just some honesty about the hard times - keeping in mind that "success is the last step of failure".

Maybe I'm not the only one who would like to know the answers to the following.

Me:

Great thread. It takes guts to come forward to admit and share your mistakes. Not everyone will do this. I'm not scared to admit mine.

I'm hoping to hear some more stories. Actually there are some great interviews on SS where investors share their mistakes too. Sometimes its good to see what others have made mistakes on so you dont make the same mistakes but sometimes it doesnt always work like that in that you have to make the mistake in practice yourself for you to appreciate it and learn from it.

 

[battle on]

We could go from Paul Kelly to Queen on that note..

I've paid my dues
Time after time
I've done my sentence
But committed no crime
And bad mistakes
I've made a few
I've had my share of sand
Kicked in my face
But I've come through

 

[Singo]

1/ What did you buy or not buy?
Our offer of 250k was accepted for a R20/30 corner block in June 2012 just 5 months from buying our PPOR. The first bank said NO to our application. We almost booked an appointment at another bank but backed out of the deal.

2/ What were you thinking? What influenced your thoughts?
At that time, we had a sizable personal debt which was to be paid to our relatives. When the bank said you cannot service the debt, we panicked. We didn't even think of talking to a broker.

3/ What was the result of this mistake?
That property is worth at least 350k now. We lost 100k of equity gain. That is enough to buy at least another house in that area.

4/ How did you get through it? What strategies did you use / are you using?
No saving history was the reason given by the bank. So instead of paying our debts each month, we started to pay off the loan. (another mistake and a reason why we had to sell that PPOR once it became an IP) Then refinanced and accessed more equity. Using that savings and equity we paid off our personal debt in November 2012. Then continued to save and bought our 1st IP in March 2013.

5/ What would you do differently?
We would use a broker, buy that property, do a small renovation and refinance to pay off the personal debt earlier!

6/ What have you learned? What wisdom can you impart?
We were novice at that time. By reading property magazines we thought we know all. But we lacked the experience. Knowledge is not enough. One has to go out and do things to learn!

 

[Angel]

Alex, Love, in those years you have lost weight and become healthier. That is always a major achievement. You are a champion

 

[Alex P Keaton]

Alex, Love, in those years you have lost weight and become healthier. That is always a major achievement. You are a champion

Thanks, yes, I am very proud of myself, I achieved a lot. I got my life back!

I plan to use some of the profit from the sale of my ip to do a cert 3 in fitness with the goal of becoming a casual personal trainer. I'll pick up a couple of shifts a week. I want to inspire others to lose weight and get fit!

I'm looking to enrol in the September intake. I'll have bought my ip by then. Waiting for loan documents to be processed at present.

 

[Robbo2621]

1/ What did you buy or not buy?
Bought my first ip in Gladstone through a BA in 2010. Overpaid and had nothing but dramas with it since, maintenance issues coming in every week or so, some major ones lately that are costing me a lot of money but these things happen I guess, had a little bit of growth early on which I released to buy ip no.2.
2/ What were you thinking? What influenced your thoughts?
Young, dumb, read a magazine that said this place was about to boom, so i bought. Did no research, thought it was a good idea at the time.
3/ What was the result of this mistake?
Negative equity, ongoing issues. Couldn't sell if I wanted to couldn't take that big of a hit. Would be in the red by about 80k.
4/ How did you get through it? What strategies did you use / are you using?
Something I'm still going through at the moment, just have to break things down and take each thing as it comes, but the good thing that has came out of it is that second ip I brought, which has gone up in value around 55-60k in the last 18 months or so. And has good positive cash flow Which is holding my little portfolio up
5/ What would you do differently?
Knowing what I know now and after discovering this forum after the first purchase, I would never buy into a hot market, or somewhere that was "tipped" to boom. I'd much rather chase the sleepy hollow now that hasn't had much said about it.
And probably buy something not so old with less maintenance. Would go units and town houses these days, unless I was buying to renovate/develop and sell. Looking at doing this once I build up some funds.
6/ What have you learned? What wisdom can you impart?
Research is one of the most important things you can invest in. Take your time, don't rush in as others have said. Get a second set of eyes to go over what you've found, numbers, details. They may pick up something you've missed, take the criticism onboard. Break things down, if you get a massive maintenance list or whatever it may be, take a deep breath and sort through it, it's never as bad as the first time you read it, keep a cool head.
Most of all, have some fun with it, I haven't had the greatest run with it so far but I still enjoy property and the endless possibilities it has.
I 'WILL' tame the beast and make some money doing it

 

[Angel]

Hi Robbo. If all else fails in Gladstone, just think about the opportunity to have a nice holiday on Heron Island next time you go up there to check for yourself if the PM managed to sort the leaking tap or blown light bulb yet.

 

[Robbo2621]

I could tell you right now they wouldn't have it sorted Angel

 

[WattleIdo]

Hey everyone,

Thanks for all these great posts.

Vanillascent: hmmm ... cars.
You may have missed the cycle in Sydney and a few places in Melbourne but there are plenty of other places to get started. As Robbo says:

chase the sleepy hollow now that hasn't had much said about it.

Alex P Keaton - thanks for the links and info on the Perth flat. One bedders are so popular in Sydney these days ... interesting that they haven't taken off elsewhere yet.
You've made some profit with it though! And got to live with the olds again

Singo - you must've been very disciplined with all the repayments and saving that you did. Good on you!

Robbo2621 - yeah you've had a good lesson too!

Seems to be a few themes here:
1/ we need the yield as well as the CG
2/ it's amazing how frugal we can be when we have to be
3/ there's only one way to learn.


This is great:
Robbo

Take your time, don't rush in as others have said. Get a second set of eyes to go over what you've found, numbers, details. They may pick up something you've missed, take the criticism onboard. Break things down, if you get a massive maintenance list or whatever it may be, take a deep breath and sort through it, it's never as bad as the first time you read it, keep a cool head.

Singo

Knowledge is not enough. One has to go out and do things to learn!

Alex

Sometimes its good to see what others have made mistakes on so you dont make the same mistakes but sometimes it doesnt always work like that in that you have to make the mistake in practice yourself for you to appreciate it and learn from it.

Keep it coming! (The property gurus/journos are loving it!)

 

[Deltaberry]

My biggest mistake is relying on the wrong JV partners who just aren't aggressive enough, have no vision, resulting in me missing at least two good opportunities.

Choosing the right partner is very important in any business.

 

[Bantam Roosta]

3/ there's only one way to learn.

2 if you include learning from other peoples' mistakes, which we are not exactly good at, but threads like this can help if we pay attention and take on board the information provided.

I haven't made any 'mistakes' as such, but I do know that I am a fairly risk averse investor which has resulted in many opportunities passing me by. Sometimes I rue these missed opportunities, but I also understand that I am who I am and I accept the results that occur because of this. There is no point trying to act like someone you aren't and then continually stressing about the situation you are in.

BR

 

[Deltaberry]

My biggest mistake is relying on the wrong JV partners who just aren't aggressive enough, have no vision, resulting in me missing at least two good opportunities.

Choosing the right partner is very important in any business.

Reading my post again makes me angry.

Never ever partner with people with no vision.

 

[MsAli]

Reading my post again makes me angry.

Never ever partner with people with no vision.

Could it be they are in a learning process and hence would as a result form a vision?

Or were they plain lazy?

 

[Deltaberry]

Could it be they are in a learning process and hence would as a result form a vision?

Or were they plain lazy?

Probably a combination of both.

They were incredibly green, but also were not very committed to understanding a market. Wanted to pick things up for prices 10 years.