John Burley

Discussion in 'Original Property Investor Forum Archive' started by WebBoard, 17th May, 2002.

  1. WebBoard

    WebBoard Guest

    Scott G

    Reply: 2.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Scott G
    Date: 06 Dec 2000
    Time: 11:39:35

    I've noticed on a lot of these forums the use of margin calls when discussing managed funds or shares. If you gear yourself to the eyeballs on your margin loan, you get what you deserve (you don't have to gear all the way to your limit, if your portfolio drops by a certain percentage, you are forced to make up the difference in the shortcoming). Similarly, if your portfolio was loaded with tech stocks (or biotech for that matter), you've also got what's coming to you.

    Please don't use this as an excuse to talk down securities as an investment form. IMHO, you've got to achieve balance, which is a mixture of property and shares/managed funds. If you structure your investment correctly (i.e. a mix of blue chips from different sectors), it will perform well, and diversify your risk.

    Regards to all, and thanks again for sharing your collective wisdom.
     
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  2. WebBoard

    WebBoard Guest

    Darren

    Reply: 2.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Darren
    Date: 05 Dec 2000
    Time: 22:22:09

    The difference between the two is simple. With Jan Somers strategies you can retire with a certain amount of properties to fund your retirement, but you must work in a job to fund the negative geared properties until retirement, or until the properties become cash positive, at some stage in the future. John Burley is the opposite, by wrapping properties that provide positive cashflow TODAY, you can live off the passive income now and aren't reliant on a job to fund the net losses each month, on a negatively geared property. My explanation is very basic and hopefully it makes sense. Regards
     
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  3. WebBoard

    WebBoard Guest

    Scott G

    Reply: 2.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Scott G
    Date: 05 Dec 2000
    Time: 20:55:19

    Gareth,

    You're not the only one confused. There are two schools of thought out there, and I'm not really sure if there is one correct answer. There appears to be one thing for sure - you can only negatively gear a certain amount of properties (from what I understand, and someone please correct me if I'm wrong) until you hit a point where you are totally geared (well that's one point of view I read).

    Positively geared props seem to be the opposite, where you can keep buying because you're making a profit on the property, instead of funding a loss (remember, to negatively gear, you've got to make a loss, however small or large to make it work with the ATO).

    People I've read like Steve McKnight (who posts here regularly) chant this like a mantra - Never, Ever Buy Negatively Geared property, whereas Jan's book sings it's praises.

    Sorry I can't give you a straight answer, as I'm still on the long, long road of education myself.

    Regards, Scott
     
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  4. WebBoard

    WebBoard Guest

    Gary

    Reply: 2.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Gary
    Date: 05 Dec 2000
    Time: 22:13:43

    There is a range of properties out there - from those with high income with little capital growth (positive geared) at one end to those at the other end with high CG and low income (negative geared). And those in the middle with some of each. You should work out a strategy of what is important to you. If you concentrate on positive geared, then you may find yourself in the position of having the cashflow to service new property loans, but not having enough equity to borrow. Or if you concentrate on negative geared, then you may have enough equity, but not the cashflow. There is no simple answer, and I think that simple slogans like 'never ever negative gear' are about as meaningful as political slogans at election time.

    The really good investors are those that can find - or more likely manufacture - high income and high growth as well.

    Gary
     
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  5. WebBoard

    WebBoard Guest

    Owen

    Reply: 2.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Owen
    Date: 06 Dec 2000
    Time: 11:10:49

    With you on this one Gary. Each IP has it's own story to tell and it depends not only on what the property has to offer but what your requirements are at the time of purchase. There should be room for both in any balanced portfolio.

    A couple of my own thoughts though. The simple thought how many IP's costing $50pw can you afford compared to earning $50pw is a powerful one in my mind. It turned me around regarding negative gearing but I still believe it has a short term place if you are still in a job. Bear in mind that most negative gearing gurus made their money in a huge growth market for property. You could afford to pay for the loss because the capital gain was so strong you could refinance in a few years and pay off the over-debt. It's not like that now and I believe won't be again for a few years to come.

    Many have also said that the rules will never change too but if negative gearing is ever removed by the government (like they did in the US in 1986) there are going to be some very broke people out there. Passive income will always be passive income. If you don't have to work for it then changes to the "system" will have little effect on your life. If the market booms then you get the growth too. If the market drops then you income should still be fairly safe.

    Just my opinion.
     
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  6. WebBoard

    WebBoard Guest

    NIF

    Reply: 2.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: NIF
    Date: 06 Dec 2000
    Time: 12:35:10

    I would agree with the previous comments & add that in my opinion Jan Somers strategy is directed more towards people that are employees looking for a low risk way to fund their retirement without putting too much time into researching real estate i.e. buy another IP every few years. In contrast John Burley's strategies are more for full time real estate traders & investors, or for those looking to retire from paid employment ASAP & who are prepared to put more time into real estate wealth creation.
     
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  7. WebBoard

    WebBoard Guest

    Owen

    Reply: 2.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Owen
    Date: 06 Dec 2000
    Time: 14:56:23

    Yes good point. It depends on your goals with your investments. Comfy retirement after working for 40 years or being wealthy and financially independent?

    Some people have complained that a guru says "I have to treat investment like a full time job". My answer to that is to ask "How much are you earning now?" and "how long is going to last if you lose your job?". I know where I'm spending my time and energy. Short term hardship for long term gratification beats working for the man for 40 years every time!!!
     
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  8. WebBoard

    WebBoard Guest

    Sim

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Sim'
    Date: 07 Dec 2000
    Time: 09:01:59

    I agree with both NIF and Owen...

    I have personally noticed two main differences between the "negative" and the "positive" gearers...

    For example, Jan Somers states that she spends very little time choosing property and lots of time choosing finance (because you need to be careful and creative when negatively geared).

    On the other hand, people such as Steve McKnight tend to promote spending much more time choosing the right property for positive cash flow and then let the finance take care of itself to a large degree.

    Sim'
     
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  9. WebBoard

    WebBoard Guest

    Gary

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Gary
    Date: 07 Dec 2000
    Time: 10:12:32

    For me its about the amount of work you want to do and how important money is to you. Sure the Burley approach will make more money quicker than the Somers one, but you need to do a lot more work. It's like the difference between share traders and those who put their money into managed funds. The traders sit in front of their screens all day buying and selling, while the fund investors play golf, go to the beach, etc. The traders make more money, but who has the better lifestyle? Is the effort and time required to implement Burley type techniques worth the extra money? Are you just getting yourself another job, that job being a a real estate buyer, seller, financier, manager instead of your present one, say a teacher, with some easily looked after investments?

    Gary
     
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  10. WebBoard

    WebBoard Guest

    Tony B

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Tony B
    Date: 07 Dec 2000
    Time: 17:04:41

    Just my 2c worth! It sure as hell beats working for someone for one-third of what your really worth, hands down! Many active students of JB here in Oz, US or NZ will tell you that. You have to work at it, I give you that but, it does provide you with the opportunity of choice and I think thats all we are all really after isn't it? See you on the beaches! Tony
     
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  11. WebBoard

    WebBoard Guest

    Scott G

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Scott G
    Date: 07 Dec 2000
    Time: 10:22:26

    You are so right Gary. I want to enjoy the journey as well as the final destination. I don't want to drive myself into the ground and regret that I couldn't walk the great wall of china, or skydive, or bungy jump because, when I'm retired, my body (or spirit) won't hold up to it. You've got to achieve balance between now and then.

    Retiring early is important, but so is taking time out to smell the roses and enjoy the journey there.

    Just my .02 cents worth
     
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  12. WebBoard

    WebBoard Guest

    The Wife

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: The Wife
    Date: 07 Dec 2000
    Time: 11:29:39

    heres my 2 cents

    come on guys, its about thinking OUTSIDE the square, getting a little creative.

    IF you bought a house that was giving you a passive income of $5 per week, how many of those houses would you need to say, OK, i can chuck in my day job?

    Doesnt mean dont go buy positive houses, means get creative. You know what, sometimes those things that swirl around in your heads about ideas for making money , really should be acted upon.

    And yes, its a full time job, thats why not everyone does it. And yes, smell the roses along the way, but if you are willing to put yourself into a position where creativity is allowed into your life, then the journey becomes one HELL of a ride, YEEEHAAAAA!! You will see and meet more interesting people and places you could ever have hoped for playing it the ultra safe way.

    Im not advocating UNsafe, heck no, i got 5 and 3 year old at home, but nothing goes by me without me picking it up , shaking it, rolling it over and checking out every posibility, in the hope that it just might propel me further along.

    If its not illegal, its never a no. Its always a give us a look at that!
     
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  13. WebBoard

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    Dugald

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Dugald
    Date: 07 Dec 2000
    Time: 15:36:26

    Your worth .04 cents now The Wife!!! I'm with you.
     
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  14. WebBoard

    WebBoard Guest

    Sim

    Reply: 2.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
    From: Mike .


    Re: Opinions on John Burley
    From: Sim'
    Date: 07 Dec 2000
    Time: 15:35:59

    I agree about the creativity side of things...

    Most of the things I've read about successful investing deal with creativity.

    Too many people need a simple "solution"... a step by step process for creating wealth.

    Those who aren't creative, but are willing to follow a simple formula (such as Paul Clitheroe's "get rich slowly") will succeed if they start early enough and stick to the plan.

    Those who have a decent stable income and are willing to be creative with financing and managing debt can succeed using Jan Somer's formula.

    Those who aren't creative, but get greedy and want instant wealth typically get caught in the stock trading trap (losing lots of money because they don't understand the market) or get ripped off by marketing companies selling high-rise (and overpriced) units on the Gold Coast on the promise of fantastic capital gains (potentially losing lots of money because they don't understand property investing).

    Those who are creative with renovations and improvements can be successful with a formula of buy-fix-sell_at_profit.

    I read Steve McKnight's newsletters where people ask him "... but how do I do this ? How do I do that ? I need a formula... ". His response is to be creative... understand the concepts, but there is no one detailed formula that works in every situation... every property and every potential purchaser/tenant/lessee is different... to maximise your investment return, you need to be creative and invent win-win situations for everyone.

    If you aren't willing to get creative, then I think you need to find a financial planner and invest in managed funds.

    That being said... don't despair !! I firmly believe that creativity can be learned. You just need to work at it a bit (find some good books... for example try Edward de Bono's books on lateral thinking).

    Just my thoughts !

    Sim'
     
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