Maxed Out

[mbl]

And here is an example of the reckless pieces of advice I have seen on the forum :

Buying To Live In Or Buying To Rent Out
From: Elsie
Date: 9/14/99
Time: 12:27:24 PM

My husband and I live in Auckland and we have a deposit for a house now, but we want to stay in the area we are renting in now (which is expensive to buy).

Also we don't particularly want to buy at the moment, we want to buy several houses over the next few years and rent them out and increase our equity this way.

We also have a cash flow of $1,000, when I mentioned my plans to my accountant he was against us not buying our own home first but didn't really give me a satisfactory reason why he did not think I should do it my way. Do you think it is a bad idea?

and the reply :

Re: Buying To Live In Or Buying To Rent Out
From: Les
Date: 9/19/99
Time: 11:34:11 AM

G'day Elsie, Sounds to me like you need to buy your accountant a book (one of Jan's - any one!!) - or find another accountant. With the cashflow you already have, and extra rent coming in, And Tax benefits for "losses" (if they apply in New Zealand), AND staying where you like to be, I can't see you losing if you go your way.

I have only recently paid out my own home, and immediately borrowed against it again for my first two investment properties - but if I had my life over, I would have done EXACTLY what you want to do - viz. buy rental FIRST, live where I want, and have the Taxman and the tenant ON MY SIDE right from the start.

Go for it - and good luck Les (a Kiwi in Brisbane)

Noted that the above is an old post.......however, how on earth can someone sit here and give this sort of advice so easily.......

Would you obtain medical advice from a stranger on a forum as well ?

Anyway....this is the reason why I am here......blatant advice that has been a 'given' these passed few years, will NOT be so in the coming years. And I have stated numerous times the reasons why.

I am here to try and 'protect' people like Elsie above.

 

[BV]

I am here to try and 'protect' people like Elsie above.

I wouldn't be surprised if Elsie is now a multi IP millionaire....
Cheers

 

[mrsdawnrazor]

So MBL

You say many on here are not qualified to give advice. I would disagree. We have professional investors here who have learnt through doing, have a proven strategy to grow wealth and have a considered position for if the market weakens.
If a new investor takes their advice along with a multitude of other advice that is available and chooses property as their wealth strategy, I think they would be using a tried and tested strategy with proven results. One would also assume that since they are on a property forum some initial research has been done into the pros and cons of property investing and the use of this forum is a continuing part of that.

On the other hand what are your qualifications to give advice not to invest in property? Have you generously shared your experiences such as many long termers on this forum have? Have you offered a well through out and structured investment plan based on your view that cash is king, can you and some other Australian based investors show us the wisdom of your plan. Where is your forum with thousands of members that talks through the pros and cons of your strategy.

I think your posts are interesting if misguided however I do not think you have the position as the 'moral arbiter' of this forum, protecting the unwary and the inexperienced. In this life personal responsibility is the final arbiter and it is every ones personal choice as to what they do.

Mrs DR

 

[kathryn d]

Les didn't give advice. He only said he would have done exactly what Elsie wants to do.
I have found that most people don't really give advice. They share how they might handle a situation.Everyone has a difference risk tolerance.I find as we become more experienced we are willing to think outside the box or expand our mind.
Property investing isn't for everyone.I'm glad it isn't.As others have said, it is one of the easier or attainable ways an ordinary person can make a lot of money.
You cannot "save" your way to wealth.Many who are investors also have the delayed gratification mindset.Someone posted earlier that it was the hunt of the bargain that many enjoy when being thrifty.
A dollar you save is worth about two dollars earned.

mbl likes to ruffle feathers.That's OK. However a little can go a long way.
I would assume that mbl is a "wannabe".All he has to do is open his mind to some great infomation.What he decides to do with it......

 

[JoannaK]

Hi MBL,

Let's get 2 things straight here, so that you, and everyone else, can have an enjoyable experience being a member here.

YOU HAVE NO ROLE ON THIS FORUM! No one has a role on this forum other than the owners. Everyone here is a member, and that's all. THERE ARE NO ROLES!

Who the hell do you think you are to be the saviour of all and sundry? No one here needs protection MBL. You've heard the term CAVEAT EMPTOR I presume....buyer beware.

We here, are simply a group of people, a nice little community, who discuss property. We have no problems with alternative points of views (just in case you thought you'd use that as an excuse for your "role").

No one gives advice, only opinions, and everyone is encouraged so seek their own independant legal and accounting advice.

Now, I've been incredibly patient with you...but your 2 posts above have really really annoyed the hell out me.

GET OFF YOUR HIGH HORSE, OR RIDE ON RIGHT OUT OF TOWN!

 

[Lucyinthesky]

MBL, as you are giving the other side of the story, can you please provide some scenarios of somebody's buying investment properties sensibly then coming acropper due to the problems you are highlighting? I am not asking for links to newspaper articles or press releases, I am asking of people you personally know of who this has happened to and what happened to them. Thank you.

 

[alexlee]

See, I don't mind when some people tell me resi prop is not good if they have a genuine alternative (shares, derivatives, whatever). I know that people have different personalities and some people are more 'suited' to certain asset types (traders, say, would find resi property relatively boring). For example my personality doesn't suit share trading, but at least I acknowledge that SOME people will succeed in it.

When someone who does not appear to own property and simply dwells on negative experiences, and doesn't provide any alternative except for cash... that's a different story. Members on this forum have proven that you can survive and prosper from recessions / crashes (including, of course, the Sainted Lady Somersoft). So success IS possible. Will it happen for everyone? Not necessarily. Some people DO get fried during recessions, but not everyone will. However, I KNOW going 100% cash is not going to make you rich.

As many would know, I'm one of those who currently has a negative view of the market, but I also believe in the fundamentals over the long term. In short, when the recession I'm predicting comes, I'll be buying, and I'm certainly not so negative (or sure of my prediction) that I'm going fully long on cash.

As always when listening to someone else's opinion, ask this: is this person experienced in what they're saying? Why should I believe this person? Have they walked the walk? If someone doesn't own property and their only experience is a negative one from years ago, how much weight should you give that opinion?

Incidentally, the ignore button really makes threads a lot clearer!
Alex

 

[bort]

And here is an example of the reckless pieces of advice I have seen on the forum :

Quote:
Buying To Live In Or Buying To Rent Out
From: Elsie
Date: 9/14/99
Time: 12:27:24 PM

My husband and I live in Auckland and we have a deposit for a house now, but we want to stay in the area we are renting in now (which is expensive to buy).

Also we don't particularly want to buy at the moment, we want to buy several houses over the next few years and rent them out and increase our equity this way.

We also have a cash flow of $1,000, when I mentioned my plans to my accountant he was against us not buying our own home first but didn't really give me a satisfactory reason why he did not think I should do it my way. Do you think it is a bad idea?

and the reply :


Quote:
Re: Buying To Live In Or Buying To Rent Out
From: Les
Date: 9/19/99
Time: 11:34:11 AM

G'day Elsie, Sounds to me like you need to buy your accountant a book (one of Jan's - any one!!) - or find another accountant. With the cashflow you already have, and extra rent coming in, And Tax benefits for "losses" (if they apply in New Zealand), AND staying where you like to be, I can't see you losing if you go your way.

I have only recently paid out my own home, and immediately borrowed against it again for my first two investment properties - but if I had my life over, I would have done EXACTLY what you want to do - viz. buy rental FIRST, live where I want, and have the Taxman and the tenant ON MY SIDE right from the start.

Go for it - and good luck Les (a Kiwi in Brisbane)

Noted that the above is an old post.......however, how on earth can someone sit here and give this sort of advice so easily.......

Would you obtain medical advice from a stranger on a forum as well ?

Anyway....this is the reason why I am here......blatant advice that has been a 'given' these passed few years, will NOT be so in the coming years. And I have stated numerous times the reasons why.

I am here to try and 'protect' people like Elsie above.

Umm, in the situation above, it sounded like Elsie wanted to buy an IP first whereas the accountant was advising her to buy her PPOR first.

i'd say people would still generally give the exact same advice now - if the person didnt want all the 'other benefits' of owning a house - being able to put nails wherever they want etc, and were happy with where they were renting, aren't people financially better off by renting their own home and buying an IP? (i'm sure this is covered in a lot of other threads)

either way Elsie was buying property, so either way she was taking a risk of her property going down in value - just in the situation suggested by Les, she would be getting tax benefits to assist in paying off the property more quickly ... (and potentially a capital loss for tax purposes to use later if it was an IP that did quickly devalue)

i'm not sure how mbl would have been providing any 'protection'? but i am interested to know how.

 

[BV]

Alex,
Why do you think a recession is coming?
How will it start?
Cheers
Bill

 

[handyandy]

I would assume that mbl is a "wannabe".All he has to do is open his mind to some great infomation.What he decides to do with it......

I don't even think he is up to a 'wannabe' but rather a 'couldntbe' as he hasn't the risk tolerance of a jellyfish.

From everything that I have read you are super conservative and simply are jumping on the 'heading for recession/depression' bandwagon. This bandwagon appeals to you because that is your 'investing' style. So having come into your own (so you think) you are now the great evangelist and everybody must follow in you footsteps.

Basically I don't think that you have added anything to this forum, as using only your style between '98 and '02 and out to '06 in WA you would have failed to capitalize on ideal RE opportunities. (which no doubt you have, hence your rather bitter and twisted attitude)

Investing is all about flexibility adjusting your style to suit the investment environment. There are times to take calculated risks and there are times when you sit and wait.

You now drag up some posts from back in '99 to proof your case (what case) when in fact that was the idea time to make money in RE and absolutely irrefutably proofs the opposite of the point you are making.

You are a joke and need to find a forum that shares your views.

 

[keithj]

Why do you think a recession is coming?
How will it start?

Hi Bill,

I think that every knows for certain that a recession is coming - it's all part of the cycle. However, absolutely no-one knows when - I'm sure Alex will agree with me .

I don't think it will be one specific thing - it'll be a chain of events that gradually erode confidence (market & public). Again, I think no-one can know what will be the final straw that breaks the camels back.

The investors who persist in climbing the wall of worry will benefit the most - provided they protect the downside.

Trying to predict the when & what of this type of thing is impossible because of all the chaos & emotion in the world. I believe that provided you're prepared for likely bad scenarios you will benefit more than trying to predict them.

Cheers Keith

 

[alexlee]

Alex,
Why do you think a recession is coming?
How will it start?
Cheers
Bill

As Keith said, I don't know when the recession will start. I can only look at the economic environment and suggest that a recession is more likely than not at this point. Amongst other things, slowing US housing, rising interest rates, high (and more reckless) lending and borrowing (private equity), etc. I also think Chinese weaknesses are being ignored, much like Japanese weaknesses were in the late 80s. Everyone seems to think Chinese consumption of resources for building production capacity and infrastructure, which is in turn dependent on US consumer spending, will continue.

However, I also believe recessions are part of the cycle, and after we shake out the hangover from the last boom, there will be a new one. I'm usually early with my predictions so if it happens I'll end up buying a bit too early. But I'd rather be too early to stop buying and too early to buy as opposed to the opposite.
Alex

 

[NigelW]

only loser's blame luck for their successes, and blame everybody else for their failures. Winner's take full credit for their successes and full responsibility for their failures.

That's got to be one of the most profound quotes I've heard for a long time!

I think the flip side to that is that people have a responsibility to become financially educated so that they understand risk and, should they so choose, can take risks.

The recent spate of finance company collapses taking lots of retiree's money with them is a sad example of failing to understand risk and return.

BUT I don't want to derail this troll bashing flame war (albeit justified) just wanted to point out some of the wisdom being dispensed amongst the flames

 

[BV]

Keith & Alex,

Thanks, I am thinking along these lines too.

I have the feeling that it will all start with the US stockmarkets collapsing.
I am suspecting that the continued US$ fall could be another trigger
and I don't know if the US reserve bank can do anything to stop it.

It will be interesting to see how a US recession could impact
on the Chineese imports and how that in turn could affect our exports
and our economy.

I am very curious as to what the Chineese will do in such an event
and if they will continue to support the US$ dollar.

Cheers.

 

[Mr. Fabulous]

You deleted my post? You have got to be be joking. The moderators on here really need to start being more consistent with which posts they choose to leave and which they choose to remove.

Mark

 

[tubs]

MBL reminds me of the Monty Python argument sketch. Remember the one where John Cleese just contradicts what the other person says?

Not sure why he's still around. His opinion seems to fly in the face of the other investors here who have applied proven principles over time with considerable success. The alternative viewpoint is welcome as long as its constructive, but if the basic premise is simply 'Dont invest in property' then I think we get it, and there's no need to continue ramming it down our throats. Its not an effective way of communicating a viewpoint, as it just annoys people and makes them instantly discount any further comments from the person.

Unfortunately, most of the threats MBL is posting in just degenerate, and I tend to ignore them now, whereas before I could learn something from them and contribute.

I hope he leaves before other members do.

 

[lizzie]

What exactly is this source of education ? Somersoft books ?

some books, some ss, some intense market research, some talking to those who have walked the walk, and a lot of "walking" myself.

i learn from my successes. i learn more from things that don't work out as planned.

a perfect example of learning - i had a house divided into two flats for sale and under offer. the purchasers were on their way to exchange the day of the newcastle floods but couldn't get thru. had waist deep water thru the property. insurance company tells a different answer every time i ring. purchasers wanted to convert the house back to a single dwelling so there is no point in insurance company putting in two new kitchens/bathrooms etc (replacement) only to have them pulled out again (waste of money).

so, the last two weeks i have been learning how to deal with inflexible insurance companies, desparate purchasers (they have sold their own house but we cannot exchange contracts until the insurance company gives their final assessment of the situation - financial and repair-wise) and keeping a sense of humor (or trying to).

but i have also learnt that, worse comes to worse, the purchase falls thru, i get the flats refitted out and the property is re-rented for $20-25/wk more each - and hence my bottom line improves. and even worse (or better) i still have the option of building two separate torrens title dwellings on the property, instead of 3 strata titles - just a bit of land banking for when the market improves.

this is the same property on which i learnt that council can change planning and zoning rules within 6 months without having to notify anyone (the time between contract exchange and getting my development plans in). i also learnt a lot about positioning of properties for development - this property is in a super-ideal location but we ran into some challenging (and potentially expensive) design factors because of the configuration of the block - challenges that i made sure wouldn't occur on the new development block we have just purchased.

... and so the list goes on. and the learning list is extensive for every property i have owned, as every property is different to the last and - having completed numerous subdivisions, wraps, renovations, rebuilds etc - i know each property has it's individual quirks - both good and challenging.

but i learn something important from every one of them. a day without learning is a day wasted.

 

[geoffw]

You deleted my post? You have got to be be joking. The moderators on here really need to start being more consistent with which posts they choose to leave and which they choose to remove.

Mark

I sought the advice of other mods before I responded.

It was felt that your post could cause offence to somebody with a religious belief, and as such, was not appropriate here.

 

[BoatBoy]

Mark

I sought the advice of other mods before I responded.

It was felt that your post could cause offence to somebody with a religious belief, and as such, was not appropriate here.

That may be fair enough, but to some, investing is as near to a religion as we get, yet other's post's [ no prizes for guessing who's] could be seen to be offensive to that religion as well, yet those post's and poster remain even after repeatedly pokeing a lot of us, mod's included, with a stick.

I do understand where you are coming from, but it should work both way's.

BB

 

[WillG]

Alex,
Why do you think a recession is coming?
How will it start?
Cheers
Bill

Good questions. I am no economist but here is a technical definition of a recession .
from http://en.wikipedia.org/wiki/Recession
A recession is traditionally defined in macroeconomics as a decline in a country's real Gross Domestic Product (GDP) for two or more successive quarters of a year (equivalently, two consecutive quarters of negative real economic growth)

from http://en.wikipedia.org/wiki/Gross_Domestic_Product
GDP = consumption + investment + (government spending) + (exports − imports)

From the following equation, one or more of the following (consumption, exports, government spending, investment) will have to fall before to cause a recession.

I guess a stockmarket crash/correction may have an impact on investment
Mining crash or reduction in demand from China/India may have an impact on exports
Rises in interest rates may lower consumption
Change of government may reduce 'government spending'

Any economists please correct my crazy assumptions (I am making this up as I go !)