Moving too quick?

[JessP]

Is there such a thing?

I've been into property in a big way for a long time but have spent the past 10ish years raising babies and building a business.

We are finally at the point where the banks will look at us and I have hit the ground running. I'm just wondering if it could all end in tears. I have spent the past 10 years learning stuff too, it's just a little different actually doing it and I'm worried I'm lacking focus.

So far we have turned our PPOR into an IP - CF+, bought a townhouse in Sydney's west - needs a spruce up then should be close to CF+, we are looking at a reno project in Parramatta which we want to reno and sell for a quick lump sum. And have just been approached by two different people who want to do a vendor finance type deal with us (rent to own in Hebersham and Blacktown). We are also looking at buying a place to live in while we are here.

We have a financial partner back home who is basically willing to do whatever I tell them to

Should I slow down? Why? Anyone else jump in this quick?

ETA: During the 10ish years we have built houses, done reno's etc so not a COMPLETE newb

 

[Peter_Tersteeg]

If you've got the cashflow, time and funds or equity to keep up a healthy pace, why not? If you're comfortable with it, there's no reason you shouldn't go for it!

 

[nhg]

I'd be curious to hear about this too. I'm in a position where I could possibly triple my portfolio from 1M to 3M in 2 years, I just don't know if I should move so quick. Especially since I only bought my first place a little over 1 year ago.

simply my first cycle, don't know 100% what to expect, even with (recently) good support.

 

[Rolf Latham]

the elastic Band theory ...........

ta
rolf

 

[Blacky]

the elastic Band theory ...........

ta
rolf

Whats the elastic band theory?

 

[Blacky]

I'm worried I'm lacking focus.

I think this surmises the issue. Its not about how much you are buying/investing, or how fast you are moving. It just sounds to me that you are doing it without a strategy or plan.

What are you doing all this for? Where is your end point? Whats the goal.
I think if you draw up your goals, and develop a long term strategy the decisions you make will be based on that - rather than just being 'ad hoc' purchases 'which seem like a good idea at the time'.

Do this and the speed at which you move will be regulated, planned and organised. You will know your next move.

Blacky

 

[Ace in the Hole]

If the biz you've built up is bringing in the cash, I'd say go for it.
Depends on your riks profile too.

We have a very similar story.
I've been on this forum over 10 years, building a business like you, didn't raise babies, but have 1 young child.
Up until a few years ago, we only had our PPOR which we bought in 2003 for 470k.
Gone hard and aggressive just the past few years and will be holding +10 mil in property by the end of this year, will probably take a breather at then end of this year and consolidate a bit.

You seem to have earnt some experience in the past 10 years.
If you have the cashflow to of financial assistance to back yourself, there's no need to slow down.
The more you do, the more you can do.
If you've managed to build a decent business, property will be easy for you.

Don't know what this rubber band thing is that Rolf talks about...
Maybe he means if you go hard enough, you can snap out of it and break free from restraint...

 

[Rolf Latham]

Whats the elastic band theory?

I have seen it a lot

People hold back from doing "stuff" for years and sometimes decades because.........

• Family tell them its risky, stick with your job and pay extra into Super
  
• Friends tell them , gee that could cost you a bunch if you make the wrong selection, best to just stay where we all are
  
• Their conscience says, what if these advisors, brokers and planners are just like the ACAs of the world say.........Im likely to get "ripped off"

But for many, there is a counter to this "noise", and often its in the mid 40s, where folks have a wake up call that its now or never.

At this stage, the elastic is sooo tightly strung that it needs to let go of the potential energy RIGHT NOW or it will snap, and we are stuck on the OAP for while its available.

Action is good yes, but mainly where its considered action and not in response to pent up demand.

yes I have clients that have gone from nothing to 5 mill portfolio in 2 years, but for many, such rushed REACTIVE action may result in impoverished results

ta
rolf

 

[OKFFW]

Going hard and fast can be a good thing. My wife and I have gone from 0 property besides our PPoR to 6 properties in about 8 months. We are now on a forced break because we have used up our available equity for now!

Before we started buying though we sat down and nutted out a strategy we are happy with and will work for us.

So I think Blacky's advice of setting a strategy is great advice.

Sounds like Rolf has hit the nail on the head too in that you obviously have a lot of pent up energy that could be a great thing to harness if focused right. It's important to set up a strategy so the momentum can be channelled and built upon.

Right now it seems you are doing whatever comes along without much structured thought as to why you are doing that particular thing.

Good luck.

 

[JessP]

Awesome responses everyone thank you!

All of it rings very true, this strategy thing has me a bit stumped. Our goal is to be free of having to work within 5 years, our business is a very physical one and hubby has an issue with his back which essentially means he has a shelf life

I want our ppor in vic paid off and have worked out that if we could own (zero debt) 7 other properties rented out at around $350pw that would set us and our 4 kids up for life. So based on that, my thoughts were to get lump sums through renos which we can integrate into the business and so get our crews of guys onto when they have a spare day or just want o/t. I just can't quite see how that will get us to our goal very quickly unless we prove awesome at it and do a few a year (not out of the question but not very passive either).

Other option is to try to build a CF+ portfolio but this carries huge debt which seems out of sync with the end goal. I've got a pretty high tolerance for risk though and would like o get into some small scale developments once I have the capital to carry it. Especially back in vic where I have a great team already in place.

I guess I just have to figure out a combo of all of the above?

 

[JessP]

Just looked into doing a MAP session with one of Nathan's partners. Can't get into one for 4(!) weeks. By then I will have bought 4 more properties lol. Maybe I should slow down a little....it's like an addiction.

 

[Deltaberry]

Yes I have seen many people get too big too fast.

A recent example is a 29 year old I know who's bought $100m worth of land in the past 18 months. Suddenly the pipeline dried up and there's money to develop any of them, and the investors who put money in are not happy as the properties are development sites, not yield plays.

Another example is a few people I know who also went too big too fast, got crunched during credit crunch, and ended up having both their prime sites being gobbled up by the 29 year old (who was 28 at the time), and another site by the moguls of Australian property.

And then lastly there's the guys who made good $$ on a 33 storey tower in Melbourne. Now they want to build 100 stories and have gotten aprovals. As they paid a lot for the site this time, they suddenly realise they need to sell apartments at $9800/sqm to make money.

Then of course there's Eddy Groves and Becton too.

Going hard is good, but there should be contingency planning. Most recently we were looking at buying a site that could build mayb 30-40 stories. The thought process was, even if I didn't build it, it felt like a decent entry price and I don't mind holding the site. If your plan is contingent on one particular outcome, you could get in to a lot of trouble if that outcome doesn't eventuate.

The biggest strength in property is buffer and existing financial prowess. Eg if all your properties stopped paying rent, how much can you support it? If you'll struggle either because all your properties burnt down or because you're out of a job, you're probably stretching. But that's coming from someone rather conservative.

 

[DaveM]

Just looked into doing a MAP session with one of Nathan's partners. Can't get into one for 4(!) weeks. By then I will have bought 4 more properties lol. Maybe I should slow down a little....it's like an addiction.

Will your bank actually let you buy a house a week with all the credit file hits? You may find that after a couple, credit depts want some repayment history before they will lend again.

 

[kum yin lau]

Hi, it really depends where you are financially. If your income supports the purchases, then it's not fast at all.

That's the reason for going to mainstream lenders. If they approve your loans, then you may be in a stronger position than you realise.

I'm one of those who went into property buying in a rather big mouthful.

Now I realise I could have bought double of that.

I love loans. Every time I apply for one, I get a free audit!

KY

 

[JessP]

I have the option of taking on a financial partner which will allow greater lending. But may/will hit a wall sooner or later

Doing heaps of work on developing a strategy. Also think I have to go for it to a certain extent, everyone I talk to has a different opinion! I can see how it is easy for it all to become too hard.

I'm going to move on the parra Reno and the vendor finance deal in hebersham. Then take a breather for a month or so and probably get a place to live in here.

 

[china]

The biggest strength in property is buffer and existing financial prowess. Eg if all your properties stopped paying rent, how much can you support it? If you'll struggle either because all your properties burnt down or because you're out of a job, you're probably stretching. But that's coming from someone rather conservative.

Can many property investors survive a scenario wherein all properties burnt down and rent stopped and you lost your job? Even assuming that you had all your insurances up to date, I think that this scenario would end many investing journeys?

 

[Rolf Latham]

Can many property investors survive a scenario wherein all properties burnt down and rent stopped and you lost your job? Even assuming that you had all your insurances up to date, I think that this scenario would end many investing journeys?

OMG................catastrophe management required here

ta
rolf

 

[DaveM]

Can many property investors survive a scenario wherein all properties burnt down and rent stopped and you lost your job? Even assuming that you had all your insurances up to date, I think that this scenario would end many investing journeys?

Investor building insurance covers loss of rent for 52 weeks while repair or rebuild is completed. My IP's are geographically diverse and pay for themselves net and losing my job would not impact holding.

The chances of all IP's burning down simultaneously as well as losing my job... well thats End of Days stuff and if hell hounds or zombies are prowling the earth, the last thing on my mind will be mortgage payments or fixing a broken tap at an IP

 

[SRB]

Can many property investors survive a scenario wherein all properties burnt down and rent stopped and you lost your job? Even assuming that you had all your insurances up to date, I think that this scenario would end many investing journeys?

I think this scenario would certainly mean a visit from the Arson and Fraud Squad ....

 

[lizzie]

The strategy process is exactly what you need to do.

We were in similar situation around 10 years ago - good paying job - lots of equity - approaching boom - made some very good money on the first few properties so went for it.

Ended in tears. We (I) had no strategy, or goal set, detailing where we were to end up - ie - how many fully paid properties bringing in how much income.

Dabbled in reno's and flip, subdivisions, vendor finance, knock down and rebuilds ... anything that took my fancy at the time.

We ended up over extending as the bank just kept saying "yes" and then the market crashed. Had to sell almost everything to keep afloat and lost quite a few thousands due to the very last big purchase that lost value quicker than we could sell it.

I look back and think that if we'd just bought good, basic, stock standard and boring properties, with solid income, we could be fully retired by now.

Actually - despite this hiccup, property has still been kind to us ... just could have been a lot kinder if we'd thought it through ...