Reality check folks

W

WebBoard

Guest
From: Eric Snow


I hate to burst everyone's bubble here, but it has to be said. Residential property is NOT a good investment. Far greater returns are to be found on the stock market. That's a fact. Deal with it.
 
Last edited by a moderator:
Reply: 1
From: Sue J


hmmm...thanks for that Eric. Are you speaking from personal experience?
Let us in on some of your reasons. All your post did for me was make me laugh. How many wealthy people you know only own shares???

I think diversification is the answer. There is room for both shares & property in anyones portfolio. You may be missing something if you become narrow minded & don't look outside the square.

Good luck to you & your shares...but don't knock property.

SJ
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3
From: Eric Snow


OB: Cute, very cute.

Sue: I'm glad to have amused you. Seeing as most of the posts in here make me laugh, it's good to return the favour. I almost got suckered into buying an IP once. It would have been the worst mistake of my life. I don't know any wealthy people, share owning or otherwise. I would like to keep it that way. I will stick with shares, they are proven growth assets.

Good luck with your property, you will need it.
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 2.1
From: Anonymous


Another share managed Fund Manager selling wares.

Or perhaps a ex hih director looking for a job.

Or Pacific Dunlop Managing Director that was off loaded. Sorry Retired by the major shareholders.

If you are going to post here at least come up with the goods.
 
Last edited by a moderator:
Reply: 3.1
From: Robert Forward


If you hate the property market what are you doing here??

And I'm sure you never thought that 300%pa+ is achievable in the property market. I personally know a number of people that have now retired from the rat race from property investing.

Now a question for you. What due diligence did you do when you were looking at your first IP. Why was it not a good deal? Maybe it wasn't but tell us why. Were you nearly burnt by a 2 tier marketing company, I can understand why you have a bad outlook on property if this was the case.

For everyone's interest, it would be greatfully appreciative if you could elaborate on why you think property isn't the go.

FYI: I know of people that have lost a fortune in the share market so it's not the be all and end all of investing either.

Looking forward to a constructive reply.

Cheers
Robert
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1
From: Robert Longmore


Interesting but sort of true, Shares have always out performed Property in the long run, but then it goes back to everyones comfort level.

I am in the middle of deciding if i should spend my saved IP deposit on starting another business. but as the saying goes, No risk = No return. wheresas i am willing to risk a reasonably large sum of money on starting a new company, others won't. my thinking at the moment is, if i buy an IP, returns will be approx 8 to 10% on a regular basis with Low risk, but if i spend the cash on a startup business then the risk is great, i could loose all of it, but the returns could be unbelievable if it works, and also the tax benefits are good as well. (if the business fails then the losses can be carried over to the next business)

But i guess the big difference is if i lose all of my capital in the business, it will not effect my lifestyle, sure it would hurt a bit and take a few years to get back to the same position, but i will still survive, keep a roof over my head and keep paying the bills.

I have made a reasonable amount of cash from shares, Investing in IPO's (floats) but only after a few years of reasearch and sticking to my rules when looking at investing in a company. Investing in shares also needs more work to maintain, and keep current with the ever changing shares landscape.
But i am also new to Property investing, and i am in the learn like hell stage.
 
Last edited by a moderator:

Sim

Administrator
Reply: 3.1.1.1
From: Sim' Hampel


Hi Robert Longmore,

You wrote:
"Shares have always out performed Property in the long run"

You stated that as a fact, where I would suggest that it is an opinion. Please don't confuse the two. If you feel this is a fact then please provide data to support this statement or a reference to literature which proves it and provides context to the statement.

If you consider a cross section of the Australian share market as measured by the All Ordinaries index and also consider the entire Australian residential property market measured as a whole (there is an index for this, but I don't remember what it's called), then my opinion is that you most likely will see that "Shares have outperformed property in the long run" in this context.

But unless you are investing in index funds and some sort of "joe-average residential property trust" (which I'm pretty darn sure doesn't exist !), you will NOT be able to make a comparison yourself in a similar context.

The people on this forum who have been ultra successful in property have NOT been buying joe-average houses at market rates and then holding them long term.

They are doing things like buying below market value, or doing renovations to quickly add capital value, or buying in high demand-high growth areas which they have picked deliberately, or mass-market "wrapping" for ultra high cash-on-cash returns, or developing property for resale.

These people are "creating" their wealth, by actively managing and manipulating their investments both before and after purchase. I don't think you can do this (legally) in the sharemarket.

If you are looking to create wealth, I personally believe that property is one of the most powerful and flexible ways to do so. However, it is not the only way, and indeed utilising a number of different vehicles such as share and business ownership can be a very potent mechanism for wealth creation.

In summary, my point is that blanket statements like yours do not provide any context and are therefore immaterial to any argument.

Please don't take this personally, you just happened to push one of my "big red buttons" with your comment ;-)

 
Last edited:
W

WebBoard

Guest
Reply: 3.1.1.1.1
From: Glenn M


Guys, how about we just move on from this. Eric obviously threw in his comments to see what type of response he would get.....you are all playing into his hands.
I mean, why would you jump on to a Property Forum and make the type of statements he did???


There will always be those people out there who are biased towards Shares just as there are those who are biased towards Property. This debate has been raging for years.


The majority of the BRW richest 200 made their money from Property or their own business/company.....as I said, let's move on from here.


Glenn.
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1.1.1.1
From: Robert Longmore


i was basing my comment on the ASX All ords index.
No offence taken :)
What i was trying to say is that there are many different ways to invest and do very well, but whatever vehicle you use, you still need to study hard and educate yourself to make it work sucesfully.

time to move on.
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1.1.1.1.1
From: Eric Snow


Robert Forward: You made some excellent points in your post, but I must take issue with your claim of 300% returns. It sounds like something you would hear at a Peter Spann seminar. "I bought an old run-down terrace for $78,000, painted the kitchen and bathroom and had it re-valued by the bank a week later for $126,000, thus creating $48,000 of equity out of thin air!" (Always an exclamation point.)

It's not hard to understand why people get conned by such nonsense. Greed overrides their reasoning. Also Robert, I noticed you used the term 'rat race' in your post. Please tell me you are not a Kiyosaki cultist.
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1.1.1.1.1.1
From: Dave :)


Eric,

I wasn't going to waste my time replying to you. However, you are so wrong that I felt I needed to.

Firstly, you say you don't know any rich people - through property investing or share investing. That'd be half your problem. You obviously associate with unsuccessful people who have no idea, and listen to advice from those who have no credibility. I read an interesting article once that said an individuals wealth, or income, is very close to the average wealth/income of the 10 people he/she associates with most. I'll leave it at that.

I bet you visited a financial planner at some stage recently? He/she did a great sell job on you. If he base your claim about residential property being a poor investment purely on the 9% average growth rate, no wonder you feel that way. I recently spent an hour at a financial planner who was trying to persuade me to buy into a share plan that's returned 32% over the last four years. That was impressive. However, I decided against it and he insisted I illustrate why I decided on property, using his whiteboard. Four weeks later, I helped him buy his FIRST IP.

300% ROI sounds too unrealistic? Are you sure? That's common place for many property investors. There are far more impressive cases than this. A close friend of mine bought an apartment in an inner city suburb last year using an $1100 deposit bond. 15 months later, he on-sold the apartment prior to settlement for $92,000 over the contract price. What was the ROI here? Try 8363.6%...without even visiting a Bunnings Store.

If you and your ill-informed friends even tried employing some of the aggressive strategies used by successful property investors, you may even know some wealthy people one day.

To your credit, you've returned to this forum to defend your point. I commend you for that. I hope you hang around long enough to learn more.

Cheers,

Dave
:)
 
Last edited by a moderator:
Big percentage returns

Reply: 3.1.1.1.1.1.1.1.1
From: Paul Zagoridis


I wasn't going to reply to him either. But I like this thread on returns in property.

Leveraged plays that return 300%+ are available in commodities markets, but if you time it wrong you get wiped out. You don't end up owning a negatively geared buy and hold.

My current "bragging" property?

1999 Bought a filthy, stinking, tiny unit in Kings Cross at auction for $54K (worth $90K if clean). My partner and I maxed out credit cards to buy it and settle. Spend $3K on paint, carpets and re-rendering the walls. Total investment ~$64K inc stamp duty, legals and interest so far (all borrowed on credit cards @ ~18% pa)

Get loan from Aussie HL @ 60% LVR. Valuation comes in at $110K. 60% = $66K cashed out with $2K extra.

Property rents for about $3,500 pa more than all expenses.

Hmmm I can't work out the return. I think it's infinite.

Let's be conservative and factor some sort of deposit. Return would be significantly above 25% pa.

On 5/30/01 9:45:00 AM, Dave :) wrote:
>300% ROI sounds too
>unrealistic? Are you sure?
>That's common place for many
>property investors. There are
>far more impressive cases than
>this. A close friend of mine
>bought an apartment in an
>inner city suburb last year
>using an $1100 deposit bond.
>15 months later, he on-sold
>the apartment prior to
>settlement for $92,000 over
>the contract price. What was
>the ROI here? Try
>8363.6%...without even
>visiting a Bunnings Store.
>
>If you and your ill-informed
>friends even tried employing
>some of the aggressive
>strategies used by successful
>property investors, you may
>even know some wealthy people
>one day.
>
>To your credit, you've
>returned to this forum to
>defend your point. I commend
>you for that. I hope you hang
>around long enough to learn
>more.
>
>Cheers,
>
>Dave
>:)



Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
Last edited by a moderator:
Reply: 3.1.1.1.1.1.1.2
From: Robert Forward


Hi Eric, thanks for the reply. Your points of view is appreciated in having a good lively discussion. Please tell us though about this property deal you mentioned earlier that you were going to buy but pulled out of.

Yes, the above figures of 300%ROI is very true. I won't go into how it was achieved as you will have read from some of the other posts that they have had bigger gains. What makes the property market, in my mind, better is the sheer fact of leveraging. Can you borrow all and sundry against the purchase of shares (not including warrants & options) because I can borrow 110% to purchase a property ie: no cost to me and still receive an income from the rent.

I don't negatively gear property so I don't have to stay in the rate race. And yes I believe in the realisation of not having to work for an employer, that is why I finally got to resign from my job yesterday nearly 2 years to the day after returning from backpacking the world and arriving back home with $3000 between my partner and myself, and I am not going back to an employee job I am working now on my own investments full time.

I will add that property isn't the only source of wealth creation. Property is a good start that gives you equity and grows that equity steadily (it should anyway). I also believe in opening companies and other ventures to gain my income. But this is the difference with shares, you can only live off the money if you sell your shares and as such you lose your equity (Note: I know there are always dividends but most dividend payouts are only a small percentage and you'd need to own millions of dollars of shares to retire on dividend payouts). I, on the other hand receive a weekly income from my property that I can actually live off. And this is after paying the mortgage and the council rates and other expenses.

I do look forward to your reply and to continue this great trading of thoughts.

Cheers
Robert
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1.1.1.1.1.1.2
From: Eric Snow


Dave,

Thank you for your eloquent post. A few points:

Yes, I have no rich friends. I would imagine not many people my age do. To call them unsuccessful though is a bit of a stretch. How does one even define success? I happen to like it that way. I am not about offer my friendship to anyone on the basis of an income statement or a balance sheet. There's a word for people who do, it's sycophant. That article you speak of almost certainly relates to social class rather than anyone consciously choosing to associate with others on the basis of wealth.

Never been to a financial planner either, and never will. I don't see the need. Are you saying 32% annual return is not good? Warren Buffet, the world's greatest investor has averaged around 22% for the last 30 years, and that is extraordinary.

A pretty impressive coup by your friend there, with the deposit bond trick. A friend of mine bought a $2 scratch lottery ticket and won $25,000, a 1,250,000% return. Risk equals return. That should be the first thing we all should say in the morning when we wake up.

I look forward to hearing more from you Dave.

Eric.

P.S What is a Bunnings Store?
 
Last edited by a moderator:
W

WebBoard

Guest
Big percentage returns

Reply: 3.1.1.1.1.1.1.1.1.1
From: Eric Snow


Paul,

Congratulations on your wise purchase. You must be one of the very few people to have made any money in property.

Eric.
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1.1.1.1.1.3
From: Eric Snow


Michael,

No relation I'm afraid. Yes Peter Spann's ideas are ludicrous and unworkable. His property and share strategies almost had me gagging when I saw him give his little introductory talk. Ironically though, it was probably the best $48 I have ever spent. I got to see mass delusion in action. Buying Put options to "insure" yourself in case the market falls! Ridiculous! He is just another get rich quick artist who makes his living selling overpriced seminars. Avoid at all costs.
 
Last edited by a moderator:
Big percentage returns

Reply: 3.1.1.1.1.1.1.1.1.1.1
From: Paul Zagoridis


I've made money in real estate, listed securities and business.

I've occasionally also lost more than I've made in all three as well. The only time I've been wiped out was over-gearing when 1st mortgage rates hit 18% in 1991.

I wouldn't say I was one of the few to make money in REI.

Check out BRW's rich list over the years. Most members hold some of their wealth in real estate. Many of them made millions at it. Few got there via stock market investing.

The BRW list is an extreme. There are many "normal" people I know who have made money in real estate. And the value of their profits are normally significant to them.

I used to be a divorce mediator. You'd be surprised how many people have a "nice little earner" IP.

Professional real estate investors don't normally retire when they have a $1 million portfolio. Often their equity is only about
$200K. Imagine now having $1M in the market on 80% margin. Most people wouldn't sleep and wouldn't be taking care of their day jobs either. This level of gearing is conservative to normal.

Put $200K in the market with no debt and most people will think of doing it full time. But it's not enough equity to warrant it. But it's too much to not watch daily/hourly.

Famous Stock Market book is "Where are the clients' yachts?". Think about it. Also 80% of players in commodities trading lose money. Sure it's not the stock market.

Dreamspinner
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 3.1.1.1.1.1.1.1.2.1
From: Dave :)


Eric,

My pleasure re: my post. I've never been linked to anything remotely
eloquent, so thanks for that - this is one day I'll remember. Despite
our obviously contrasting views, you're ok when it comes to a descent
(well, sort of) discussion. I hope you hang around.

The definition of success is altogether another subject, which I won't
dwell on too much. Success is relative. For one person, it's saving
for a deposit to buy their first home. For another, it's being promoted
up the corporate ladder. Whatever...

Don't think for a moment I'm suggesting I pick my friends on the basis
of their wealth. That's ridiculous. What I am saying is that you are
more likely to achieve a certain financial goal when you associate, both
personally and professionally, with like-minded people who have
attained, or are in the process of attaining, an outstanding financial
goal.

Of course 32% annual return is good. I'm not saying it's not. For an
investor who is used to conservative returns, 32% is great. However,
much higher returns are possible through residential property. Paul's
example is a good one...and I'm sure there are thousands more like his.


You see Eric, a certain stock's value can plummet overnight by for
reasons beyond anyone's control, leaving shareholders gasping for
breath. I recall an incident early this year where the CEO of a major
US corporation sent a confidential and rather frank email, sternly
rebuking 300 of his most senior managers for poor performance. This
email was forwarded on to others, and within 48 hours the company was
worth 35% less because the market lost confidence in this CEO to
positively run this organisation.

If due diligence and market research is done, this would never happen
with residential property. There are too many constants that are
unchangeable, ensuring it remains a secure investment.

You amuse me by describing the use of deposit bonds as a trick. That's
just it. Those who are unaware of certain strategies simply dismiss
them as either too risky or 'tricks'. To compare is to paying for a
lottery ticket is not only highlighting your lack of knowledge in this
area, but also suggestive that investors using this method are rather
stupid.

The one CRUCIAL advantage of residential property over shares is in the
buying process. You can negotiate anything in real estate. And, as we
all know, you make your money when you buy..just realise it later. I'll
use a recent example of mine. Some in this forum will know of a recent
purchase I made in the Melbourne inner city suburb of Footscray. After
bypassing the agent, I was able to very quickly find out just how
motivated the vendor was in selling. He was asking for $235k each, for
two, off the plan 3 bedroom homes. I had the properties independently
valued and found that to be just under the market price. I signed
contracts 10 days later for $200k each. The great thing is this, and
here I emphasise the beauty of negotiating when buying real estate, I
paid ZERO for it. That's right - no deposit. The $400,000 is payable
upon completion. Since signing the contract, I have already had offers
for $240k each. What's the ROI here?? Impossible to calculate. How do
you work out the ROI on zero $$ down earning $80,000 in four months??

Try doing that with shares Eric. If someone can show me how, I'll be a
stock market convert.

Cheers,

Dave
:)

p.s. A 'Bunnings' store is a hardware store...like a 'Mitre 10'....you
know, Peter Spanns favourite store....maybe Michael Crofts too. *grins*
 
Last edited by a moderator:
Reply: 3.1.1.1.1.1.1.1.2.2
From: GoAnna !


Hi Eric

Do the people surrounding you reflect the person you aim to be? If yes, then likely you feel successful and content with your life.

The idea that an individual's characteristics are reflected in the ten closest people around them is true for most things. I think that if you surround yourself with travelers and adventurers then you are likely to be a traveler and adventurer yourself. If the people around you are full of honesty and integrity then likely you are too.

And the fantastic opportunity this forum presents is an opportunity to surround yourself with people who have achieved a lot through property investment.

In the half year I have been on this forum I have begun to mix with a greater number of people who are either wealthy or on their journey to riches. I don't pick and choose my friends by their nett worth however I do seek out those who share my passion, my vision and sense of integrity. Whatever my passion is (and property investment is only one of mine) I enjoy any opportunity to mix with people with a similar focus.


GoAnna !
(aka Anna before she got real)
 
Last edited by a moderator:
Top