That which doesn't kill us makes us stronger

[JoannaK]

Hi Guys,

Sometimes you believe others have had it easy on the path to financial freedom since we usually hear about the highs, rarely the lows.

Following on from here, this comment is quite correct; it's never as easy as people think it is, and we are constantly facing challenges in our quest. Although there are many highs, we rarely hear about the lows of property investment.

So would anyone care to share their low points, obstacles and hurdles that they've experienced and what they did to overcome it.

I'm going to think about mine (I've had quite a number of them) and post a few later (time restricted at the moment).

 

[Kevmeister]

It's not just property investment that this applies to. It's the have/have-not mentality. My wife's brother thinks we are "loaded" (we're certainly not) and he gets this impression from the fact that we committed to buying a new house a few years ago (with associated big mortgage at the time).

He's still renting. He sees our house (the visible side of the equation) as the upside. He doesn't see the mortgage (the invisible side of the equation) which is the downside, or perhaps even understand the commitment we've undertaken in doing that.

He's averse to loans, averse to long-term financial commitment. I don't see buying a home as a "risk" per se but it is still a little unnerving to commit to the biggest loan of your life. He doesn't see (or doesn't want to admit) that we took the "risk" and committed to buying a property when he would not leave his comfort zone and continued to rent.

The funny thing is that I see renting as more risky than buying (long term), because we are slowly building an asset base by the simple necessity of maintaining a roof over our heads. He maintains a roof over his head (at a cheaper cost, albeit) with no payback.

And now he effectively tells us that we had it easy back then because we bought our house in 1995/6 and house prices hadn't entered the "boom", so it's now much harder for him to buy in, etc. And that we didn't have a child eating up $ like he had (we have one now). Or that we've never had to work extra jobs to raise money (my wife worked three jobs, I worked two). Yep, in our new house we've eaten 2-minute noodles for dinner a few times in our life (fortunately few enough times that's it's been more funny than dire) when an unexpected bill or two has arisen.

The simple fact of the matter is we had a goal and we worked hard to achieve it and finally got there. Owning our own home was one of our life goals so we put our mind to it. We're still paying our house off, mind you, but at least we have a house. Houses are much more expensive now than in 95/96, but relatively speaking they were still expensive back then compared to what we were earning back then.

But you're right, Joanna, many people don't talk about the low points with anything - they focus on the positives. We don't really sit around trying to tell anyone who will listen how hard we worked to get our deposit etc for our first home. Most Aussies I believe aren't whingers like that. So time fades everyone's memory and leaves the impression that we had it easy. Our memory eliminates the bad and keeps the good - that's sentimentality for you.

I think the tendency to believe others have had it easy is somewhat endemic in people, however. I see other people further ahead on the path to financial freedom than myself and I'd be lying if I said I wasn't envious, but I'm mature enough now to realise that they've probably done the hard yards, or taken the calculated risk, and they're reaping the rewards. Certainly there are a proportion of people who have been just plain lucky, or who are simply riding the success of someone else (eg. their parents), and good on them.

 

[JoannaK]

Hi Kevin,

You're very right. I had a situation with my younger sister a few months back. She's 25 years old with 4 young children and in a very unstable marriage at the time (now separated). We were having some sort of disagreement and money came up in the discussion. She had the nerve to say to me "It's all right for you, you've got money coming out of your a----". This comment was so hurtful, simply because she has no idea what I had and didn't have, and she had no idea what it took to get where I was, or the pressure and risks involved.

She also failed to remember that only a year beforehand on 2 seperate occassions I had offered to wrap a house to her and her husband so they could get off the renting merry-go-round. The houses I was looking at were in a growing suburb of Wollongong and they were ex-department of housing. They were selling off for $70,000 - now, they're worth over $200,000!!!!

Her husbands mentality was "I'm scared because if I lose my job, I lose my rent assistance from the government!"

I've just given up now.

 

[JoannaK]

On low points:

About a year ago I found a fantastic development site in an area that we were looking heavily at...

The site fit our price range and capabilities, had potential to build a great building, one you could hang your hat on so to speak, and would achieve fantastic water views.

Commenced negotiations with the agent, agreed on a price and conditions, everything was great. We asked for an extended settlement by six months so we could get all the Council stuff together. The agent went on holidays, the vendors got shaky and asked to meet me....they wanted to make sure I was genuine.

Met them, had a coffee and a good chat, agreed to proceed with the deal on the previously agreed terms and conditions.

Set the exchange date, arranged funds etc.

We were so excited, this is exactly the stepping stone we were looking for.

Got a call from my solicitor three days before exchange. Another agent had approached the vendors and offered the same price but earlier settlement. The vendors said yes. After re-doing the figures we increased our offer by a substantial amount but still original settlement period which they agreed to.

Got a call from the agent two days before scheduled exchange saying you've got until 2.00 this afternoon to exchange otherwise deal is off.

We went to our solicitor, signed contracts, then drove the 1 and a half hours and made it to the vendors solicitors at 1.30 to exchange contracts. We were led to wait in the kitchen of the office until they sought instructions from the vendor. The solicitor came back half an hour later - it had only just hit 2.00pm - and said that the vendors had exchanged contracts 15 minutes ago with the other party!!

We found out later that the agent that we had originally done the deal had his hand in this situation, and didn't even inform us of what was going on.

How could someone not honour an agreement like that? I was sitting there in the kitchen, of all places, in a solicitors office waiting to exchange my contract and the whole time the vendors and the other party were in the next room doing the deal!! and before the timeframe condition that they had imposed on me....

At the time, in my eyes this felt like a huge failure on my part. I was absolutely devastated and took the whole saga quite personally. It eroded my confidence and my faith in the people I was dealing with.

Of course, there's always a silver lining, and mine is that the eventual purchaser paid too much (as he bought it straight out and not subject to council approval as we had agreed with the vendor), he didn't get the approval that he was banking on, and now he's still trying to re-sell the site at a highly inflated price!! And, I got a better site!

This was a valuable lesson for me, and my husband. We've learnt that we needed to negotiate better, keep our fingers on the pulse better, anticipate problems and plan for them, and not take things so personally...now if we miss out we miss out - it doesn't matter. The deal of a lifetime is always around the corner.

 

[XBenX]

Originally posted by JoannaK

Of course, there's always a silver lining, and mine is that the eventual purchaser paid too much (as he bought it straight out and not subject to council approval as we had agreed with the vendor), he didn't get the approval that he was banking on, and now he's still trying to re-sell the site at a highly inflated price!!

Damn thats a dangerous game they were playing - got to love people like that !!!

Now all you need is the other developer to go bust - you buy the property at the price from yrs ago or better

Regarding the original post.... its very much like gamblers... in that regard... you only hear when their bets come in.

 

[Kristine..]

Joanna

Years ago (about the time of Clockwork Orange) I say a movie starring Ronnie MacDowell (I think) called 'Oh! Lucky Man'

Everything he went for, he didn't get by a whisker.

The girl, the career job, whatever.

Later, while working as a volunteer with a soup kitchen, he came across the girl and the man she married, living under a bridge, both hopeless alcoholics.

The career job ended up with all the principals in jail.

etc

That movie made a profound impression on me (I'm easily impressed). Be careful what you want, for you will surely get it. And everything has a price.

Of my three auctions last week, none of the properties has sold. Calamity? No. I'll just bring my husband in on the titles (no stamp duty on spouse transactions in Victoria, costs about $100), refinance, and with the rent and depreciation Myrtle will just about break even.

If I had said last year 'Let's buy more houses to rent' he would have said no, in no uncertain terms. Now, having worked on Myrtle himself, he's used to the place and is more amenable to taking it on as a buy & hold proposition. After all, I own it anyway.

If the 'medical centre' had sold, it would have been demolished and two cute little units built instead. My dream of a community health centre would have evaporated, and as I still regret selling the child care centre nine years ago, in a way the medical centre is a turn of the karmic wheel.

If the subdivision land had sold, I would not have the opportunity of building the house which I have designed myself, and bringing the vision of the amazing space into reality. Someone else would have built the design, but interpreted it differently.

I bought the child care centre business in 1989 with a Better Business Loan from ANZ, at 24.25% interest. There were many tears before bedtime in the first year. All the equipment was old and unsafe, 'What had I done?'. As soon as I put the fees up some of the seven families left. I had to sack staff and borrow more money. Times were tough. I worked the entire opening times, 69 hours per week, plus did the laundry and bookkeeping after hours. My youngest child was barely two years old at the time.

But soon, the interest rates started falling. New families started arriving. After two years we bought the freehold, and could start repairing the possum occupied building. After five years the building had been renovated and extended twice, I had increased the licence with a further application underway, 105 families used the centre, I had 16 permanent staff, etc etc

When I sold the business I calculated that I had earnt a little over $2 per hour for all the hours I had worked in the business, and we made a few thousand (after costs) on the freehold.

With the proceeds of the sale I put a deposit on the first investment property and bought a block of land, on which we later built a two storey house, also for rent. I also opened the shop in rented premises, two years later buying larger premises on the main street. Notice the thread of buying the freehold?

Joanna, nothing happens without blood, sweat and tears. I don't believe that any real success can be achieved without significant failures along the way, without frightening levels of risk, without working till you drop.

As we gain experience, we can attempt to minimise our exposure to risk, but we may as well stay in a paid job if we think that is the way to success.

I love to read the stories on this forum which tell, in 100 words or less, how we 'bought this, sold that, did a development' etc.

In my experience of the past year, my diary is crammed full of notes of phone calls, visits to council, surveyors, etc. Of the advice and encouragement from all the professionals involved with me, of the actions of doing this simple little dual occ in Ringwood.

So while you sat in the solicitor's kitchen as your opportunity was signed away in the other room, I feel that I have been given back the wonderful opportunity that I may have signed away last Saturday.

The Rev Norman Vincent Peale once said:

'If you realise that you don't have any problems, you should be very, very afraid! You should stop what you are doing immediately, and rush home as fast as you can, throw yourself down on your knees beside your bed, and say as loudly as you can 'What's the matter, God? Don't you trust me anymore? Give me some problems!!!'

He said 'Problems are a sign of life, the only people who don't have problems are past dealing with them!'

So Joanna, every morning I wake up and thank God for the problems which I will deal with today, for deal with them I will. And when the next golden opportunity comes along, I am so ready for it and all the exciting problems which it will bring, that I can fairly leap at the opportunity, grab it with both hands, and wrestle with the problems until I can bring success out of the situation.

Better for the constitution than Weet-Bix!

Thanks for starting this thread. I eagerly await other peoples stories of hopeless situations and how they dealt with them!

Cheers

Kristine

 

[Cosmo]

The “lows” of property investment.

My dad was an active property investor through out his life and all I remember from the late 60’s onwards was constantly cleaning, repairing and preparing house for rent. The rest of society was heading down to the beach etc etc and we were stuck with another weekend of labour. Not to mention the countless stress attacks at home when a tenant trashed the place and did a runner. Also the nightmare of evicting a non-payer (thru the courts etc). He purchased everything with cash, didn’t borrow a cent so you can imagine the financial strain on the family as he saved for the next property aaaaaahhhh!

Dad NEVER put a buck back into his properties so the standard of tenants when down every new lease. I remember one property he had in an area that was being re-developed for commercial use. The tenants had done a runner and the house looters had moved in and removed EVERYTHING of value (copper taps, pipes etc and even the lead flashing on the roof!!!!).Stress attack 10,000 in our house the night he discovered that. Luckily on that occasion he sold the place to the developers next door.

…………………BUT from the outside he was seen as a very successful property investor. And we were so “lucky”. Nobody knew the real story.

He died recently a very wealthy ex property investor.

 

[Jas]

It isn't hte big things that get me, but the little ones. ATM I'm refinanicng most of my portfolio and it's a huge task. There are so many lawyers involved, let alone all the different banks and other interested people. Each wants "just one more piece of paper".

These little prolblems are like a deck of cards. If one falls over, the whole thing will have to be done again.

Yesterday I had to hand deliver some papers to the lawyers office. I found out a 9:15 they had to be there by 10. I have already given one set of originals to my lawyers, and faxed these lawyers a copy. Now they tell me they need originals (when they where happy with faxes last week).

I rush home, pick them up, and drive into the city like a crazy women. I spend 15 mins circling around, trying to find a park. It's raining, and I finally park illeglly (I've seen two inspectors while I'm circling). I run up to the lawyer's office, and deliver them to her hands.

I run back down (past another inspector) and happily the rain has slowed all the inspectors down, and I have no ticket...

This has been going on and on and on....

I am so tired of it...

I am now calling my lawyer two and three times a day to get this finalised... You should see my phone bill.

The sad thing is that when this is all over, I will be refinancing the rest of my portfolio... Ah well, when its over I'll have more cash to buy more houses (the good side!), and deal with more banks and lawyers (see, every silver lining has a cloud).

Jas

 

[jahn]

Hi
In comparison to some of the forumites events, I've been very lucky.
But I can still remember when we first got married, (long time ago), we lived in a caravan for 18 months and worked two jobs each on lots of occasions, to save for a deposit on our first home. Not much social life, etc. yet later on when we built our first home there were lots of comments after the event, "youre so lucky"

And Kristine, liked the story "Oh Lucky Man". Got to admit though that I prefer "There are no such things as problems, only opportunities for solutions", instead of
'Problems are a sign of life, the only people who don't have problems are past dealing with them!' If this is true I could be in big trouble
jahn

 

[Les]

G'day JoannaK,

Having lived in Sydney for a few years now, I'm starting to get a "feel" for the bs that buyers have to put up with....

Now, others with more knowledge may "shut me down", but, frankly, I can't see THIS kind of thing happening in Brisbane. Things work quite differently there (and it is FAR more comfortable) ....... I have never heard of "gazumping" in Brisbane - there, you sign a contract BEFORE you check out for finance, Building Inspection, etc, etc..... It seems to work SO DIFFERENT in NSW. All I can think of, is to say "Good Luck" - as you seem to need so much more of it here.

That probably shows that I don't have too many "say it isn't so" stories to share with you. Even without the 5 day "cooling off" (which didn't exist in Qld 1 year ago), I really didn't have any major issues with IP's bought there..... So, I really have nothing to add to this great thread - sorry!! I wish I could tell a tale or two - but the ones I do have are so "Ho-hum" that I won't even try.

But, I DO wish all of you all of the best !!! (Gad, HOW do you do it??)

Regards,

 

[geoffw]

I'm already on record for some of the lows.

Shortly after attending the Peter Spann course in early 2000, and seeing what I could achieve, I was hit with a $53K tax bill (for a tea tree investment as suggested by a financial advisor). That used up all my available house equity, and left us all walking a very tight rope.

I had been working in an area where I had been treated like dirt, because I came from the mainframe area, and I was obviously not as good as the younger newer graduates. I was fired from that area (twice, after my sacking was overruled the first time). As a contractor, I was fortunate to be allowed into another area where I learnt a lot, and which I enjoyed to some extent.

MrsW had been made redundant because the company she had worked for closed up shop in Canberra. She found another job in the travel industry which she loved- the best place she had worked for for a long time.

But towards the end of 2000 a few things happened.

My work in the new area fell through- and I had to go back into the team which had treated me so badly previously.

And MrsW's job also fell through- the job which she loved so much was working for Ansett.

All this happened in the week of 9/11.

At a time when money was so tight, the future looked really bleak. No equity for the vision of property, and just a single income- in a job which I dreaded doing.

But we've fought our way through.

I'm still working for that same team- and I love the work- I'm getting some really positive feedback about my work, and I feel I'm contributing something positive to the world. Some of the people who initialy treated me very badly treat me very well, and respect my work. It took a lot of work to get there.

MrsW is also working. Her job is not as good as the Ansett one. But she is working in the area affected by the Canberra fires. Her boss lost his house. And for a while it appeared as if the agency would go under- people who've lost their houses don't really want to travel. But business has picked up, and so the job appears a bit more certain now.

We're a long way from getting out from the J.O.B. But at least we have some excellent equity now, and some cashflow positive income, which will only increase in time.

I've seen some lows in recent years- and that just makes the highs so much better.

 

[beech]

well done Geoff,

you just kept plugging away doing the RIGHT things (head down bum up)and its all coming together for your family now.



beech

 

[Kevmeister]

Someone on the Today/Tonight thread re: GeoffW/Michael Croft made the very good point that when we look for inspiration we need to find a "role model" who is within our boundaries. Someone who is in a position where we think we can get to. Most people see Bill Gates as rich but [I would suspect] don't necessarily see him as inspirational because he is so far beyond our usual ideas of being wealthy that we [probably] feel incapable of ever getting to that level.

And I have to say, then, that GeoffW is somewhat of an inspiration for me, for several reasons:

1. He represents to me a practical example of someone who has undergone adversity but is still chugging along towards financial independence.

2. Geoff is good role model for me because I feel his position is something I am also capable of reaching (see point above).

3. He has expressed openly and honestly his ups and downs and has been forthcoming about the property he owns etc. In this respect each is to their own, and I don't begrudge anyone for not wanting to share their circumstances, but it has given me a more 3-dimensional picture of Geoff's circumstances, what he's doing, how he's doing it, etc.

4. He has admitted he didn't know much about investing when he started (leading to getting burnt on one occasion) but is still in there making in happen.

5. He's been willing to share his time, his knowledge, etc, on this forum without making judgements of people.

Cheers GeoffW!

 

[michaelg]

Hi,

Hmmm, I guess I can say a few words here...

Since I'm known for wrapping here are a couple of wrapping stories...

One of my first deals resulting in me holding a property I didn't want at the time because the buyer decided to pull out before exchange, from that I learnt the importance of an exit strategy at each step of the deal.

I had a classic deal where my wrappies made front page of the local paper, 'cause they had skipped town in the middle of the night, I was left with another property, even the buyer's solicitor lost out on that deal. That was resold, but I racked up alot of stress (and dumped alot too among those around me).

I found out the impact that having a company deregistered during settlement can cause to loan approvals (it was my trustee company, due to late tax return). Plenty of lessons learnt there

Alot of this happened at the same time, so I became a little shell shocked, but I learned a heap and am was better for it, though it would've been nice to have things go smoothly.

Alot of the problems were silly procedural mistakes, some obvious, others not so obvious.

The obvious ones because clear when you feel either rushed or the onset of greed coming on, seriously its a good indicator that you are jumping without looking.

The not so obvious ones are less predictable and can only be fixed usually in hindsight. These will be due to lack of experience, you can reduce this by learning from others, but I doubt you'll be able to cover everything because, basically, things change and this creates new problems, and you'll want to try new things that others have not done before and you'll be trail blazing and therefore there's no one in front to point the way.

So what's the best advice I can offer for this?

To tell you, that you're not alone. If you're having problems, get together with your investing buddies and have a bitch and moan session and let it all out. 'Cause what's done is done, learn from your mistakes and sometimes talking about it will give you new ideas to fix it. Keeping it inside and cursing yourself doesn't make things better, seriously, it works, I know.

That's why I like to attend dinners and BBQs and gatherings, sometimes the best questions aren't "How did you do that?", but "What wouldn't you do next time?"


Just a thought
Michael G

 

[steven]

Very well said Kevin, I agree 100%.

Geoffw, your work mates are very fortunate.
regards Steven.

 

[fitguy]

Kevmeister:

I agree with your comments regarding GeoffW.
Couldn't have said it better myself.
Thanks Geoff for being so open!
Thanks everyone for sharing their stories. We can all learn from each others mistakes!

 

[jahn]

Hi
Have to totally agree with Kevin.
Big fan of geoffw
Also big fan of many on this forum, and no, I'm not easily impressed.
jahn

 

[geoffw]

Thank you Kev- and thanks FitGuy and Jahn for the endorsements.

Positive comments are always appreciated. Not just by me- by any poster in the forum.

For me, some of the things which have happened in the last few months have helped lift my standards and aims. I feel a lot more confident in myself.

But I'm not an eagle soaring as it may seem. I'm a tortoise who is plodding one step at a time. And there's a lot more tortoises (and even eagles) in this forum.

I've been helped enormously by being a part of this forum over the last three years. And I'm glad I've been able to be in a position to give value back.

I am especially thankful to MrsW who has stuck with me through some pretty hard times- "for richer and poorer". It was a tough call for a while.

Life is a roller coaster. I know down times (in whatever way they appear) will come again. But the ride is great- and I hope I can continue to learn from the tops as well as the drops.

 

[Olly]

"Originally posted by Fitguy
We love hearing inspirational stories about others so please everyone share yours with us."

Hope you find this inspirational.

I've been a struggling single mother most of my life except for a 5 year bad marraige followed by a bad property settlement. Couldn't touch his business or super and the house was signed over to me in leiu of maintanence, so I walked out of there with a mortgage, 2 kids and no job, during the high interest era.

Well, I found a job and over the next few years job hopped chasing the better $$'s. Could never chase the jobs that paid better but were far from home, or required longer working hours or travel (because of the kids) so have never had the opportunity to reach my full potential or persue a career. Won't bore you with all the lows that hit me during those years, but I can tell you that I can't think of any highs offhand.

Somewhere amongst all this I got 2 TAFE Advanced Certificate courses in HR under my belt as HR was all the go then and I figured this would give me more stable employment (I'm adaptable if nothing else!), but no, they preferred graduates or someone with experience so couldn't crack that market although I did gain valuable knowledge of course.

I've been retrenched 3 times during the "restructuring" years that so many big businesses went through and have had a few periods of being "in between jobs". All of this really knocked me around confidence/morale/security/spiritually/health etc wise. However, at the last retrenchment they had serious doubts about my sanity as I was actually smiling about the whole thing. I got a reasonable payout (about $20,000.00 but that was heaps to me at the time), and only had 2 more payments left on my house which I paid off!! So for the first time in my life I was debt free and with a bit of money to give me some breathing space and the time to consider my choices in life AND someone was actually chasing me to work for them when they heard I'd been retrenched!!! I even had the audacity at this point to say I'll think about it - I haven't decided what to do yet!!!

I did end up taking the offered job but at the same time was hit with a family crisis that lasted 4 years and hit me harder than anything I've ever been hit with before. More depression and health problems!

In about the 3rd year of this crisis I looked at my life and what I had and decided it wasn't enough to give me a "life" at the end of it all and a "life" that so far I hadn't really had, so I bought an IP in an effort to get some sort of financial freedom at retirement. Had no idea what I was doing - literally walked into a solicitors and said I'd like to buy a flat - tell me what to do and I'll do it 'cos I've got no idea (this was 5 years ago).

I was handy with DIY stuff - had to be as a single mother and low income and felt I had a better chance of understanding bricks and mortar than shares.

I've been a bit slow to follow up on that since, but now thanks to this wonderful forum and my family and employment matters stable (hope I didn't just jinx myself!!) I'm turning to it again. Some would call me a late starter (approaching the big five oh!), but better late than never! Let's see what I can do in the next 5 years!!

So my advice is don't let the "invisible bastards" who keep knocking you down keep you down - keep getting up, don't let anything beat you. It's OK to have a "pity phase" and wallow in it for a while - it can be cathartic, but don't stay there. Slap yourself around and say "OK, got beaten, mourned, now it's time to get up and have another go". Don't envy what others have or are doing - be happy with what YOU have or YOU are able to do.
My best isn't your best and so on and in the end all you can do is your best and be happy that you've done the best that you can with what you have.

Keep on keeping on
Olly

 

[steven]

Hi Olly,
I have had some problems in the last 3 weeks, your timley post has given me a well needed boost,
Olly, your determination and will to keep battling on when the going gets tough is a credit to you and an inspiration to others,
well done on your hard earned acheivments so far,
Sincerly Steven.