The most important lesson I've learnt in Property investing

see_change

see_change

I was just reflecting on the last 7 years since we started our property investing and the thing that really struck me was how smooth our path has generally been. My wife was saying we've been lucky but I think a big part this is because at no time have we taken any really big risks..

We started buying well after the previous property cycle had started , we never over committed in terms of cash flow or equity and always had plenty in reserve. Probably more importantly we didn't get involved in any thing we didn't really 100% percent understand or have control over.

We've gone from a position of being laboured with a large mortgage , three kids in private schools and bugger all in superannuation to a point where , financially , tomorrow if we wanted to retire , we could do it .

Now to an outsider , what we did might be considered risky , but to any one with basic understanding of property investing , we were relatively conservative.

The basic knowledge of property investing is " Pretty Basic ". If you want to get involved in the sharper edge property deals and that's what you want to do ,fine. Just make sure you really understand the risks involved and what will happen if things go wrong . If you're not sure what the risks, are wait untill you do. The property market generally doesn't move that fast and when it does you need to really know what you're doing or you will get burnt.

From what I've seen , it's easy for some to go from minimal assets to comfortable retirement in two cycles without much effort and hardly any risk.
For people who are prepared to put time and effort into it and make property investing a passion it's possible to do that in one cycle.

Cliff
 
i learnt to make sure ,that if your in debt is a million $$$$, to next time get other peoples money to pay it??/ and i read rich dad, i'm a goose,
 
hi see_change, thank you for your post. As a new investor (I bought 2 last year, which were my first two), I have a rental return of about 5-6%, which I know many say is good but its a highly negatively-geared investment and constantly wonder why I am doing this when I could have surplus cash and travel the world and enjoy life instead. I guess for me I am hoping that in 10 years time they will be positively geared and will have a combination of negative and positively geared portfolio which will give me options in the case I decide I want to scale back on work and enjoy life a bit more, in other words, im investing now to hopefully bear fruits down the road. When I hear stories like yours it emboldens me to continue, as I am currently strongly thinking about purchasing one more property.
 
Good post S.C.

A sensible comment in this climate of fear and uncertainty.

I've been much like yourself; a bit on the risk averse side, even though having a crack.

I think it's important to decide on a strategy, become good at it and always keep safety and cashflow as the no.1 priority.

From my observation, a lot of people are in a big hurry to accumulate, and take on much risk, or; do nothing out of too much fear.

Have a go, start small, and watch the Balance sheet and Financial Statement at all times.

Never listen to those who haven't done it yet, and/or who would discourage you from doing it.
 
my lessons?

don't get emotional about a property and "must have it at all cost" - there will always be another opportunity.

do your due dilligance properly before making an offer

get your structure right.
 
Good day See change

Good reflection on how you have acheived your dream....


see_change said:
at no time have we taken any really big risks..

I agree with you 100% and practice risk management (don't put all your eggs in one basket) but more importantly how to split those eggs up eg. financial risk management.

Probably more importantly we didn't get involved in any thing we didn't really 100% percent understand or have control over.

Now a few times I have stepped out of my comfort zone and tried things - but I always only risked a small amount of $.


financially , tomorrow if we wanted to retire , we could do it - Great feeling isn't it.

Now to an outsider , what we did might be considered risky , but to any one with basic understanding of property investing , we were relatively conservative.

really know what you're doing or you will get burnt.

From what I've seen , it's easy for some to go from minimal assets to comfortable retirement in two cycles without much effort and hardly any risk.

For people who are prepared to put time and effort into it and make property investing a passion it's possible to do that in one cycle. Cliff
Click to expand...


Kind Regards
Sheryn:p
 
Good post see_change!
I think taking the mystery out of investing is very important...it is not rocket science one must just be disciplined in their approach.
Well done for allowing others less experienced to see that it is possible for anyone...DanielG you have a good attitude and will no doubt see the fruit one day!
 
1. to take things slow. i.e just because you have only $500k in equity as oppose to $1mil you are still better off than majority of the population.

2. It's better to be in a situation where you have your ppor paid off and 2 to 3 IPs neutrally/positive geared on 50% LVR and plenty of cash buffer. It may mean that your net worth is less but I prefer it to 7 x IPs all to 80% LVR eventhough networth may be higher. It's very risky and you're slaving to top up your loans.

3. Don't be too greedy. I once sold a house to a nice tenant without even listing it on the market first. i reckon I could have got $30k+more but it was our good deed. When we have been too greedy we got burnt/in trouble. But bless others not because you want to be blessed in return but because you have already so blessed. There has been plenty of times when we have a lot of outgoings and help out family when we can't afford to but miraculously we still manage or we get a short term windfall. It's a bit religious but it's happened so many times now can't really not believe it.

Friends have followed what I do, buy land and build and they can't move it on completion and are left with a highly geared property plus the stress of building.

To me, it comes naturally and I have done very well but I think part of it is definately a blessing or if you want to call it luck.

4. Don't get too obsessed, especially if you have a partner that isn't too interested. There are more important things in life
. It's really just another job.

5. you have to treat it like a business. cashflow is really important. but at the same time keep it simple.

6. Money is easy come easy go. I've seen people lose everything quickly.

7. a profit is still a profit
 
Such wisdom that many people should listen to....Thanks Sue!:)
......dare I add another anecdote:

8. Please stop to smell the roses along the way......

Cheers!
Thorpey!
 
G'day sea change, well I can realate to your story very well. Although we haven't yet bought our first IP, we have always used a conservative approach when buying our two PPOR's.Never allowed any broker to dictate to us how much we should borrow.Now we owe 8K on our house and just been approved for our loan to purchase our first IP. As I said in my previous posts, I'm in it for the long haul, not to make a quick buck in a short time.So I'll just take my time...
 
I'll go against the trend so far and preface what I'm about to say by the saying "give it herbs".


Don't hold back when you are young. Don't be shy and cautious. Be bold and outrageous. Take on property deals that would make your mother's hair stand on end and your father gag on his malt whiskey.


Try something different, negotiate with people who are complete strangers with you. Learn to walk away when emotion gets in the way.


My lessons in a nutshell....

1. Know thyself.
1a Settle on your risk profile - know it well.
1b Know what properties suit your personality. Don't buy units and flats near a college if you can't stand poor young people - cos that's who your business partners will be.
1c Accentuate your strengths. If you are a tradesman - perhaps reno's might be your thing. You'll have a distinct advantage over a housewife in her 50's with 4 kids in that regard.


2. Only do business with people who have lots of money.
2a Get a decent bond from your tenant. It's the # 1 factor to keep them in line.
2b Ensure your rent is not # 6 or # 7 on their priority list....else you won't be paid in tough times.


3. Get talking to people 1 or 2 stations above your current position.
3a Don't waste your time learning hi-faluting techniques that property gurus use, if you only have a 250K budget. Talk to people who are buying 500K props.


4. Time is of the essence.
4a Turn that TV off. TV sucks the marrow from you.
4b Compounding is truly amazing. It hits you after the second or third time that you need to re-adjust the vertical scale on your net worth chart (get one) that you realise how quickly it starts to go vertical. Five or ten years lost up the front end has GINORMOUS consequences on the back end.


5. Try something risky.
5a Just because your parents and all your friends have never done something before - doesn't mean you shouldn't give it a crack. Are any of them super wealthy ??
5b Get to know the basics of both businesses and sharemarkets upfront early on. Don't be scared - be bold. If you stuff up at the start when you are economically small, you'll have 40 years to rectify it.


Give it herbs. Life isn't about balance. Make something extra-ordinary of yourself.
 
Fair go Dazz....you know I do not seek the credit that comes from conforming.

You say- do something risky, do something that'd make your father gag on his malt.............as if dad's life experience and values amounted to squat. But you have also said recently many of us might have to go back to living as frugally if this credit thing doesn't straigthen out.

"Try something risky" means what? it means doing something I gauge as risky because I am vague about the probability of losing or the size of the loss.........If I educated myself, if I read as much as I could and spoke to as many smarties as I could, if I didn't take the word of the RBA or the banks, or any other self interested party, then I could remove a lot of risk...ergo it wouldn't be as 'risky'....

Success to me is very much based on knowing the risks well enough to minimize risk exposure or downside.....which then allows one to be bold compared to Joe Average.

There's only so many times one can take on high (unclear) risk, and survive.

And there's another way to reduce risk apart from loads of due diligence, and that's by acting on intuitive hunches.....but that's another story...
 
Last edited by a moderator:
I am actually hesitant to give advice because I know what I do have not worked for everyone.

You just have to find your own niche.
 
Hi all

What i have learnt is a great question.

The Questions I now always ask myself.
WHAT IS THE RISK TO ME.
WHAT IS MY CASHFLOW GOING TO BE LIKE
CAN I RIDE THIS OUT IF IT DOESN'T GO AS PLANNED
WHAT IS THE WORST CASE SCENARIO
CAN I SLEEP AT NIGHT

In the past i have listened to FAs FPs etc and i wish i had asked those questions.

Cheers
BC
 
I like your work Dazz.:cool:

There are so so many lessons I have learn along the way but the ones that spring to mind today in no particular order.

Don't lose life / investment balance. The present is as, or more, important than the future.

Cashflow, cashflow, CASHFLOW!!

Trust yourself. If you've done your homework and you see an opportunity where no-one else does seize it. Don't let the lack of crowd allow you doubt yourself.

Delegate pretty much everything and then manange carefully those you have delegated to.

Just keep going and keep tackling each challenge as you come to it. Persistance and confidence will get you there in the end.

Focus on managing the risks. It's ok to be taken by surprise by success so you don't have to focus on it so much.

Don't rely on the market for growth - create your own.

Question every assumption you stumble accross and you will see clarity and opportunity when others hear cliches and confusion.

Life is short - the ultimate risk is playing it way too safe.
 
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