The bit that I didnt understand with the today tonight segment, was when Jan Somers was explaining to a young gentleman (her son I'll assume), with a spreadsheet in hand and stating the property will only cost you $55.00 per week.
Can someone in plain english explain to me how I can get wealthy, if every property I puchase costs $55.00 per week.
15-20 years is a bloody long time to wait to get rich!
I think she said $44 actually
But anyway, the point is that it may cost him that much NOW, but as the time rolls on and the rent exceeds the repayments then it gets better (obviously). Yes, it was a negative gearing example, but it's a hell of a lot better to put $44 a week towards a growing asset than waste it on depreciating items such as stereos and flash cars. Just my thoughts anyway..
Yes Jacque I agree, better to do that than nothing. However the gist of the story was about regular people who have become very successful full time property investors.
How do you become a full time investor if you are losing $44.00 per week per property?
How can you live on negative cashflow?
It just didnt compute to me and I personally thought it demeaned the story.
All the investors featured on last nights show have one thing in common. They have succeeded in accumulating wealth by using individual strategies that worked for them.
There are many vehicles on the road to wealth.
I believe that finding the one that suits you is the key to it all.
The most important word I heard mentioned during the show was "FEAR". The fear of debt, not finding a tennant, no capital growth etc is what stops most would be investors from taking action. Overcoming this seems to be one of the most important reasons for these investor's succeding. And what amazes me is that for every one of these "what if" fears these successful people have always found solutions to substantually protect themselves from negative outcomes. Gees, so philosophical this early in the morning - phew.
Ok Rolf, I understand what your saying, but you didnt answer my question. How can you become a full time investor, ie no JOB to supplement shortfalls and make a good living on losing $44.00 per week, per property.
Did Michael & Nivia rely on negative cashflow when they first went full time? Maybe the can do neg cashflow now, with all the surplus income they receive, which is a good strategy.
But with Jan Somers $44.00 week strategy loss, it implies that this is the method they have used and I now from TW's posts, she loves cashflow.
So how can someone with serious property investing ambitions, that is quitting their job for full time investing, become really successful by losing $44.00 per week?
Some people may not want to wait 20 years to quit there jobs.
Paul is so right when he refers to neg gearing as a forced savings plan, for that's just what it is. Watching the growth on your property is the exciting part, and knowing that asset is yours (well the title anyway!!) is doubly exciting!
I've said it before but I really believe that you have to love sourcing and buying properties to do it successfully. If you don't have the passion then it will become a chore.
Nivia does love cashflow (don't we all) but I bet she didn't obtain positive cashflow on all of her properties, especially in the beginning. (Nivia?!)
Like anything, you have to start somewhere, and if that involves incurring some initial losses then so be it. I'm prepared (and financially able) to do this, as are many others. For me, the cap growth is the growing asset- my future super fund.
If, however, your strategy is to make money from the very beginning (like Dirk ) then you employ different strategies to achieve that outcome.
As for me, I prefer to have a bit of both, so that the positive can offset the negative. Mine is not a get rich quick scheme but I have confidence that in nine years time, I'll be financially independent.
It's also about goal setting and doing what Nivia and Michael are doing so admirably ie: Just do it!
Point taken, if you want to get wealthy quickly then the traditional Neg gearing strategy may not be for you; however, note that Jan never implied get rich quick - indeed I recall she specified wealthy slowly.
Thanks for all the great feedback! I thought it turned out quite good, although it was heavily edited, ( I did talk at the interviewer non stop for hours and hours).
Jans style of investing is different to mine, mine is different to Michael Crofts, not many people do it all the same way. However we all had similar goals, and perhaps placed different time frames on them.
I would also like to say, I said on the show I have very little fear, and this is correct, I have no fear of loss of money, I safeguard it as well as I can, but I am telling you, its only money, my fear issues relate to my children and husband, they are the things I worry about.
I have also worked very hard for what I have, and I have sacrificed, very early on in the piece when I was told I had run out of sevicability, I went out and got another job. Today when I am told my structure needs more cashflow, I usually go sideways, and find a new stream of income that will allow me to keep buying more of my favourite thing, property.
The 70/20/10 rule, can be applied by anyone, those that say it cant work for them, are not prepared to do some delayed gratification, or some sacrifice, this is ok, but dont whinge at me that I have it better/easier/luckier/smarter than you.
We call the 70/20/10 rule, "Forward Living" (trademarked), as opposed to going backwards.
More about Forward Living on the freestyler website soon.
The channel 7 website has it wrong, I dont give computer advice, I'm sure you all know I started Freestyler Network, not to give advice, but as a place where people with similar goals could meet up and discuss them with other likeminded people, in a supportive environment.
A big thanks to the guys at channel 7 and to the reporter David Richardson for a great experience.
Michael Croft is moving house and I am sure will be back on air soon.
I will be at the Newcastle Freestylers this weekend if anyone wants to catch up and have a chat.