Want another reason to invest?...

[Nathan]

I guess we will tell who is better or not in 10 years time.

FWIW i think W2BW is going gang busters. over the last 18 months or so he has grown, learnt, and accumulated. Over the last 18 months what have you done??

I guess at the end of the day you have to decide what line you want to be in...

Is it reasons or results?

 

[HealthyWealthy]

So, they assume that super is safe and put all their available funds into it and expect it to just go up forever.

This was my point exactly - except, with respect to property not super. W2BW has said plently of times to just sit back, relax and wait 10 years for property to double. Indeed, most people here openly say that property is their retirement strategy. All I was pointing out that what's good for the goose is good for the gander - who's to know for sure that property is going to outperform super going forward? Who's to say that the same thing can't happen to property - indeed it can and has happened all over the world. Why is property necessarily the be-all and end all of investment? W2BW can choose whatever investment strategy that he likes and obviously he takes the risks that go with that but my point was how surprising that he's slapping himself on the back when it could well be that he's setting himself up for a similar fall by putting all his eggs in one basket - just like the two old ladies.

W2BW has since said that he's got other business ventures to fall back on and that's wonderful but I thought his initial post was a bit myopic with with respect to property and somewhat ironic.

I can't speak for him, but I'd say W2BW's strategy involves far more effort - both in actual work and in knowledge to apply. By this very application there is already way more safety attached to his investments, and his chances of succeeding will continue to improve as his effort and knowledge increases.

Since when did effort equate to safety in investments? If that's what you believe, go your hardest.

Dare I say it; this applies to most people who are into shares; they buy on hot tips, or on impulse, chasing the big pay-off, and never sit down and do the study and background work required to improve their safety and success of their investments.

And I could give you tens of examples of the same thing being done with property, but I forget, its property and nothing could ever go wrong

Over the last 18 months what have you done??

Tempting, but p**sing contests are just that.

 

[HealthyWealthy]

How fortuitous, the Age has printed an article that illustrates my point exactly about how we see precisely the same characteristics in some property investors that some of that class find repugnant in others. Which brings me back to my whole point (which isn't actually that W2BW is arrogant) but that that it can be foolhardly to be one-eyed about one class of investment only to the exclusion of others.

http://www.theage.com.au/national/negative-gearing-on-the-way-out-20090414-a69c.html

A few excerpts:

"The in-depth telephone and face-to-face interviews with 20 to 40 landlords from each Australian state paint pictures of "amateurish' and "emotional opportunistic" decisions dictated by circumstance and familiarity rather than economics."

"But it can also be a positive, in that many such investors appear not to be as reactive to market fluctuations or poor short-term returns as more professional investors."

"Many did it to have somewhere to live when they retired or to be near other members of the family. They distrusted complex investments and could understand "bricks and mortar".

 

[Aaron Sice]

"The in-depth telephone and face-to-face interviews with 20 to 40 landlords from each Australian state paint pictures of "amateurish' and "emotional opportunistic" decisions dictated by circumstance and familiarity rather than economics.".

"amateurish" and "emotionally opportunistic" are terms used by those that follow an economic theory when talking to those that don't.

i'd trust familiar "on the ground" news, over economic theory, any day.

that article is bunkum.

i think the funny thing is, everyone seems to think you NEED a strategy, like some big legal constitution style document pre-prepared for you to read every morning over your morning coffee to remind you of your goals and intentions.

here's a newsflash - not everyone gives a sh*t about formalities.

some people are just happy to landbank. others are chasing CF+ properties to drop a day or two a week of work. is that a strategy? maybe a shadow of a strategy - but certainly nothing based on "economics". what about the good old "it's the banks money. spend it until they lend no more" strategy?

who are YOU to argue with the merits of either of these?

opinions are like a**holes - everyone's got one and they're all full of sh*t.

who's got that signature about the economist and the $50 note?

 

[craigb]

good bloody on ya's!

i was reading through all of those big words , and trying to keep up , and you did,nt resolv a thing and ..I BURN'T MY PIZZA I HAD IN THE OVEN FOR LUNCH!

 

[tubs]

All those so-called ameteurish and economic opportunist investors have probably made more money than the person who did the report.

And probably continue to do so this very day. Must be a fluke. Hang on, they've got 10 properties? OK, it must have been 10 flukes then.

What is that saying about "the harder I worked, the luckier I got"?

 

[BayView]

Since when did effort equate to safety in investments? If that's what you believe, go your hardest.

And I could give you tens of examples of the same thing being done with property, but I forget, its property and nothing could ever go wrong

I wasn't referring to property specifically - all investments.

However, in terms of what investment is the safest, then you would have to say existing residential property is no.1.

I could go into enormous detail as to why, but we all know that if you don't over-leverage, stick to established, well positioned property; and hold it forever, there is no risk. Period.

Not the most exotic and fast-track investment, and doesn't take a lot of knowledge; but takes a degree of work to be involved in just the same.

The amount of effort you put into investing knowledge and skills is the best protection you can have against loss.

Of course; there is no guarantee in any investment, but you get my point.

 

[HiEquity]

who's got that signature about the economist and the $50 note?

That was me - until I changed it. It read something like:

"An economist walked past a $50 note on the street.
He knew it couldn't really be there because if it was someone else would have picked it up."

Still makes me laugh...

Don't know any rich economists...

 

[BayView]

And I could give you tens of examples of the same thing being done with property, but I forget, its property and nothing could ever go wrong

I'll guarantee you that all 10 of those examples you mention would be due to operator error.

Operator error can take on a number of forms:

1. lack of investing knowledge and/or skill in their chosen investment vehicle.
2. greed
3. impatience (see 1. and 2.)
4. over-leveraging (see 1., 2. and 3.)
5. laziness (see 1.)

I used shares as the main example in my other post because this is where the majority of "investors" live.

They often don't have any real investing knowledge, but know that shares is an easy investment to be involved in, so they hand over their dough without much thought or preparation; just keep "dollar cost averaging" and sit around and wait.

Problem is; share can plummet dramatically in a very short time, dropping through stop-loss orders and you can be left with no buyers at any price. These types of investors have no exit plan that will cope with this situation; no knowledge to save them.

That - if you are lacking investor knowledge - is a death knell, and you can be totally wiped out in a few days. See the last 12 or so months.

With property, the winding-down is much slower and steps can be taken to avoid a total wipe out earlier - even for an investor with little knowledge.

 

[BayView]

That was me - until I changed it. It read something like:

"An economist walked past a $50 note on the street.
He knew it couldn't really be there because if it was someone else would have picked it up."

Call me cynical, but didn't that tag appear about the time YM was on his armchair investor high-horse?

He was always ranting on about how property was so over-valued therefore no-one could possible buy it. But they still were.

Like the $50 note; it couldn't possibly still be there; but it was.

In any event; I thought it was very apt for the time.

Well done H.E

 

[evand]

Great post and very true. I have said a thousand times on here that just owning properties and being in debt does not equal wealth. True wealth takes time.

Even tho its a common belief on the forum that it does equal wealth. There might be quite a few surpised individuals in the years to come. Kudos to you for an excellent post.

I'm sorry, I have to say that you're a bit arrogant and short-sighted in the way you bask in your presumed superiority merely because you've bought a few investment properties are are in <$1M of debt.

What you're forgetting that property investment, like any investment, has inherent risks. If things transpire for the worst, it could well be YOU saying 'I don't want to work but have to now because my investment properties are worth less than I paid for them...I was depending on them for my retirement strategy.'

I was in the US for business recently and ran into an ex-pat Aussie who was a manager at the San Diego Hilton I was staying in. He told me that he had planned to retire but with the falling value of houses he had to keep working.

Now I know everyone will rush to say that 'its different here', and well it may be, but ithe current environment is not necessarily all sweetness and light and it is certainly not impossible that values will decrease.(I'm guessing that drops of even 20% would be enough to upset a few apple carts).

So rather feeling all smug about your investment properties and laugh about a couple of old ladies on a public forum, why don't you put the lesson to good use and see what you can learn from it?

Just remember that many people thought that salary sacrificing and topping up their super was just as fool-proof as your investment strategy and they weren't necessarily going into debt to do it either!

Good luck. I hope this little post never comes back to haunt you.

 

[BayView]

Great post and very true. I have said a thousand times on here that just owning properties and being in debt does not equal wealth. True wealth takes time.

Even tho its a common belief on the forum that it does equal wealth. There might be quite a few surpised individuals in the years to come. Kudos to you for an excellent post.

Well said Ev.

Owning two properties (especially neg geared) is usually a bigger millstone around the owner's neck. In a word; servicability.

To me; wealth is:

when your nett income is so high and from a never-ending passive source such as rent, dividends or business income, you cannot possibly spend it unless you spend it like there's no tomorrow.

Just having a high paying job does not class you as wealthy. This is earned income.

 

[bojangles]

I know of a family that have got acerage in Hoxton Park worth 2 Mil. They decided to transfer the deeds to their property to their children so they could get the full pension.

 

[Token Funder]

"amateurish" and "emotionally opportunistic" are terms used by those that follow an economic theory when talking to those that don't.

Rubbish. Are you suggesting that simply by investing in property the enthusiastic, ill-informed amateur receives a personality transplant?

I've seen more than my fair share of investors in deep financial trouble and very few are in that position as a result of bad luck. Most fit the characteristics listed in the Age plus "heavily geared".

There are plenty of professional property investors who treat it purely as an investment class -unemotionally, by the numbers, and fully aware of the implications of the term "landlord".

One need only trawl through this and other forums to find plenty of others in the Age category.

 

[Aaron Sice]

Are you suggesting that simply by investing in property the enthusiastic, ill-informed amateur receives a personality transplant?.

now that's rubbish. you're putting words in my mouth to discredit my position and then argue the same point as me......?

wtf?

i was saying terms like "amateur" and "opportunistic" and "emotional decisions" are used by those with a more tertiary knowledge (as in, understand economic theories behind property price movements and investing strategies etc) of property investing to describe those that invest outside those exact economic theories - regardless of who is right.

to call someone an amateur because they gave it a shot and didn't succeed is called "being an arrogant pig", who clearly think they are above the average joe - when in reality - again, a signature -

80% of drivers class themselves as being in the top 30%.

if that so-called "amateur" made money, then "oh they were lucky" or "had the boom on their side".

why are economists "economists" and not "retired"? because theory will only take you so far.

 

[HealthyWealthy]

"
some people are just happy to landbank. others are chasing CF+ properties to drop a day or two a week of work. is that a strategy? maybe a shadow of a strategy - but certainly nothing based on "economics". what about the good old "it's the banks money. spend it until they lend no more" strategy?

Bluecard, I think the article is saying precisely what you're saying. I don't think they're using the term 'amateur' in a derogatory way, more in terms of explaining the sorts of people (and their prevailing attitudes) who are attracted to property investment over other investment strategies that require more 'tertiary knowledge' (your words).

The article says nothing about 'giving a shot and not succeeding' so not sure where your point on 'arrogant pigs' come into it.

Respectfully, I think you're giving more credence to the thrust of the argument than debunking it.

 

[Aaron Sice]

you're kidding aren't you?

The in-depth telephone and face-to-face interviews with 20 to 40 landlords from each Australian state paint pictures of "amateurish' and "emotional opportunistic" decisions dictated by circumstance and familiarity rather than economics.

"This very amateurism can be problematic policy-wise, because investors are not easily susceptible to policy levers," say the researchers from Swinburne, Monash Queensland, Western Sydney and NSW universities.

could that be any more derogatory? it paints the investors as amateurs, according to a plethora of university researchers....?

first impressions in journalism are the firecracker in an article. it makes no difference that they then backflip and provide this little number

"But it can also be a positive, in that many such investors appear not to be as reactive to market fluctuations or poor short-term returns as more professional investors."

because the article has done the damage.

i think you just fell into the trap of believing it was a "balanced article". watch ABC news a little more often and you'll understand what i mean.

 

[BayView]

I think the term "amateurish" was used to describe the type of person who is sort of "dabbling" in property investment as a sideline, or by accident.

You know; the average married couple who has one IP, or a holiday house down at Torquay etc. They're neither rich, nor well on the way to it from their investing, and work full time in a normal job, and have no real amibition to acquire a large portfolio of investments.

It's not meant to be derogatory I'd say; just a description of a certain type of investor. Poor choice of words - I would have used "part time" or something similar.

I would consider someone as a "professional" investor who has reached the heady heights of the top 1% of IP investors - have 5 or more properties, has a nett worth of near the $1 mill mark (or more) and is seriously looking to become wealthy from their investing.

They may not necessarily be "successful" at it at this point in time, but they are approaching it as a professional endeavour.

 

[HealthyWealthy]

you're kidding aren't you?

could that be any more derogatory? it paints the investors as amateurs, according to a plethora of university researchers....?.

Bluecard, I think your interpretation of the term 'amateur' is what's derogatory:

amateur
// (say 'amuhtuh), // (say 'amuhchuh)
noun 1. someone who cultivates any study or art or other activity for personal pleasure instead of professionally or for gain.
2. an athlete who has never competed for money.
3. a superficial or unskilful worker; dabbler.
4. Obsolete someone who admires.
--adjective 5. of or relating to an amateur or amateurs. [French, from Latin amātor lover]
--amateurship, noun

According to just about everything you've said in this post, it seems to me you fall most neatly into number 1 of the Macquarie definition of amateur.

i think you just fell into the trap of believing it was a "balanced article". watch ABC news a little more often and you'll understand what i mean

How do you even know what I watch? Or are you just making derogatory assumptions? Bluecard, that's not your style, I'm sure.

 

[vbplease]

I think the term "amateurish" was used to describe the type of person who is sort of "dabbling" in property investment as a sideline, or by accident.

Thing is Bayview, the majority of prop investors only own 1 property.. about 76% according to the ABS. Perhaps supporting the "amateurish" claim.. who cares about the play on words anyway..

The thing that worries me is W2BW thinking property consistently doubles every 7-10yrs..