Well well well, how things change.

I have occasionally cringed when I have read anything that sounds like this, so I suppose there have been comments along this line.

But as I said, those types of comments are not the "norm" here.
Not so much direct comments but underlying and very real attitudes, it is rampant.
This forum was built on it.

So you all agree then that this perception would be not a real healthy one?.
I am not saying it is the worst thing in the world just that it is not productive and it is 100%bogus.
 
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I would have thought that having property and in a way having control over your own destiny and discussing it with like minded people (hopefully without putting down those who are not doing the same) is not unlike, say, a Hi Fi forum discussion about how fantastic the new "thingamy" is and how anybody who is content to listen to the AM radio beside the bed is settling for so much less than is available to them :p:D.

Or perhaps a car enthusiast discussing his latest "thingamy" under the bonnet, or.... you get the drift.

I personally do cringe at the occasional post that does "put down" or belittle those who chose not to invest, but they are in the tiny minority really.

Most of the stuff on here is helpful. I don't like it when new posters have asked questions, only to be shot down like they are stupid, and I suspect that many others also feel the same. We all are entitled to ask whatever we want. Just because somebody is further along the journey is no reason to belittle the question or the poster.
 
I just rented out one house for a great return and nearly got ambushed by prospective tenants.

The lesson I learned was bugger it! I wish I had 10 more!!! :)
 
I think my comment may have been taken out of context. It was never my intention to belittle or shame anyone & i would hate for that to happen to me (being a newbie and all). I was skimming through this post and found it hard to decipher the point in some sections and found it perhaps slightly antagonising to those like myself. Apologies to anyone who may have taken offence...

Gee... lucky no-one knows who i REALLY am...
 
So I am wondering what have people learned from all this?.
.
Not buying any property been like that for several years, but still investing bought back into several banks and a few high-risk a week or so ago, GMG is one 2 days ago,all markets have the possibilty of problems,each person
is gauging the impact each day, does not mean every investor is in a state of delusion because they mistook the fin advice that was given them,or what they failed to act on,in 5 years time you will look back on these times and think what was al the fuss about if the world goes into the gutter as some think it will then it will only stay there as long as the media control their mindset, for me it's just another day just enjoy each one as it comes,if anyone knew what the property market is going to be like in six months, the price of anything then they would be acting on it,i don't but i still think all this mess will pass us by in time,we still have a strong banking system,and Australia is not the US-UK-Germany -China-Japan it's diferent here..willair..imho..
 
I watch the finance shows these days even the hard nuts are talking cut your losses.
I was just meaning that all the believers in "what you think is what you become", or that it does not "take money to make money" type mentality are learning some hard lessons, being that they do not have the answers they thought they were supposed to have by joining that elite small % of society that do have the answers and brush of all failures as mere puddle on thier climb to world domination as they stomp on the pysche of the poor weak minded/self pitying majority who work hard at pathetic menial type day jobs.:rolleyes:
Finance shows very rarely, if ever, talk about direct property investment - the strategy of going out and buying a rental property on your own, with a loan, and a tenant in place.

They seem to only focus on what the majority of penguins are involved in;
1. Shares
2. Managed Funds (shares)
3. Superannuation (shares)
4. Consumer spending
5. Interest rates

Because finance shows are all about ratings, they will naturally focus on what the penguins do and what affects them. people like me who are not in any of the above categories have no interest in these shows, and happily, because of my not falling into these categories, my financial position has not suffered in the slightest. Well; slightly, some of the properties have not gone up in recent months - maybe slightly backwards.

Most people are only invested in either super or funds, with a few more sophisticated investors in direct shares, and an even smaller percentage of very sophisticated investors into trading, puts, calls etc. Considering most share investors have been slaughtered in the last 6 months (only the very sophisticated ones will have done well in this latest crash), this means that points 1-3 badly affect most people's lives. Super is down, so many retirees are bleeding as well.

So, these shows say "cut your losses" because they assume everyone has made a loss. Not the case for all.

Point 4. also applies to most of the penguins. Very few people are not mindless consumers who walk around saying "we're only here once" or "I deserve it" or "you have to live too you know" or "you can't take it with you" etc. So consequently, most people are up to their eyeballs in consumer debt on a daily basis, and spend all they earn. When a downturn occurs, they are poorly prepared for it.

They also buy too much house for what they can afford, so the interest rates are a big issue. When the rates are lower, or they get a bit of a pay rise, they buy the bigger house.
I am watching one of my 6-figure income friends doing this right now; got the pay increase, let's buy a better house. The rates go up and kill their cashflow. At least they are buying at a good time.

Also keep in kind that most of the news people who report on financial matters fall into the above 5 categories themselves, so they would assume that everyone else is in the same boat.

For me, it has only ever been (so far) buy and hold, maximise cashflow, minimise debt and repeat.

Thus, the LVR is in good shape and the cashflows are in good shape. No reason to listen to any of the D&G.

I still listen, but it only serves to make me more careful and think more about longer term safety.

People keep saying "cash is king". I say "cashflow is king".

And, if you have bought property and have been sensible about the factors such as position, value, % of population who may be a renter and/or buyer, LVR and cashflows, and keep minimising the debt regardless of the state of the economy, you will be fine.
 
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Hi, Kiyosaki refrain is cashflow. Takes courage and fortitude to believe that when interest rates hit the strastosphere but then down they come again and everything reverts to 'normal'

Some of us are on low LVR by virtue of our advanced age and also quite possibly because we had been rash in our youth and have learnt to be more circumspect.

I can report that my cashflow has been surprisingly constant in the last 5 years - it didn't matter if my borrowing was nil or half million or 1 million, I still only got the same amount of spending money every month.

And that is why my constant refrain is property investment is 'stable' - exactly the way I like it.

KY
 
Hi Jo, there has always been a smug element on the forum, that look down on others that are in unfortunate circumstances or say that there is enough room in the world for all to be rich and successful but this just is not right even a good thing to believe, it is actually counterproductive to a healthy society.
Of course it always good to be positive, absolutely strive for that but never run down others in a worse position and claim that you are of a higher education or mental state etc, this is pure rubbish.
It`s a numbers game with a lot of different factors involved, certainly hard work and study will place you higher up the ladder but it doesn`t ensure success.
If what these gurus and glass half full types really believe is true why is the world in the state it is in?.

Why don`t they teach finance and "think and grow rich" in schools?.
Because time has shown that it does nothing but cause a decay in real values.
It is funny how you are bought up to believe this and that yet the governments and large corporations all show otherwide on a daily basis and everyone accepts that it is ok.

Look at what Bush (and Howard) got away with:eek:!.
Haven't you yourself held quite a few properties, selling some very quickly for the instant cash gain? What's changed your moral financial views?

Most comments and comparisons here of people that haven't made money are about those that use plastic credit or their home equity as an ATM and don't worry whether they can really afford something or not, or because they cry poverty due to living beyond their means, not those that have experienced unfortunate circumstances beyond their control.

Each to their own but most people here strongly believe in working towards being financially self supporting so this type of discussion is going to come up on a forum where financials and creating wealth are the subjects.

Lastly schools don't not teach 'how to think and grow rich' because it is the cause of decay in real values. Are you serious? If anything children need to be taught basic stuff like learning to budget and saving first and only then how interest, repayments, good and bad debt works. Hopefully this starts at home. To not teach them about money is what is 'wrong'. It's hardly along the lines of teaching 'How to run a successful Ponzi scheme' or 'Making quick and easy money - guaranteed'
 
Hi Weg well it is a fine line.
I am not saying nor have I ever said that trying to be financially independant is wrong or even really a problem morally or whatever.
It is the fine line we cross when it becomes an allconsuming self interested obsession to the point we tread on others or use it as some kind of testement to our superiority or disipline.
I don`t think you understood what I was getting at.
Yes to teach more understanding regarding interest etc would be a good thing but not to teach in any way shape or form creating money out of thin air or how to get yourself into position to not ever work again.
It is a complete ridiculous theory and goal to have or to encourage others to be able to acheive imo.

On the subject of lvr, this has always been top of my agenda to always try to maintain a low lvr.
Many would often say WHY dont you buy ten houses instead of three and leverage your money etc, well thank god I left that one alone.
 
On the subject of lvr, this has always been top of my agenda to always try to maintain a low lvr.
Many would often say WHY dont you buy ten houses instead of three and leverage your money etc, well thank god I left that one alone.
Agree here.

Both are simply mindsets and risk profiles. I'm in the "I could buy 5, but I'll stay safe and buy 2" camp.

I hate hearing some here at SS say; "not for this forum" like it's too dangerous for the kids to listen to or something. That's cr@p.

Come on; we are all adults here; give us all the dirt; all the strategies.

We know some are risky, some are safe.

Then, give us all the pros and cons and then let each person make up their own mind how dangerous they want to play the game.
 
I dont drop in to this forum much anymore as it has become obvious what a winners positive attitude can backfire and that a lot of what has become accepted as written in stone around here by the "winners brigade" has come to a very.....painful reality.
As being one of the long time "negative bias posters" it seems now quite imbedded into this forum that long held philosophies are crashing down all over the joint.
So I am wondering what have people learned from all this?.
I had sold a few properties myself, after the first boom thinking that was it, then it went again and I thought here I go again, bailed out too early but no now I am very glad I got out when I did.
I think more than anything you need an escape route and to really think about worst case scenarios.
What do the long time "positive bias posters" say now, that it is different this time or are there still some out there that hold the belief that the time to buy is when the market tanks in ready for the big upswing?, just like history had proven?, anyone at all who is putting thier money where their mouth is?.
I'd be classed as a D&Ger on this site as far as how tough its going to be in the next ten years. Having said that if you want to blame someone look in the mirror. I believe your destiny is entirely of your making.

A positive attitude helps but a pinch of common sense isn't very common:D

Regards NR
 
I dont drop in to this forum much anymore as it has become obvious what a winners positive attitude can backfire and that a lot of what has become accepted as written in stone around here by the "winners brigade" has come to a very.....painful reality.
As being one of the long time "negative bias posters" it seems now quite imbedded into this forum that long held philosophies are crashing down all over the joint.
So I am wondering what have people learned from all this?.
I had sold a few properties myself, after the first boom thinking that was it, then it went again and I thought here I go again, bailed out too early but no now I am very glad I got out when I did.
I think more than anything you need an escape route and to really think about worst case scenarios.
What do the long time "positive bias posters" say now, that it is different this time or are there still some out there that hold the belief that the time to buy is when the market tanks in ready for the big upswing?, just like history had proven?, anyone at all who is putting thier money where their mouth is?.

I agree with you Mark. Ppl who are holding for the long term may be ok but there's still a lot of ppl here after quick money. You can never know what will happen in 5 yrs time yet alone 2mths away. I have learn so much from PI and I'm still learning.

The market is so unpredictable now that even banks can get valuations right. PPL seem to forget the real value is what someone's prepared to pay for it.

90% LVR with no buffer..that's crazy.

I think cashflow and cash is the same thing:confused: I don't mind either $3mil in the bank or $100k p.a of positive cashflow..it's all cash.
 
Agree here.

Come on; we are all adults here; give us all the dirt; all the strategies.

We know some are risky, some are safe.

Then, give us all the pros and cons and then let each person make up their own mind how dangerous they want to play the game.
Totally Agreed. Well said
 
Greed is Good

The point is, ladies and gentleman, that greed -- for lack of a better word -- is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind.


Michael Douglas "Wall Street" 1987

This statement had a profound impact on me during my younger life. Why should you just settle down into the average joe bloe's lifestyle, why cant you try to do something with your life, why cant you aspire for something better (and not by using credit cards to achieve it!!!). When i first watched this movie, Australia during the early 1990's had a distict socialist feeling about it.

At the time i was working as an graduate accountant. I remember having a mentor meeting with one of my managers and he was saying if you work hard you can be like me in a few years. Hmmmf i thought to myself, you are working 50 hours + a week for a salary after tax that was only $300 per week higher than mine, sure you drive a nice new BMW, but its on hire purchase, you rent your nice apartment, what do you have to show for all your hard work!!!!!!!!

At the time i was working after hours in some reasonably high paying cash jobs that made my after tax salary higher than his. But instead of spending my money on doozies, i saved and invested it in the Australian stock market.

I left 6 months later to start up my own business (1997) and have never looked back. At the time i took a big gamble leaving a steady job, i used all my savings, took out an overdraft and maxed the credit card to set up the business. People said i was crazy, the economic climate was week, but i saw an opportunity and i grabbed it.

Fast foward to year 1999 and i discovered Jan Sommers books about residential property. After avidly reading it i started researching property in melbourne. The current theme in the media was that residential investment would be a bad investment because:
1) there is no GST imputation credits on expenses since there is no GST on rental income
2) Australia is in a low inflation area and hence property will underperform.

I researched the actual market at the time and saw that rents were more than 7.5% gross on apartments (mmm maybe alot of people were listening to the media), with a 20% deposit i would be completely cash flow neutral. Who do i believe Jan Sommers or the media: i chose Jan Sommers.

During this time i was also hearing about the Asian credit crisis from my Asian friends. I thought to myself where there is crisis there is opportunity. I was familiar with Thailand since i studied there in my uni days. I flew to Thailand to assess the situation myself. What i saw stagered me, the major bank Bangkok Bank was offering interest rates on deposit of 20%, the exchange rate was roughly 50 baht to the AU$ (when i was a student there it was 18odd). The stock market had gone from 2200 odd to around 300. Sky scrapers were left half finished. Where there is crisis there is opportunity. Again i was viewed as being crazy, but i started diverting my business profits initially to term deposits and then when these came down into Thai micro cap stocks export stocks. This market was not pricing shares effectively. Thai micro cap export shares were trading on PE ratios of 3-4 times earnings, they had minimal debt and were paying 15-20% dividends (and in thailand a foreigner does not pay CGT tax and a flat 15% tax on dividends).

Fast forward to 2003:
My two residential properties in Australia had shown incredible capital gains. And this is where in my ignorance i made a mistake. I sold both of them for around 50% profit on purchase price (200% return on equity). I figured that a bird in the hand is worth two in the bush, so i sold them and paid CGT on them ( i didnt know at this point about using draw down facilities so you take your equity out of the property through refinancing but still have control of the properties).

In the mean time in Thailand the baht had started to recover giving me a nice capital gain on currency movement. The market had woken up to my strategy on export orientated shares and had priced them accordingly. I needed a new strategy, especially as these sought of companies are not a 'buy and hold' forever investment, they do not have any economic moats that will sustain them through different economic times. I started to move part of the funds into higher grade stocks (hotel and land banking and development companies), i also saw an opportunity to start getting involved in thai shipping companies. I wasnt really familiar with the resource boom that was about to take off, but i did notice sustained movements in shipping rates. Thai shipping stocks were still trashed because of the asian economic crisis, but again (because many companies in asia have significant management ownership) their debt levels had been brough under control. Dividends were around 15% which was my insurance against incorrect buy in points. So i basically traded against the BDI index knowing that in thailand the market tends to focus on just on quarterly results. This enabled me to stablish positions where i could extrapolite profit results based on the BDI (having regards to the diffferent shipping types).

Fast foward to late 2006:
I started to see an opportunity in melbournes cbd apartment market again (this was not through research or foresight, but rather i was renting at the time, and my land lord wanted to move in himself, i tried to look for an alternative apartment and saw how tight the rental market was, i also noticed that property prices had not moved much since 2003 even though the rental market was tightening significantly and rents were increasing significantly).

Fast forward to 2007:
With the strong strong baht i started selling off part of my thai share portfolio and invested the proceeds in 5 apartments in melbournes cbd in early 2007. Also joined Sommersoft around this time:D.

Fast forward to 2008:
Started to see opportunities in the Australian stock market, so i slowly allocated money into the australian stock market (my mistake here was that i underestimated the severity of the GFC so i entered to early, also because i had been out of the australian market for 10yrs i made some early mistakes on value traps because i didnt understant the nature of the underlying companies).

With the drop in interest rates i wasnt going to make the same mistake i did in 2003 by disposing of my australian residential properties. Instead i got them refinanced (with bank valuation increases of more than $500k between mid 2007 and Oct 2008, this has allowed me to effectively cycle my capital out of the properties and into the share market without loosing control of the properties).

So in conclusion i have no idea where the near term future lies. Do i believe in greed: hell yes BUT its also because i am greedy that i invest based on cash flow.

So what have i learnt over the last 10 years of investing:
1) investing fashion trends come and go.
2) dont listen to the media, by the time they figure out a position its likely to be crowded out
3) invest based on cash flow, this is your insurance against unforseen circumstances
4) By investing based on cash flow you can actually ENJOY your life whilst accumulating assets. I would be alot richer now if i had continued to scrimp and save like my younger years. But i have had an incredible life over the last 10yrs, i have travelled internationally 3 times a year every year for the last 10yrs, every year i get to spend more money (even though i try to spend only 30-40% of my income and save the balance, but as the income grows my expenditure can grow).
5) there are always opportunities in economic crises if you can figure out the right angle.
6) the time to be fearful is when others are bullish and conversely.
7) You only have ONE life, make the most of it to achieve your goals, what ever they are.
 
Very insightful and candid post chilliaa.

Life and investing is like the seasons. We cannot change the seasons but we can change ourselves, by learning from our decisons/choices and being prepared to take stock and make even better decisions next time with the benefit of the information and experiences we have had along the way.


Thanks for sharing your learnings and experiences.
 
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Chilliaa - I wouldn't call that greed. It has taken you 10 yrs + to get to where you are. Eventhough you only bought your apts in 2007, you had to accumulate the cash through many years to purchase those apts.

It's true that you can make money with lil or no money but I believe that's also due to luck/blessing. We've done it before, made $270k from $3k in 6 mths in our 2nd venture. Basically bought 3 blocks of land for $60k each on $1k deposit with 6 mths settlement (land not registered andeventually took 1 year to settle and we even got back $2k per block and a goodies basket due to the delays). After 6 mths they were worth $150k each. On sold 1 block for $150k ...easiest thing ever to do and no finance required. It was sold by ballot too....crazy. Since we held it for over 1 yr only had to pay tax on 50% of profit. Tax was only about $10k.

We have also lost loads of money from dodgy deals or being too greedy. Thankfully not greedy enough that I didn't lose more. But overall we've been so lucky/blessed.

I learnt that money is easyish come and easy go.
 
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