what about the low key property investor

[bob shovel]

I know there are heaps of threads to buy big and build portfolios but what about the person that doesn't have the property bug or interest to build a large portfolio.

What's the plan if they did want to invest though. A mate doesn't have much interest in property but commented that he would like to buy two places ~400k pay them down and one day own out right. What's the best way to go for those people?

How could they pat then down quickly or a good plan to have in place?

 

[jerrybee]

I don't know if people inherently want to have plenty of debt, we all want to get to the same destination as your friend - just faster. The goals are ultimately the same, no? Debt free, feeling secure etc.

 

[Xenia IM]

Bob
low key investors, ones that just buy a property when financial circumstances are favourable..

do so much better in the long run.

let him keep doing what he is doing.

keep some kind of cash flow happening, job, business, go about your day, buy a property when you can, do not expose yourself to too much debt, keep ego out of it

it's not rocket science.

 

[Terry_w]

I know there are heaps of threads to buy big and build portfolios but what about the person that doesn't have the property bug or interest to build a large portfolio.

What's the plan if they did want to invest though. A mate doesn't have much interest in property but commented that he would like to buy two places ~400k pay them down and one day own out right. What's the best way to go for those people?

How could they pat then down quickly or a good plan to have in place?

Pay PI over 30 years. Or buy 4 and later sell 2.

 

[Propertunity]

A mate doesn't have much interest in property but commented that he would like to buy two places ~400k pay them down and one day own out right. What's the best way to go for those people?

We as Buyer's Agents deal with some people like your mate quite frequently. They know they should invest in property (and shares etc) but they really have no interest in the details.

They can outsource everything. Finance to a broker, search & purchase to a buyer's agent, management to a REA PM company etc. if they wish. All they have to do is sign forms and have it all done for them.

 

[Peter_Tersteeg]

There's a lot of arguments in favor of smaller portfolios. Personally I'd take 5 $800k properties over 20 $200k properties any day.

The biggest benefit of lower price points tends to be you get a better rental yield.

This tends to be offset quite a bit by proportionately higher council and water rates, maintenance and other ongoing costs. Rents tend to be more predominately tied to social security. That's been quite reliable in the past, but possibly not in the future. Social security isn't exactly known for increasing that much either which affects future rental increases.

Personally I like to invest somewhere around the median price point for a general location. This tends to be more affordable for many people (both rent and purchase) which can drive growth (both rent and capital gains).

For the aggressive investor I do agree that lower price point higher yield properties tend to work well. It's certainly less short term risk of negative gearing yourself into bankruptcy. It does tend to take more work on a continuing basis.

For the less aggressive investor I think they can do just as well (if not better) over the longer term investing when it suits them in higher price point property. It just seems that 5 properties doesn't sound as good as 20 properties.

 

[hugh72]

5 for $800k each is okay depending on the LVR, one or two vacancies or major maintenance issues and you could be exposed depending on income. I would rather have 4?600k and 4?400k spread geographly to minimize risk as 5?800k is fairly concentrated. I agree with Peter that sticking close to the median for an area is the safest bet, more people can afford to rent them and they are easier to sell.
The actual price point is dependent on the location, I would not spend 800k on an ip in BN unless I intended to live there one day for example unless it was a small unit block.

 

[Big Will]

With Peter, I buy quality not quantity.

I read a story the other day of a person who had bought 3 houses by the age of 25 which I was at one. Got me down until I read deeper and my one is a better quality stock than their 3.

When I was 18 I nearly bought in Woodridge (QLD) but bank didn't allow me, as I was a casual employee and wanted parents to be guarantor (Not happening!).

I later bought in Melbourne and the Woodridge property has gone up by about 80k-100k but the place in Melbourne has gone up 200k.

The place in Woodridge would require a lot more work and the client/tenant I would be attracting wouldn't be as nice as Melbourne and would likely cause more damage to the property.

Also I would rather deal with only 8 properties and leases than 20 each year!

 

[xactly]

Im Low Key.

have a few good quality properties, set and forget. No time for managing or developing. Not interested in Renos. Turning from neg to neutral geared.
It isn't about how many, Its about how solid the cash flow is and the diversity of investments.

better tax advantages in shares. not interested in trading.
Less annoyance from flooding (*sigh* for tropical QLD weather)
40% ASX
40% US and Global
15% developing markets
5% stock punts (for high risk fun, NFLX has been a cracker but I don't have the temperament for trading).
A mix of LIC and ETFs, a couple of direct stocks in the ASX and S&P

If I keep doing what Im doing then I will be solid in 10-15 years.
I would rather get on with life.
Its too slow for some but Ive got time. I like what I do. And its safe.
Investing should be boring.

But the forum has taught me:
-structure,
-Investment principles,
-Critical thinking
-Admiration and respect for people with different ways to get to the same goal.
Financial freedom? which in itself means different things to different people.


don't let this place give you an inferiority complex,
many ways to skin a cat

 

[devank]

I'm one of the low key property investor. I don't want much hassle. I would rather spend my time with kids, tennis, travelling or spending time with friends.
As Propertunity said I would rather outsource anything if they can better job than me.

For the less aggressive investor I think they can do just as well (if not better) over the longer term investing when it suits them in higher price point property. It just seems that 5 properties doesn't sound as good as 20 properties.

Totally agree.

I kind of worked backwards. Worked out the minimum amount/asset we need to live comfortably at the age of 55. Worked out the value of IPs we needed to achieve that. In last six years, we achieved our first goal. We simply bought when financial circumstances were favourable as Xenia stated. Nothing fancy.
I recon it can work for any 'low key property investor' as long as they have two property life cycles. You accumulate during the first cycle. Extract as much equity as possible during this stage to buy IPs in different places. Then wait (or do other investments) for your egg to hatch during next cycle.

 

[bob shovel]

Wow all very interesting comments!!

I do like the 5% stock punts xactly! why not, you could stumble on the next google!

I guess the thing with joe average buying more than one IP does sound like a huge thing that is just so far out of reach it isnt funny, along with a lot of stress and unknowns. the mentality for your upper middle class bogan would be to buy an investment property but thats it(very generalised comment ) no shares or diversification, it is a common mindset. not realising or educated that you can go further

I guess the down side of the "one or two IP person" is that for most on this forum you can see the inefficiencies of someone only buying one or two, mainly when and where of the cycle. It may take 10 years before getting neutral... but i guess if they hang onto it in 30 years they will be better off than not buying!

The set and forget does have its advantages and also the spread approach with shares etc. you can diversify for the long term without the worry! But id say a lot on SS do love the chase and really are in tune with the cycle and markets etc etc and it can/will/has definitely take them places. It is still taking up time to manage so it really comes down to the person. Being an employee does have its advantages too... like a nice cushy council one where you can invest during work hours!!

 

[jerrybee]

With Peter, I buy quality not quantity.

I read a story the other day of a person who had bought 3 houses by the age of 25 which I was at one. Got me down until I read deeper and my one is a better quality stock than their 3.

When I was 18 I nearly bought in Woodridge (QLD) but bank didn't allow me, as I was a casual employee and wanted parents to be guarantor (Not happening!).

I later bought in Melbourne and the Woodridge property has gone up by about 80k-100k but the place in Melbourne has gone up 200k.

The place in Woodridge would require a lot more work and the client/tenant I would be attracting wouldn't be as nice as Melbourne and would likely cause more damage to the property.

Also I would rather deal with only 8 properties and leases than 20 each year!

It's encouraging to hear others going with a Quality vs. Quantity approach.

Reading about how others on similar or even lower incomes than me with triple the amount of properties was starting to make me feel really inadequate, like perhaps I was doing it wrong. I've laid down a strategy of buying quality properties, big land, near key transport and shopping areas and the obvious trade off has been...these properties don't come cheap!

 

[Big Will]

It's encouraging to hear others going with a Quality vs. Quantity approach.

Reading about how others on similar or even lower incomes than me with triple the amount of properties was starting to make me feel really inadequate, like perhaps I was doing it wrong. I've laid down a strategy of buying quality properties, big land, near key transport and shopping areas and the obvious trade off has been...these properties don't come cheap!

Yes it is more expensive but as you probably already know land appreciates and house deprecates.

So if you have 2x 250k regional properties being 50k land with a 200k house on it in theory you have 100k land and 400k house.

Where as if you have a 500k capital property with a 300k house and 200k land you in theory have double the land value of the smaller cheaper houses and it should increase by more over the years.

As there is more demand for the capital property and migration increasing and jobs education and amenities better in the capital than regional this is further way they will increase in value more than a regional which don't have the same demand and might only have 1 or 2 main industries.

 

[Deltaberry]

Quantity has so little do with making money.

 

[jerrybee]

Quantity has so little do with making money.

Cheap properties inherently have higher yields which offers some tactical advantages. It's a totally valid strategy, just not the one I've taken. But in general yeah quantity is meaningless, but when you see so many others take a different path from you, no matter how much sense your own strategy makes on paper you do start to doubt yourself! Reading comments like the ones in this thread helps reinforce that I'm not on the wrong path.

 

[Big Will]

It depends on each person's strategy, just because it isn't yours doesn't mean it will not work.

Yes I did hit the same feelings you had a while back where you get demotivated as you hear these amazing stories of multiple houses by certain ages. It isn't until you read in between the lines do you relies you are at the same stage (in terms of $$) or perhaps ahead that you go 'actually I am pretty well off'.

A story of I own 1-2 houses by the age of 25 doesn't sound as good as I own 4-6 houses by the age of 25.

 

[hugh72]

Cheap properties inherently have higher yields which offers some tactical advantages. It's a totally valid strategy, just not the one I've taken. But in general yeah quantity is meaningless, but when you see so many others take a different path from you, no matter how much sense your own strategy makes on paper you do start to doubt yourself! Reading comments like the ones in this thread helps reinforce that I'm not on the wrong path.

Find a strategy which will work for your situation, your income, assets,stage in life and risk tolerance and don't look over you shoulder.

 

[Deltaberry]

Cheap properties inherently have higher yields which offers some tactical advantages. It's a totally valid strategy, just not the one I've taken. But in general yeah quantity is meaningless, but when you see so many others take a different path from you, no matter how much sense your own strategy makes on paper you do start to doubt yourself! Reading comments like the ones in this thread helps reinforce that I'm not on the wrong path.

Could work the other way - expensive properties command higher yields because there's less competition.

Just saw in the papers a $50m building just sold for 7% net yield on Collins St. And the tenant covers all outgoings except land taxes.

 

[TMNT]

Quantity has so little do with making money.

exactly, like those people in those magazines who have been labelled property gurus for their 10 property portfolio in 5 years, when all thye have down is put deposits down for 10 OTP apartments

 

[Jamie M]

We as Buyer's Agents deal with some people like your mate quite frequently.

Same here.

Not every client that comes to us wants to purchase half of Brisbane under a hybrid trust with their uncles cat as guarantor.

Some just want to purchase an IP or two. They're not overly fussed about property investing - they understand the basic concepts and leave most of the work to us, the accountant and sometimes a BA.

Cheers

Jamie