Why are you here?

Thankyou everyone for your interesting and varied replies.

The diversity and enthusiasm is quite inspirational.

My husband and I are both in our thirties. We are seeing people, like my parents, who are approaching retirement but who are not financially set up for it. I suppose this is scaring us into doing something to make sure we are not in the same position in 20 years time.

We have been working on building up a property and shares portfolio over the last couple of years (he loves shares, I love property). I only wish we had started years ago when we both had incomes (I am now out of the paid workforce but have got the best job in the world - caring for our beautiful toddler daughter). However, when I realise we are already better off than my parents I know it is better late than never. Still a long way to go though.

At the moment am feeling very conflicted. We have some $ to invest but feel too confused and nervous to do anything about it. Hubby thinks we should put more money into shares but not sure if we have reached the bottom of the market yet, and seeing how much our shares have gone down over the last year dosn't exactly inspire confidence. We were determined to buy a rental property in Brisbane a few months ago, while we were up that way on holiday. But found prices were way above what we had researched (eg. one suburb we expected to pay low 200's for a house, didn't see anything under $270K). So did nothing!! Would love to buy a property now while can lock in a 5 year fixed rate close to 6.5% but low rents and talk of the bubble bursting is putting us off. We have done loads of research but still plagued by indecision. We know we have to work on this - we are both so worried about making the wrong choice that we do nothing at all!!
I just keep looking at the position my parents are in and hopefully that will motivate us eventually.

I love this forum. It is loaded with great information, and more importatnly, is inspirational. Keep up the good work everyone.

Lily
 
Hi Lily,

Have you thought of looking for something like a 1 bedroom flat close to where you live as a way to "dip you toes in the water"?

Even if the market crashes in Melbourne, small places like this will always have a lot of people willing to rent it from you. You will not get burnt by buying something like this which is cheap and is a great way to learn. It would cost you very little, may even be cashflow positive and still allow hubby to buy shares in time for the next bull market. The bonus being at that time, a lot of people will be selling their investment property to jump to the sharemarket, limiting the supply of rental accomodation and leading to higher rents.

Glenn
 
John Doe,
If you're on the lookout for a financial advisor that understands property, check out http://www.navra.com.au. Steve is the greatest, he really knows his stuff, and his main interest is getting you onto the financial independence train to freedom as quickly as possible, not just to line his own pockets. And you're in luck, too. He's moving back to Sydney soon as well!

Mark
'no hat, some cattle'
 
Hi Glenn,

Thanks for the advice. But the way the market is in melbourne at the moment, I think it is impossible to get a positively geared investment. Anyone who disagrees feel free to correct me and let me know where those bargains are. :)


I am considering buying something in a large regional town at the moment (good rental) or maybe buying something to renovate closer to home. I am not a handy person but we did make some dramatic improvements on our own home a few years ago with a little cash (painting/sanding floorboards etc) so would love to do something like that again (which would hopefully make a negatively geared property at least nutrally geared).

However it is the usual dilema - which way to go?? I'm hoping I'll know the right property when I see it. I actually saw something that excited me a couple of weeks ago but it had sold the day before. Had been on the market for two weeks - the same two weeks I had had a break from it all as I was becoming disillusioned! So just goes to show I have to keep looking, every week, and soemthing will happen eventually.

Thanks for the encouragement glenn. I appreciate it.

Lily
 
Hi Lily,

I guess the first place you would need to look would be in your own suburb. This is often the best place to start as you would know the area pretty well and drive around it most days, getting an idea of trends and issues.

Also, it seems as though many people have become wealthy without buying the "Grand Palace". Just because you would not live in a property does not mean that no-one will.

As an example, I have just gone through the real estate section of our newspaper here in Perth that came out last weekend and listed both for sales and rentals for every single property listed, drawing up lists in excel showing me the average price of sales and rentals like this

Average all

Average 3 bed
Average 3 x 2
Average 3 x 1

Average 2 bed
Average 2 x 2
Average 2 x 1

Average 1 bed

I put the price, number of bedrooms and number of bathrooms/toilets in separate columns then combine the sumif and countif functions in excel to give averages

This gives a more accurate figure of what price/rental figures I should be looking for when appraising individual properties
 
Hi Glenn,

Conincidentally enough, this is exactly what I have just done with the regional town I mentioned earlier. As it is quite a large town I also divided it by 'suburb'. It is quite revealing seeing it there in black and white, and it also makes it a lot clearer when a good deal does come up. Have you found this with your data?

My next step in this area is to ring a few property managers to ask where they think the demand for rental is, and also to find out what sort of properties they find hard to rent. That will hopefully narrow my search down further (eg to 3 bed house versus 2 bed unit or whatever).

Thanks again for the suggestion.

Lily
 
Hi everyone,

Very inspirational thread, indeed. It is great to read the "real' stories of some "average" (not at all average) people who set goals and going to achieve it.

I have came from an ex communist system (money and capitalism were to absolute worse things man has every created as we were told almost every day) to Oz back in 1981 with $100 and 2 backpacks and for the first 10 years studied hard and worked hard and achieved some progress on the corporate ledder AND lots of bad debts, apart from a house in AVALON.

Then (2nd time around) the recession hit and I had no work, interest rates at 19% and tons of mortgage. Fortunately the bad times did not last long and contracting in IT was going along nicely. It scared me and I have started to get involved in EVERYTHING (I thing this is Level 2 investor - the idiot type - ala John Burley) from ostriches, financial advise based agricultural schemes and films and stage productions (still bleeding from them), business, 2 IPs in Sydney, shares, options, IPOs, you name it, I throw money at it. Big part of the money and its fool parted (as it always happens), but I got a very expensive financial education. The 2 IPs were made some more profit (way under of projections) when they were sold and due to the great negative gearing fallacy at the end of the day I was the only one who did not make real money on it. There is a great article in this month's API by Margaret Lomas about the "real" gain on negatively geared properties. Later the ATO assisted to part with more money when they asked back the previous tax deductions with penalty and interest and you name it.

Only good thing of these years was that I got to meet some great people (some of them member of this Forum) as well as that I have read several great books (as usual 10 to 20 year later when I needed them) and finally that via The Investor Club I got started in property again. I only bought 1 property via them in Kedron for 128.8K (I am very happy with it, now it worth somewhere in the 170K to 190K range) and listened to Kevin Youngs prediction about Logan. I did my homework this time and over 10 months purchased 7.5 properties in the area (several unseen and via the net), basically all cash flow positive without depreciation (I prefer on this way) and they showed great capital gains since purchase. Some of the were renovated (rest of them will be) and trouble tenants are priced out and the rents are reviewed on the lately purchased up by 20% without spending much / any money on them.

Then the IT recession / depression no 3 arrived and I was out of work again. 250 to 300 job applications later and working in a factory as casual labourer for pittance, here I am.

We managed to hold onto the portfolio (have / will sold / sell only one with around 25% real profit after all expenses 7 months after purchasing it and great positive cashflow while had it) as it did not cost me real money to have it.
My wages not enough for our own mortage (my better half is also casual) and we are really in struggle street which makes me feel very frustrated and angry, but also very determined. I know it will change very soon and our early retirement plan and life will be back to normal. Then I will continue my journey in IP land.

Tibor
 
Hang in there Tibor.

You may well have had an 'expensive education' at times, but I like to look at any kind of education a bit like stored equity.

When you again come off the starting blocks when times pick up(which they will!), your not only going to be away faster than most, you'll also be heading exactly in the right direction.


:)
 
G'Day Tibor,

I'll repeat Alans comment......Hang in there Mate!

Things will get easier, but by all means hang on to those properties.
In time you'll look back and you'll be glad you did.
Sometimes life throws us a few hurdles to overcome and by overcoming each one we get mentally stronger to deal with the next one till we get to a stage where we simply walk over them without no great effort.

Working as a casual labourer in a factory can't be all that inspiring but think of this as a temporary hiccup in your life plan.
You will soon move on and in time this will be one of the inspiring stories that you'll be able to tell your great grandchildren.

regards and all the best
 
I reluctantly bought my 1st IP 5 yrs ago, when I was kind of pressured by my brother into buying his IP.

It was 2yrs ago when I got back into property after the crash of the sharemarket....I have since bought another 6 IPs.

I am now 30 and I don't plan on stopping..

My inspiration is my 2yr old son and my wife, and my will to retire and become extremely wealthy as quick as humanly possible...

I would also like to take this opportunity to thank Jan Somers and forum contributors.

Happy Investing !!!!!:) :)

Ryan
 
To Lily House

reading your comments it would appear that you are now looking for a regionial town for locating an investment. Would that be in Victoria?. That would indicate that your are looking for an emphasis on good rental returns vs capital growth. I dont know where you may be in Melbourne but I predict that the area of growth is more likely in the western suburbs, in recent times prices have started to go up as the average price precludes many people from the eastern suburbs. Areas that only a few years ago was no mans land is now being targetted.
To give you an example Williamstown- yuck 20 years ago and now the Toorak of the West- $100k 10 years ago now average price price $500-600- dont listen to what is in the newpapers stats thaey dont know anything.
Yarraville only 10 years ago $50k and now $300-400K. Even the working class suburbs of Maidstone, Sunshine are being ddiscovered and prices are starting to rise.

So where to with reasonable growth and rental return as the ripples go further out into the outer suburbs
Altona a BAYSIDE suburb , 15ks and 25mins from the city that is only now being discovered. a mixture and old and new properties, Westgate freeway easy access. Or even cheaper Werribee/ Hoppers Crossing-Seabrook Their prices have been low/stagnant for the last 10 years and now are starting to increase. The government has just released their plan for limiting land release for the next 30 years and that will impact the region. But at the same time a gross rental return available of 6.2-6.5% Buy a afer 1985 house and you are close to or achieving positve cash flow. eg 165k house returns around $195-200 pw.
 
BKH,

Thanks for the advice. I have a friend who bought a house in Kensington 5 years ago for $160k. It was sold a year or two ago for over $400k. More than doubled in a little over 3 years. And I expect that same house now would be worth around $500k. The trick is to find the next suburb to be gentrified. I am actually in outer eastern suburbs but will look into the suburbs you suggested. Thanks.

Tibor,

From what I can gather you have at least 7 positively geared properties that have also shown capital gains. You are already a success as far as I am concerned. It is unfortunate that you are not earning as much as you would like at the moment but at least you can hang on to your properties. Imagine if they were all negatively geared!! Well done to get where you have already and good luck with your job search.

Lily
 
I bought my first property at 23 after reading a Jan Somers book (I can't remember which one!) I was so inspired. I didn't realise that someone earning next to nothing (me) could buy property.

I saved for 2 years to get my deposit together (It helped that I lived at home) and then went into the bank to get my loan approved. It took me about 5 weekends to find the right house. I was given every real estate trick in the book. I was shown the worst, most grubby houses first and then finally the one I was actually looking for. Needless to say I can thank my real estate agent to the ends of the earth because that house not only returned a positive income after 2 years but also more than doubled in value (according to bank valuations that tend to be very conservative).

I have since bought 2 more IPs and read countless books but stayed pretty much to the Jan Somers philosophy of buy and hold. I did buy a unit and then sell it a couple of year after but I feel more comfortable with house AND land. (I bought a piece of land in Queensland which I'm still trying to flog!)

I'm far from rich now (I'm 29) and am looking at diversifying my investment strategy. My basic philosophy is if you don't understand it, don't do it, once you understand the in's and out's then there's nothing holding you back.

I think I've taken it rather slow but I try to sleep at night as well!

Cheers!

Landholdings.
 
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newbie

Hi,

Just a newbie tonite. I was given this URL by Mr Ed. Thanks mate.

We are just starting down the road to getting our first IP. I suppose we started thinking about it when we made $30k on our 1st home 12 months ago and then had our new home appraised $50k above purchase price (in 6 months).

Time to unlock and use the equity, we decided.

Currently looking for IPs in Adelaide and have seen the good and the bad, in our very inexperienced view.

It seems there is so much to learn about investing in property but Jan Somers books sound like they have the advice I am seeking. The forum has helped already and I found little helpful hints and discussion at just about every place I have looked.

Looks like my phone will be engaged a lot more after our decision to invest needs to be supported by a lot of reading.

jocko:confused:
 
Welcome Jocko

It's great to see new people.

You've made some great gains.

Just a caution. As you probably realise,gains are unpredicatble. Do your best to be able to predict them, because growth is the fundamental appeal of reale state.

But don't get caught into just buying property for possible growth. There's been glory days for property in trhe last 2 years. It may or may not continue.

Look at it for the long term. There will be ups and downs, but the long term will probably be up (and will probably even out somne of the short term spurts)
 
Unbelievable but TRUE, so inspiring sitting here after finishing shift work at 2am. After work I cannot wait to get home and "do my due diligence" for my, no our first IP. (internet costs have tripled)

Growing up in the 70s, roaming all over the world, "rebelling against the Capitalist world."

Forward to 1999, Nhulunbuy(Gove) NT, fell in love with a wonderful lady and decided to move to Darwin, rang a mortgage broker and amazingly told we had x dollars available , didnt tell them that we were "in between employment" after resigning from our jobs.

Landed in darwin and bought the first house we saw ( I had a a fair idea what we wanted - been living in the Territory since the 80s.) My lovely partner scored a job thankfully but it was a while before I fell into a job, and then fortuiotously fell into my present job which I like!

In 2001 bought a block of land on the other side of Darwin on a whim with dreams and grand schemes.(Anathema to positive gearers like you guys!)

2002 and super funds shrink and retirement thoughts loom large after my vagabond ways, now we are on the trail of that first IP before I turn 50 in March.

Thanks to Jan Somers (her book provided the self belief) and the wonderful people on this forum we are eager and excited to take the step, to strike down the fear and face the wonderful world of property investing for the "twilight years". So I can get back to my vagabond ways!!!!

So to all you wonderful and generous people out there, "we dips our lids":D
 
"gains are unpredicatble. Do your best to be able to predict them, because growth is the fundamental appeal of reale state."[/B]

Thanks for the welcome and the advice above,

I suppose getting the PIA software and Jan Somers book is the next step to the prediction you are talkng about. I was also thinking about going to the seminar here in Adelaide in March to meet some other investors.

Any thoughts?

jocko:)
 
Jocko,

Yes and Yes................then keep on going.

Investing doesn't need to be a continual 'chore' of reading though.......often it can be exciting, a lot of fun and REALLY interesting.

I used to look at investment as being rather clinical and calculated in nature(and the figures etc. ARE a very important part of the process) but increasingly I've also learnt that a good dose of 'human behaviour observation' is a critical part of the mix.

What do I mean by this? Investing often involves interacting with other humans during periods of 'extreme' behaviour. You see it everywhere......Real Estate, Stockmarket etc. Investors often move in large, herd-like but often irrational groups. The frenzy of an auction........the sharp price drop of a good company that has missed a single quarter by a few cents of an analyst's forecast........a home buyer who has fallen in love with a property and 'must have it all costs'.........a property owner that thinks they have to sell their property at any cost because interest rates have moved up a couple of percent.

Personally I find it fascinating and I'm continually 'amazed' at the strange things that cause humans to change a market condition.

I guess what I'm saying is.......yes......definitely get Jan's books.......yes.........get the software too(especially good at looking at various 'what if' scenarios), watch various market movements, read as much as you can, BUT ......ensure that during this period of learning you also take into account another vital tool in your 'armory'........and that is how does 'human behaviour' fit into all this.............and how can I use it to my advantage.

Good luck........it can be a great journey!


:)
 
Since this thread got bumped I thought I'd share my own story. It's a tad long... probably too long for my relative lack of experience compared to others here. Anyway...

I first got interested in property as a teenager in NZ.
My father read everything he could find by Bob Jones, a commercial property investor and contemporary of Ron Brierley. He followed Jones' prescription and used his business savings to buy several commercial properties. Unfortunately a bad business venture, a fire in a $1M dollar property which the insurance company refused to pay out on, and poor asset protection lead to it all evaporating.

I read the same property books and wanted to do the same. I went to real estate agents and analysed deals, but being a uni student with no savings I didn't have the confidence to make any offers or construct vendor-finance deals. I figured I'd just wait till I got a job and saved some money.

Many years of study and travel later, I started my first real job at the age of 30 :). My wife and I quickly saved about $12k but had no thoughts of property investment. Then my mother told me about RDPD. I devoured it and discussed it at length with my family. I read Jan Somers' book and any property book I could find.
Soon after, my mother (a RE office manager) told me about a property in her city which would make a good growth investment. She crunched the numbers with an old DOS version of PIA and ran different scenarios. It was slightly negative cashflow but she figured that some minor redecorating would bump up the rent to make it cash-flow neutral.
We made an offer 10% below asking price, and we counter-offered a few times. Negotiations stalled for a few days as the vendor refused to come down further... Until an interest rate rise was announced and the vendor asked us to resubmit our offer. It was accepted.

At this time my wife was extremely anxious about the deal, while I was pretty gung-ho. We would need to use our credit card to top up the deposit. And we had no additional funds to fix up the property or cover initial vacancies. She was right. We weren't ready for this property, so we bailed on a finance clause. [The property subsequently sold for the same price and was redecorated and rented quickly.]

Lesson: only invest when you have sufficient funds to cover buying/redecorating/vacancy costs. Minimize the financial risk and reduce stress.

Some months later my wife was discussing our plans with her brother and being cashed-up, he asked her to look for properties for him in the town we were living in (Dunedin).
We hadn't even considered looking in Dunedin - "no capital growth, no point investing there" we thought. We looked in the RE section of the local paper for the first time and were amazed at the cheap prices.
She found a good deal for him, was a tough negotiator, and turned it into a great deal. We could not believe the IRRs coming out of PIA.

Lesson: high rental yield properties with low capital growth can make money too!

A few months later we found a property for ourselves. Our offer was accepted, finance approved and went unconditional. There was just an issue with a new title needing to be issued after the vendor had subdivided. 3-4 weeks they said.

NINE MONTHS LATER we had to wait while our 10% deposit was sitting in the agents trust account, and the tenants I had found were paying rent to the vendor. It was the first property we had ever bought and it was a nightmare. The Lands and Deeds Office were computerizing their system, the vendors' solicitor was merging with another company, documents were lost.

Lesson: if there are title issues to be fixed up, put in penalty clauses!

There have been many more lessons learnt over the past few years.

Now we are back in Perth and were able to use the FHOG to build a new PPOR, 5 mins from the CBD where we knew we would get strong capital growth. We will soon look to buy another property.

So why am I here? I'm here to learn from the successes and experiences of fellow property investors. And I have learnt so much already.

cheers, Tony
 
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