The power of property...

[tech/a]

UN Realist

This irks me how so much disinformation goes out to the public by morons who probably made a little money during the last property boom and think they are experts.....

From a guy who's never bought a property in his life!

Investing in highly profitable fair priced shares that pay dividends will give you far better returns.

So youve been to the bank and are now trading your $150K or so???
Or just theory as usual?

Stop

Never b4 has the average Joe blow been able to afford or have easy access to the share market.

The sharemarket has only ever been for the rich.

Of course it has,if you seriously have to worry about brokerage then you shouldnt be buying shares just as you wouldnt be in the position to buy a house.


Do you guys really believe that people who have done OK in life have NEVER been in the position you 2 are or WORSE??

Difference is THEY'VE DONE SOMETHING ABOUT IT!

Are you guys genuinely intersted in bettering yourself???
(What are you doing here???)
Or are you just here to bitch about those greedy rich people??

 

[Jay-684]

couldnt agree more tech/a

sure real estate in general is in bad shape right now, and sure the changes to super legislation means the property investment market may slump, but so what? Its like the AMP slogan "There is always a property boom somewhere in the world".

It rings true for every investment class.

I prefer to look at what is performing now (and invest in it) and what can/will perform in the future (and plan to invest in it)

Realist, you KNOW that property is such a poor investment right now, so why harp on it continuously and start new threads on the failure of property as a viable investment vehicle every week?

Put this wasted time into researching more on what YOU THINK will make you money and I'm sure you'll be much better off.

 

[nioka]

Oh dear, oh dear.

From what I know Warren Buffet, Ben Graham and Ingvar Kampstrad (Ikea) drove oldish boring cheapish cars..

Think I read in the fin review today about Warren Buffet selling a Lincoln because they are going out of production and ordering a new caddy.?
Doesn't Harvey Norman drive an old Holden.

 

[Julia]

couldnt agree more tech/a


Realist, you KNOW that property is such a poor investment right now, so why harp on it continuously and start new threads on the failure of property as a viable investment vehicle every week?

Put this wasted time into researching more on what YOU THINK will make you money and I'm sure you'll be much better off.

Jay,

Realist has openly conceded before that he just loves an argument.
That's why he continues to restart this tired argument.
As long as everyone bites and contradicts him, he has achieved his purpose.
Fine with me.
I find it all very entertaining.

Julia

 

[clowboy]

O look,

Another spinoff property thread

 

[Realist]

Well I apologise for another proprty thread, but you must admit they are popular, it is a hot topic.

No, I have not bought a property, something which I am proud of. I was thinking of buying in Sydney 4 years ago.

No, I have not ever got a margin loan, something I am proud of. I was thinking of doing so in 1999 with tech stocks..

Yes I like to 'waste' a bit of money on wine, restaurants and clubs, but only every so often, you need to live your life and enjoy it. If you truly love cars and truly love driving a new Merc then by all means do so on the understanding you are wasting money, but that is what money is for. If you just buy a new Merc to impress other people think again!

I do spend many hours researching what will make me money and at the moment I believe there are many ASX stocks that will perform better than property, I like to discuss it though as over the next few years there will be a time to buy property, I'm interested in others opinions and there'll probably be a time to sell some shares. Now is not the time though.

 

[Realist]

Do you guys really believe that people who have done OK in life have NEVER been in the position you 2 are or WORSE??

I'm not in a bad position at all, and I hold no grudge against anyone profiting off recent property booms, I do feel for poor people that have lost money because of it though - generally by entering too late and being too leveraged. And I do somewhat resent so called experts telling people to leverage themselves to the hilt to make money.

The first rule of investing should always be "don't lose!!"...

 

[tech/a]

And I do somewhat resent so called experts telling people to leverage themselves to the hilt to make money.

I believe closer examination will find the word SENSIBLE used in abundance when I refer to leverage.

I do spend many hours researching what will make me money
I was thinking of buying in Sydney 4 years ago.
I was thinking of doing so in 1999 with tech stocks..

You'll actually come to the realisation someday that you actually have to DO SOMETHING.

Youll be patting yourself on the back for being so clever problem is opportunities will pass you by as those above did because you failed to do anything.Too much fear!!
Those who succeed also fail.

I do feel for poor people that have lost money because of it though

Well thats comfoting so you'd have had compassion for myself when I lost a House and a Marriage.3 large commercial properties when interest rates went to 18% and I got slugged a further 6% on default back in the early eighties,when my tennents went broke faster than they could be replaced.
Back then it was around $1.8 million I lost---that was the un realised profit I had to sell to avoid bankruptcy plus the house $120,000--peanuts. Started again with no house and total cash of $5k,rented a 2 bed unit and slept on a been bag.That was all I had Oh yeh my Datsun 1600.

The first rule of investing should always be "don't lose!!"...

Learn how to lose!!!!!!!
Cause youll lose often!!!!

 

[Realist]

You'll actually come to the realisation someday that you actually have to DO SOMETHING.

Is not putting the majority of my money into shares in highly profitable fairly priced blue chips that pay dividends, some of my money in trading 'punts' like CQT and MTN and leaving some money in the bank not doing something?

What would you recommend I do instead??

Learn how to lose!!!!!!!
Cause youll lose often!!!!

I have lost in the past, I do not want to lose again thank you very much!!

Graham and Buffet are right, DON'T LOSE!!

 

[clowboy]

Realist,

Funny how the popularity of the thread seems to have more to do with the arguing than property itself, the same crap is just rehashed over and over again.

It would probably help your cause if you could show some degree of consistancy as well. One moment all you eat is homebrand tuna and the next you are lashing out on wine. Make your damn mind up.

 

[Realist]

Realist,

Funny how the popularity of the thread seems to have more to do with the arguing than property itself, the same crap is just rehashed over and over again.

It would probably help your cause if you could show some degree of consistancy as well. One moment all you eat is homebrand tuna and the next you are lashing out on wine. Make your damn mind up.

Rubbish!

Stop the Clock eats homebrad tuna, I certainly do not, never had it even once. Never even mentioned it before.

 

[Sultan of Swing]

That is the conclusion of some stupid woman called Karina in this morning's Daily Telegraph who wrote the book "The power of property".

I think this may be the 'Karina' you're talking about. This is the first post in a thread from another forum where she kindly shared her story with us. She's a gutsy young lady who bought 23 properties in 5 years. Not bad for a stupid woman......

I could post a link to the whole thread if Joe allows it. Obviously, it's a property investment forum.

This was posted on 7th July 2005. Values have risen a lot further since then in WA and QLD.

This post and the whole thread for that matter is truly inspirational.

Hi everyone,

I had a request in a previous post to post my story so here goes.

Just over 5 years ago my marraige broke down and I found myself divorced and living with my parents. I wouldn't wish it on anyone , a really difficult time in my life.

After a year or so I decided to buy my own place and settled on a unit in sydney. I was having a chat with a friend of mine that was really into wealth creation at the time and he mentioned a book he had read and suggested I read it. "rich dad , poor dad , by Robert Kiyosaki" The book really opened my eyes as to the power of real estate and motivated me to read more and get out there and buy more property.

I stumbled across another book by John Fitzgerald "7 steps to wealth" which taught me some great lessons like , land appreciates, buildings depreciate so from now I on I was set on buying affordable houses instead of units which has been a good strategy for me.

I was also introduced to the concept of the property cycle and during John Fitzgerald's seminar (it is advertised at the back of the book) in 2000 the presenter showed us information that suggested that brisbane prices start to rise after sydney prices start to boom. The presenter was recommending brisbane as the place to invest (of course they were selling property there, but I wasn't really interested in buying off them, feel more comfortable soucing my own deals)

I had never really considered buying properties interstate but after spending hours on the internet checking out brisbane I thought it was worth a look as prices were so much cheaper than sydney and it was easier to find properties there that were close to nuetrally geared than it was in sydney.

After doing some searches of key words like " boom suburbs, hot property" in yahoo search engine I came across some articles that suggested that redcliffe was an undervalued suburb , prices started at around 80k at the time so I booked a flight to brisbane and off I went to buy some property. I had a budget of $216k to work with and on that weekend I bought 2 houses. One for $108,000 renting for $140 per week and the other for $107,500 renting for the same.

When I was booking the flight over the phone I asked if she could organise accomodation in redcliffe and she asked me why on earth I was going to redcliffe to buy property, she said brisbane prices don't go up in fact she had a place and sold it because they never go up there and that redcliffe is a dump! ...hmmmm I thought not a good start. (lesson number 2, be careful of who's advise you take , it could cost you a lot of money)

Anyway flight was booked and I was going to have a look. Spent the whole weekend looking at properties (I had lined up appointments with agents in advance so had the 2 days fully booked) Offered on 2 houses and signed contracts on the monday.

When I returned I told a good friend of mine what I had done and he was a bit concerned suggested that I should only buy 1 not 2....also called my other friend the one that suggested I read the kiyosaki book and he told me to be careful not to buy in brisbane that all these people are getting ripped off....so as you can see I didn't have that much encourgament...except for my parents that thought it was great, they have always been supportive.

My strategy at the time was that in 5-10 years when prices doubled I could sell 1 and pay the other 1 off in full. Prices went crazy in QLD and 3 years later I sold one of them in the 280's

My first 3 purchases all occured in 2000. A few months after my purchase I was questioning whether I had done the right thing so you do go through that self doubt.

I then got a little distracted from investing as I met the man that is now my husband but that is another story all together so I will stick to property.

In 2002 a friend of mine asked me if I would go to brisbane with her and help her buy a property I thought sure why not and in the excitment of it all I bought another 2 properties. A similar property in redcliffe to what I orginally bought except it now cost me 145k and a house in redland bay for 167k

I then met through a property forum a young lady that was into positive cashflow, she had purchased many properties and spoke about buying blocks of units and properties that generated multiple rents. I had never heard of such a thing. I thought what a good idea...She mentioned that she had bought a house with 2 flats in broken hill for 49k and was getting 250 in rent...I though what the...so I had a dabble in positive cashflow ended up buying a block of 4 x 2 bedroom units for 175k renting for 440 per week. Also bought a house in elliott heads QLD for 150k (later sold for 225k) and and a house in sandy beach NSW for 169k (later sold for 215k)

I then read some more books, Jan Somers , Peter Spann and one that really stood out for me..."Ordinary Millionares by Jim McNight" it's a book about how ordinary people have become millionares through property investment and each chapter is dedicated to someone's story. Each story uses a different strategy but they all end up at the same place...financially free

I found chapter 4 Jesse's story fascinating, it talked about a guy that bought houses off the department of housing in Elizabeth SA for 25k and rented them for $60 per week, rents then rose to $95.00 and he had bought a stack of them , paid them of in cash after a number of years. It was an amazing story.

One night whilst searching for deals on the web I came across a house for 63k in geraldton WA (brick and tile, about 20 years old fully renovated) I rang the agent (this was Jan 2004) and he told me that there was nothing wrong with the house that it was the cheapest brick house in town but that it was in the worst street in town , there was a family fueding there. He said that he couldn't guarantee that I would get a good tenant but that in 12 months the area would improve as the dept of housing sold off houses in the street. He offered me another home he had for sale that was also renovated but fibro at the same price but in a better part of town so I bought that one along with 4 others in the 70,000 range, rents were 125 - 150 per week.

Having another chat with the agent about the house in the bad street I told him that I knew I would kick myself in 12 months if I didn't buy it now so I asked him to send me a contract and asked if the vendor (it was the dept of housing) would allow me to have a 6 month settlement. Somehow they just signed my offer without paying much attention to the settlment date and by the time they had it was too late it was all signed. I have an excellent tenant there and the value has increased to around the 115k mark if not more. (a fibro has just sold for 120k in that street, so I am being conservative)

The department has sold off the houses and the fueding family no longer lives there.

Anyway I purchased a total of 14 houses in geraldton, mainly off the department of housing at giveaway prices. I don't think I would have quite picked up on the opportunity if I had not read Jesse's story.

I have recently purchased a duplex pair in Cairns for 200k , a house in tassie, a house in goulburn , a house in kalgoorlie (all under the 100k) all in 2005

What has worked for me
1. Buying affordable houses in coastal areas with affordable rentals
2. Buying houses below market value off the dept of housing
3. Buying houses instead of units (land appreciates,, buildings depreciate)
4. Not listening to people that are negative
5 Following my gut instinct
6. Learning from other investors
7 Dedicating time to finding good deals
8. Buying whenever I can afford to buy
9. Managing cashflow and understanding impact of every new purchase to my portfolio.
10. Adding to my portfolio whenever I could afford to
11. Reading lots of books , attending seminars
12 Having a good relationship with lenders and not to give up if a bank says no , just try another one, a broker , you can find a way....

Have I made mistakes sure...read my post about being out of rent for 32 weeks..(mainly becuase I don't have time to check my statements)

What the future holds for me, I guess it's a bit like my original plan wait for prices to double and then sell down to pay down the debt and then live off the rents. In the meantime I'll add good deals to my portfolio. How long will that take not sure, maybe 5 , 10 years whenever the next cycle comes along.

Well that's it folks. Hope you enjoyed my story
Karina

 

[Realist]

Yep, but if you try it now you will get smashed. She got her timing right back then anyway.

Has QLD not dropped in the past year?

 

[Realist]

3. Buying houses instead of units (land appreciates,, buildings depreciate)

An old but incorrect theory.

The next boom may very well be Sydney apartments...

Have Manhattan apartments or Utah land appreciated more over the past 200 years?

Location....

 

[lesm]

Just as a matter of interest, as most of the repetitive discussion is around residential property.

Has anyone considered commercial properties, as opposed to residential?

Cheers.

 

[tech/a]

Lesm.

Yes I currently have 2,been smashed in Commercial before.

Unrealist
Karina's story is amazing.
Yours,dull,colourless,un inspiring,repetitive and boring.

There are many ways of profiting from R/E even in these times.
I'm doing it as well as many others.We arent leveraged to the bejesus (Currently 37%) and yes Joe Average can and is doing what I do.

You'll be one of those guys who look back on life and be an absolute expert in what you should have done.

An old but incorrect theory.

The next boom may very well be Sydney apartments...

Have Manhattan apartments or Utah land appreciated more over the past 200 years?

Do you ever think before putting both feet in your mouth!

Position and Scarcity of land will determine price.

Put an apartment in Manhatten and the same one in Utah,which will sell for the highest $$$s.----and why do you think that is?

 

[cogidubnus]

Rubbish!

Stop the Clock eats homebrad tuna, I certainly do not, never had it even once. Never even mentioned it before.

What is wrong with home brand tuna? I like it especially the one in spring water. It is cheaper than John West and is of same quality. Some homebrand is good, like tinned tomatoes. Their sardines are not nice, I buy brunswick sardines. Homebrand baked beans are tastless but their red kidney beans are very cheap and nice.

 

[professor_frink]

If you are to make money on property investing you need to postively gear if at all possible, get good longterm tenants, and hold to reduce taxes. You also need to pick your time to buy, 70% of years are poor to buy from what I know. Only 30% of years, so 3 out of 10 will you get significant captial gains.

If you positively gear a property, then trying to time your purchase isn't anywhere near as much of an issue. It pays for itself, so you can comfortably hold through periods of slow or negative capital growth.

Investing in highly profitable fair priced shares that pay dividends will give you far better returns.

What good is earning a slightly better return on your investment if you aren't going to use any gearing?

An example-

You and I both have $100 000.
You buy shares with no gearing, and earn 15%
I borrow $200 000 and buy a positively geared property and make 7.5%.

Your return is twice as good as mine, yet I come out ahead.

When people talk about making lots of money about property, it isn't really the "power of property", it's the power of leverage combined with a little commonsense.

It's all well and good to say that shares are a better investment because they return slightly more over time, but it doesn't actually translate to you making more money over time when everyone else uses leverage to buy property and you don't use any to buy shares.

 

[Sultan of Swing]

What is wrong with home brand tuna? I like it especially the one in spring water. It is cheaper than John West and is of same quality. Some homebrand is good, like tinned tomatoes. Their sardines are not nice, I buy brunswick sardines. Homebrand baked beans are tastless but their red kidney beans are very cheap and nice.

I was reading that and thought, 'Hmmmm, my wife is posting on this forum under the name of cogidubnus'. :

 

[Realist]

An example-

You and I both have $100 000.
You buy shares with no gearing, and earn 15%
I borrow $200 000 and buy a positively geared property and make 7.5%.

Your return is twice as good as mine, yet I come out ahead.

Oh dear, oh dear, no you do not come out ahead.

I have $100,000 and I buy shares hold them for one year then sell, I pay $1000 in brokerage, and after tax I make $7,000.

You buy a $200,000 property that is postively geared (good luck finding one) hold for a year then sell. You borrow $100,000 at 7% interest. So you pay $6,000 in stamp duty, $7,000 in interest, and you pay insurance, rates, water, repair/rennovations, advertising, empty time (no rent), agents fees, body corporate fees, then capital gains tax.

after 1 year you've spent alot of time and effort and you've made nothing


Now what happens if houses and shares drop 5%. YOU LOSE MORE.

So the one alternative left is we hold for 20 years.

If I invest $100,000 for 20 years at 15% I end up with $1,400,000. If you do not believe it is possible please refer to W Buffett.

If you invest for 20 years in a house you are not going to end up with 1,400,000 because houses do not appreciate as much as shares do. If you think some crappy $200,000 postiviely geared (ie middle of nowhere) house will go up to over 7 times its value in 20 years you are dreaming.

There is no scenario where you are better off leveraging and buying a property, if so please list how it works on the proviso you include all fees, motrtgages and taxes and houses do not appreciate as much as shares (especially country town positively geared houses).