Fear

What does TLDR mean?

Liam wrote:

I am repeatedly faced by scoffs and warnings and head shaking. IT DRIVES ME NUTS.

Hey Liam

Best to surround yourself with like minded people (such as those on this forum) rather than discussing with family/friends.

Cheers

Jamie

Hi Moggy,

I will not be fooled into borrowing to buying property as this only makes the banks richer …. You can try to out run the debt, but lose your job and the bank comes knocking for the keys. Never let emotion rule your head. Don’t buy anything unless you can pay cash for it including a house. Renting suits me just fine. The sharemarket is one source of passive income so long as you can amass a huge share portfolio. But risk is there too. You can combine the two sources of passive income but still problems will come….. It’s all about income….

Wow, that is an interesting take on things. I have heard of people who only ever rent, but also own IP’s or shares to offset the rent. In your case, you are saying “only pay cash for a house” – and I was wondering how you go about that? Are you looking to grow a share portfolio until it is large enough to sell to buy a house?

I do recall a time (about 10 years ago) when one could buy a house on a credit card in Broken Hill – there was even a story where a widow bought her “first home” with the Owners Grant (then $18k) AND GOT CHANGE !! But that is a long time back now.

Anyway, I am interested to hear your side of things Moggy – care to share?

Benny

@lblanden As you can see even from a few posts above people have very different viewpoints. Personally I am in love with property and it SUITS ME JUST FINE that many folk aren’t. If everyone was into property the competition in the market would be so much fiercer. If you stick something (anything) out for long enough you become better than all the jonny come latelys and making profits get so much easier. For me property is that thing and after 15 yrs it gets to be more fun every year. @benny has got good advice above too so read that twice!

Benny: yes you can do it 3 ways through shares or property or savings to make money to buy the house for cash(both passive income creators good for those that can’t work and those that can). But shares are cheaper. Or through saving year after year depending on your income. And as we know through mortgages. But I wouldn’t hold the mortgage for the full 30 year loan term. Only 5 years and no greater than 10. After that time to check the equity level, if the level is high enough to buy the home you want, then sell the invest properties(2 or 3 should be enough) and buy the house for cash the same for your share portfolio once it’s reached critical mass then pay cash for the house. The same for the savings road once reached then pay cash for the house.

Liam .. in one of my most vulnerable times .. and when I was most highly geared .. I nearly threw my hopes away …

Because of a newspaper headline.

It was 2006 .. and I was earning well .. and reaping my rewards .. and making my investment judgements. I remember it very well because in August 2006 a very well known broadsheet .. not mentioning any names but it is a lot thinner now .. released some doom and gloom statistics about how the market was oversaturated and there was a correction due any day now.

Now I turn with this headline to my father .. who has lived longer and seen a couple more markets than I have and is also a successful property investor ..

He says .. ignore it .. they come up with these headlines every couple of months.

I stuck to my guns .. highly geared .. and in that year to end .. spring season .. property marched up 33-38% in my area of investment.

You either listen to the headlines .. listen to the naysayers .. or get on with the doing, using your best judgement to value your cause.

I keep doing the latter .. even in markets where other people are running from them. I have invested in Florida .. Detroit .. Atlanta and now am starting my first projects in New York. Its taken time but the rewards have been worth it .. and with my experience I never doubted my actions again.

Even in this current climate in Australia (which I will rate as VERY average) there are still goodies coming up for sale .. and if you raise your hand at the right time .. you too can be there to invest.

Improve your judgement calls so you can turn around to any naysayers and just say .. WELL I WENT AND DID THAT RIGHT.

I did.

Hi John,
(and all others reading this into the future)

If I had ever listened to friends and family, I would have probably only paid off 60% of my mortgage in the last 15 yrs and I would be sweating worrying if my superannuation would cut it when I retire, instead I have no mortgage, ten investment properties (two within a SMSF) and no concerns about if and when I can retire.

You said a mouthful there. No, let me take that back – those few words said a BOOK-full.

Let’s see now – based on your experience, do I :-
1. Pay off 60% of my house mortgage over 15 years by just making P&I payments, OR
2. Pay it right off, AND be holding 10 IP’s after 15 years?

Tough choice !! Can I phone a friend? *rotflmao* Of course, one way requires a bit more input than the other – in cash and in education. But hey, what a good result. Well done, John.

I hope Moggy is still around and taking this in!!

Benny

Hi Liam,

On a reread of this, it struck me – when hearing “tales of woe” from others, they are usually all about someone being “ripped off” when purchasing a house. As I mentioned earlier, marketeers would fly folks “FREE” to the Gold Coast to stitch them up on a poorly built new property at an inflated price.

Always too, the “clients” would be flown from either Sydney or Melbourne – so that the “clients” would be heartened by the low(er) prices and be thinking “This CAN’T be a rip-off – these new properties are so CHEAP!” It was all cleverly thought through by the marketeers, and they would supply lots of urging, and provide a solicitor to “advise” the clients on the day too.

Well, those of us familiar with investing have known of such things since OUR early days. The thing that strikes me now, and should give you HUGE ENCOURAGEMENT to keep going, is to note that these rip-offs are all SOLUTION properties.

Steve says “Buy PROBLEMS and Sell SOLUTIONS”. Don’t go BUYING solutions.

i.e. Don’t buy H&L packages as investments. Instead, look for situations where YOU can add value to a property once you have bought it. It might be an unloved house in a nice street that needs some $$ (and time) spent on it to bring it up to par. Or it might be a “Renovate or Detonate” purchase that you might rent out while you plan to demolish it and develop the block down the track.

Then again, it might be that you find someone who just NEEDS to sell – e.g. they have already signed up to buy another house, the sale of this one has fallen through, and you can help them to move on – they will cut you a discount just to be free of the problem.

There are many more angles – but I hope that gives you the idea. Always buy problems, and create solutions.

Of course, you need to school up on just HOW to do this so that your “problem house” doesn’t eat you up and spit you out – that is where education comes in. This forum goes some way, as do others you meet, or else find a mentor.

Or, spend some $$ on learning HOW to do all this the proper way, and then just go do it !!

Rock on Liam,
Benny

Hi Liam,

I’ve got a slightly different spin to add to this thread. In the past, I’ve been a fraidy cat. Not an outright naysayer, but often confused by the different concepts involved in property investment, and struggle to wrap my head around numbers.

Partner and I have been together for just over 10 years, we have 12 yo and 3mth old daughters. Its the birth of our youngest that has kickstarted a “Right, let’s do this thing!!” interest in investment property.

But its taken 10 years to get to that point (and I have been apologising so much this last month, its not funny).

My partner is generally more financially savvy than me – he was using margin loans to build deposits from when he was about 16 years old. I saw my parents lose 4 properties in a year when I was a kid due to the sky rocketing interest rates of the late 80’s. Any time my partner would raise the discussion around investment property, I would be anxious – which wasn’t helped by his tendency to use hypothetical figures to justify his strategy! I attended a property investment seminar (OTP scam) and figured if that was what all they hype was about, I’d better find another way to financial freedom. It didn’t occur to me that there could be more than one way to invest in property – so maybe change your phrases – “Cashflow positive property investment” has been a good one with me and some of our family members to get the distinction across on how what we’re doing is different. I’ve also welcomed one especially anxious family member’s comments and questions – it forces me to take off my sometimes rose coloured glasses and find answers that satisfy the concerns raised (or at least address them to my satisfaction).

IF you want to convert those around you to being more positive – ask them what they’re afraid of. What worries them about property investment? Specifically! Ask them what they’ve read, and point them to better information. Ask them how they plan to be financially free – and if they scoff at the notion, let them go. If they look slightly desperate, keep pointing them to more information.

For my partner, he’s been patient while I’ve read, and read, and read (!), asked noobie questions, read some more, in between been flat out working and trying not to spend all our hard earned on “make me feel better” stuff (holidays, furniture – parental guilt is expensive in more ways than one). I really feel for him, and wish we’d been able to have more constructive conversations on property investment much sooner. But we’re here now, and I’m determined to make this work!!

And I’m education our eldest as we go – keep an eye out for her success story in about 10 years ;)

Hope this helps!

Woodlin