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OK, so I’ve found a block of flats yielding 11% gross or 9% nett. They look to be about 40 years old but are reported to be in “good condition” and are on a good sized block in a central location. All are currently tenanted and the property is within our price range. Problem is, they are in a different state and I can’t get out to look at them. I’m thinking I’ll ask the agent the following: When do each of the leases expire, are there any planning restrictions, do the properties contain any asbestos, what is the occupancy history, what are the management agents fees…..What else should I be asking the agent? Would it be sensible to get a local builder to give me a building report or do I ned to go myself? Any help would be appreciated.
I’m new here, but I found it interesting to read about promises and guarantees.
A few years ago I was invited by an acquaintance to dinner with two young investment bankers in New York. I was in awe of the lifestyles they lead and the numbers they talked in. After listening for a while I asked them what sort of people invested with them. Considering the minimum investment for the funds they both worked for was USD$2 million, their ‘average’ investor was miles away from where I was. I asked about the returns and how they made their money. They both quoted returns of ‘up to 25%’, but when I foolishly asked what the minimum guaranteed return was, they gave me a strange look and said in unison “there is no guarantee”. These two guys handled billions of dollars of other peoples money but didn’t give a second thought to the fact that they might lose it all at any moment; that was just an accepted fact. I guess that’s why the US is suffering now.
Since then I have learned that what they said is right, there are no 100% watertight, failsafe, foolproof guarantees. I know because I signed up for one and after 3 court cases and many sleepless nights am left with nothing of my original investment, not because of the fine print, (I read that carefully) but how that fine print was interpreted. Everything entails a degree of risk, and even if you spent a lifetime educating yourself in all the ins and outs of investment, my guess is you will still get stung occasionally. I’m sure there are lots of people who have done extremely well without ever attending one of these seminars (what did people do 100 years ago?). They just learned their lessons by other means, usually trial and error.
As a footnote, of the two guys I had dinner with that night, one now (apparently) is worth over $USD800 million and the other still ‘only’ about USD$4 million. Even for them, schooled in investment to a much higher level than I could ever hope for, nothing was guaranteed.Thanks for the replies and advice.
We’re both in our mid forties Paullie, and we have 3 kids to put through high school (two still in primary), and (hopefully) they will also want to go to university. I guess to a young person starting out we are considered well off, but I don’t think we’ll be enjoying financial security if we don’t improve our position. I don’t think there’s anything wrong or greedy in wanting to be better off unless you fall for a snake oil salesman (as we previously did). Experience can be a cruel teacher, but you never forget lessons like that. I think we’d prefer to learn from people who have actually done the things we want to do, i.e. start slowly, get good advice and support, and progress steadily.The young people you refer to as starting out with nothing will be our children if we don’t get organised and prepare ourselves (and our children) for the future.
Again, thanks everyone for the input.Thanks guys! I get plenty of time to read in my job (I travel a lot), so that will be my first step, going back over all the books I have read in the past and getting some new ones form the authors you mentioned. I’m not hoping to get rich quick, I just want to be comfortable later in life and hopefully have something to show for myself. More importantly, I’d love to have experience and results that I can pass on to my kids so that they don’t make the same mistakes I did. We live in Tasmania so the temptation is to find something locally as there are some lower cost properties around that fit in with our lower risk level, but I realise that investing close to home doesn’t make sense if there are better deals elsewhere. I’d like to find something that is cash flow positive just to get us on the map.
