Forum Replies Created
Thanks for all of the great responses. This facility is marvellous as a sounding board for like minded souls.
Most of your inciteful responses have struck a chord. What I really needed was a good kick up the bum and that’s exactly what you have all collectively given me. It gets a bit ‘bluesy’ sometimes here where I live for 57% of the time.
It’s higher up here than the tip of Mt Kosiousko so perhaps the lack of oxygen is getting to me.[blink]
Yep – we’ve set a date for the ‘ambition’ – 28 April 2007…so that ones nailed down. What exactly are the definitive steps in which to realise the goal by that date…no, that hasn’t been nailed down. Maybe a big session with the mentor, the wife and the banker / acctnt is in order when I am next in Oz. Must get out the trusty pencil and calculator as ol Uncle Noel used to say.
Tried doing the “drag the wife and kids with me” scenario…but never saw the family at all. Left for work before the kids got up and woke them up at night when I got home just to kiss them goodnight. We thought we’d improved dramatically going from that gig to the current one. Plus, living next door to the bin Ladens on one side and the CIA on the other side watching them here in Sana’a is one thing…having the wife and kids exposed to all of that nonsense with AK47’s, RPG’s and tanks everywhere is not on.
A holiday – now there’s a novel idea, we had planned to book ourselves onto a lazy cruise for a week or two when our ‘distressed’ property we bought was all fixed up and fully tenanted. Might have to accelerate that reward I think. It’s been since ’99 since we had a holiday…time to just pack up and go probably.
Pulling the plug on the current gig is definitely a big ask. The money and conditions are indeed a big trap. Everyone I work with have son’s older than me here…so it’s easy to slip into the ‘cruisy’ mode for a decade or three if you let it. Chatting with all of them, there’s not a single one that wouldn’t turn the clock back to spend more time with their families when their children were growing up. Great monetary providers all of them, but you can see the pain it causes them when they think back. I don’t want to go down the same path.
Anyway, the chin is now up and actively looking to flesh out this master plan over the next 20 months to unshackle the developer beast from within.
Anyone just happen to have a master plan blueprint handy that I can copy and paste ?? [biggrin]
I can feel that cake getting closer already.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Excellent – I suppose if we are all agreed then that the initial joke was just that…a flippant joke…and we all take it as such, then there really is no substance to any of it – or any of the hundreds of emails like it…or is that generalising to much again ??
“The Lord, in his infinite wisdom, replied, “My son, I feel you have learned your lesson.””
I gather there is no lesson to learn then.
Simple appreciation by both partners for each partners contribution to a healthy and successful marriage where all things (money / housekeeping / babycare etc etc etc) are all thrown into one big melting pot as in ‘ours & us & we’ instead of this constant American drivel of ‘me, me, me & you & I, I, I’.
We (both the wife and I) call these people that initially come up with these very predictable man bashing emails (only in the Western World mind you, and only because the women have it so good…but don’t know anything different…) that spread like wildfire all in the name of a good laugh…optometrists….you know…I (eye) specialists.
I’ve never responded to jokes like that before, and probably never will again, but they do seem to be coming thick and fast in the past couple of years. Perhaps ignoring them is the best approach.
By challenging some of this garbage spread out under the guise of ‘humour’ though, it does seem to elicit some strong responses, so I’m not sure that the content of these jokes really is all just flippant humour.
Enough – I’ve kicked my soapbox away.
Redwing,
Yeah, I think many societies have this problem – perhaps everyone on the forum is either the first or second generation ??
We are planning on making our kids lives quite tough (i.e. not handing them everything on a plate) so that they aren’t typical third generation people – if you know what I mean.
I think the English call it “shirtsleeves to shirtsleeves in 3 generations”.
Surely both the Packers and the Murdochs would be outstanding exceptions to this general rule ??
I read somewhere that Frank Packer was handed about 1.5 MM pounds in the early 30’s by his father. He then did an outstanding job as the 2nd generation and handed Kerry about 470 MM dollars in about ’74. Kerry, supposedly the useless 3rd generation has once again done an outstanding job by increasing that to 7 or 8 BN. Jamie is the 4th generation – and looks to be handling things reasonably well, although his OneTel debacle wasn’t that cluey. All up – they seem to be going from strength to strength. Despite Kerry’s gambling forays, he never bets real big – enough where his fundamental wealth is ever threatened.
There’d have to be a few lessons for all there I reckon. How do we get big Kezza to join this forum ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Simon,
Pretty cheeky there. If you read Melinda’s post carefully – all her friends have partners, they just don’t want to get involved financially.
Melinda, if for some reason your parents werent there, eg. overseas, what would you do ??
Also, what are 18-25 yr old’s standard expectation of accomodation ?? Do you need to be in a place that is the equivalent of your parents house, which they have probably struggled to acquire over the past 30 yrs ?? Would you be happy living in a bottom 10 suburb (yes – the ol’ drossville) in a 2br fibro run down house ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Redwing,
Out of the 300K, what value is the dirt worth ?? Is it up around the 70 to 80% mark ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hiya springchicken,
As requested, please find a couple of comments based on your figures presented ;
1. Well done on where you are right now. At 23 you are going great guns.
2. Let the debt hang for a while. Grow accustomed to it for a wee while.
3. Your breakeven percentage is only 1.8% (16/890). When I started, my portfolio breakeven rate was identical at 1.8%, it was a reasonably successful strategy. Frowned upon by the +CF kings, but successful nonetheless.
4. If you sell one prop for say 300K, your breakeven percentage rises to 2.1% (12.7/590), i.e. you are worse off. Assuming of course your goal is to make money.
5. If you have a cracker of a year – say a 15 or 20% cap. increase year, (133K or 178K), you’ll be kicking yourself you sold down to say 590K holding, (88K or 118K) to gain 3.3K in cashflow. Make sense ??
5. I agree getting your salary up higher is probably the thing to concentrate on.
6. You’ve probably read my opinons before on this, but personally I think 23 is pretty old to be living with Mummy and Daddy. I’d be sacrificing some of the economic benefits of living with M&D to break out on my own. The lessons you learn from this are also valuable.Good luck with your endeavours.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Excellent to see so many people contributing, even some first timers – well done.
I’m waiting for the first motorbike riders to show up. Who’s got a ’93 Fatboy or a ’54 Panhead ?? Probably not too practical for housing purposes – but great for scouting opportunities.
Abby – loved the “it’s a white one” description.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Yeah – not bad….except it missed a couple of things…what did the wife do all day ??
1. It doesn’t mention the wife fighting the traffic and rat race to get to work.
2. It didn’t mention the wife grinding through a day in the office or out in the sun digging ditches all day.
3. It didn’t mention a nasty and vindictive control freak boss who smashed all self esteem and confidence out of her.4. Most importantly, this was completely wrong “stopped at the bank to make a deposit”….I don’t think so….try “stopped at the bank to pay off the credit card”. That point and the payment of all other consumed goods during the day is the very reason for the father going to work in the first place !!!
It’s hardly ever mentioned, and nowhere near as visible as the women’s work in and around the house, but without one partner earning the dosh…everything sort of grinds to a halt.
If you don’t believe me – ask 20 somethings about what they remember of their parents when small and growing up. “Oh, Mum was great, she was always there looking after us…oh Dad, didn’t see him much – he was always off at work.” Money is a necessity in this society of ours and someone has to sacrifice the time so as everything else in the family life can function.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Well we just finished our weekend last night. Where I am weekends start on Wednesday night.
We work 7 days a week, so worked all weekend.
Ah, Saturday morning – start of the working week here. This is the worst time of the week for the locals. Sounds great doesn’t it ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Wow Abby, great to see you posting.
Would love to hear some of your recent development successes. I think the whole forum could learn bucket loads from your experiences and “go get’em” attitude.
In regards to the Perth meeting thing, you conveniently forgot to mention the little club you got going. Now don’t be shy. I thought you did an amazing job as chairwoman and convenor of the inaugural meeting – despite some of the strange cats that turned up. It took alot to organise and probably dented your mobile phone bill a tad, but I gained quite a lot from your residential development experiences.
I presume there would be alot of interest in starting up a Perth club – like the PI forum clubs over on the other side of the paddock.
Maybe we could called it “Abby’s forum” ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Rob and Janice,
To my mind you’ve only asked 3/4 of your question…what’s your intended purpose ??
How many properties of a certain value should you own…..
a) to give you a headache ??
b) to live like a king ??
c) so it takes 10 weeks to inspect them all ??
d) so you can leave paid employment tomorrow ??
e) to be wealthier than all your peers ??What exactly are you trying to find out. Without the last 1/4 of the question, it’s a bit like a piece of string.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Linar,
This exact scenario happened to us 18 months ago.
The bank sent a wet behind the ears valuer around (naturally escorted by the REA). The REA knew the bank was operating on our behalf. During the inspection the wily and shrewd REA managed to squeeze the final figure out of him.
The next Saturday afternoon during a home open the REA approached us and ‘quietly mentioned’ that our bank had valued the property at the vendor’s full asking price….After the wife and I picked ourselves up off the floor, we shrugged our shoulders and gave up.
Their slip up, if we had of proceeded, would have cost us over 50K. Instead, and solely based on this slip up, we walked away from the deal. The REA and vendor incurred a delay in selling the property of over 7 months. (A lose/lose situation if ever there was one).
In hindsight, it was a good thing, as we chased and secured another deal that yields triple what that house would have.
My two suggestions would be ;
1. Don’t pursue the valuers. All you’ll do is incur more time, expense and most importantly give yourself an ulcer. The principal would of dealt with complaints like this before and will be a master at batting away your grievance and avoiding any and all ‘slings and arrows’ that you may throw at him.
2. Walk away and find another outstanding – better deal.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Fascinating to see the responses so far.
“Where are all the really flash cars – the Benz’s and BMWs ??” Good question giddo…
What were people’s initial expectations ??
Any more people like to share ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hey Thomas,
Thanks for the PM. Agreed. Good luck with ’em.
“Wouldn’t be that sorry for them to leave as they over react to issues and then don’t let people in to fix.”
I’m hearing ya. One of the many reasons we dumped them.
Have you noticed how big institutions who are focussed on making serious money in property also don’t play the silly ‘quickly react to whinging tenants’ games.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
thomasp,
I’d like to help you, and have a bunch of contact companies / names / phone numbers and email addresses in my study. Unfortunately I’m not in Perth at present and therefore don’t have access to the required info.
Having just recently gone through the sqm process with A/C consultants for our PPoR, the common thread running through the vendors was their overquoting of unit capacity vs area….my suggestion would be whatever they recommend, go for about 80% of that in terms of capacity. They try and use the ol’ “but it’s facing west and lots of glass” etc etc…
I’m far more interested on a broader level – when you say “will need to do something” do you ;
A) Feel compelled as a Landlord due to simply the tenants running off if you don’t install something new ??
The A/C unit is specifically in your lease agreement and stated they you will cough for all expenses related thereto ??
C) The RTA explicitly or implicitly assumes that it is your responsibility, ‘cos it’s a fixture ??The reason I ask is two fold. Firstly the responsibility of fixtures came up in a thread about 6 months ago and it became pretty murky with residential houses as to who is actually responsible for repairs. Secondly, I find it staggering the length (both in time and expense) to which some LL’s go to – to keep their tenants comfy…despite the tax deductions and depreciation for larger items counterarguments.
My father and elder sister fall over themselves pampering their tenants with all sorts of little luxuries. It’s only in the last 3 or 4 months they’ve realised the tenants don’t give a rats about them or their “worthless house” as the tenants termed it, and try at every turn to squeeze for little extras. This has a large negative effect on their cashflows, and the tenants know it.
Call me harsh if need be, but from my current perspective (non-res where the tenant pays for everything) I’d never chip in to fix A/C’s. One of my gym tenants kindly upgraded the A/C’s last fin. year to the tune of $ 8,000. He knew what the answer would be if he wanted me to chip in.
Who knows, perhaps they are paying you a premium to normal rent levels and you enjoy the running around and extra expenses.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Your question can’t really be answered by anyone until they know the full picture. You could be 83, 53 or 33 years old. What are your accom. plans now that the family home has been sold ??
As a general comment though, it is normally preferential not to trigger a CGT event until retirement, so as to reduce the relevant party’s marginal tax rate right down. Get it down low enough and the CGT might be very small.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Yes Megan you are correct. My post purely related to cashflows between the two situations.
If capital issues are introduced, you are exposed to the growth (or loss) by purchasing.
The ‘differential cost’ of ownership in the first case is $ 69 p.w. ($ 3,588 p.a.). Therefore, the property needs to grow by only 1% p.a. for you to break even with the renting scenario. If it went up by 21K in the year, you’d be well and truly in front.
The ‘differential cost’ of ownership in the second case is minus $ 163 p.w. ($ -8,476 p.a.). Therefore, the property can sustain a loss of 4% p.a. and you’d still be ahead of the renting scenario.
Once the capital aspect of purchasing vs renting is introduced into the equation, it makes the buying alternative look attractive I suppose. The cheaper the place, the more attractive it becomes. Of course you can always downgrade the renting side as well and rent a hovel for $ 100 p.w., that would flip flop the numbers around again. Ah, so many choices and ways to skin the cat.
This discussion completely ignores investors ‘lifestyle standards’, and purely centres on the numbers. Once you know the numbers though, it’s easy to see what your lifestyle standard is *really* costing per annum. Only individuals can weigh up if the price is good value or not.
Surely this is only relevant when you are starting out and have to choose between renting and paying off a NTDD debt. You have to live somewhere – right…ignoring the third option of the free park bench. Maybe Mummy and Daddy’s hotel is a fourth ???
Surely the best solution (which many people already do) is to live in a fully paid off PPoR and carry on with their investing game. No renting, no NTDD debt and no park benches. [biggrin]
The only difficult bit before reaching this comfortable stage is deciding if the PPoR you’ve paid off matches your lifestyle expectations. If so, happy days, if not, you need to carry on with the bunny hop process of upgrading the PPoR and incurring more NTDD (or sell down productive assets).
I’d hazard a guess that it’s these draining and insidious ‘lifestyle expectations’, coupled with the expenses of raising a young family that prohibit the majority of the population from becoming wealthy investors, especially in the first 10 or 15 years out of school.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hmmmm, ‘rent is dead money’….
1. Suggested Solution
Purchase Price $ 350K
Purchase Costs $ 18K
Outlay needed $ 368K
Deposit $ 100K
Loan $ 268K (76% LVR…OK)
Interest rate @ 7%
NTDD Interest per year = $ 18,760
Annual Outgoings = $ 2,500Total needed per year to fund purchase = $ 21,260
Ownership ‘dead money’ = $ 409 p.w.
Rent ‘dead money’ = $ 340 p.w.Conclusion ….Keep renting
2. Alternative (Buy and live in a hovel in Drossville)
Purchase Price $ 200K
Purchase Costs $ 10K
Outlay needed $ 210K
Deposit $ 100K
Loan $ 110K (55% LVR…OK)
Interest rate @ 7%
NTDD Interest per year = $ 7,700
Annual Outgoings = $ 1,500Total needed per year to fund purchase = $ 9,200
Ownership ‘dead money’ = $ 177 p.w.
Rent ‘dead money’ = $ 340 p.w.Conclusion ….Buy the hovel
From where I sit, it looks like it all boils down to your individual lifestyle standards. Just starting out, I set the bar really low, and worked up from there.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Jonesy08,
We struggled with the same issues as you are now going through. It was very tempting to sell one IP to upscale into the new PPoR and bunny hop your way around the place.
We chose not to do that, instead buying a smaller, less expensive PPoR on a decent chunk of land and hold onto the other IP’s and let them tick along. In the end, the compounding capital growth from the several properties working for us swamped the slight nett gains (after all fees and taxes) we would of realised if we had of cashed in our chips each time.
Bottom line for capital issues – keep your IP’s if they are in a good area and reasonable growth is still foreseeable.
In terms of renting, you seem to be struggling between the higher risk / higher return conundrum vs perceived lower risk / lower return. This is the eternal old struggle that everyone goes through. Being only 25, you’ve got time on your side and should IMO be dabbling in slightly higher risk ventures to attract the higher returns.
To me, the decision is easy…go the higher return option, and if it doesn’t meet your thoroughly researched expectations and targets, swing it over to a standard leasing arrangement. It doesn’t appear to be a one way track, where you can’t turn back if it all gets too hairy / scary.
One advantage of the short term corporate gig, is the whinging factor from the tenants should be far less. I don’t know about you – but I place alot of emphasis on this, as this impinges on your lifestyle which to me is counterintuitive…after all, these things are meant to look after you – right ?? Not the other way around.
If you can get the PM to do the short term thing for the same rate, extra bonus.
Have a crack at it.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Fair call F, pretty solid strategy.
We could point to a few suburbs (smelly industrial ghettos about 5km from the CBD) that haven’t grown in the past 4 or 5 years, but are primed to take off (IOHO) and we’ve jumped in boots and all.
HRM, I think GR is getting at asset protection – when you are doing big developments, don’t let your PPoR get caught up legally with the development so you don’t lose your shirt (or house) when things go belly up.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
The A/C unit is specifically in your lease agreement and stated they you will cough for all expenses related thereto ??
