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I'll option a whole aprtment block in a resort town for one dollar please Mr. Richard sir. Could you please arrange funding for the option fee?
IP Freely wrote:The median house prices in Australian capital cities when compared to other cities is a furphy. Why? Our expectations for housing has changed dramatically over the past 50 years. We now expect to buy a 4-5 bedroom new house in the outer suburbs at or around the median price whereas 20 years ago we expected 3-4 bedrooms and prior to that 2-3 bedrooms was the norm. If you compare our expectations with those of the highly developed housing markets OS, their expectations haven't changed – they still have the same dilapidated housing and high densities that have existed for decades.There are plenty of affordable sub-median priced housing options available, you just need to know where to look. (There are just as many sales below the median price as above it).
On this theme, the whingers will however continue to complain because they have allowed themselves to be conditioned by the purveyors of instant gratification…..vendors of consume now, pay later, interest free for 40 months, etc.
Solution is quite simple…..pay yourself first by living beneath your means, invest and re-invest the returns to compound. When a deposit is achieved, buy what you can comfortably afford and trade up as salary and equity position allows. Requires a re-evaluation of priorities and expectations.
Note, that I said the solution was simple however I did not say the solution was easy…..easy implies lazy and no effort. People are always free to choose between instant versus delayed (or at least moderated) gratification and consumption.
Some folk like to look rich with fancy cars and high status artefacts…..big hat and no cattle
. The minority just get on with the job and allow tincture of time to do its job………or maybe they're just LUCKY These are less than bullish times, however people's expectations need to return from blue sky well above median house price aspirations that some first home buyers have.
This will be an interesting thread.
OK two years ago, purchased a four pack in Parramatta. Always wanted some units in the mix as I generally go for land rich subdivision potential properties with good amenity and that tick the right boxes as far as my criteria are concerned. However with household demographics (dwelling occupants) reducing, some two bedders were on my shopping list. I wanted a six pack however bought four in one line.
Initial 5.9 % yield in middle Sydney with property very much on the nose at that time. They were underlet. Depreciation very juicy as they were reno'd and had some building write off left. Locked up 7.2 % fixed for five and with rent rises they are now cash flow positive.Any regrets, considering how things have panned out. No! They are leaving money in my pocket and have seen some growth. Middle of the road rents with below median purchase prices, for me was a no brainer. They were strata approved, however I have not registered the strata as I'm not going to sell off one by one. Keeping them in one line reduces costs such as rates, council, land tax, etc. They are 500 m from Parramatta campus of Uni of Western Sydney and the draft plan in Parramatta is potentially going to up zone them to high density residential. I will flip the lid and put another three doors on top of that…….
What I would have done differently is with regards to share holdings I had in our SMSF. I would have pulled the trigger sooner and locked in profits. Fortunately I liquidated all holdings last June to pay cash for a property purchase in the fund. Market has slid even a further 30 odd per cent since then, so not too bad.
You have a good intention to share the learnings here wealth4life, so I think by sharing even further back in time, I hope to help others learn from my successes and also my mistakes as I have certainly learnt from the latter, that makes the cost of our errors worthwhile. If we don't learn then the cost of our mistakes escalates.
I'll go back to wjhen I first started to invest in my early twenties and finish with where I see things heading………
Here are my list of 10:
1. The most important lesson for me is to actually learn from my (and others) mistakes.I started investing in my early 20's very aggressively in old (land rich) properties in Melbourne with poor yields………Ahh! the influence of accountants and negative gearing. Although I didn't know what I didn't know, I had no fear was earning more than enough to cover the shortfall. All are now two or three town house sites and two are actually pre-CGT. There is a strategy for those in a decade or so.
2. Even though you don't know everything, do something.
After the near 20 % interest rates of the late 80's and early 90's, I figured that 105 % lends were not such a good idea at the time. I actually paid down most of my debt diligently and was well and truly positive cash flow.3. Don't park.
Then I parked and missed the boom (by way of further purchases) from 1998 onwards, despite trivial borrowings at the time (in comparison to overall portfolio value), I was so engrossed in my career, that I became confortable in my lack of debt scenario. Did I get anywhere that way? Well not even a dog gets excited enough to bark at a park car. We all know what dogs do to parked cars. They say that if you find others are *****ing on your dreams, chances are you're parked.4. When life serves you up a lemon, make lemonade.
Then I saw opportunity everywhere as I was given a gift disguised as a problem in the form of a physical health challenge…..changes your perspective.5. Reinvent yourself along the way.
Having changed professional path a couple of times since due to health problems, I also saw that I needed to get more actively involved and after a dinner one night with friends I was compelled to take action again. One friend declared outlandish net income requirement to live in his retirement that was actually more than he currently earned and we are both in our forties. When I asked what he was doing to achieve this, he had no plan of action, beyond 9 % super.6. Learn what not to do from those who are not successful.
Following on from that dinner, I thought how interesting it was that he had audacious requirements and expectations, without a roadmap or plan of action to achieve this. I knew who not to ask for advice.7.Begin with the end in mind.
I worked out how much we needed to be fully independent and worked out what net worth and yield would be required. I then set about buying more properties. I read more than I had ever done and worked out a strategy that suited us and my capacity to service debt.8. Be flexible and adopt an abundance mind-set.
Our original plan has now been modified to achieve higher and greater things that can be shared amongst others where money can do good.9. Enjoy the journey and pay close attention to those who are where you are going. Listen more than you talk and following on from this, be interested (in the other person), not interesting.
10. Think Big. Life is too short to be little.
Where to now. I've posted in other threads here that I'm sitting on my hands at present. No share holdings whatsoever. I don't have off set accounts so my cash is in term deposits. Return not so great, however I'm loathe to borrow big now to develop or buy more. I don't believe the next 12 months will be better; I think until the wash-up occurs with job losses levels out, it is a case of watch this space…….eyes wide open, research well and if a positive cashflow opportunity comes along (with value add potential to increase doors), research it well and if it suits strike fast. That's my bias on things. It isn't necessarily right, but that's where I'm at and where it has brought me to date.
I am prognosticating that I will likely enter the stock market before I buy any more IP's, but who knows. I have certainly learnt my lessons to act unemotionally when executing stop losses and am re-reading some of my trading and mindset texts to prepare me.I trust this story hasn't bored too many of you however, I am happy to share with like mindeds so we can all leverage our knowledge as we learn off each other.I wish everyone here every succe$$ in their journey.
No worries K. Thanks for clarifying what you meant.
With 327 posts to date, no one could could ever accuse you of spruiking, when providing support to a product, course, educator or strategy.
Thanks for the heads up Steve,
Don't own any IP's in mining areas. Investigated last year and decided against it.
In fact I saw more safety in, say, Mackay, where although a daily commute was a chore it was achievable if looking at the mining market tenants. As a town with some critical mass, it has other positives going for it with permanent residents, tourism and the like.
I still didn't buy. Sitting on my hands at present and looking for opportunities. As W4L mentioned, the second half of the year will be most interesting and telling. My LVR's are very conservative and I own no stocks currently. Cash may not be king right now as far as return goes but it's safe from the volatility. I don't have an offset to park it in. I've also got two fixed loans coming off this year so hip hip hooray for that
I've invested thru the late eighties and early nineties and survived to tell the tale with recession, high unemployment and very high interest rates. I don't remember such rapidly falling rates however with rising rents (for now) and a reported housing shortage. Interesting times indeed…..
Will the stock market lead the other sectors out of this? What are people's thoughts?
Thank you for your insightful opinions Chris, and for taking the time to post.
I'm sure others here have learnt plenty along with myself from your two posts above and your earlier thread:
https://www.propertyinvesting.com/forums/property-investing/commercial-property/4325441I will contact you if I have any specific scenarios or potential deals that may need further exploring. Appreciate the offer. I cannot give you kudos votes on this board so I'll declare them in the public domain. KUDOS
Thanks mate.
Nice first post, already looking after the welfare of all here on this forum.
I have a couple of questions, friend!What time does the bus tour leave?
Will they accept an option?
Will they vendor finance?………………………………………
. The minority just get on with the job and allow tincture of time to do its job………or maybe they're just LUCKY 
