You got it in a nutshell, Fire Nero [biggrin]

Read Peter Spann’s chapter “The Endless Deposit” in his book “$10 Million Property Portfolio in 10 Years.”
Cheers
Greg

Hi Chris

Can I assume you’ve paid a Quantity Surveyor for a depreciation schedule on your IP? Crucial for tax effectiveness.

Also, DON’T do a depreciation schedule when your PPOR becomes an IP before speaking to your accountant. There may be some pretty serious ramifications down the track (click on Julia’s site http://www.bantacs.com.au and get to know an accountant who’s really property savvy).

Re your fears, you need to develop the stance of the FEARLESS INVESTOR if you’re going to build your wealth. My wife and I have 16 properties, and over the past 20 years have learnt that this game is so easy if you practice three simple rules:
1. When renting is easy, charge the market rent.
2. When the market slips a little, drop your rent 10% – 15% to keep full occupancy (it’s cheaper than having vacancies or high tenant turnover).
3. Be FEARLESS, but put financial safeguards in place and sleep well.

All our IP’s are brick, and that helps, but by following these simple practices we’ve been able to enjoy a long term occupancy rate of 99%.

Go for it.
Cheers
Greg

Hi Michael

Xmas spending spree? Count Niki and I in, mate. Santa Claus is gonna get a hernia carrying that massive chunk of land we’re buying ourselves for a Xmas present!!! Mmmmmm….. Investments for presents… Yummmeeee, don’t you just luv ’em!!

Guess the ham and turkey will have to wait for another Season while we pay off this deal. [blush2] [biggrin] [buz2]

Merry Xmas to all (now where’s that Santa smiley?)
Greg

Didn’t your grandmother mean that if you keep masticating, you’ll go blind?

Ahh, the sublime pleasures some of us get from big words. Anal retentive indeed!!

Some of the nicest people I know are anal retentives who KNOW they’re anal retentives, and can laugh about it. Anal retentives who link with pragmatic visionaries can have lots of fun (Stop it! That’s your naughty minds[cap]).

ROFL

Greg

A friend of mine spent approximately $25,000 going to Burley’s Bootcamp in USA a few years back. He says it was money very well spent, and who am I to question him on that one. Today he’s a very experienced multi-property wrapper. Myself, I’m more like you, Michael, than you might think…. I won’t be spending anything like $25,000, but I will be going to one of Rick Otten’s Boot Camps towards the end of next year with my JV partner who went to one this year. Apart from the information sharing, it’s all about the networking with the real achievers, not the talkers and/or people who’ve psyched themselves into analysis paralysis (that’s clearly not you, in case you were wondering) [biggrin]

Thank you for the reference to Peter Spann’s “$10 Million Property Portfolio in just 10 Years?”. I haven’t read this book and it seems precisely the sort of specific information on how to select and invest in optimum properties that I’m looking for.

Enjoy Peter’s book. I know you’ll devour it. I suspect you’ll also LOVE his tip about how to get a bank’s Panel Valuers working for YOU instead of your bank (amongst stacks of other juicy tidbits he has included in his book).

A good compromise re seminar affordability and effective networking might be for you to go to one of Peter Spann’s seminars (I believe he’s quite $$$ reasonable. His website is something like http://www.freemanfox.com.au If this link doesn’t work, do a google search, PLUS a search on this forum under “Peter Spann” for a long, mega-inspirational thread which ran from July 2004 – October 2004). I’ve never been to one of Peter’s seminars, but he’s DEFINATELY ON MY SHORT LIST. Let me know if and when you’ll be going, and I might be able to meet you there (depending on how sales are going in our rural subdivision). [cap]

I don’t have access to too much in the way of statistical projections, but I am the Demand Manager for one of Australia’s largest MDF businesses. This is a lead team role reporting to the Business Manager.
Okay, expose my ignorance publically, why don’t you Michael? [confused2] (Just joking, my ego can take it!) What the hell is MDF (is it something to do with Mortgage Finance?)

Just to wrap up, are you suggesting that these micro markets are not subject to the dynamics of the macro Australian RE market?
Maybe, but it’s more to do with the evolution of my thinking / experience / growing expertise as an IP investor. One of the real secrets I’m in the process of still learning more about is that “full blown success” really does have EVERYTHING to do with your thought processes. When you use language like “the dynamics of the macro Australian RE market” this is a very impressive and precise use of technical terms, but you flirt with the possibility that you become mentally REACTIVE (ie., you start seeing yourself as a passive victim of market realities way beyond your control) rather than PROACTIVELY searching for, and then confidently applying, strategies which WILL GENERATE (albeit smaller in the down times) profits which are at least partially independent of market cycles.

20 years ago, I was just one of the -ve gearing mugs who went for the good old fashioned “Buy and Holds” because I didn’t know any better. Boy, did I suffer: 16-17 years of negative gearing before the market paid me back!! Then I finally realised there are many, many alternative
a) Strategies…
b) Markets and…
c) Market segments…
out there. And even though I knew all other businesses buy wholesale and sell retail to make a profit, the penny only dropped a few short years ago that this applies to the Real Estate industry just like any other industry. What did this mean for me? That I, too, could start buying real estate WHOLESALE, instead of paying RETAIL price for it. So yes, Michael, I’m devouring all I can about wraps, flips, lease options etc from both Steve McKnight and Rick Otten’s Wrap Packs, but more significantly I’m getting into sub-divisions and will be applying all sorts of strategies along the way. The secret? To me, it’s the subtle sub-text in Steve McKnight’s motto: “Success comes from doing things differently.” My tip is to really chew on that one. There’s so much hiding in there that escapes most of our minds.

And, if I use targeted analysis at the micro level I might still spot an opportunity for an informed investment even in this nationally depressed market? That’s an interesting concept, and I must admit, I thought all of Australia would be subjected to the dynamics of increased interest rates and reduced sentiments.

I offered you Peter Spann’s 212 mnemonic because I thought you’d relate to it as you’ve expressed above. However, in spite of your obvious professionalism, I suspect you’re still at least partially in the more traditional “Buy and Hold” thinking. Don’t get me wrong. I LOVE my buy and hold properties!!! After all, isn’t that what it’s all about? Increasing our net worth by owning tangible assets? Of course, but there are a few other important dynamics to this constantly moving equation. The key is the subtleity of our thinking, our mentality, our thought processes. You’re ruthlessly methodical and rational, Michael, and boy is that ever so refreshing!! My point is that there are 2 hemispheres in our brains, and it’s all about balancing both hemispheres and just “going for it”.

Hope I’m not being too vague or mystical [blush2][blush2]

Cheers
Greg

Hi Nobleone

You’re from Qld’s Sunshine Coast? Me too!! I’m from what is euphemistically called “Hinterland Sunshine Coast” [biggrin][bonjour][cap] and have some nice IPs in Mountain Creek, Mapleton, and Gympie.

Given that a large part of this journey is about networking, how about you pop over for afternoon tea sometime soon and “chew the cud” re RE strategies /opportunities?

Re “secrets”, you’ve already substantially answered your own question with what you said about thinking laterally and outside the box:
“I might have made a good start into IP’s but I still need people like yourself to give me reasons to think laterally and out of the box.”

Perhaps “secrets” is too strong a word, given that this forum is frequented by wrappers, flippers, lease-optioners, developers etc etc etc (from extremely experienced to relative newbies).

I’m a longtime fan of the subtle use of words to get across “hidden” and “not so hidden” truths:
“Success comes from doing things differently”

My tip is to REALLY chew on that one, because there’s a lot more wisdom and experience in there than meets the eyes of most people.

Looking forward to meeting up with you.

Cheers
Greg
PS: How was the beach? My wife Niki and I were out dancing and partying last night, so we’ve had a lovely “veg-out” day in front of the tele watching the Australian Open Golf.

Hi again Nobleone

Brilliantly done re your $2 company, trust, LOC, “go-get’em” attitude, research, involvement in mentoring group etc etc.

And again, please accept my apologies if anything I said above came across as trying to teach you to suck eggs.

There are a couple of mini-refinements I’d suggest re your intention to not buy anything for 18 months: “I like your “212” mnemonic, it’s very apt given that I believe the market is now at the beginning of the first 2 years stage”:
1. My summary of Peter Spann’s 212 strategy is very, very rough. Have you read Spann? Great stuff!! I’ve re-read his chapter on practically applying median price data many times to get the fuller picture.
2. I’m not one of those who intends to sit on my hands and not buy any properties for the next 18 months. Why? Because there are both
a) mini-markets and
b) mini/major market segments
which are still performing attractively. And if, like me, your 5 year plan involves giving up your job courtesy of IP incomes, 18 months out of a 5 year plan is a big chunk of precious, precious time.

One key secret I’ve picked up is that certain strategies are virtually guaranteed to make you a profit irrespective of the state of the market, or what stage of the market we’re at. And to optimise that realisation, another discipline I’m trying to adopt (and I keep “falling off the wagon” lots of times)is to refine my language whenever I’m tempted to talk about “the market” and replace it with phrases like “plethora of mini-markets”. Fussy, but important.

So my tip is to tweak your strategies, or move across into a different market segment, rather than sit quietly for the next 18 months.

Cheers
Greg

Hi Clint

If you want an authorative ruling on that one, you can do no better than PMing Julia Hartman:

[email protected] .

Julia is an eminently respected accountant on this forum (based in Brisbane and Sunshine Coast).

Check out her http://www.bantacs.com.au website, click on the Free Books link for free pdf files of stacks of titles, download a few, and you’ll get a reasonably unbiased idea of what I’m talking about.

Cheers
Greg

Hi Michael

Great post, and congrats on your determination.

For my money, I can’t for the life of me see why you’re prepared to wait so long when this magnificent country of ours doesn’t have one single property market, but rather a plethora of mini-markets, many of them at vastly different stages of their OWN, PERSONALISED PROPERTY CYCLES.

You’re clearly very professional and methodical in the way you go about things; all you need is a bit of “fine tuning” to make yourself into a real property tycoon. To this end, I’d urge you to set aside $5,000 – $10,000 for your personal professional development, and get yourself off to a few highly-regarded seminars / “boot camps”. I hate the term myself, but they REALLY DO WORK, and the networking contacts they bring into your life are awesome.

But back to your questions. I’m particularly interested in:
1. Your comments about TIMING
2. Your access to statistical information
3. Your breadth of PI reading

Have you read Peter Spann’s “$10 Million Property Portfolio in just 10 Years?” (published 2004) or ever gone to one of his seminars? If “yes”, I’m thinking about Spann’s brilliant tips on how to PRACTICALLY APPLY Median Price Data to time your entry into the markets at the most advantageous point of a particular suburb’s cycle (Ch.13, pp56-66).

I was so impressed with this chapter, I even invented a “212” mnemonic to help me remember and apply it:

2 years + 1 year + 2 years = 5 year cycle

2 = 1st 2 years of cycle: RELATIVELY FLAT GROWTH
1 = 3year of cycle: STARTS MOVING UP
2 = 4th and 5th years: MAJOR GROWTH SPURT
ACTION/MORAL: Buy at the end of the 2nd year or early on in the 3rd year of the cycle

Spann’s talking city suburban cycles here; I doubt it works so clearly in regional/rural towns, which are so sensitive to regional employment factors etc. Spann gives an example of suburbs which have risen ON AVERAGE 8% over a decade:

“You’ll see that property growth comes in spurts…. many suburbs follow this pattern: two years flat, one year up, two years jump, followed by a repeat – two years flat, one year up, two years jump. Let’s look at this suburb’s growth and plot it. The first year is coming off a flat period. Very frequently a big growth spurt will follow a flat period like this. Then the growth rate kicks up tp 7% in year 2. This is our warning of the growth spurt to follow. If we had bought then we would have picked up the natural growth of the next couple of years. Year 3 the growth is 16% and year 4 the growth is 20%. If we had bought a $100,000 property at the end of the SECOND year in the cycle, it would be worth $139,000 at the end of year 4, or a growth of just over 39% in 2 years. And this is all pure profit to us. The growth rate then stagnates for a couple of years – no problem, we just sit and wait – and then it moves up to 8% for year 8. This is our warning of the next big jump, and we see 14% and 21% over the next 2 years. That would mean our $100,000 property would now be worth $233,000. Pretty exciting! While you don’t have to be this precise in timing property to make money over the long term, it will shorten the time it takes for your property to double in value and it saves you buying before the stagnant years.”

Please forgive me if I come across as if I’m trying to teach you to suck eggs.

Cheers
Greg