Great post Terry. I have one question relating to Strategy 11. You mention borrowing 105% from the start. Can that still be done? I haven’t bought a PPOR for almost a decade so am not familiar with such details.

cheers
Pete

I’ve used “and/or nominees” on-selling 2 blocks of land between signing the contracts and settlement dates here in South Australia, but not sure if what I did is comparable to what you have in mind. As I used an “Assignment of Contract” to sell both blocks, I never got to settlement personally so didn’t have to pay stamp duty (that I recall). Also, this was 9 years ago so things may or may not have changed since then.

As TerryW wrote best get some legal advice.

cheers
Pete

• This reply was modified 7 years, 2 months ago by  Pete.

Hi Corey,

Does the security for the guarantee have to be property? I have 100k which I invest with a local developer, for which I get a cash return at the end of each development. Could this investment capital potentially be used as a guarantee to purchase more property? Am currently weighing up whether to take one of my IPs to 90%LVR to release funds to buy another IP, but the LMI is going to cost somewhere around 9k to do so. If I can avoid having to fork out 9k in LMI then that’s a win obviously.

cheers
Pete

Cynthia a couple of books I found a worthwhile read are “Borrowing to Invest” by Noel Whittaker, Steve McKnight’s 0-130 properties book and Gavin McPhersons “Value Investing in Property”. The first two books I read about 10 years ago when I was just starting out, so can’t say how relevant they are today. Noel Whittaker’s book compares borrowing to invest in property vs shares, Steve McKnight’s book was an interesting read but the strategy outlined in this book just wasn’t for me. Gavin McPherson’s book I read in August of last year and I really enjoyed it. A slightly different strategy to other books I’ve read, so learned something new.

I’d suggest have a look in your local library and see what they have.

cheers
Pete

I can attest to what Benny is saying about having negatively geared properties being cash flow positive. I have two IPs, one positively geared by around $70/wk and the other just scrapes in to positive territory by just a few dollars per week. Even though I’m in positive territory by just over $70/wk a week across the two, by the time I take depreciation into account, on paper I’m back in negative territory so still get cash back at tax time.

cheers
Pete

I totally agree with you on this Dean. How can a landlord be held liable for something that’s happening outside the boundaries of his property. If the tenant has an issue with the smoke (which I completely understand), let them leave but how the hell can they be entitled to compensation?!!

If the smell of the cigarette smoke had permeated into the apartment that badly making it “uninhabitable”, could the downstairs neighbour be sued for damage to the property I wonder?

cheers
Pete

Jamie Moore wrote:

DeanCollins wrote:

uhm those percents add up over a few properties. you wouldn’t suggest not bothering to haggle over interest rates as you wont be holding the mortgage for the entire life of the loan.

You’re right – it’s just important to not always focus on “lowest” costs. Investors get caught up in wanting the “lowest” everything and often overlook other important facets. Cheap doesn’t usually equate to best.
Cheers
Jamie

I would add to this that expensive doesn’t necessarily mean you’ll be looked after either. I’ve typically paid around the 8% mark over the years, but have paid 11% at one agency, with their service being the worst I’ve experienced.

cheers
Peter

Have any of you that are looking into this mentorship done any research of your own yet? There’s a wealth of information out there, and most if not all of it is free. I’ve read a bunch of books (each book had a different approach), and each method had its strengths and weaknesses in my opinion. I read up on several different strategies, then used what I learned to develop a strategy that’s best for my personal situation. As everyones’ situation/circumstances are different, I have my doubts that any one company offering a cookie cutter, everyone gets the same info approach, no matter how successful it has been for the author/mentor, is right for everyone. And to hand over $10k or more to find out if that particular strategy works for you can potentially waste your money.

$10k could be better spent going towards the deposit for ones’ first IP. There’s forums like this one where there are lots of people who are happy to share info to help you on your way. I started out reading books from the library, bought my own copies of books that I liked, and have been successful in building my portfolio without ever paying for any information (other than a few books). A good mortgage broker (preferably one who invests himself/herself goes a long way), I wouldn’t be where I am today if it wasn’t for the relationship I’ve built over the years with my particular broker.

If you take into account the costs of purchasing your first IP, then adding $10k on top of that, you might need a few years of capital growth just to “break even”.

cheers
Pete

I’d also like to hear how you arrived at your opinion of property investment Moggy as your views scream “bad experience” to me.

Losing income, particularly your job, is not a good position to be in, but it doesn’t mean the end of the world. This is my story of the last 8 years which I believve is a good example of this.

Near the end of 2008 I lost my job at the worst possible time. We had just bought our current PPOR and were in the final stages of building an IP, so we were forking out each week two mortgages (not even taking into account the costs of our 2nd IP) with no income coming in from the IP we were building.

On top of that, the day after I lost my job, my partner started 12 months unpaid maternity leave as our first child was due to arrive in a couple of months. Then, only a week or two later, I got not one but two margin calls on the loan I had against my share portfolio just a month or so apart. Given that I only got $16k redundancy, that money disappeared very quickly. $6k for the margin calls and $900/week on mortgage payments, then there were living costs on top of that without so much as $1 of income coming in.

It was a horrible position to be in, so what do you do? Give up and lose everything? or do whatever it takes to get through the tough time? I had been working as a tradesman doing nightshift in the mining industry so I was earning some really good money, but I ended up working in a factory for well over a year getting paid $40k p.a. as the GFC was in full swing and that was the only job I was able to get at the time. I would have cleaned toilets if that was what I had to do to get by.

My point is that when you lose your income, if you’re prepared to do what it takes to get through the tough time, then you’ll probably come out the other side of it relatively unscathed and hopefully a new perspective on things. We got through the tough time, I am now back working in my trade and we’re in a better position than ever. Yes, it’s taken some time to recover financially as we had to use some LOC’s to supplement our income through the tough time, but we managed to keep all our properties. My share portfolio took seven years to recover, but it DID recover and I’ve now sold my shares and am now more liquid than ever and didn’t lose a single property.