Hi,

While structuring is important, it is really secondary to the investing purpose to start off with.

Personally, I think you have made a very good (perhaps great) start as it is as I had nothing like your asset situation at 27!!!

My comments come back to a few core issues:

1. The equity in your property may become lazy money if your do not continue to earn solid capital gains. As such, you may like to consider ways to recycle it so it works harder for you. In our business we do this by selling our properties and then buying more assets with the net proceeds. I talk about this concept in my second book and then go into more detail at the MasterClass.

2. I like to keep personal assets personal and business assets business. Mixing the two can create all sorts of mental and financial problems. In short… keep it simple whenever possible.

3. Crunch the numbers on your ROI with your savings. I’e found that many people find they earn a better after-tax return ploughing the money off their mortgage rather than keeping it in savings.

4. Finally, have you ever considered commercial property? There is a world of opportunity there too.

Cheers,

Steve McKnight

P.S. The link to WealthGuardian is: https://www.propertyinvesting.com/resources/11.html

Hi,

It’s been a few years now since I lectured at RMIT on a sessional basis… and I was more in accounting than Eco/Finance. Still, there’s a few people around that would remember my name.

In terms of where to get started – I think Terry’s comments about having some sort of saving plan organised, together with G7’s post about education is good advise.

In many ways you have to mature in your thinking so that you are ready when the right opportunity comes along. For example, in my case, to work out what I didn’t want to do (i.e. accounting) I first had to try it.

In fact, I believe that it’s necessary to reach a low point from which you promise yourself you’ll never return in order to create the motivation to keep going when the situation becomes tough.

Practically then, have a go at working out a five-year plan that pinpoints:

1. What work experience you want to have gained
2. How much money you want to have saved
3. What education you want to have mastered
4. Which people networks you want to have established
5. What life experiences you want to have enjoyed

Finally, don’t let age stop you from having a red hot go. If you want it bad enough you will be able to find a (legal) way to achieve your goals.

Regards,

Steve McKnight

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Hi,

Thanks for your feedback.

Inadequate examples? Hmmm – perhaps more detail may have helped but I would have thought the broad discussion on what each of the Mappers did would have been a great starting point – especially with the mix of people and their diverse approaches.

In any event, thanks again for your feedback and best wishes for the future.

Regards,

Steve McKnight

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Hi again,

In the beginning, I’d spend a couple of hundred dollars buying books. Try to read widely to gain an a perspective of what has worked for others.

Authors that I would recommend are:

Kiyosaki (especially early books)
Allen (anything)
Classon (Richest Man in Babylon)
Burley
Somers
Lomas
de Roos
Spann

If there is any spare change then see if you can pick up a copy of my books too.

Cheers,

Steve McKnight

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Hi,

There have been some excellent tips posted, but I have to say that if you can’t find any good properties on the net then look for other ways to find deals.

Really, there is no substitute for getting in the car and going for a drive as my experience is that not all deals actually make it onto the net and it’s amazing what agent’s will show you when you land in their office and they take you for a drive.

Cheers,

Steve McKnight

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Hi Maria0911,

When it comes to property consultants you generally have two choices:

1. A buyer’s advocate: These guys work on your behalf to find and then negotiate a deal on a property. The ones that I have seen are generally to do with the home rather than investment market, however over the years I have seen some investor-specific schemes come and go.

I’d turn to the trusty yellow pages and see what you can find. You could also ring some agents and ask if they know any names of people they have dealt with.

2. Using bird-dogs. A bird-dog is another name for a fellow investor who sources deals and then onsells the details in exchange for a fee. Naturally, this is far more atune to the investment market and this forum has plenty of tips and insights into the pros and cons of using that kind of service (do a search on bird dog and see what comes up).

Regards,

Steve McKnight

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Hi Daryl,

Do you have a specific need for someone local?

When it comes to tax and accounting, the laws are such that you should be able to use a quality adviser from your non-home town and still get a very good outcome.

I’d encourage you to have a look through the Tax and Accounting forum, which is where I have moved this post.

Good Luck!

Steve McKnight

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Hello Techhowse,

Hmmmm – I see your dilemma.

As a parent, you don’t want to see your child make a mistake and as such generally advise the ‘safer’ road.

Having said that, this is your decision since you are an adult and are now more than old enough to understand the responsibility associated with making independent decisions.

My recommendation is to sit down and work out some kind of five year plan and to then look back and see which path will bring you closest to achieving your goals.

What I mean is that you would be wise to look at the consequences of either decision rather than the actual decision… does that make sense?

For example, deciding to leave Uni may give you more time, but you may then lose out on some key skills that you actually need in two year’s time. On the other hand, leaving work may mean that you cease having income which is critical to your investing needs (both in terms of deposits and also being able to borrow money).

Is there no way to stay at Uni and at your job (perhaps in a different capacity) and also start investing? For example, perhaps you could take your annual leave during school holidays and give investing your best shot for a month and see what happens…???… That way you could test the water without having done anything to radical up front.

All in all, keep thinking through the decision but have enough faith to trust your gut instinct as it is through refining your intuition that you will ultimately become a better man and a better investor.

Regards,

Steve McKnight

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Hi,

It’s important to understand the difference between an investing and a lifestyle decision.

Unfortunately, it’s not a clinical or easy decision when it comes to choosing whether or not to buy a home.

Having said that, I would encourage you to treat the thought process of buying a home and buying an investment property as two separate decisions.

Speaking from a financial perspective, wherever possible I’d encourage you to defer buying a home as the interest and ownership costs are not tax deductible, and as such need to be paid from after-tax dollars.

Practically, this makes it very difficult to be able to afford both home repayments and also save enough to pay the deposits and closing costs on investment property.

To get around this issue, some think that they will be able to use the equity in their home, which is accessed via refinancing, as capital for investing. While this may be the case, the problem with this approach is:

1. There is no guarantee that property values will rise
2. You will only be able to borrow a percentage of your equity (usually 80%); and
3. The more you borrow the higher your debt and also exposure to adverse interest rate movements.

One of the principles of the MAP was ‘Cost = Sacrifice + Delayed Gratification. Steve, the issue you raise comes down to this saying. In my own case, my wife and I rented from 1997 until 2004 while we saved an invested with the view of then paying cash for our house.

Perhaps, in hindsight, we would have been better to buy something cheaper as values have skyrocketed, but to do so would have meant less investing capital and as such would have slowed down the success of our investing.

In the end, the answer to your question needs to be “do whatever brings you closer to your personal and investing goals”. To the extent that you can’t have both, all I can say is that delaying gratification has worked very well for me.

I hope this has helped.

Bye,

Steve McKnight

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Hi again Mandy,

To answer your questions:

Funding Growth

The three ways to fund growth are through (1) Savings, (2) Debt and (2) Realised Gains.

If you use debt then you may find that you reach a glass ceiling. Dave and I saw this limitation from the start, so we used savings (surplus of income over expenses) and realised gains (multiplication by division) to fund our growth.

That is why, although we have bought around 200ish properties over the past few years, we currently own around the 80ish mark. As a general rule, we only borrow 80% (max) of the purchase price and look to repay debt quickly (funnel +ve cashflow to repay debt and also use a P&I repayment basis).

I’m worried for people who have use/are using debt as it may leave them open to problems should interest rates keep rising or else costs of ownership increase.

Mandy, be very careful about funding further purchases from debt. Good on you for getting in the market, but don’t leave yourself open to unforseen risk. Do your sums based on +1/+2% interest rates to see what impact that has on your affordability.

As we are no longer in a growth market cycle, my thoughts are that it is better to go slower but using a sustainable system, than it is to ramp up using debt.

Finally, make sure you have a plan for your property. Don’t just let it plod away… the skill of investing isn’t just getting a return but rather maximising your opportunities.

Cheers,

Steve McKnight

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