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Lets not confuse business owners with Share traders and share investors.
Can I tell you a story.
I grew up in Mentone and attended schools there. When I got my licence 1983 – we went away for a canoeing weekend and had to pickup a canoe from Aspendale. I thought what a shitty area. Now I live around the corner and always drive pass the house where I picked up the canoe.
So back in 1983 i never imagined I would be living in Aspendale.
Chelsea is still a bit rough around the edges. There are many units on the Frankston side of Thames Promenade.
Beachside is undervalued and not appreciated in the eyes of Melbournians I reckon. After all Aspendale, Chelsea etc were like Rye, Rosebud is today. A holiday area where you did not spend alot of money on the house unlike Kew, Hawthorn etc.
My Dad grew up in Highett and people used to go on their holidays by train to SEAFORD. You gotta laugh now when I hear that story.
Personally I reckon those surburbs from Mordialloc to Frankston will boom. Low income earners are being squeezed out as people are starting to appreciate the bay/beach and the train/transport.
Many of my mates have moved into Aspendale/Edithvale/Chelsea. I am 400m to train station and 500m to beach.
Hi Mini
I would love to compare notes in 5 yrs time. Lets say Aug 2009.
Lets compare where your at and where I am at in Aug 2009.
If I am going to renovate a property I would rather a return of $70k on a surburban property than a $20k return on a rural property.
I am gainfully employed and can afford to buy growth properties that require some cash from me first up when purchased.
Let me respond to these questions –
<<<<1/ you say you turned 10k into 500k since 1997, a return of 5000%. Do you think you can now turn this 500k into 25 million in the next seven years? If not why not?>>>>>
In short – No. I am limited in my ability to borrow more. I also do not think its a good time to be overextended on borowings. My assets base is around $1m. In 7 yrs time I expect the asset base to be $1.5m. They say property doubles every 7 yrs but as we are at a peak in prices, I expect property to rise 50-70%% over the next 7 years.
Being conservative I expect to turn $500k now into an extra $500k.
<<<<2/ Do you think you could turn 10k today into 500k in 2011 using the same strategies? If not why not?>>>>>
Almost. If you had a salary of $60k and was able to borrow $400k. I reckon you could probably make around $300k by 2011 starting with $10k. I could have made more than $500k if I had bought houses and not units.
<<<<3/ What is the nett bottom line return of this 500k equity and could you maintain your present lifestyle without selling any assets? If not how much equity would you need to fund your retirement?>>>>
My present lifestyle is not effected. I am on a good salary in the IT industry. My salary is able to fund my lifestyle and property investing. I have a wife and two kids at kinder age.
We have a reasonable lifestlye – we run two cars, the kids are at 3 and 4 yr old kinder and the oldest starts school next year. We have had regular holidays over the last 3-5 yrs – Qld, snow for a week and Merimbula twice in the last 4 yrs. We live in a median priced house about 24 kms from the city about 500m from the Bay in Melbourne. Its not fully paid off. As a family we are off to Canada and the UK for a wedding in a few months time. Funded by the gain on the sale of the last property and tax refund. We dont eat out at restaurants too much (twice a month) and try and limit take away as well (once a week). My wife is busy enough looking after the kids so she does not work. She does see a personal trainer once a week.
I am not at retirement age and expect that when I do, I would need to sell a property or two to pay down some debt. To fund my retirement, I reckon I would need triple ie. $1.5m equity.
<<<<<4/ Some economists are signalling a major deppression starting at some point in the next decade (let’s leave aside whether they are right or not for now) If this eventuates, how would your strategy stack up? What effect would this have on you retirement income?>>>>>
I sold my latest purchase about 6 weeks ago. I cashed in the gain (I expect property to be flat over the next 2-3 yrs) as the interest was going to exceed the growth. Now my portfolio is neutral. I am well placed for my next purchase. Based on what I have learnt, I will look for a house with room in the backyard to develop. Or a house to develop.
If I had my time again I would do a few things differently. But property is the key and even now is the key to investing in my opinion.
I am an accountant and do know a little about shares. I have exposure to shares in my super fund.
The thing I like about property is this. The time value of money.
Property Bought 1997 $100k – salary $60k. Rent $140 per week. In 2004 $270k and salary $100k. Rent $205 per week. The Salary are rough figures but as you gain experience salary increases as it does for inflationary purposes.
Notice that just by holding the property its increased in value and for very little effort. Your pay and rent increases and repayments stay the same. The only effort is the odd phone call to property manager.
<<<I like both shares and property I feel they both have a place in my investment plan.>>>
You are in a better position than me to answer this. Have you made more total dollars out of shares or property?
So lets say someone comes to you and says – I have limited time, energy, capacity etc. I want to retire wealthy with an asset base of $1m.
Am I better off devoting my attention to property or shares?
Ok – lets say someone comes to you and says – I have limited time, energy, capacity etc. I want to retire wealthy with an asset base of $1m.
Am I better off devoting my attention to property or shares?
There is no doubt in my mind that Property is the way to go.
My views on Chelsea.
If its beachside of the rail – go for it. I reckon its an underrated area. Well I reckopn everything beachside of the rail in underrated.
If its the city side of Thames Promenade its ok.
If its the frankston side of thames Promoande – i have my doubts. There are units everyhwere and its a bit of a battlers area.
If I was looking in that area for a 2 bed unit, unless its beacshide, I would pay a little extra for around Mentone or South Frankston.
I live in Aspendale.
<<<Lets have a good example if you had put your $10000 in caltex in may last year it would be worth 4.5 times more or $45000>>>
Did you buy caltex in may last yr? Probably Not. So Caltex is one stock out of 10,000 stocks or whatever it is. But a trader would have bought and sold before they received the 4.5 times return.
<<<positve cashflow opportunity>>>
Is that the only reason you have decided to invest in that town of 1500.
There is more to investing in property than positive cashflow. Do you earn enough postive cashflow to make it all worth your while.
What do you reckon the property will be worth in 5-10 yrs time?
Having a property manager able to manage my property is a MUST for me. But I dont invest in regional or rural areas.
Can I ask – have you read more Books than 0-130 properties in 3 1/2 yrs?
as its only a small amt – i would whack it all to repairs – but the ATO would probably rule it as capital expenditure.
Sounds like capital expenditure to me. Thats the state the property was in when you bought it. You incurred capital expenditure to get it to a state suitable for renting.
I believe some of the people running the show have a history with Henry Kaye. ie. worked with him.
Not for me.
<<<<when ALL occupants are avail,& get a video, &/or photo’s of them.>>>>
There maybe some privacy issues. I would just stick with the law and do things with the property manager.
Congratulations on the new Book. I look forward to reading it and I am also looking forward to reading the new Peter Spann Book.
One is more positive cashflow while the other is more growth oriented. So by reading the two I get a more balanced view of property investing.
I would love to be at the book viewing but I will be overseas at that time.
Why did you not list the properties for sale with the property managers agency? I always list a property for sale with the property managing agency.
How far away from your home is this investment property?
I suppose thats always a danger of having a rural property. It almost sounds like there is a shortage of tenants in that area if the agency owner is doing this type of stuff.
If there is nothing you can do – I would march down to the property managing real estate agency and contract them to sell the properties.
Hey – you guys should read the Book by Peter Spann – he renovates and holds and then with increased equity buys the next.
He used to renovate, sell, then buy the next. Then he realised he would have been better off if he held them instead of sold them.
Anyway worth a read.
My advice would be to put a sign out front and some ads in the local paper.
<<<<On another matter i’d love fixing my loans for 15 years at 5.49 %>>>
Me too. But I was more referring to the sentiment that as the US economy comes out of recession, increase rates will rise.
Rates head higher Inflation fears help push 30-year loan back over 6%
By Steve Kerch, CBS.MarketWatch.com
SAN FRANCISCO (CBS.MW) — U.S. mortgage rates rose in the week ending Thursday, sending the benchmark 30-year fixed-rate loan back above 6 percent, Freddie Mac said. The 30-year loan hit a national average 6.08 percent, up from 5.98 percent a week ago.
The 15-year mortgage, a popular refinancing choice, jumped to 5.49 percent from 5.39 percent. One-year, Treasury-indexed, adjustable-rate loans also were up, to 4.17 percent from 4.12 percent a week earlier.
All three loans required the payment of an average 0.6 points to achieve the rate. A point is 1 percent of the loan amount, charged as prepaid interest.
Freddie Mac (FRE: news, chart, profile) chief economist Frank Nothaft said the hikes came on the heels of market expectations that the Federal Reserve may move more aggressively to raise interest rates to combat inflation.
“So far, inflation seems to be under control, but if the economy should heat up too rapidly, the Fed would have to act quickly and decisively,” Nothaft said.
So who know!!!!!!!!!
