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From the 30 Jan 2004 Newsletter.
It refers to the MAP.
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The Secret to How to Eat an Elephant
===============It takes vision to set big goals and courage to try to achieve them. Over the last few years I’ve been able to accomplish some rather significant achievements, like building a massive property portfolio and even writing a best selling book when I barely passed English in my final year of High School.
This isn’t a chance for me to pat myself on the back, just to recognise that if I hadn’t taken some massive action then I’d probably still be unhappy working as an auditor.
All too often we stick to what we know and don’t venture out into the unknown. Uncertainty is a big killer of our dreams and self-doubts about our ability make it easy and comfortable for us to stick to what we know, yet doing this doesn’t allow for growth.
Although there’s always a lot of hard work, faith and discipline required, once you’ve attained your goal, in hindsight it never seems nearly as challenging as it was when you began.
I’d like to ask you a question and invite you to spend some ‘honest time’ contemplating your answer. It’s this: “Thinking about a big goal you want to achieve this year, do you really believe you have what it takes to get the job done?”
If the answer’s ‘yes’ then you owe it to yourself to give it a red hot go – not tomorrow or next week, but starting right now!
This is a point that I make time and time again in the mentoring meetings I’m holding for a select group of investors. It’s a message that I tell these guys over and over again, and I think that now for some, seven months in, it’s finally getting through.
For example Rachelle, a 23 year old just starting out in investing, went and bought a 23 bedroom + communal lounge + kitchen + laundry and 3 bathrooms boarding housewith a cash on cash return of 35% as her first deal.
At the time she didn’t have the necessary money to close the deal, and this was just one of the many challenges she faced along the way. Her comment on reflection was “”There were plenty of times when I thought the deal wouldn’t go ahead. Yet my doubts were just obstacles, and so
long as I kept taking action (and seeking advice), I made gradual yet ever increasing progress.”Another participant, Robbo, has just quit his safe financial planning job and relocated overseas as step one in his effort to build an investing business. It’s a massive step of faith – a full immersion property investing experience, but something which he said if he didn’t do now then he may never do at all. He correctly noted that he can always go back to his financial planning position with another employer if things don’t turn out as planned.
We might be one month into 2004, but we’re still in the dawn of a new year. What will be your big achievements this year? This time next
year will we look back and conclude it was more of the same, or will we be able to transpose some experiences ahead to the highlights reel of your
life?I encourage you to think big and to map out the next few steps to further your success. The way to achieving massive goals is the same as the
secret to eating an elephant – take one bite at a time.I have always pondered the same thing. My kids are 3 and 4. I am keen on a holiday house and want to negatively gear it.
TO do that I will
a. Make it available all year round, and I will use it when not rented.
b. I was always worried about the capital growth – as they say its a lifestyle issue v investment issue. But the peninsula and the bellarine areas have gone ballistic – so there may not be the worries after all.
c. My parents had a holiday house and sold it when we were teenagers. We did not want to go down there and Mum reckons she had to clean two houses. Its was sold for $25k now its worth around $280k. Now we wish we still had it.
d. as the property will be geared and claimed for tax purposes I propose a cleaner and gardener and mtnce dude can fix the place up and I claim it on tax. I cannot see why that wont work.
e. For $800k you must be talking about Lorne or something.Anyway – my thoughts, when the time is right I will do it. I look forward to further debate.
PS. I prefer the holiday areas of Melb than rural towns and regional centres like ballarat.
This post is discussed by Steve McKnight in his latest newsletter (30 Jan 2004). Its a great reply and I feel that all newbies should read it before they do another thing. Its advice I totally agree with.
I hope my questions are not interpreted as hostile. We all have a common interest/passion here in property investing. I hope you agree.
But an update would be good. Just be honest. If someone has dropped out, so be it. If opportunities are limited, so be it – we all have this experience.
Are the Mappers experiencing the same as everyone else. I would imagine they are. So please let us know so we can all share similar experiences like we do by reading and contributing to this forum.
have you looked at the area around the unit? what types of tenant cars are there? Is the complex looking dirty or reasonably clean?
I have a 2 bed unit with study worth around $200k and I am struggling to get a tenant for $150 a week and I am in surburban Melbourne (Sth Frankston).
So good luck.
I totally agree with you. We are at the stage of the property cycle where the returns are not worth the effort. Again thats MY interpretation.
Yeah, prices are just stabilising. Yeah there have been some decreases (only minor) but thats good. You cannot expect good growth every year. The surburbs I invest in Mentone (down 1.8%) I expected and South Frankston (up 16.5%) I sort of expected as this area has sort of exceeded my expectations. However there is some good stuff happening there with a Marina, restaurant on the beach above life saving club and over $100m worth of future developments in Frankston CBD including a marina development.
Actually if there are any dropout, I would love to know why! What were there experiences? Why did they change their minds? They were all extremely keen at the start? No opportunities out there now? Return not worth the effort? The property cycle not good for positive cash flow at the moment? How many properties has each bought? So many questions?
Are any of these MAP people using these forums?
So if the Millionairre Apprentice Program is up the Schinzenhousen, then is it fair to say the substance to the Book 0 to 130 properties is not really as relevant at this stage of the property cycle as it was 6 months ago?
If we all started this program in 1997, we would all be millionairres now in 2004.
Keep your principal place of residence PPOR as a hedge when you get back from overseas. My wife and I went to San Francisco for 12 months. If we had sold our PPOR we would be in the shit now.
As for selling the negative geared property or not. As you have little income it may be worth selling and using that equity in your PPOR as prices may stablise and go down a little over the next 12-18 months.
I would love $5 for every time I have heard someone say “if I had not sold that palce it would be worth $XXX,XXX now”
I myself would keep the property and then later get some positive and negative geared properties.
When you see a place – you know within 11 secs if its the right place for you to purchase.
If that does not make sense, then read the Book – “From 0 to 130 Houses in 3.5 yrs”
Its the premise of the Book.
Westan – you are right. I dont really have much idea about rural properties. I rather invest closer to home so I can keep abreast of my investments. I also work full time and dont need travel pains. I also want properties close by so I can add value to them by doing periodic renovations amd make cosmetic improvements.
Maybe one day I will look at places like Ballarat, Warrnambool (we used to go their for our hoildays as kids), Bendigo.
There are no opportunities at the moment, so I am not going to waste my time.
Which means there are more opportunities for the Millionairre apprentices and newbies.
All I am really saying is that we are at a point in the property cycle where the 11 sec rule is highly unlikely to be achieved. Unless you buy a rural property where the hassles, in my view, exceed any postive cash flow you can get over the LONG TERM.
Let me give you an example of where, I wish I knew the 11 sec rule back in 1997.
In North Frankston (otherwise known as the Pines). Its a housing commission area and the reason Frankston even today has somewhat of a bad name eventhough they border on Mount Eliza and the mornington Peninsula.
Back then in 1997 you could have bought an ex-housing commission house for around $40-$60k. Rent would have been $130-150. Great return if you were prepared for the odd hassle and meets the 11 sec rule.
Now in 2004, the same properties are going for between $150-$200k and the rents now are still around $150- $180.
This is because of the property cycle we are in.
Is the 11 sec rule relevant in property investment? YES. Is it relevant today in the current state of the property market/cycle? In my opinion NO.
Property Investing is a long term proposition. I will wait because one day those properties in North Frankston will come on the market with good returns and meet the 11 sec rule. BUT IT IS NOT TODAY.
Agree/Disagree
aussierogue
I am not sure what you are saying. Are you saying you would only buy if it met the 11 sec rule. Or are you saying you would still buy if it did not meet the 11 sec rule but was a quality property? Or are you saying there are n decent properties out there that meet the 11 sec rule. I am confused by your last post.Today Tonight and ACA ALWAYS play these stories. Every 2-3 months you will see them. I reckon its part of their TV program formula. I always have a good laugh. Usually those caught with a bad tenant have done the rental themselves or they have a VERY bad rental manager.
I remember a few months ago there was this couple who trashed a house. They did not even live there except for their dogs. There was dog crap everywhere. They were probably growing stuff there. ACA tracked them down to a nice house they were renting. If they had a regular inspection from an property manager then there would be no problem. Should be a good story in a few months.
jarmbie
How far from your house is this place? Are you able to easily get to this place to assist in getting quotes and doing a few things yourself to make the property more tenantable. Five months with no tenant is a red flag for me. No proper running water – Do you really think thats the only problem. Good Luck.
I am surprised there has not been much debate on this topic
There is a database that property managers contribute too and use. I dont know the name of it, but thats one of the reasons I always use a property manager.
I would prefer to sit on my bum and do nothing than buy $50k-$100k properties that give me a $1,000 positive cash flow.
There will be some good opportunities in the future. I would rather sit tight now than waste my time with the hassles of these rural properties.
I just could not believe how prices were increasing so much and that interest rates only had one way to go, and thats up. Well more like 2 yrs ago. Thats when i bought my last property and I was umming and aaarging about whether to buy or not. Or wait for prices to go down. At that stage I thought they might. Since I bought the place prices have gone up, they have also gone down in the last 3 mnths but not to the stage of what I paid 2 yrs ago. I am still well ahead.
But the point is, even then (2 yrs ago) I thought prices may go down.
