Ordinary Millionaies – my review
Cht 1. Ordinary Millionaires – introduction. What did these people have that made them millionaires. Antyhing common eventhough each took different methods to get there.
Ch2. The BenchMark – Borrow Buy, Never Sell. Jan Somers story. This is basis for my investing. Use equity in each to buy next property.
Cht 3. The Renovators – $5m Sydney beach front. Always fixed and sold PPOR for next one.
Cht 4. The Cash Flow Approach – Yes the Steve Mcknight method. This cht profiled a guy in Adelaide.
Cht5 – The Speculator – he would plot values and pick areas for growth, sell then buy again. He was into computers
Cht 6- The Scrounger – used a lot of second hand materials and cheap labour
Cht 7 –The Owner Builder – built her own homes. Bought land built house then did it again. A bit like the renovators.
Cht8 – Higher Use – Buy commercial property eg. Shop and fix it for something better then sell then do it again
Cht9 – The Agent. A real estate agent and how he got into property development and commercial properties
Cht10 – The Banker – how he got into commercial properties and brokered the deals
Cht11 – The Taxpayer – an investor who bought and held and kept as close to neutral by having a very good knowledge of tax system
Cht12 – The Builder – Builder who sought to fix other builders problems. That’s how he was able to earn qucik money
Cht13- Selling Ideas – Like a broker who had options on properties and on-sold to person who really needed it.
Cht 14 – Summary – most fell into property investing, do something anything, got to have some determination, be decisive and have some forethought.Anyway in summary – I enjoyed the book. I will use a combination of many strategies. I believe in the Jan Somers story (buy, hold never sell). I should keep upgrading my PPOR (owner builder, renovators) and maybe look for some positive cashflow properties. Then I may dabble in some property development, then some commmercial property.
Any other thoughts?
Yackadoo,
So many ways to make a million bucks it cant be that hard can it?? Well i am with you on the buy and hold if possible but of course sometimes you have to cut your losses but i think that if i spend time getting to know the market before i buy then i cant go to wrong can i? Haven’t had to sell and bad ones yet. Although i think i could have bought a chook shed 3 years ago and i would have made a hansome profit by now so that doesn’t mean much[
]I think never sell is a pretty good method but it may not suit all people, and sometimes by selling you can utilise that cash better than you can equity.
Never sell is easy to say before or during booms, but traditionally there can be a very long gap, it`s a long time to hold property and have tenant headaches etc.
My method really is to buy, renovate, sell but I do tend to hold some a while until the CG kicks in and ultimately outright I`d like to own my own property plus outright own a few rental properties, and buy/start a different business, something I would enjoy doing that`s not so labour intensive.
I am not patient enough to buy and never sell and I don`t like to have too many houses, just sitting there, lifes too short for that imo.[]Who was the author of the book, is is available at any major bookstore?
Thanks.
What I learnt yesterday, I know better for tommorrow – Dean
Hi Yack
Thanks for that intensive review. Would you mind putting it in the book review thread located in teh Heads Up forum board so it doesn’t get lost.
Cheers
leigh K[]Investment unit for sale – includes a rental guarentee.
Hi Yack,
Read that last chapter this arvo huh? Thanks so much for the review. I’ll probably pick up this book next!
Cheers
BronKenshin, author is Jim McKnight, and yes available at ‘all good bookstores’.
Cheers
MelYack..
read the book Ordinary Millionare$ by Jim Mcnight a while back and enjoyed the reading, people doing well motivates me also..
Think mJim Mcnight was a Psychologist at one of the UNI’s
With your ‘Growth’ style approach i’m supprised your not more into Margaret Lomas’s book’s or such..??
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
“I think never sell is a pretty good method but it may not suit all people, and sometimes by selling you can utilise that cash better than you can equity.”
Markpatric,
yep, in the end even capital gains people need cash.
So, equity is useless if you pull it out to spend on lifestyle. But how about if you pulled some out to buy some +ve CF properties that make you more than it costs to borrow the money? You could get income i,e. the cash you need plus hold on to your assets.
I mean, nobody wants to sell, do they? They think they have to because they need money.cheers-
miniThat`s what I was getting at Mini you can in fact buy more properties with cash than equity, a lot more![^].
In the right market if for instance someone had a CF- property they could sell it and buy a few cF+ ones on many occasions, whereas the equity alone will not allow them to get as many CF+ houses, this can also give you cash in the pocket.
It all comes down to how many houses you want to own and ultimately how much income you want from it I suppose.
Which brings us back to my argument against buy and hold, I feel buy, reno, sell and use the cash to purchase more homes and turn over profit quicker is the way to quick riches, but I do tend to hold for varying periods of time with different houses and you need to keep an eye on costs.Redwig
I have bought and read one of her Books. I have the following issues with Margaret Lomas and her strategy.
1. She has not been investing all that long, probably less then me. I alos had the impressions she has less properties than me.
2. I have considerable doubts about her strategy of targetting new homes to take advantage of the buiding allowance and depreciation benefits.I prefer to pay for something older that looks a little tired and can be painted on purchase and renovate kitchen and bathroom 3-5 yrs later. That way you pay less now and 10 yrs later both properties are worth the same. Its like buying a new car and second hand car. After 10 yrs they are both worth the same.
I reckon (but dont have any scientific proof) that the interest you save is more than the deprn benfits in the long term and after 10 years both properties are the same.
Markpatrick
There ia a book by Peter Spann. I cannot find it now so I cannot quote the name of it. He did what you suggested, buy renovate then sell. Some came up to him and asked what he would be worth if he had kept them all. Thats when it dawned on him that he should keep all his properties. He was able to reflect that ones he sold for $150k were now worth $300k etc. So now he buys, renovates and holds. He uses the increased equity in his portfolio to make his next purchase. Over time the older properties will be ve+.
Others
The think I liked about the book was the different stratgies. I would like to implement most of them. eg borrow for growth, some Ve+ cash properties, renovate and develop PPOR, maybe some property development of existing properties and maybe try some commercial property.
Originally posted by yack:2. I have considerable doubts about her strategy of targetting new homes to take advantage of the buiding allowance and depreciation benefits.
Agreed. New homes have more money in the building and less in the land, so growth prospects are less.
As Steve McKnight always says there’s a limit to the number of properties that you can buy if you’re reliant on tax benefits to pay for them.
Her greatest insight is if there are two identical buildings, one built in 1984 and the other built in ’86 (or better still ’88) then the newer one is going to be a better investment.
But there was a case I deliberately flouted her rule.
I had the choice between a duplex half built in 1984 and a villa unit built later. Both were in good beachside suburbs of a small coastal city. The yield of the duplex was 8.3% whereas the villa was nearer to 6.5-7% as the older duplex was $15-20k cheaper. The duplex’s garden wasn’t flash but it had a much larger land component with a larger backyard, so has more growth potential.
The building depreciation on the newer building would certainly have been less than the interest on the larger loan, some of which I’d rather put towards the next IP!
On a building that cost $80k, building depreciation should only get you back about $600pa (2.5% & 30% tax), which is handy but not the biggest factor.
Had the duplex been built a year later it would have been even better. However nothing like that was available at the time, and I am satisfied that I made a good decision.
Regards, Peter
Yack/ Mark Patrick..
Peter Spanns book is WEALTH MAGIC, again not a bad read, an Australian book also.. think he went from checkout chunk to property hunk ( worked at woolies checkout )
did ‘very’ well for himself, started renovating and selling properties, then was once asked how much $’s he would have made if he *Kept* the properties.. out of interested he worked it out, got a shock, and didn’t really sell the properties from then onwards..
My recollection of the book anyway.. Yack ?
Agree wholeheartedly with his buy well, value add and manage well thought’s also
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Yack I think if you catch the market and hold is good, but in a down market or stagnant it might be better to reno and sell.
I don`t think there is a easy answer but some sell some hold maybe better, why hold when a market has obviously flattened out?.
In retrospect a lot of people would have wished they held!, not only renovators.
But yes hold is certainly a great way to being financial for most people, I`ve never seen a better way out of an average life, but it can take some time.
I`ll hold my ppor once I have the amount of equity I want and my house built of course but rentals are not a long term plan for me at this point.
The only reason I point this out is so people looking for answers and a strategy are given food for thought.
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