Nerves of Steel – Whats you Risk Level?

Hi SIS,

I’d suggest I am about a considered 6/7 – still looking to buy but with ’emergency’ funds available.

Derek
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Hello Mr sis

WEll, I would put myself as about a 6 these days. A while ago, I would have been a 3, and before that, I had the nerves of a complete chicken (now, I’m like a genetically-engineered chicken (full of hormones, oversized, but still a chicken). I still want to keep my LVR at 70%. I have no emergency fund (wouldn’t that be going into one’s mortgage or into buying more IP’s?)

But I am far less scared than I used to be, because now I understand a little more of what I’m doing. When I first started out, as an uneducated investor, I just had no clue, and so was just *hoping* it would all be ok, and that I hadn’t screwed up (it did turn out ok), but it was like a random thing, and I really had so little money, that it would have killed me financially if things went wrong. Now my financial situation has improved, I’m more educated about RE (I have to say this forum helps no end), and so whilst I don’t see myself as being hugely into risk, I now see what I’m doing as not hugely risky, and less scarey.

Risk can be like investing in emu’s- that was in vogue about 15 years ago- highly speculative and then got killed off by retrosepctive tax changes anyway. Risk can also be like gambling on a horse- you either win big or you lose it all. So what seems to me like “risk” now is actually being “informed”- and that’s a far better headspace for me.

Actually, maybe I’m a “5” on your scale, sis

kay henry

Hi SIS,

I would have to say I am between 5-7; I am fairly conservative, yet tainted with a dash of aggressiveness (opportunity, and husband, permitting of course)!!! [rambo][rambo] Love him to bits, but he is a real investment “scaredy cat” poor boy!!![worried][worried]

I have been burnt with interstate property investing (no, not 2-tier market jobs) so in that respect, I prefer to keep IPs in my own backyard; have “dabbled” with shares (too yo-yo ish for me) and would never allow myself to be maxed out on anything…..other than good food, wine and pleasant company!!! [party][party]

Cheers,

Jo

sadly, i think im between a 2-3 Somthing im going to have to work on

julie

I have no idea, really, – I think I am cautious (I.e., I would and do tend to follow someone’s advice who has done what I want to do before, i.e. Steve)

but the world, AKA people that don’t invest, has told me ever since i started that ‘I’m crazy’,
(10)

but as i have 100 percent equity I actually think I’m super-conservative – so far i’ve been too chicken even to gear *at all*!!! (1)

Buying three properties for the price of one, i get three rents, so risk of vacancy and loss of income is spread. (conservative.)

(that’s all gonna change folks…clean credit check, tick, eliminate consumer debt, tick, one year of stable rental history, tick, confidence up , tick, etc etc)

I reckon by the end of the year I’ll be geared up to the eyeballs (by my standards) with about a 70 percent LVR. Maybe up to a 4 or 5.

but i would still call myself risk-averse.
Lower-priced properties (i.e. accessible to the maximum amount of buyers in the market, therefore always more demand, therefore easier to sell)
i think are a great niche market which I have kind of discovered, without realising it (really I just bought them because that;s all i could afford at the time, and it seemed better than nothing) – but I’ve seen the cheaper houses out-perform more expensive houses for capital gains *in the same market*, over and over again.

So even in the future, I would rather have ten 60k properties than a 600k property. More flexibility (can sell one, hold other nine)- multiple streams of income, etc etc)

Also, I quite like how you can own a measly $100k worth of 20 percent returning property which equates to about 20k per year, which is basically the rent on an 800k house( a 2-3 percent yield) – a house I could never afford to live in otherwise. To me that is a beautiful and special concept…

joy to the world

10 months ago, I would never have contemplated buying property interstate. One month ago I settled on a property in SE Qld. Now investing interstate doesn’t hold the same fears.

2 years, being geared and taking on debt to the extent that I have was unthinkable. Today, my $1m debt doesn’t concern me.

What I have done, I would have previously thought of close to 10 than to 5. Now, I think I am somewhere in the middle. I suspect that in 2 years, I will probably undergo another paradigm shift. I am sure others with heavy experience in property would see me as a 3-4.

James

I trade derivatives for a living so you need to be a 9-10 in risk tolerance. emotional ppl get wiped out very easily.

The property people that can genuinely claim to be very emotionally controlled and risk tolerant are the ones that got through lived and survived the late 80’s – early 90’s boom bust and are still in the game playing hard (though i think a lot would be sitting on cash right now).

For the property gurus of the last 3 yrs the test for your resolve i think is still to come. The only true way, is to test yr reactions when it really hits the fan.

Anyone can have large exposures and leveraging to shares, property or derivatives but it is other factors that call the shots with risk tolerance credibility in my opinion..