Hi all,
I just read an interesting piece of information from Sunday’s paper showing how unit prices west of Sydney have outperformed inner cit ones. The big winners seemed to be in St Marys amongst others. The information included median prices for units by suburb, and here’s where the bitter lesson comes in…
About 8 years ago I bought a little unit in Carramar for $80K only to sell it about 4 years ago for $75K after floundering for four years and then giving up. The yields were good, I was getting $130 a week rent and was neutral on it. But I was just about to by my house and wanted to free the $30K equity that was doing nothing for me. Why sit on neutral gearing and no CG for 4 years when I’m about to borrow at 6.5% from a bank? So I dumped it for $75K.
Yesterday I note that the street I had that unit in was the star performer and medians were now up to $200K! Ouch! So, I forewent $120K in non-taxable CG (I’d lived in it for over 6 months) just so I could have $30K off my mortgage.
Needless to say I was very depressed and its a bitter pill to swallow. I’m now IP free and still paying off that bleeping mortgage. If I’d held the IP until today I could sell it and almost discharge the balance of my mortgage!
I know what I should be doing, and this is a very important lesson to have learnt, but it just seems that I never quite kick that goal. Now that I am ready to invest again the markets are transpiring against me. I guess I’ll just have to chalk yet another one up to life’s lessons and wait to finally get it right one day.
To make matters worse I also had a little bit of a dummy spit and put some of the blame on my wife who was the one who was so adamant we sell the place to pay down the mortgage. I should have known better than to lay blame, but I couldn’t help myself. Now that’s 2 life lessons in one day, and far more than I really needed at the moment…
Just sharing a little lesson so hopefully some others there don’t actually have to live it themselves. Set your plan and then STICK TO IT!!!
Cheers,
Michael.Very sad today… [glum2]
There is NO DOUBT there will be lean times for property investing in the future. How resilient can you be? There are thousands of stories like this.
The question is – can you put up with the low growth, low positive cash flow (a few $100 a month), tenants, repairs, property managers, renovations etc for a period of time. Its not easy.
Many will loose interest. When I was 19 it was shares not property. Now the 19 year olds think its property.
Yack,
I personally have now learnt the resilience lesson! [biggrin] I’m ready to invest for the long term on a neutral, maybe even slightly negative CF balance and sit tight. Unfortunately, now that I’ve learnt the lesson, the market is not ripe for me to get back in. I’ve got to sit on the fence and wait for the worm to turn.
I guess it does take a cycle to learn the lessons though. But, I am so ready for the next cycle to begin!
I guess I’ve now got to learn that other lesson, patience…
Cheers,
Michael.You might need a fair bit of patience, I can’t see things kicking off for a couple of years… interesting to note though, that properties are available in inner-Melbourne (houses, not apartments) fully renovated for early to mid 300s… unthinkable 18 months to a year ago… keep waiting, watching and looking… I think things will come back a bit more yet…
cheers
rRichmond,
Mid-300s? Wow, that is starting to come back. I’m watching postcodes around my area and they are coming off the boil. But I too think they’ve got some more to come off yet.
Patience is a virtue, I know. But if there’s one thing I’m not good at its “doing nothing”. I hate sitting on my hands so to speak.
I guess if I look at it as “active analysis and preparation” then I am actually doing something, just not the execution bit until I like what the analysis is showing me.
Cheers,
Michael.paying down your ppor and scoping for opportunities whilst learning as much as you can ain’t “doing nothing” my good man. It’s a heck of a lot more than most manage.
cheers
rRichmond
I totally agree. Thats better than rushing in and buying something you will regret down the track. Property investing is a patience and long term game.
michael, sometimes you lose (or don’t win), learn from that & get back on the horse. Things are always easier with retrospectoscope.
Sydney : here is what I think – the cabramatta/liverpool region is/was an industrial magnet as it used to be one of the cheapest places to get industrial property. My opinion is that this moved to the penrith area until recently. Until about 2002 you could still find cheap industrial property there and positive cashflow residential properties. I still think it is a centre of growth although there seems to be large tract of land between penrith and blacktown that when released may clog up the m4 when it gets developed. This may not necessarily be a bad thing. I think the area has a lot of potential but the flat price differential between blacktown and penrith a negative.
Outer ring in general : It seems many people sold out of their IP’s in these areas around 2000. You are definately not alone. People got tired of holding something unglamorous that hadn’t gone anywhere for years, when everywhere else had started moving & it seemed it was a CG deadzone. Moral of the story : holding onto your strategy in the long term is hard, particularly when prices are stagnant. Another moral whcih people may learn soon is that chasing yesterdays gains is also a hard game.
Melbourne : I agree, it starting to get interesting and may become more interesting aver the next few years.
At least you can see where you made mistakes, property investing is full of people in the same boat.
You would think it is dead easy to make millions in property the way some people talk, problem is reality is very different and especially in the current market.
Many people also disregard taxs, fees and interest rates etc etc not to mention blowing way out of proportion what they are worth in reality.
You have learned a great lesson, if I thought as you do about what might have been there is several million I could have made if I had trusted my judgement which was spot on when I bought in Kingston and Rockhampton etc etc.
I stood in Rocky 18 months ago with my mouth dropping to the floor and an incredible excitement at the house prices yet I actually only bought one house when my gut instinct wanted to buy ten, prices doubled soon afterwards and even though I “knew” I did not act.
There are many stories like this I`m sure.any mistake you learn from is an expeirience worth paying for it will stop it from happening again. Well maybe not that true look at people and credit cards????
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