We are fairly new to the world of property investing, although have always been very keen on property. Unfortunately we made all the mistakes first and then read the books afterwards!!
1.We bought a beautiful house on waterfront in SA at auction without even inspecting it first and bidded because it was waterfront and just what we wanted (even though we don’t live in it!!) We did not have pre approved finance and nearly had heart attacks with the stress of getting finanace afterwards. We now have tenants in and they are great but it is in no way cash positive. (paid $260.000 and getting $190 p/w rent) There may be capital gain later as the property is absolute waterfront but unfortunately we are in a remote coastal part of australia and a long way from a capital city.
2.We recently bought a large house with a small cottage on the the same title and have both tenanted. The cottage needed quite a bit of extra work to get it totally independant of the house (separate power meter, gas hot water service, fly screens, tv arial etc) this has cost close to $5000 however it has been easy to get a tenant in but the house was another story. The house has 5 bedrooms and 2 bathrooms and has presented us with some rental dilemmas. A lot of people thought it was too big for them, a lot thought we were asking too much rental ($300 pw) as whilst this particular town has high rental demand the majority of people are in the $180 pw rental group. Some people were reluctant to rent a house with a cottage in the same grounds.So the house sat vacant for 7 weeks and we panicked. Eventually we have managed to find 3 young people to house share for $280 pw.
So finally we have 3 properties all rented and we can sit back for a while and ponder on the lessons we have learnt on the way, read the books and be much more diligent in our next search for houses. We plan to start buying again in August if we can find the positive cash flow properties.
We have learnt that neither of us cope with the stress and the lows of investing in property and unless we do it differently next time then property investing may not be for us afterall.smjefford
Hi mermaids,
I’ve been property investing since the mid 80’s and you only get to enjoy PI 2 years out of about 10 (the boom phase). The rest of the time is full of repair costs, vacancies, rent defaulting, damage, overheads, crappy PM’s, etc, etc, etc.
Sometimes you should look at the “smart guys†and observe what they do. The smart guys once used to be buy and holders!! They buy into the market before a major rise in prices and sell once they’ve got their capital gain….. In the market and back out again with their GC’s in hand ready possibly for the next big thing or for a bit of a personal treat (holidays, car, new house etc).
I‘m a buy and holder and you certainly have to have the right temperament for this game.
Originally posted by mermaids:
…So finally we have 3 properties all rented and we can sit back for a while and ponder on the lessons we have learnt on the way, read the books and be much more diligent in our next search for houses. We plan to start buying again in August if we can find the positive cash flow properties. We have learnt that neither of us cope with the stress and the lows of investing in property and unless we do it differently next time then property investing may not be for us afterall. smjeffordFrankly, MERMAIDS, I LOVE what you’ve done. OF COURSE there was a smarter way, but you’ve got your 1st 2 IP’s and you’ve got us! [biggrin][biggrin] So where’s the stress?
When Niki & I were newbies, there was SFA advice /books out there. Now you’ve got a veritable banquet of battle-tested strategies and fellow forumites to choose from.
Whatever you do, hang onto your 1st 2 IP’s if you can:
1. As a memento of where your heads were at when you first started in this game (be like Scrooge McDuck who framed his 1st dollar he ever earned)
2. Because transaction costs are prohibitive, you’ve already absorbed these, and ocean views will always rise (yes, even the remote ones). The only question is when, right?As someone who’s been around awhile, I can tell you that both here and on http://www.somersoft.com.au you can get quality advice from a lot of highly experienced investors who exhibit variety and a healthy mix of diverse investing styles.
“Lust for property” is what this game’s all about. Look at proven strategies which help you BALANCE your portfolio. To that end I’d like to recommend:
1. You divide your time equally between http://www.somersoft.com.au and this forum
2. Do Searches on both Somersoft and here under the following people, and read their posts /literature /websites EXHAUSTIVELY / EXTENSIVELY:
~ Peter Spann (His 2 absolute MUST READS from your nearest bookshop: “Wealth Magic” and “How to Build a $10 Million Property Portfolio in 10 Years”). In particular, look for his chapter in the latter book where he outlines how he uses Median House Price statistics over the past 10 years to inform him of WHICH city suburbs to buy into and WHEN.
~ Steve Navra (“Living Off Equity”, “Dollar Cost trading”, “Rental Reality” and Navra Invest). Seriously consider going to Navra’s and Spann’s seminars.
~ Michael Yardney, who says “I never sell anything”, and he’s got genuinely prime holdings.Don’t follow the doomers and gloomers; just set in place a variety of hedges (Steve Navra will show you how to do that)
Having progressed from being a passive to a pro-active investor (I make deals happen through sub-dividing, development, and “doing things differently”), here’s how I keep my 17 brick IP’s at virtually 100% occupancy over the past 20 years:
~ In the good times, I charge market rents and ENJOY!
~ In the lean times, I drop my rents 5% – 15% below the market, just to get a tenant in there asap. Better to have SOMETHING coming in than nothing, right?I’ve only self-managed once, and it was a big, big mistake. Use quality PM’s. I tell them “I’m an experienced investor with a considerable portfolio, and not too many things phase me in this game (so don’t worry about how I’ll react if you ring up with bad news).”
Hope this helps.
Greg
Welcome to the forum Mermaids. Are you hooked yet?
Greg has put up a good reply with some good reading. I don’t post much but get a fix out of reading others stuff. One things for sure, there are plenty of books available on property these days but not many really help when things turn to custard. There is no substitute for experience.
Enjoy the forum
Shawn
Originally posted by Pursefattener:Welcome to the forum Mermaids. Are you hooked yet?…There is no substitute for experience. Enjoy the forum Shawn
Hi again Mermaids
I forgot to add:
~ Go to http://www.navra.com.au Click “Articles” in the dropdown menu and read every single one of them extensively. “Rental Reality” and “Dollar Cost Trading” are particularly good, as well as his stuff on “Living On Equity” both from his website articles and his recent, extensive, long, brilliant somersoft posts.
~ You can find Peter Spann’s site at http://www.freemanfox.com.au (with or without the au?)Cheers
GregHi Mermaids,
Don’t wait until August! You won’t find a +ve cash flow deal. You need to make them.
I too am licking my wounds. About to add a new topic describing them.
I have recently moved to SA and would like the opportunity to meet up. Maybe we can generate some ideas to move your deals into =ve cash flow territory.
We may also be able to generate some suggestions for my situation.
I am inspired that you had a go!!
email me and we’ll link up.
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