If you could go back 2 years ago what would you do differently considering the global market of today?
Did you see the signs on the wall but failed to understand what they meant?
Do you believe you got bad advise back then or farther back than that?
And finally:
Make a prediction for the next 12 months …. Worse … Better?
Tell us your story there are hundreds of members out there looking for guidance and hope and we can all share together, it's times of greatest need that true leaders shine the light for all to prosper. (c)
D
This will be an interesting thread.
OK two years ago, purchased a four pack in Parramatta. Always wanted some units in the mix as I generally go for land rich subdivision potential properties with good amenity and that tick the right boxes as far as my criteria are concerned. However with household demographics (dwelling occupants) reducing, some two bedders were on my shopping list. I wanted a six pack however bought four in one line.
Initial 5.9 % yield in middle Sydney with property very much on the nose at that time. They were underlet. Depreciation very juicy as they were reno'd and had some building write off left. Locked up 7.2 % fixed for five and with rent rises they are now cash flow positive.Any regrets, considering how things have panned out. No! They are leaving money in my pocket and have seen some growth. Middle of the road rents with below median purchase prices, for me was a no brainer. They were strata approved, however I have not registered the strata as I'm not going to sell off one by one. Keeping them in one line reduces costs such as rates, council, land tax, etc. They are 500 m from Parramatta campus of Uni of Western Sydney and the draft plan in Parramatta is potentially going to up zone them to high density residential. I will flip the lid and put another three doors on top of that…….
What I would have done differently is with regards to share holdings I had in our SMSF. I would have pulled the trigger sooner and locked in profits. Fortunately I liquidated all holdings last June to pay cash for a property purchase in the fund. Market has slid even a further 30 odd per cent since then, so not too bad.
You have a good intention to share the learnings here wealth4life, so I think by sharing even further back in time, I hope to help others learn from my successes and also my mistakes as I have certainly learnt from the latter, that makes the cost of our errors worthwhile. If we don't learn then the cost of our mistakes escalates.
I'll go back to wjhen I first started to invest in my early twenties and finish with where I see things heading………
Here are my list of 10:
1. The most important lesson for me is to actually learn from my (and others) mistakes.I started investing in my early 20's very aggressively in old (land rich) properties in Melbourne with poor yields………Ahh! the influence of accountants and negative gearing. Although I didn't know what I didn't know, I had no fear was earning more than enough to cover the shortfall. All are now two or three town house sites and two are actually pre-CGT. There is a strategy for those in a decade or so.
2. Even though you don't know everything, do something.
After the near 20 % interest rates of the late 80's and early 90's, I figured that 105 % lends were not such a good idea at the time. I actually paid down most of my debt diligently and was well and truly positive cash flow.3. Don't park.
Then I parked and missed the boom (by way of further purchases) from 1998 onwards, despite trivial borrowings at the time (in comparison to overall portfolio value), I was so engrossed in my career, that I became confortable in my lack of debt scenario. Did I get anywhere that way? Well not even a dog gets excited enough to bark at a park car. We all know what dogs do to parked cars. They say that if you find others are *****ing on your dreams, chances are you're parked.4. When life serves you up a lemon, make lemonade.
Then I saw opportunity everywhere as I was given a gift disguised as a problem in the form of a physical health challenge…..changes your perspective.5. Reinvent yourself along the way.
Having changed professional path a couple of times since due to health problems, I also saw that I needed to get more actively involved and after a dinner one night with friends I was compelled to take action again. One friend declared outlandish net income requirement to live in his retirement that was actually more than he currently earned and we are both in our forties. When I asked what he was doing to achieve this, he had no plan of action, beyond 9 % super.6. Learn what not to do from those who are not successful.
Following on from that dinner, I thought how interesting it was that he had audacious requirements and expectations, without a roadmap or plan of action to achieve this. I knew who not to ask for advice.7.Begin with the end in mind.
I worked out how much we needed to be fully independent and worked out what net worth and yield would be required. I then set about buying more properties. I read more than I had ever done and worked out a strategy that suited us and my capacity to service debt.8. Be flexible and adopt an abundance mind-set.
Our original plan has now been modified to achieve higher and greater things that can be shared amongst others where money can do good.9. Enjoy the journey and pay close attention to those who are where you are going. Listen more than you talk and following on from this, be interested (in the other person), not interesting.
10. Think Big. Life is too short to be little.
Where to now. I've posted in other threads here that I'm sitting on my hands at present. No share holdings whatsoever. I don't have off set accounts so my cash is in term deposits. Return not so great, however I'm loathe to borrow big now to develop or buy more. I don't believe the next 12 months will be better; I think until the wash-up occurs with job losses levels out, it is a case of watch this space…….eyes wide open, research well and if a positive cashflow opportunity comes along (with value add potential to increase doors), research it well and if it suits strike fast. That's my bias on things. It isn't necessarily right, but that's where I'm at and where it has brought me to date.
I am prognosticating that I will likely enter the stock market before I buy any more IP's, but who knows. I have certainly learnt my lessons to act unemotionally when executing stop losses and am re-reading some of my trading and mindset texts to prepare me.I trust this story hasn't bored too many of you however, I am happy to share with like mindeds so we can all leverage our knowledge as we learn off each other.I wish everyone here every succe$$ in their journey.
Great thread idea, and very interesting response from Michael. I didn't find it boring at all.
I wouldn't change anything that we did either. We set up our own business, based on a government contract. It is earning well, and has us in a good industry and location to sit out the down turn. We are a bit sick of where we are and look forward to doing something new, but we'll just stick with what we know, and what is safe and fairly debt free for now.
We sat on our hands RE wise over the past two years. Partly due to our location. We are 500km from Townsville. Makes it hard to stay well informed about a RE market. I strongly believe that you need to know a market very well in order to perform well in it. So we researched and found it impossible to locate anything positive cash flow in Townsville (other than opportunities that would really require us to live in Townsville ourselves and be actively involved in the management of the property). We strongly considered Cloncurry (mining town) and then backed out of a contract at the last minute – which now seems like an incredibly good move. So we threw our resources into building our cattle herd, which is going to be good this year, seeing as cow prices are expected to be very high due to an end of the drought in the Barkly Tableland, and the low dollar. Strongly considering selling all our cattle and paying out all our debt, leaving us $100% equity on two properties (1 is PPOR). We look forward to being savy property investors, but sit back, learning from our near miss with Cloncurry, and the mistakes of others, watching the market and waiting, waiting until it feels right.
There is no replacement for careful research and thorough market knowledge.
Our conservative approach sees us well positioned to weather the down turn.
Regrets in real estate tend to be expensive.
Be careful who you listen to. In a market you don't know and don't have direct physical access to, it can be hard to get information from anyone other than the RE agent – and of course he has his own agenda.
I hope GMH – Grinch adds to this thread as I enjoy his posts so far, but have't actually seen anything about his own decisions and investments, and their performance, just a commentary on what his baby boomer client base is doing etc etc etc. Perhaps I missed it.
Did we see the signs on the wall? No, really, other than the fact that it is an economic certainty that boom is followed by bust. Also had a sneaking suspicion about how sustainable lending levels were, and spending levels, and the constant influence of the economy of the mining industry. I had felt for the last two years that we were certainly in a golden time, and suspected that it couldn't really last, but never really saw hard economic signs – I wasn't really looking.
Bad advice? – Only from Real Estate agents.
Good advice? From Steve McKnight, actually. I posted here about wether we should enter the RESULTS program, or wait until we were better located (geographically) to be active participants in the property market. Steve replied that I should wait.What to do now? Sharpen the sword. Learn learn learn.
sI'll be quick.
No I wouldn't do anything differently. Have just sat back and repaid debt, now can borrow and buy as much as I like ( almost ).Took money out of Growth and into Cash over 1 year ago, so all my Superannuation is safe.
Outlook – bad. The world of yesterday has gone ( living beyond your means, buy now pay later.) Properties to drop 20% this year and keep dropping next year another 20%, assuming the worst case for Australia and the world economies. Even worse if we have a major war or killer virus outbreak.
Hopefully, I'm wrong. very hopeful of being wrong.
If I could travel back in time 7 years I would have never gone to University and done a degree in Commerce. This resulted in me not being able to Participate fully in the last property growth due to low income and not being able to purchase in growth areas.
However having done economics at University I could detect the next downturn that was approaching and prepare for it.In the last 2 years I sold most of my shares when I detected the share market had changed and paid down all my debt except the HECS debt which I plan on never paying back until I get the job I was promised would help pay for it.
At the moment I am looking for employment as my daughters are going to kinder this year.I have enough equity to borrow once I get a stable job and I am expecting the next recession to really bite with increased unemployment which will force people to lose their houses as they will not be able to afford their mortgages, car loans, personal loans, equity loans or credit card debts anymore.
Another thing I did was I changed the superannuation that had most of my money in it to conservative when the previous stock market crash occurred as they were losing 10% a year when I was making 25% a year in the stock market. So when the market crashed this time I have retained most of my super.
The world of yesterday has gone ( living beyond your means, buy now pay later.)
One thing I have learned is history repeats itself, this current turmoil is 1992 repeating itself. As I was working then I remember the unemployment, property price drops, high interest rates and high oil prices (Gulf war)
96% of the population will once again live beyond their means when the economy turns around again and once again recreate the required over borrowing to bring a halt to the great times that will reoccur again.
Don't forget that a new generation will come into the work force that has not experienced this down turn as well.Great thread and very interesting posts to read.
Would i do anything differently? Well, yes. I would be more careful with the advice I was given and realise that just because someone gave you good advice once doesnt mean everything they tell you is gold. Sorry Dad, that ones for you. Great advice on the basics but not so good on the technical stuff.
Oh yeah and I would eat less pies. That ones for my wife.
Educated myself on investment sooner and started in property earlier.
Would have had more deep and meaningful conversations with my dad.
OTher than that, life is fantastic. Great job, great and growing family and I am at the start of a very exciting financial independence journey.
Bring it on!
You must be logged in to reply to this topic. If you don't have an account, you can register here.
