Advice for a failing portfolio and a poor start

Wow, relax. How quickly did you expect things to happen?

You are doing great! I think the bar is set too high sometimes, especially if you only read the biggest and best success stories from around here.

Have a think about what you want to achieve with investing. I feel you are only upset with your results because you don't have a destination so you aren't able to measure how great your progress has been.

 

So what exactly is the problem with the portfolio then?

You had an offer rejected...? If that is the first time it has been rejected this is amazing but I have had multiple offers rejected, don't take it to heart.

If it is a lack of finding good properties, the east coast capitials are in booming, this is when good quality stock is snapped up right away. In Watsonia where I live there is not 1 house I would buy for IP personally as they do not match my criteria however I know more stock will come in time but you need to either act fast or wait for the market to slow down.

If you are lacking deposit for the next property, maybe look at more CG properties as it will help you get a deposit quick to acquire more stock.

You can improve cashflow on your existing properties by review insurance, PM etc.

It is rare in this market you will find the higher yielding stock in capitals with investors having interest rates at ~4.5% they can afford to pay more or rent a place for less. I know of properties in Brisbane that haven't had a rent increase in 2-3 years and some have gone backwards as more apartments are being built.

 

Have you got your depreciation schedules up to date? Might turn them all positive.

Mine are more negative than that, and at way higher LVR.

I think you are sitting pretty. What's the rush? Rising market will serve you well.

PS All the negative comments are still complimentary. Most of us are jealous of your yield .

 

Don't take it personally @hotmail . Most of us would love to be in your position.

I've found that 5-6% yields are generally the norm for most capital cities. Could potentially get above 6% if you did a small Reno, maybe hit the 8-9% mark with secondary dwellings.

Rents generally go up with time. Don't worry, you're in a good position.

 

Yes, this is a great position. Hard to improve.

 

@sash you're a funny dude. Respect.

@hotmail you're in good shape- you are locked and loaded in the Sydney market (well done) , plus well positioned for future growth in Brisbane. Chin up.

 

No mon...I am a simple Rastaman....

 

I don't think you have anything to worry about!

We started with very little capital, and wish we could have bought as many IPs in a year! Grateful for the Sydney boom - but it did not happen over night. I have learnt that you need to keep at it, and results will come.

Be patient - and let time do its thing.

Good luck!

 

Why is your western sydney property so under rented?

 

What you have to do is comsider yourself lucky. You seem to lack a lot of knowledge for someone with 5 IPs. You can't lose money on capital gains. It's taxed ONLY on profits.

I don't know what your doing but if your negatively geared based on those numbers Im assuming your loans are P&I not IO. Depending on your future plans either change it to IO if you want to purchase more properties in the future or my in my opinion leave it as P&I and focus on your life outside of property. Do some research. But otherwise focus on career, life ect. you portfolio will grow and so will you. You will see the growth and gain confidence.


You need to do more research though. Learn about capital gains tax, investment structures, depreciation (if you don't have a depreciation schedule GET ONE!!). Read articles on investing not just this forum. Get yourself a good accountant and mortgage broker. What's your interest rate?

But overall if I were you I'd just focus on your life and career and just let the portfolio sit and grow with time. When your ready and confident then buy/sell some more and by then you will have so much more knowledge and confidence and CG!

 

Firstly, don't compare your holdings performance with anyone else's. So what if someone else is getting 7,8,9...+% yields??.
There will always be people, friends, family, their dogs, their dogs fleas, etc who have picked higher performing assets...
As mentioned in a lot of posts above, let the magic of time do its work...the longer you hold them, the better the numbers will look. The Australian property market has strong fundamentals and is in demand not just by us, but by a lot of the world.

 

All I can see here is: A person who has been buying up a lot of properties doesn't know what he is doing...

 

Aahh.......the drunken Elephant style of buying property.....

 

When I started property investing I spent too much time comparing myself to others feeling like I made poor choices. I think I was more intimidated by those with more experience. After 2 property booms the prices I paid now seem irrelevant and give me a good income. Now I understand that I needed to keep focused on the big picture. It was not always right but it worked for me.

 

HI Hotmail,

Congrats thus far mate!

Basically i get the impression you want to have a higher yeild AND good CG. I understand the feeling of not being satisfied (especially early on in the game) and personally i think its a powerful driving force of great achievment. Worrying about having LVRs at different amounts and making a conclusion on your success thus far with regards to equity without attempting to do any valuations really leads me to believe you just need to buy some books to get the basic stuff down pat.


If your after improving your yeilds dramatically, then your gonna have to be very proactive, especially if you want to increase your yeilds PLUS have good CG at the same time. I am not sure where CG sits on your ladder of importance but i sense its also at least equally important to you. Depending on your financial situation, strategy, plan, mindset and risk tolerance, i would be looking to buy properties that have potential to add value with a cosmetic reno or perhaps some development potential, as well as buying BMV. I would be reading books, materials etc that really focuses on that and get your knowledge, approach and strategy right for that sort of thing. Also developing your negitiation skills/tactics as you suggested is a great and vital addition to compliment your investment skills. But as i said it really depends on your financial situation, risk tolerance etc. I also strongly suggest you engage in mindset development material. IMO it goes hand in hand with invesmtent success. There's no two ways about that.

God luck mate!

 

Hello all, thanks for the responses.

I have been doing some thinking about everyone's advice in this thread and I do think I should change my attitude. I will to complain less in the future and try to work harder so I won't miss any opportunities and have to compare with others, although I still feel that comparison may sometimes help to set the goal of what one should be achieving rather than thinking that you are "doing well" already when you are not.

Whilst I do have depreciation schedules for all the properties, I have read here that properties should be positive BEFORE having to factor tax in, therefore depreciation and negative gearing (however slight) should only be a "cherry on the cake". In any case, I will try to read some more books on the areas that you guys recommend.

@Scott No Mates the unit in Lidcombe is rented so low as there was, will be and is currently a big building boom in the area and has been/will be a definite flood of apartment supply on the market in a few years. Additionally the property is in a pretty poor location near a train line. Was thinking of selling it but Sydney is currently in a boom and plus the capital gains tax would be too much of a hindrance at this stage of the journey.

@Be Developer: those numbers are just the purchase price. I only calculate the purchase costs when doing the return on investment calculation using purchase costs+deposit versus predicted equity growth over the next 10-20 years. According to the figures the aim should be to make bake the total invested money 10 fold once the property doubles i.e. turning 25k (purchase cost 5% deposit+purchase cost) into 250k equity (on a 250k property) I have screwed this up due to stupidly not using 5% deposits for all the buys

 

@hotmail

I personally think you have done better then some others.

Re; number calculation

One should calculate total cost, Inc

Stamp duty
LMI (if applicable)
Search fees
Conyncing cost
Etc.


I agree with you on Return On Investment logic.

 

I echo everybody else's sentiment. You have gone off on a flying start! As long as you have serviceability to keep going, you can build your empire over time with the capital growth you can keep extracting. Only downside is I dont think banks (with APRA pressure) are too keen on letting you pull out equity to 95% LVR though, so you may have to sit on the sidelines for a while till your LVRs decrease sufficiently.

 

For the Lidcombe unit, is the 650K the purchase price? My friend bought a 2 bedrooms OTP in Lidcombe for 520K end of 2013 (settled last month and probably worth at least 650K now) and currently renting around $570. Just wondering if you can increase your rent?