Any people that have lost it all or made major losses for debt build up

Discussion in 'Investment Strategy' started by Drunkanbarbarian, 18th Oct, 2016.

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  1. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Often i hear the success stories of people who brought as many ips as possible with debt and leverage etc

    Well has anyone lost it all because of that method or made major losses ? I want to know ( maybe fellow investors that you know , friends , family etc)
    Thanks
     
  2. Gockie

    Gockie Life is good ☺️ Premium Member

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    Check out the mining town threads...
     
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  3. Agent30yrs.

    Agent30yrs. Well-Known Member

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    I think if I had been through that wringer the last place you would find me is on a property forum
     
  4. hobo

    hobo Well-Known Member

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  5. Biz

    Biz Well-Known Member

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    If you lose it all there is always a good time to be had snowballing with friends.
     
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  6. WattleIdo

    WattleIdo midas touch

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    For what it's worth, I don't believe going hell for leather with this approach is optimal or necessary. There are some smart cookies who do it well. Fine if you want to do it but there are a lot of successful people who don't do it like that, too.
    Any shopaholic could tell you that there's always a bargain to be found and it's important to buy what suits you. In my view, you make your money when you buy. Buy carefully. Then, having bought well, why would you want to sell, flip, 'shoot the dog'?
    Also, the snowball effect will work well if you are gung-ho on paying down loans and throw every extra cent you have at your loans. It will work because of the psychological effect it has on you. If you are able to do it, why not? A lot of the people who answered you before wouldn't like to handle their debts that way but that doesn't mean it won't work for you.
    By the same token, be careful not to deplete your life of time and love while paying your debts off asap.
     
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  7. MTR

    MTR Well-Known Member

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    If interested my story is in this thread, we lost $1M in partner's business and made recovery with property.

    Power of positive thinking:)

    How many hours a week do you "work"?

    "I did not particularly want to post this on a public forum as its personal and very painful, but seeing you asked I will elaborate on my story.

    Just after GFC my husband was operating a successful manufacturing business in Perth employing 18 people, solely dependent on the mining industry. Within 2 weeks many of our major jobs were mothballed and one of our major clients went into administration and took us with them.

    We lost over $1M practically overnight and a business that provided a very nice lifestyle was gone. That's a lot of money in 2008, probably does not seem like much today.

    At this point in time I had been property investing for about 6 years, day job gone, and was purely focusing on property. I also never worked in my husband’s business, way too stressful. During this period I had 12 properties in various States around Australia. However the majority were highly negatively geared, what you call blue chip I guess for a better term. This was the only strategy I understood at this time and of course the business had the income to support these blood sucking properties. We were able to manage the debt because our company just increased our income, and the company was always making money and enough cash flow to service lifestyle and debt.

    Once the **** hit the fan and the company went into administration, we placed our dream home then worth close to $2M on the market and within 1 month I sold 6 investment properties. Five of these properties were in Melbourne. Melbourne had just had an amazing property boom and I was able to flip these very quickly. Which saved the bacon.

    We were then able to take our dream home off the market, the best day of my life when the "for sale" sign was removed from our verge. We still live here by the way.

    We picked up the pieces, and then things started to turn around, my husband’s largest client was not ready to give up on our business and decided they were going to buy into it, they were basically just buying the name and they wanted my husband to operate the business.

    Next chapter in my life, I realised I needed to do things differently with property investing and that I needed cash flow, no longer did we have the big income from our company to support continually buying negatively geared property.

    This is when I started looking at different strategies, where I could generate cash flow.
    This is when I decided to go to USA Atlanta purchase properties that would generate income/cash flow from day 1. I had $1M cash and spent $500K and purchased 8 properties in Atlanta, these properties now generate an income of $120,000 pa and have tripled in value. Problem solved, have cash flow. However, I was not ready to just stop property investing.

    At this point in time my husband was in a position to give away his day job, however I started reading Westminster's posts and realised I was doing something wrong. I told my husband I want to be a property developer, he said "but you cant, and I said, but I can".

    Moving on I have completed 2 developments in Perth which I sold and currently 2 on the go in Melbourne. As a developer we are dependent on bank finance and this financial year will be the year where I do not need my husband's income to service futures loans. Praise the Lord:).. or whoever

    I never posted the story on the forum because its been very difficult when you have gone through something like a failed business, but I now feel liberated, I have done it now.

    The moral of the story is never give up and be positive".
     
    Last edited: 18th Oct, 2016
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  8. Gockie

    Gockie Life is good ☺️ Premium Member

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    Great story! Kudos! I also think when you really need to do it, that's when you go into fight mode to pull through it. It was great that you had those Melbourne IPs though. .. didn't have to sell the PPOR...
    It's also great that your experience pushed you into buying in the States. It's not in everybody's risk profile, but you know what you are doing.
     
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  9. The Y-man

    The Y-man Moderator Staff Member

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    Very similar story to MTR here - we started share trading as a way to fund the shortfall of a very negative cashflow IP protfolio. 2000~2007 was great - anyone could make money on the sharemarket.

    Then came the GFC and wiped a decent portion (like over half the net worth) out.....
    Like MTR, we sold half the IP portfolio on the dying edge of the Melbourne property boom (yeah, indeed Praise the Lord the property cycle lags the share cycle!!) to pay down debts and ward off any margin calls etc.

    Unlike MTR, gone back to essentially the same model now (with listed AREITs this time).

    The moral of the story might be:
    - some people never learn :rolleyes: (oops)
    - it's going to be different this time (heard that one before?) :eek:

    Wish us luck! :D

    The Y-man
     
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  10. Ted Varrick

    Ted Varrick Well-Known Member

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    An excellent thread that is very worth a read.

    And the subject of this thread (and awful experience) is very articulate, pragmatic, and focused on the future, and I wish her the best of luck.

    I'm sure that this story has a lot more upside yet to play out.

    TV
     
  11. emza

    emza Well-Known Member

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    You've just nailed survivor bias and why the real failure stories will barely make a ripple on this forum...
     
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  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Back in the last 'crash' I knew two separate women who bit off more than they could handle. One lost a property and the second one lost a property and went bankrupt.