Everyone thinks I'm a property tycoon, yet I feel like a failure

If it makes you feel any better, at 55 I have 1 IP purchased 2 yrs ago, worth $500k, 1 PPOR worth $1.2m, and $800K in debt. You are way ahead of me financially, with 20 years in your favour.

I also have a fantastic wife that didn't work for 16 years, 4 wonderful children and 2 grand-children that my wife cares for 2 days a week as she only works part-time. I also have no regrets.

Money has no inherent value - you cant eat it, it doesnt keep you warm or give you a hug on a bad day. Its only value is in the choices it unlocks for you, and those you care for.

You're doing just fine financially. Look at your wife and child and focus on whats really important!

 

I think the issue here is that self worth is not only "current position" but also "direction."

You are used to the direction being a financial one with savings and net worth increasing each year. But one income will put a hold on that.

With the birth of a child, a new direction must be found. Find something you can achieve that's not financial, aim in that direction and make progress there. At least for the meantime.

 

Yes thanks. I always cancelled this type of insurance in my super prior to having a child, but once he was born, I made sure that I was covered.

Thanks for your reply, it always helps to see that other people either are or have been in a similar position.

On a positive note, our spending is reasonable. My wife spends (“wastes” in my opinion as she could have it much cheaper, but she enjoys it, so I don’t complain about it) around $10 a day on coffee and a snack, but other than that, she doesn’t really do any unnecessary spending. I like to buy the odd tool/gadget, like a $50 cordless rotary impact drill earlier this week, but again I’m not spending any more than a couple of grand a year at most in discretionary spending.

The baby costs were really adding up for a while but I think we’re through the worst of it now.


We have actually spent a fair bit of money on extraordinary expenses in the last year, which I definitely don’t regret, but have hurt our bottom line:

• I converted one of the garages into a nursery and a spare bedroom: ~$10,000 (my best guess anyway)
• New used car for my wife (2 door Yaris wasn’t going to cut it with a child): $15,000
• Reverse cycle aircon: $7,500
• Replacing dead/dying dishwasher and washing machine: $1,500
• Europe trip for my family to meet my son: $6,000
• Plantation shutters: $4,000

So all up it’s over $40k, but at least they’re not ongoing purchases.

That’s the thing, I’m trying to only one person, but unfortunately that person is my harshest critic when it comes to investing: me


I love my son, but there’s no way that little rascal is innocent!

Thanks mate, all very good points. I especially liked the last sentence!

You’re right, I didn’t mention my son much as I saw this more as an investment problem, but I guess everything is intertwined in life.

While he hasn’t been an easy child (the first 8 weeks were hell) and I didn’t get that strong initial attachment, I’m totally enamoured with him now!

I finish work early, so I’m home at 4:30pm most days and as soon as I walk in the door, I get handed my son, which works for all three of us.

Yes, it’s weird, I’d probably be impressed by my position if I saw someone else do it, but if it’s you, it always feels like you should have done more.


I completely agree with not talking about mental health in men enough. The last two funerals I went to were suicides of guys that were both a little bit younger than myself.

For a guy, I think I’m reasonably well in touch with my mental health, so if something was to arise I would make sure I got help.

I better not, I might look at what’s on the right hand side of me rather than on the left on a networth graph.

Thank you. Yes, I’ve done calculations as well to see how my wife and son would be off without me. My wife assures me she’d actually be far better off without me!

Yup!

I’m usually a glass half full kind of guy, but just having to sit on the sidelines and watching our savings go down instead of up (though our net worth still increases due to paying down principal) has been difficult for me.

You had me fooled with your sage advice into thinking that you were a real doctor!

Last night was the first night that I got 7 hours (obviously not in a row, but still) for the first time in over a week. My mood is definitely different today than it was when I first started this thread. Some of it is due to reading the replies, but some certainly because of having had a nearly reasonable amount of sleep as well.

If I could just sell now and rebuy later without losing at least $200k, I might do that. But given all the costs involved, I don’t think it’s worth it in the long run.

Thanks for your uplifting reply, but I’m not sure about the young part, the beard on my chin is almost entirely white!

I’m definitely taking your comments onboard, but while my wife and I have our ups and downs like very marriage, all in all it’s a very good relationship. The reason for me not really mentioning her was because I initially saw the issue as being contained to PI, which I guess it might not be.


For me it’s not really the debt doing my head in, it’s the not moving forward (or at least not fast enough part). In all my thought experiments where I sell my IPs, I end up borrowing against my unencumbered PPOR to buy IPs, I so think selling might not really be the answer for me.


Oh and I love my veggie garden! I’m not a very good gardener, but I’m getting better. Though quite a few of my plants died in the recent frost. ☹

Thanks mate. Yes, I think maybe setting different markers for me of what success means might be good.

While money itself has no inherent value, it is the greatest tool ever. The reason that I started investing in the first place was really more about time than money, if I’ve got money, I’ll be able to have more time to spend it with my family and to do what I want.

When I was all keen and starting out, the plan was to be able to stop working at the age of 40. Now that probably won’t happen, so I’ve revised it to working 3 days a week at age 45, which would probably actually be better as I’ll need some work to give me some mental stimulation.

 

Don't tell 'em! Seriously, if you go around talking about your investments you can expect that people will either think you are a braggart or that you think you are better than them. They really don't understand & even the best of friends can get an instant case of jealously just hearing about it. Keep this to yourself & only discuss with others in a similar position. If you just HAVE to talk about it, keep it simple & play it down big time.

Hold on just a minute, before we go any further. You do realise that YOU ARE A MILLIONAIRE, don't you? OK, I know it's not as impressive as it once was, but if you walked down the street doing a survey of whoever you ran into, you would soon find out that this is still an awesome achievement.....and you're still only 36.

• Oh, boo hoo! Seriously, when things happen, it seems it all comes at once. This will pass. In all my years of investing, this year has been the most challenging financially. I've never spent so much money on repairs & maintenance. We've had two ducted air conditioners, several ovens, fences, gutters, huge plumbing issues. I don't want to sit down & count how much we've spent, but it's a small fortune. Luckily, we've been doing this for a few years now & not had large expenses every year, so we realise that this is temporary.

Yes it is.....see above!

At the end of the last boom, we had a large portfolio, but it really felt like treading water. Yes, it was more or less cashflow neutral, but there's this feeling that things should be better. Well, it went from that to negative as the GFC came along as well as huge personal bills, but we held on, because we knew that as soon as things started to move again, we'd be in a good place. Now living on rents, but challenges don't just stop. You need to have the confidence in yourself & work through the hard times.

I was in my 30's when we started. I would have loved to have that kind of equity at 36.

Lets just put this in perspective here. You are one cycle away from a nice windfall. How long that will take, well, I don't have a crystal ball, and I'm presuming that your IPs are in different markets, so the CG fairy will hit each at a different time.

You need to step up & own what you've got & stop second guessing. Stop telling people about your finances, it's none of their business.

Many years ago we bought our first IP. We were excited & told family about it. They all congratulated us and told us how we were doing the right thing for our future. Then we bought the second one. We were just as excited, but family less so. Yes, they were happy for us, but the tone was different. The next one, we stupidly told them again, and then the mocking started. "Well, we're not ALL rich, you know", "How many can you live in at once?", "It's getting harder for youngsters to buy due to greedy Baby Boomers" etc.

Anyway, we learnt pretty quickly not to say anything. Family still know we have property. They don't know how many & they certainly have no idea of our income or net worth. If asked, we just say something like "Oh, yes, we're doing fine" They can't identify with someone who in their eyes has moved out of their 'station' in life. Even a good friend of mine (who is a property investor) goes around saying how 'lucky' we are & how 'hard' her life is. This only started when Hubby retired from work, so I no longer share as much as I used to.

 

@spludgey, look at it this way.

You are 36, own 10 IPs that you say are mostly on P&I payments.

Even if you do nothing more, just keep paying these off, then at around age 56 you will own 10 fully or mostly paid off IPs, surely a most comfortable position to be in. Sometimes it really is slow and steady that comes out ahead.
Marg

 

As a ward clerk in a hospital; I see people every day who are far worse off than I am.

 

Haven't read all the replies only your post. Who cares what others may or may not have achieved. Just run your own race. I think it's most likely just a blues period, we all have them.

I really see no point in comparing but if you really wanna put it into perspective you're probably doing better than 90% of folks and you're only 35!

Go out and treat yourselves .



Definitely wouldn't make any impulsive decisions when you're feeling this way. When you 'feel happy' in life, that's when you generally are able to make better long term decisions I've found .

 

Difficult time to be comfortable with large amounts of debt for both your personal situation and as a property investor - I know I was/still am feeling a bit the same.

Don't want to feed in to the fears but a net 2.7M debt on a portfolio of $3.8M doesn't leave a massive buffer - so it all depends on how much of a believer you are. For us, we sold to have a more comfortable buffer and a little less exposure.

You just need to find your right balance between growth assets and manageable debt after taking personal and market projections in to account.

 

Your wife ‘wastes’ $10 a day on coffee and a snack?

Please change this mean thought - don’t even think it privately. It’s not a waste - she deserves it, it’s her money too and hopefully it gets her out of the house and meeting people. It can be very lonely at home with a baby all day...

 

They didnt get there in a day. They took decades to get there. You are 36. By the age of 56 -61 ( 20-25 years from now) if you just let everything keep going as it is right now, you will have paid off all the properties under P&I . Even with zero growth. And if your rents just double over that period , which isn't a huge ask , you'll have an unencumbered PPOR and 10 x unencumbered INV properties providing a fantastic income stream. Thats the end game, right? financial independence?

The sexy part of property investing is the action part. The research. The due diligence. The buying. The loans. setting up all the insurances, tenancy management etc... then its just kinda boring after that. Unless you are in a crazy boom market, nothing much happens once you are finished with the accumulation phase. You might have some bills to pay once in a while, and a tax return to do each year, but it's all kinda boring for the most part. But slowly and very surely, loans under P&I will start to reduce...rents and wages ( hopefully) will start to increase.... and eventually you will see the rewards...

I have many clients who have accumulated portfolios of 6,7 8 properties with me over the past few years... and they often used to call me (and I do really mean often) after a settlement and ask "whats next Ultan"? "what should I buy next?" "Tell me what I should do next " ... I always remind them that the plan was to accumulate X amount, and then turn to debt reduction. To be patient. Focus on paying down the PPOR. Let the portfolio do its thing. It will produce results. Every time I get a call like that nowadays, I ask them to review their tax returns and their mortgage balances and in every case they can see that their returns are as promised and their mortgages are reducing as promised. Eventually they stop calling so regularly and these days, as many of them start to migrate out of IO terms and into P&I, they can see the value in what they have been doing..... Their transition is much easier than for those with vanilla yields. They have paid down a lot of PPOR debt and the P&I jump doesnt leave them drowning. But during the accumulation phase they often became almost addicted to the action ... so I think it can be helpful to be reminded from time to time that the end game is where the reward is...

You've purchase 10 properties by 36. That's a lot of action. Sounds to me like you need to tweak what you have so the cash flows are much stronger and then leave it to do its thing. You have some dogs, by your own admission... maybe get rid of them and replace them with cash cows. This will assist with paying down your PPOR faster - which will compound into improving your overall holding capabilities , which will ultimately make the INV portfolio much easier to set, forget and pay itself off... which will deliver the end game for you, sooner.

But beyond tweaking your portfolio like that...just be patient. Takes time to get wealthy off resi property .... the booms we have just seen in Sydney and Melbourne were anomolies due to ultra low rates and "actuals" and endless IO . As soon as "actuals " were removed and the IO quotas were introduced, the markets started cooling...

So forget what the Joneses are doing. They are speculating and relying entirely on expanding credit to keep them afloat. Remember one thing always - even when credit was easy, hardly any of the Joneses made it past 3 properties . That's after a period of almost 30 years of ever expanding borrowing capacity. Even fewer of them are retired with a passive income stream worth anything much.... Don't speculate. Dividend reinvest. Then retire with a lovely annuity/income.

Dont be the Joneses. Be the person the Joneses wish they were!

 

Wow man what a position to be in at 36, who knows where that portfolio will take you too in the next 10-15yrs, even at a dismal 3% CG yoy your going to have a 6m+ portfolio by 50 and just about paid off...

I'm 10yrs younger than you but also only half the asset base you do, and I've found the killer of all happiness is expectation and comparison. Its false, and its so easy to forget why you started doing it all in the first place. Figure out your WHY and focus on that, your son, your family etc. As Euro said, you have done all the hard work, all the "action". Now you just need to focus on the next phase of your life and portfolio, your family and working on Debt reduction. Pretty sure if you work out what chunks are coming off in principle each year right now your Net wealth will be jumping up quite a lot each year.

Anyway I read this not long ago and it helped me look at the bigger picture

"Beware of destination addiction, a Preoccupation with the idea that happiness is in the next place, the next job, the next person. Until you give up the idea that happiness is somewhere else, it will never be where you are"

 

Some great and considerate replies regarding your mental state and how you are feeling about things but to be completely honest, I think you are simply over leveraged and didnt diversify enough.

Don't want to sound harsh or anything like that but
Paying off 10 IPs while thinking that your wife is wasting 10 bucks a week on whatever is simply wrong and I think you should sit down and reconsider what matters in your life because the outcome of that kind of thinking will not be a good one...

 

Hi Spludgey,

Maybe the changes made by Apra are a good opportunity to sit down with excel and consolidate your portfolio so that you are in a stronger cash flow position and can enjoy life a little more. What would happen if you sold down a few or more? Would it produce stronger cashflow, taking you closer towards your goal of financial independence? Perhaps try modelling a few scenarios on excel, selling one at a time to see what the outcome is. You could aim to keep your better performing properties and sell the rest. Or even see whether selling them all and moving the profits into shares produces a favourable result.

Remember it’s only a spreadsheet and you don’t have to sell them all.

 

Remember:
- Learn how to be happy with what you have while you pursue all that you want.
- Happiness is not an accident. Nor is it something you wish for. Happiness is something you design.
- Happiness is not by chance, but by choice.
- Happiness is not something you postpone for the future; it is something you design for the present.
- Success is doing ordinary things extraordinarily well.
- Success is nothing more than a few simple disciplines, practiced every day.
- We must all wage an intense, lifelong battle against the constant downward pull. If we relax, the bugs and weeds of negativity will move into the garden and take away everything of value.
- Your personal philosophy is the greatest determining factor in how your life works out.

SO STOP COMPARING!
If you want a comparison here it is, you are one of the 21,000 or so investors in Australia that own more than 6 IPs, that represents 0.084% of our population (counting around 25M people).
You are young, have taken the initiative, have a healthy growing family, you are living in Australia, please understand how blessed you are.
Never, ever compare, no one is the same and we ALL travel our unique and individual journey, so we don't really know other people's journeys, we assume we know, but we really don't!
Often we are unaware of their journey or the price often paid for their success. We cannot see the massive disappointments, the shattered hopes, or the broken dreams. We do not understand the risks incurred in both raising and investing capital for an idea yet unproven. We do not see the legal involvements, the tax burdens, the challenges of labour, or the restraining governmental regulations, nor do we appreciate the family dissent that seems to automatically accompany the pursuit of success. Sometimes we are unaware of the cost as well as cause that produced the success.
So remember, not all poor people make poor friends, nor do all rich friends have an enriching effect on our lives. Carefully examine the "friends" you have…not their assets or accomplishments.
If you truly wish to move ahead and understand your feelings please read those two books:
1. The Happiness Curve by Jonathan Rauch (explains and justifies how you feel in you life stage, really - you can discover your frustrations have no basis!)
2. The Seasons by Jim Rohn.
If you do read them...please post back.....I would love to hear back from you, your point of view, thanks!

 

You are negative gearing many properties - consider creating much better rent returns- it’s easy to neg gear yourself out the back door
I would closely analyse your properties real returns and how much you are losing on them as it’s not just about how many purchased

 

Well, I might as well let my pants down all the way (or almost).

Rental Properties

Here is my (anonymised) portfolio. It's the Rockhampton properties that really hurt me, as you can see. If I get rid of them though, I won't have much left in terms of savings at all afterwards.
A fair bit of the losses last year were once offs, but they'll be negative on an ongoing basis.

All my loans (except for one small one) are now P&I as well, if this wasn't the case, cashflow wouldn't be an issue.

Also, if you can figure out how to embed tables into BBCode, please let me know, I did a bit of googleing, but it seems that quite a few features are turned off on here. Is that right @Simon Hampel? I tried HTML as well, but to no avail.

 

How much cashflow can you release if you sell at least one of the rockhampton one? With that cashflow released, how fast can you rebuild your savings?

 

You might want to check your privacy/sharing settings, there bud. I think it's telling me your name...
Also anyone can edit the file

 

Have you clicked the updated link? I re-uploaded on a different account.
I'm aware that anyone can edit, I was hoping someone might make me into an instant billionaire!