How to convince a friend of property investment

Thanks for sharing Perp.

I know people too who have lost pots of money investing in property and continue to do so.

Not everyone makes money, and some people are sitting on properties today/now that are losing money, its called negative gearing, get the time wrong and keep losing money. Anyway, that's another story, smoke and mirrors.

MTR

 

@MTR i gotta say i have used a NG situation many, many times in all different situations and done well.

I honestly dont think there is anything wrong/or see massive risk with utilising a Negatively geared situation if you have a good plan and exit strategies.

You gotta use the tool, not let the tool use you.

Just my opinion.

 

Explain to him over a beer what you have done, the reasons why you have done this and how. Don't go into the details too much, just keep it simple. Give him time to think about it and if he is interested let him approach you.

 

Xenia

You hit the nail on the head.

On this forum there is an obsession - on the number of properties you hold, the more you have the perception is the more successful you are. This is so far from the truth its not funny, it does not even make sense, because there is a big picture and it includes stuff like.... debt, equity, cashflow

 

I agree more properties doesn’t necessarily mean a higher net worth. Having said that, I know people who have 50 plus properties, at different price points, yields, states, potentials, with good risk mitigation measures. The reason they have so many is because they wanted a large asset base to grow to meet their own wealth goals. They also have low LVRs and prudent buffers. They are mega wealthy too imo.


Doing the same thing spread over 8 properties would just increase the risk too much and take much longer to grow wealth imo. It did however suit their wealth goals and risk appetite. More properties is not a bad thing if it expands your asset base, risk is managed and meets your own goals.

Just my 1.5 cents.

 

Lots of different ways to skin a cat.

Haha yea me too I don't like talking about my properties at all. It's great for what it is, there's a time and place for it depending on market cycles, but there are equally equivalent or superior investment classes all the time. Properties also have its own pitfalls and risks.

One of my mates has just been liquidating properties in the order of $50m+, which is his flagship asset, and getting into sharemarket now. Each to their own.

 

Why try and convince people, let them do what they please.

 

Sometimes one first has to convince oneself, right @JDP1 ?

 

Agree with this...

Not everyone likes property or has the mindset for it.

 

He might be right in the future you can only learn if the first one doesn't work out.

I choose property simply because it's the easiest to understand. I do wish I know how to play shares though... understanding different investment vehicles can only beneficial

 

Personally, I think anyone in Australia who wants to build, grow and keep massive wealth and doesn’t seriously consider utilising property in some way, resi or commercial or a mixture, has got to be a bit cuckoo in my opinion. Yes, yes i know there are heaps of people mega wealthy in businesses and other things without property, I understand and acknowledge that. I still think they are a bit cuckoo if they are completely ignoring property in some way, shape or form though. Some of the mega, mega wealthy people i know have very successful business or businesses and also heaps of all kinds of real estate around the country growing their net worth.

 

Something like "90% of rich people make their first million in real estate"?

 

Not sure of the exact stats, but I’m sure its high. Real estate is a great investment vehicle, especially if you’re not a passive investor (nothing wrong with passive investors though) and you wheel and deal your way, playing the game, manufacturing profits and equity.

 

Hmmmm. Maybe this guy's a whiz in equities, heavily leveraged with a dream portfolio, perfectly balanced with both local and international companies across several sectors including REITs.

Does he really need a push int low yielding residential property?

 

I agree @Scott No Mates. Gotta do what your good at i guess.

 

Sounds like he's one of those people who are reckless with their money. Encouraging him to invest in property might not be a good idea... Bigger funds to lose as he is chasing unrealistic/risky deals. I would stop mentioning RE altogether.

 

You don't. You can lead a horse to water, but you can't force it to drink.

 

Oh sure - it is really quite easy.

Step 1 - go to the local bunnings and purchase a can of red spray paint (Note - it must be red or this wont work).
Step 2 - find a suitabley large brick or concrete wall - preferably close to where you regularly meet this friend. Hopefully in the actual room.
Step 3 - Paint a large circle in red paint on the wall.
step 4 - Paint a smaller red dot in the centre of the circle.
step 5 - when the urge to 'advise' him to get into property strikes - stand up and run as fast as you can head first at the dot in the center of your red circle.
Step 6 - Return to your friend and enjoy the rest of your beer/coffee/tea/latte etc chatting about what ever it is that you usually chat about which is not property/investment related.

This will quickly reduce the urge to discuss such matters with this (and other) individuals.

Enjoy

Blacky