My journey: How it started / How it's going

It's human nature. We want things quick, easy, all packaged nicely with minimal effort put in. Being sold OTP with all the fancy marketing, depreciation benefits being trumpeted as the gold standard and rental guarantees etc, its easy to be seduced into buying.

But most people won't build any serious wealth in resi real estate this way.

 

Neighbour has 2 sons, early 20's. They've bought an overpriced shiny new unit in Penrith. I tried to talk them into suggesting something different for the boys, but they were told by the slick sales person (and they believed him), that the only thing they could buy, and get all the grants, was a brand new unit and the grants weren't available for houses.

 

That's already happened. Waiting on the bank now for preapprovals and refinance

 

Spidey senses should always be on high alert when buyers agents recommend anything. Just because it's not off the plan doesn't mean it's a good investment, let alone the right investment for your strategy.

 

I hear similar often.

The amount of times I've been asked if X OTP property would make a good investment..... After I give my 3 min spiel why its unlikely...I get notified they've already bought it..

 

The plan is to grow at least 5% per annum and its tracking nearly double that. As long as it's doing that it's doing exactly what we set it up to do.

 

Ya my personal opinion is that just because you can afford a cashflow shortfall doesn't necessarily mean that it's a good idea. That's not a very scalable idea. You can only accumulate so many properties before you can no longer afford to lose money. We think it's a smarter idea to invest our wealth into income generating assets not income draining assets. More sustainable for us. To each their own I suppose. Apparently there are a whole bunch of investors out there that prefer to lose money to chase the promise of growth. Small wonder why only 20 thousand people in the entire country own 6 or more!

 

It depends on your financial situation. You said you have 8k a month in surplus income (likely from employment). Given that, and your property growth to date, imho you're strategy is not building you much wealth for the resources you have available. Unless your risk tolerance is minuscule, you're chosen strategy based on your financial resources ( at a superficial glance) is not optimal at all imo.

It's not about buying assets which lose or make money. It's about what resources are available to an individual investor, and then them being able to choose the best strategy suited to their position. Most deals I've bought were negative CF from day one and I've managed to build a decent portfolio over 20 years.

But like you said, your hitting your goals with your growth targets so that's all that matters.

 

No worries you aren't raining my parade at all. My and the wife are getting a kick out of reading these it's great please keep them coming. Perhaps I should call my broker up and say some random from the internet doesn't think what they laid out is a good idea. Perhaps they'll get a kick out of it too. Don't want to take you off your high horse or anything so you go ahead and stay on there big guy it seems to make you feel better. Keep the high going bro. Anything else you want to assume you know about my situation?

 

I'm aware of all the fears investors have about OTP. And the use of a buyers agent has absolutely nothing to do with the fact that I'm not originally from Australia. The irony that you called me a newbie investor with that lovely statement LOL!

I use a buyers agent for the same reasons why I use a dentist when I need something done on my teeth. For the same reason why I use a mechanic when there is something wrong with my car. For the same reason why I use a doctor when there is something wrong with my health. I'm sure you see where this is going. Unlike the **** posters i've experienced in the past few minutes, I don't pretend to be an expert in thing such as wealth. Also, I have two small children and a full time job as well as a whole slew of other things I do with my personal time. I do not have time to be in the market from top to bottom looking for the best asset for my strategy. Nor do I have the connections in the market to secure off-market deals that may also be beneficial to my strategy. This is why I use a buyers agent. This is why buyers agents exist. And i'm aware of the difference between a buyers agent and a spruiker. There are a lot established deals that are also toxic! Due diligence still needs to be done on everything and the end result needs to align with your strategy. The result can come in many different forms of investments.

 

And they did! The parents are so proud of how their kids are 'so successful', yet they borrowed equity from parents for deposit (no savings) and have bought an overpriced unit.

 

Absolutely. Doesn't make sense to me to go harder and take a loss while you're doing it for the prospect of growth. Property doesn't grow all the time and **** happens all the time. I want to set up my properties to support me through the journey as they grow at the targets we set out. As long as they are doing that they are working. If they are doing more than that, they are over-performing. They are currently over-performing.

I completely disagree with how you think a property should be optimized. Our risk tolerance on the contrary is far from miniscule. It's quite high. It doesn't mean we want to be stupid. It means we want to set our property up to where we can service as many properties as we want to put in there. You are less serviceable overtime with negatively geared properties. Growth is great, but what good is it going to do you if you can't service more debt because all your surplus is being used for repayments? Our main constraint is to maintain a portfolio that pays for itself.

 

But you've bought in a boom! Things WILL get growth at the moment, but it's not sustainable.

 

Most people don't build any serious wealth in real estate full stop. 20 thousand people in the entire country own 6 or more properties. So not sure if what these other people are doing is any better ¯\_(ツ)_/¯

 

So when I said "as long as it's doing that" I meant as long as it's growing at least 5% it's doing exactly what it was set up to do. 5% growth is sustainable.

 

LOL! Not in suburbs around Elizabeth, it's not. That area flat-lines for a LONG time between growth periods, but hey, since I'm just 'some random from the internet' what would I know?

You've been here for 15 minutes & start with the personal attacks. That's classy!

That's fine, I won't bother you with anything helpful, since you know it all.

 

But you stated you currently have an income surplus of 8k a month. Unless you have massive debts elsewhere, your current serviceability should be very strong.

By your own accounts, your IPs have had extremely low levels of growth over the last few years, and that's during a recent massive boom.

I'd be a little less defensive and take a good look at your overall approach moving forward.

But you're right, I am a random internet poster so do your own DD.

 

Come on @Sackie ..... we know you don't know anything about real estate, right?

 

Places like Direk and Mount barker will spend decades without growth.
I’d suggest not getting so defensive. Listen to what 20,000 with 6 or more are telling you, because many of them are on this forum.
I’d also suggest asking your buyers agent if they received a fee from the developer.
(This is directed at the OP not you skater)

 

Haha, I know.