my not so great investment experience: Cheapie strategy

Discussion in 'Investment Strategy' started by TMNT, 5th Sep, 2015.

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  1. Tony Fleming

    Tony Fleming Well-Known Member

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    Not sure where the majority you are selling are located but some of the regionals are performing quite well. Some of them also do quite well when interest rates are higher as they are cheaper buy in price and the yield is more attractive. With the banks pushing up IO rates you might see some growth. Best of luck with it all.
     
  2. EN710

    EN710 Well-Known Member

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    Given the amount of headaches and stress you posted about these property in the past, this is probably the best as it'll give you a lot of breathing room financially and mentally.
    All the best and looking forward to updates.
     
  3. dabbler

    dabbler Well-Known Member

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    I guess only you can decide.

    Have always wondered where they were, if you feel like it, can you post or pm the location/s you found the worst and poorest performers.
     
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  4. TMNT

    TMNT Well-Known Member

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    interesting point, possibly

    as I said previously, cyclewise it should be the case, but im a little skeptical to be honest, cant really imagine cheaper props being indemand when metro is falling or getting unattractive, I honestly cant remmeber what happened last time too at the end of hte boom

    yes thank you, ive even i nthe spur of the moment thoguht about selling everything ,so I can wake up one day and think, OMG ive got nothign to think about today!

    but how boring would that be
     
  5. EN710

    EN710 Well-Known Member

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    Sometimes boring is better than dying out of stress. When you are bored, you can decide to add reasonable amount of stress later ;)

    When I'm bored I feel like buying another property, after I bought I thought 'what have I got myself into?!' and the cycle continues :rolleyes:
     
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  6. TangibleGoodwill

    TangibleGoodwill Well-Known Member

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    Would like to share one of my tenant stories.

    For years they were the perfect tenant. Family with three young daughters.

    But then a pipe burst in the kitchen and flooded the whole house for hours while no one was home.

    Cool no probs. Insurance would replace all the carpet.

    Took 2 weeks and all was repaired.

    Tenant then hands me a $3k bill for relocating a total of 10 days because the house was "uninhabitable".

    I know for a fact that they spent at most 4 days living elsewhere while the big air fans were on drying the house out. Besides not having carpet for a few weeks the house was very livable. I agreed to lower the rent for these two weeks. I even offered $800 off their tenancy for inconvenience. They didnt accept.

    Here they are with hotel expenses including breakfasts at $400 a night as well as $250 a night a friend charged while they lived the remainder of the 10 days with.

    Anway I refused to pay and we went to VCAT. I was working so didnt attend.

    AND I LOST!!!! Member awarded all payments to the tenant.

    I was furious. Absolutely outraged. I demanded my agent forward on all the paperwork submitted by the tenant.

    Sure enough there were receipts from a hotel and signed letters from friends stating the nightly fee.

    Showed a work colleague the receipts and thank the stars he noticed a date discrepancy on the hotel receipt. I guess my blood filled rage eyes missed it.

    So the date on the receipt had nothing to do with the period in question BECAUSE THE YEAR WAS WRONG!!!!

    Furthermore it said at the bottom "Thank you for staying at the IBIS" and had some WA suburb on it. Problem is this hotel in question was the Mecure and is located in Melbourne.

    They couldnt even forge the receipts properly.

    Anyway when I confronted them with forgery and dishonesty they crapped themselves and offered to spend money on the property like resanding the decking and what not.

    Evicted them immediately.

    What scares me most is VCATs blind sentencing, automatically favoring the tenant.

    Also there is absolutey no protection for land lords when tenants relocate because of an event which may render the property uninhabitable.

    Seems like they can stay at the Ritz, stawberries and champaign in the morning. Tenancy insurance wont cover it.

    Scary really.
     
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  7. Dean Collins

    Dean Collins Well-Known Member

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    Regionalisation of Australia is the only thing that will save our country and make us more competitive on the world stage.

    Having lived overseas (Singapore/Malaysia and now USA) I cant stress enough that Australia is becoming uncompetitive and we need to look at ways we can introduce LCOL into our society.

    Not everyone can live 30-45 mins max from 2 cbd's its just not cost effective.
     
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  8. lightbulbmoment

    lightbulbmoment Well-Known Member

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    @TMNT where was your was worst performing or problem areas?
     
  9. TMNT

    TMNT Well-Known Member

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    Hey everyone.
    Still in two minds about what proportion or what the criteria to sell are.

    Firstly . As interest rises. I LL be converting to pi which means anything up to 40 per week increase which isn't much.

    But multiple that by 30. It's more than my entire salary.

    The ones that are giving me so many headaches due to being in the slums I'll she'd.

    For example I have in Ballarat which has finally began to move. Same with Bendigo.

    Elizabeth/dav park I'm not sure what to do.
    Hasn't moved much.
    Doesn't look like it will clean up as we'll

    I don't want to over react and sell too many or the ones that I feel I'll regret down the track timing Wise
     
  10. skater

    skater Well-Known Member

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    You started this thread nearly 2 years ago now. You've been talking about selling some all this time.....and you haven't?

    If you've got around 30, and they are set to go P&I, you really have to prioritise taking a good hard look at your portfolio to see what you can do to protect yourself.

    IMHO, Buy, hold & never sell is a flawed strategy, especially if dabbling in the lower end. If you've got a property that is always causing stress, then getting rid of it and putting excess funds into an offset on another will improve not only your yield, but stress levels as well.

    Also consider how the market is going in each area. You possibly don't want to sell out of QLD, but may consider getting rid of some NSW, that have had some capital gain, since it will be a long time before the next gains come along.
     
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  11. ellejay

    ellejay Well-Known Member

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    I've got a couple of regional cheapies that have had some recent growth (and caused me no hassles at all whilst holding). It's a very easy decision for me to just sell them as the yield isn't what I'd look for if I was buying, and the next growth spurt won't be for a long time. Why would I hold them when I could be landed with a big repair/maintenance bill before I see more growth? I sold one this year and the other will go next tax year. I've already increased my cash flow by selling one and I've replaced it by buying with a better yield in an area at an earlier point in its cycle.

    On working out which ones to sell it should be pretty easy to work out. Sell your worst performers to reduce debt on your best performers would be one option. No point in holding on to something that's costing you money now, just in case it grows at some point in the future. In your case you may be waiting 10+ years to get back what you've lost on trashed houses and unpaid rent.
     
    Last edited: 18th Aug, 2017
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  12. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    The thing is cheapies can work very well but I'm not sure what you define as cheapies.

    Regional towns in the $150k mark? I also like to buy "some" of my properties in the lower end market as it provides a lot of benefits like zero holding costs and if chosen correctly can provide very good capital gains.

    I guess my definition of a cheapie is something like 30-40km max away from a major CBD, great cash flow and good long term CG potential. I would never buy regional town cheapies like $150k ones because there is no growth there at all.

    A house for $150k in Ballarat Vs a house for $300k in Logan - I would choose the Logan house each and every single time.

    To me they are both cheapies and cost pretty much nothing to hold but the potential in Logan vs a Remote distant regional is night and day. I think people need to understand the demarcation and differences between the two kind of cheapies.

    Just like in Sydney Mt Druitt cheapie I bought for around $250k, now well worth over $650k probably $700k. So in this example the cheapie has turned out excellent.
     
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  13. MTR

    MTR Well-Known Member

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    1+
     
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  14. MTR

    MTR Well-Known Member

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    Anything works well in a boom cycle
     
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  15. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    Of course - but when is the regional going to boom? Pretty much never so bad investment from the get go.

    The chances of something booming close to the CBD vs regional is probably 1000x fold.
     
  16. MTR

    MTR Well-Known Member

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    Agreed.

    Not on my radar, or part of my strategy.

    Not interested in $2K pa buying an old property in whoop whoop... that needs maintenance etc etc. makes little/no sense whatsoever. I bet that $2K pa would end up more like $2K in the red.
     
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  17. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    Exactly! - that's why I have NEVER bought anything regional or remote. I see zero gains there and for cash flow purposes I can buy elsewhere much closer to a major CBD hub and still provide me with excellent cash flow.

    Buying in regional to me is investment suicide in my eyes. Lets face it to succeed and be a millionaire we are relying on capital growth. Chasing 7% yields on a $150k property is NOT going to make you a millionaire by any means.

    If you need to buy cheaper investments you can do that easily within 40km from a major CBD without major issues.

    No point having 10 x $150k investments in regionals and zero growth per year. Might as well have 2-3 houses at the $300k mark and have 6-7% growth each year and in boom times it will be exponential.
     
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  18. jins13

    jins13 Well-Known Member

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    Some people may love buying these properties to brag about the number of properties that they currently possess. I think in this day and age selection of good quality properties are the way to go. As you've mentioned that with the $2k pa and multiple that by a couple of properties is working the opposite of making you stay and work longer. Also, the time you have to put in to get tradies charging you ridiculous quotes for basic work is a problem in itself and they can hold you up for ransom.
     
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  19. TMNT

    TMNT Well-Known Member

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    yes skater, I havent really made a complete decision because I ve been busy with work and a few family health issues, combine with trying to keep a level head and not overreact. I always try and look at things from a 3rd perpsective,
    obviously selling isnt a quick or cheap process,

    I still askmyself, it prices shot up. then the extra repayments I have to do will be worth it, as Isee people who have over extended and benefited later

    QLD im happy to keep, its just some of th regional vic/NSW im in two minds trying to work out if the regionals are next to boom,
    some people say yay, some say nay

    very hard to work out,
    decisions decisions decisons

    I already have sold and listed a few, but if I were to go full out, id shed a decenet number of them

    thanks for listenging!
     
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  20. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    The only person they are kidding is themselves. Its part of the investment game if everyone knew what stock to buy and when to buy it we would all be retired right now. :)
     
    Sackie likes this.

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