my not so great investment experience: Cheapie strategy

you dodged a bullet

 

@TMNT reading with interest - it sucks to hear your pain but I believe you have the skills, resources and mindset to move through this. It sounds like it has been a royal pain the bum dealing with a string of bad luck situations compounded but higher than average problems due to all your properties being in rough areas. Some advocate only high Q capital city properties but we all know things can happen there too, for me its about balancing out a couple of better ones with a couple of cheapies. And then rolling with it when things hit the fan. Several of your locations are really soft rental markets and too much stock on market, so I would be interest in reviewing your market choosing and timing methods perhaps, but I know some things have shifted dramatically in world economy over recent yrs, so some of those markets may have looked a lot better at the time. No blame at all.

I would say to be honest all that matters is your mind, your goals and your actions from this point forward.

Think about what you want, the kind of lifestyle and workload you are hoping to balance. Do an honest snapshot of your portfolio, and decide whether the portfolio you have is congruent with who you want to be, and is the kind of way forward for you. If it is but the cashflow is tight then (if the worst few happen to have enough equity) to get you a year of breathing room cash flow wise I would sell 1/2/3 but probably no more than 3. Take a yr to relax a little and then re assess. Find a better PM wherever you can. If you want something else from life completely, then start selling down and head in another direction. You have already taken massive action over an extended period, something most are unwilling to do. You will succeed. But it is important to like where you are headed, so nothing wrong with thinking hard and changing direction if needed. If you do want to hold on, but need to sell a couple, don't obsess too much about which ones to sell, just sell the dogs or 1 with some equity or the ones where the worst PM options are.

Sending good vibes!!!

 

hey TMNT,
we ve spoken over the years a few times, Keep your chin up brother,
I dont have the answer for you but I too have a few properties in similar areas,

I too had a few months where I had maintenance issues, like heaps,
the good thing is that hot water systems etc, once you replace them you wont have a problem them for a few years,

but yeah I get how selling everything might be something you regret later,

good luck with it, you are a smart guy

 

I've heard ashmont horror stories. Bathurst would be pretty solid or is it in the bad area closer to Kelso? Do you find the property managers aren't doing an effective job or its just impossible to get decent tenants? Once again good luck with it all.

 

hey BA!

to be honest, im not looking for sympathy, sympathy is overrated

anyway, honestly, if all the problems were to minismise in 6 months id be happy to hold, but yes, the property in ashmont has barely changed in a few years, so that surprises me,

I still believe in propertys going in cycles, so I believe it will go up, if you look at the growth trend its a long term increase, but yes at what cost?

maybe im too soft but most of my of tennat problems the agent isnt totally to blame.
I approved them, and you cant control how a tennat behaves,

but my choice of demographics might be to blame,
one proerty has had 3 consectuive tenants, all leaving thousansda in arrears

and all 3 different agents too, and its actually a nice renovated house (actually basically rebuilt)

 

amazing enough, the problems with the ashmont property have all past, fingers crossed, not a problem for 4 months,

i suppsoe I need a bit of luck since the house was set on fire!, and broken in three times in 18 months

 

thanks ali sister(s)

ego is also overrated
there is no ego in saying "hey bro, I own a property in ashmont......arent I fully sick!"

 

gosh thats not a nice situation, however I am fortunate enough not to have a busines involved, and yes, sometimes you gotta do what you gotta do

if I sell all up, ill have 2-$3m in equity so im not in a terrible position, but cashflow has been according to my tax something like $30k short last FY, and since I dotn work full time, its not a pretty site

 

I remember you had a few in Logan in the low 200k, they should be in the low 300k by now?

 

You have a casual 2-3mil tied up in junk? Mate, sell down and pick up a few nice properties in Sydney and Melbourne when the markets settle or go commercial. If you have that kind of money you shouldn't need us telling you what to do.

 

This has me gobsmacked too. You could be (hopefully you are) living mortgage free in a very nice house. Also though you'd have enough for 3 or 4 very solid ips in tightly held areas with tenants who are extremely unlikely to burn your house down, trash it or leave without paying because they are responsible, have a work ethic and/or would have a lot to lose. It would be pretty straight forward investing. Do you think you're making life incredibly hard for yourself? I have a mix of cheapies and more expensive ones. I've had 50% gains with some over the last few years but the 2 real cheapies I have brought the smallest gains (70k ish) because obviously percentage wise a 50% gain on those properties gives less return than 50% gain on a more expensive property.

 

However equity is not cash, just saying they are different, and all associated costs with selling including CGT needs to be deducted. However, if TMNT may have some huge losses to take advantage of???

 

I was assuming he'd deducted costs.

 

Right, I assumed the other ??? you don't know what the $ value is until it has actually sold.

However, I agree with you, why hold inferior properties that are bleeding if there are better options. unless you can not sell???

The only attraction to perspective buyers is cash flow.

MTR

 

Gobsmacked as well.

$2mil invested in shares at say 5% return is $100k pa.

 

Here are some thoughts....

Many people on here or whom I have met are really scared of many country regionals, so I think you need to nut out what has moved and may continue to do so, or what provides good cash with little trouble.

You can't help doing Hot water systems, ranges, heaters, and check your other places, any that are about 13-15 years will need replacing, I document all these things and the age so I know as much as possible, also for depreciation.

If you buy old places with clay pipes, especially if any trees around, you know you will be dealing with sewer chokes, if lot of trees, blocked gutters as well. Although recent places are no guarantee of no problem, one of the neighbors is a rental, I kid you not that a plumber is there at least once a month, sometimes every week ! I often ponder the yearly expense.

I just noticed they are again advertising evocities on radio

Seeing each place is likely a complex market, I can only say Bathurst seem to have people always moving there, when I was looking in Bris, some of the agents were talking of putting money in Ipswich, it should be a growing area, no opinion on the other places as do not know them. So it really comes down to looking at what is/has performed, what has been dead or a real drag & then deciding what to do.

I guess you should also know your not Robinson Crusoe, but I agree with the others, you should be able to work out what to cut off & somewhere better that you could move the funds too, consider the APRA changes though if you need any loan/s.

 

Sell and retire! That's more equity than I've ever dreamed of!

 

Hey TMNT,

You were definitely one of the people I took advice from on the Somersoft days! I remember at one time you flew interstate almost weekly to do renos and would borrow tools/ladders from neighbours in exchange for beer? That cracked me up lol

Any maintenance/rental arrears/PM problems will suck when it happens and especially so when they all happen at once, but if you take a step back, it will be a drop in the ocean compared to that juicy equity you've accumulated over the years!

I daresay you wouldn't have been able to accumulate that portfolio/equity without the cashflow from a lending perspective - or else it would have been a massive risk and gamble to buy a couple of heavily negatively geared bluechip in Sydney for example at the time - but who knew right?

As most people know, I've bought a bunch of cashflow cheapies in Logan and only have people like you to thank. Yes, I've also had my share of tenant/PM/maintenance disasters with many happening at once or over a very long period - it definitely sucks when it happens at the time but if I take a step back (or 50), my position is that I am still very positive from a cashflow perspective over the years, thanks to having some great, easy going properties balancing out the struggling ones at any one time - would this be the case for you too?

I think the very nature of accumulating a large/diverse portfolio of multiple properties is that you will inevitably end up with some low performers, duds and even some losers. Granted, I've only bought in 'capital cities', so it sounds like you need to load up that spraygun with whisper white and give some of those regionals the boot!

I am sure you will come out fine from this challenging stage of your property journey - Good luck!

 

Best decision ever....I too bought one on Lizzie and 2 in Salisbury....the alter have performed ok...Lizzie only 50k in 9 years.....

As for gentrification in Lizzie, Davoren Park, Smithfield Plains...tell them they are dreaming.

 

Yep as for my Davoren park house, if it was costing me money I would sell it. It's not costing me from investing elsewhere in regards to equity so it's just one of those long term lemons.