What do you think is the #1 reason that stops.....

Thanks Leo. We are certainly no majority as far as the people we work with go, but we are panting at the bit trying to get beyond our backgrounds.

 

I have full respect for people who in the face of extremely challenging circumstances (health-wise usually), bravely and courageously charge ahead going after their dreams. I most likely will never be tested with those challenges so I can’t fathom how difficult it must be. I find it very humbling. My full respect to you mate.

 

Mindset wont alter banks servicibility requirements, or convince them to accept more then a 7% yield or more than 70% of rent in their calculations.

 

Currently for me, it's more attractive ventures.

 

So your claiming lack of serviceability is restricting you?

If you doubled your income/cash flow would the bank lend you more money?
Yes they would.
If you tripled your income/cash flow would the bank lend you even more money?
Yes they would.
If you multiplied your income/cash flow x 10, would you even need the banks at all?

So what's the real issue here, serviceability reliant on banks or limited earnings?

Earnings can absolutely explode with the right mindset and it's in your control in almost every case.
Banks are out of your control.
Best not to rely on things out of your control and work on the things you can control.

 

I imagine that some bad experiences early in the investment journey could put people off expanding. We've build quite a large portfolio but never really had any issues with property or tenants over the years. If I had some problems these days I'd be experienced and determined enough to handle it probably. Earlier on though...I'm not so sure I'd have bothered carrying on. You need a clear goal and determination from early on I guess whereas some of us just fall into investing.

 

I'm scared of rising interest rates on large debts. I don't think it will stop me but it might slow me down when I think what a jump in rates will do to my cash flow on $1m + debt, let alone $3m+

I will need a to build a decent LVR to give me the mindset to keep going.

 

For me it is definitely mindset, I don't particularly want piles of debt but am happy to have a reasonable level of debt.

Growing up in a poor family would have certainly framed the way I view the world as well as what I believed that I could obtain.

In the end I suppose it was the trade-off between wanting a reasonable level of security / wealth & happy to live a balanced and happy life in achieving that over the long term.

Of course I am interested in property and shares but I don't want the time that I spend on them and thinking about them to take too much of my energy that I can use for other things in life.

all the best.

 

Thanks for all the honest replies. I appreciate everyone's opinion.

 

Mindset and tenacity plays a huge role in achieving your goals.

But my logical brain chose serviceability.

Reason being that some / a lot of people are employees. Sure some can climb the ladder and achieve higher take home pay. Put in overtime hours to increase income as well.

However there will also be many that cannot. They can't just rock up to work for 16 hours a day 7 days a week and demand to be paid.
For an employee it doesn't work that way.

So unless the employee starts thinking outside the box. Starts a side business, retrains in other areas. Their income and therefore serviceability is capped.

Some will argue that this brings me back to my first point about mindset.

However some industries have a lot lower employee earning ceilings than others.

 

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I know a Filipino guy who had the normal 9-5 job that paid average. He had I think 2 ips at the the time. I'm not sure what tipped it for him but 1 day he just went out to find night work and was working so hardcore like you wouldn't believe for a few years to build a massive portfolio. Obviously that was his goal, but it was amazing. One day he was a 9-5er average dude. The next, something snapped and he went berserk going all out to achieve his goals and he did. Talking to him the other day and he said he doesn't work nearly as much now as he's already put in the hard yards to build the base of his portfolio. Cool guy too but his partner is another story..

He did tell me something I long believed. That he thought having balance in life will never do it. He said he needed to be quite imbalanced for a period of time to get to where he is now.

 

No they wont, its not that simple it depends on what you do with the income.. If you double your income and pay half it in tax there is a lot of effort for little gain. They will lend more money if you reduce what you spend. I could borrow more money when I was living overseas on a $100 a week and had SFA income. I made enough last year to pay cash for a property giving a 7% yield when I asked why I couldn't borrow against it they told me because of the depreciation claimed means it doesn't meet the servicing requirements. I claimed more than 100k in depreciation in total for tax. 60k of extra income went into superannuation so wasn't counted as income. I had a 100k balloon payment on equipment that was used to increase income but reduced servicibility. That's the problem banks look backwards look at income from 2 years ago that was down because of expenses that increased income for the present. It is easier to borrow money to buy shares or equipment and at some point it may be better maximimize your leverage by investing in areas other than property because of servicibilty issues.. If the banks will lend you money you probably haven't maximized your potential.

 

Great poll.

Mindset is the wellspring from which everything else comes. Get it right and you will systematically eliminate or overcome everything in your way. Period.

A couple of years ago a mentor of mine said my biggest investing obstacle was going to quickly become my income. He was right. So I set to work transitioning out of employment and into business to 10x it.

Where there's a will, there's way.

Where's there's no will, there's no way.

@Ace in the Hole , remind us why you started your business again?

 

While probably more relevant for new investors I chose - 2. Lack of property investing knowledge. I think knowledge can address most of the other options. For me anyway I know that the more knowledgable I become in a given field the more my confidence grows and then action takes place. This in turn drives my mindset. I can't just change my mindset without testing the waters and seeing/proving my progress.

That being said though I think it depends on where the individual is in their journey.

 

I agree with this.

My view in priority order are:

1. Mindset - this is the number one reason why people do not start. They first needs to get educated...attend as many seminars. Then at some point do the research and jump in. The issue here is some people will rely on others with vested interests.

2. Have a strategy. YOu need to understand what you are trying to achieve CF, CG, or both on a balanced approach which is what I use.

3. Structuring (finance) is very important...it is very important you do not just leave this to Mortgage Brokers. You need to understand this well also.

4. Serviceability...if you execute on the 3 above ...you should be able to keep going. But understand there maybe times you may need to site on your hands

5. Finally - run your own race...don't worry about what others are doing....

 

Obviously watching your spending is important, but increasing your salary definitely helps a lot, regardless if you are paying more tax or not. I have seen this first hand with a number of people. There is no way that not greatly increasing income will not have a major impact, assuming one is not equally spending. Generally people who work so incredibly hard to invest and are clued up, would have very good spending habits ingrained long ago. So its the income that is often the culprit. But then even way before that, its the Mindset. Just my opinion.

 

From a previous post, the number of investors that have more than 2 investment properties really drops off. (as per rpdata, ATO stats below). IMHO these maybe the serious real investors who are investing towards the goal of total financial freedom & independence.



In the beginning it may not be a lack of ambition. However as they progress they will begin to come up against more and more issues (walls) that may prevent or inhibit from progressing further. This is the vital time that if they are not truly committed to their 'reason' for investing in the first instance then they tend to flounder and not continue on their investment journey. This is commonly referred to as, hitting the wall.

Over the years I've been actively investing I've come up against lots of walls that may have prevented myself and others from continuing on.

Some of the common ones (in no particular order) being ....

• No defined investment strategy plan.

• Lack of knowledge to overcome perceived issues.

• Not being able to access further finance

• Selling up to Realise profits.

• Sick of any day to day type Property management issues

The list is endless...feel free to add others.

Basically all these 'perceived walls' comes down to ones mindset or head space. There is a classic quote I read a while ago that IMHO sums up why most investors do not continue on.

It went something like this.... "To over come a problem requires a higher level of thinking than the thinking that created the problem in the instance".

Its a sad to say unfortunately most investors start out fine with the one or two properties however when the inevitable walls do start showing up they tend to splat instead of finding a way around.

 

Here are some other things that people come up against in life that totally ruins their focus on investment properties, financial freedom and hanging out for the next best opportunity (imo ):

• Partners who are more interested in enjoying life than affirmations and youtube clips can be a real drag and it takes a very strong mindset to survive this type
• Children - again putting too much focus on wishy-washy values such as love, joy, committment and loyalty can play havoc with available time and energy needed for internet research and the rinse and repeat drudgery necessary for the investor mindset
• Cancer and other terminal illnesses - either yours or someone close to you. Tends to make people think that they only have a set amount of time on earth and for some reason, they stop doing the types of things needed to make that important step from owning 2 IPs to owning 3 or more - which is where we all want to be so that we can say we had more than 2 IPs when we die. (I hope someone will take note.)
• Aging - people lose the drive and the mindset becomes soft if they're not careful. The attention starts to wander and they would rather compete with others on who is the most generous, warmest, most pleasant person etc. A real waste of energy inthe short time we have in this life. Don't get old -it can really stuff up the mindset.
• Meditation - often a by-product of some of the situations listed above. Brings on thoughts about rowing a boat that is still tied to the jetty, barking up the wrong tree, less is more and such crap. If you want a set mind, don't do this stuff. It can change you in ways you didn't think possible. Much better to go for a more new age approach where you can leave out the parts about speaking the truth, kindness and right thinking. The full blown thing is a real time-waster. If you combine meditation with aging, you might really be struggling to get to that 3rd IP. It will play havoc with your ability to spend hours at work, on the computer and could even undo your desire to obsess constantly about your bank accounts. Pity the ones who don't even have a goal to retire on 100K.
• death - a real bummer. As we all know, those who have died have little chance of obtaining the 3rd IP.

Long live the 3+ IP mindset. For those with 3 or more are really the worthy ones and something to behold!

 

That's gotta be one of the most passive aggressive posts I have ever read. I don't agree with much of your post on a philosophical level, but I respect your opinion.

 

I wholeheartedly agree with this belief..
At some length of time you have to become completely obsessed with what it is you are trying to achieve.