Why Do Most Investors Stop Purchasing After Two Properties?

Discussion in 'Investor Psychology & Mindset' started by Rixter, 20th Jun, 2015.

Join Australia's most dynamic and respected property investment community
  1. skater

    skater Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    10,222
    Location:
    Sydney? Gold Coast?
    I'm pretty sure both mine would have been eligible for the selective high school, but I didn't want either of them to go there. My reasoning was that they were naturally at the top of their classes, and neither one of them did a lot of study. By sending them to a selective school, it wouldn't be long until they were sitting in the bottom classes. As far as self confidence goes, it didn't seem right to me that two very intelligent kids could end up in the lower classes.

    As for me & Hubby, we both left school at the end of year 10. Neither of us could wait to get out! He later did an MBA as a mature student.
     
  2. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,737
    Location:
    Sydney
    Good points Hugh72.
     
  3. Bayview

    Bayview Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    4,144
    Location:
    Inside your device
    Most folks view their PPoR as an investment - which it is in a way; it goes up in value over time.

    I now view my PPoR as a tool to fund other investments...with a CG and rental yield/dividend/business income component.

    That is a very different mindset to many folks as we all know.
     
    freyja and LibGS like this.
  4. turfy77

    turfy77 Member

    Joined:
    22nd Jun, 2015
    Posts:
    14
    Location:
    Perth
    I guess not all people want to spend there whole lives paying off properties. I got to 2 rental properties plus my PPOR and thought nows the time to start spending it on me. In the last 5-10 years Ive spent about $200k on nice cars, jet skis, motorbikes, caravans, boats etc. I'm in my mid to late 30s and I'm enjoying life.

    I've got a few friends who are property rich and they drive around in a $2000 piece of crap car, dont own anything and never go out because they don't want to spend money because they are so tied down with their properties.

    My plan is to maybe later on in life get the third rental property and hopefully have all my properties paid of so I can live of the rent in retirement.

    Anyway thats why I stopped at 2 properties so I can enjoy life now!!
     
    WattleIdo likes this.
  5. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    Why not have 20 properties and buy what you want and travel you want??

    Unless you have properties worth a million a piece....you won't get much income off 2 properties even fully paid off....

     
    Phantom, MJS1034, Hanison and 2 others like this.
  6. LibGS

    LibGS Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,027
    Location:
    Melbourne, Australia
    I'm the same. We live in a nice PPOR, it is our home. I was in the fortunate position where it was fully paid off and I used that equity to start buying. Why not use it to fund other investments?
     
  7. skater

    skater Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    10,222
    Location:
    Sydney? Gold Coast?
    Agreed! You don't need to buy properties that are going to affect your quality of life. Even if you aim to have, say, five fully paid off, you could achieve this really easily & fast by buying ten & selling half down after they've achieved growth. It's much quicker than just trying to pay off the loans from your income alone.
     
    MJS1034, Gockie, Hanison and 2 others like this.
  8. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,517
    Location:
    Investard county
    Agree with what skater and sash have said above. I find I tend to agree with you two a lot...

    Trying to pay off an investment property is a mugs game. Put the cash towards further investments and grow the pie. Since my second property I have never put another $1 of my own money into my portfolio. It grew, I withdraw the equity and buy more properties, everything I buy or build I aim to have cashflow positivve within a year. if you do that your lifestyle isn't effected and you can buy all the cars and doodads you want with the money you earn from your job.
     
    Gockie and fols like this.
  9. Harro

    Harro Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    121
    Location:
    NSW North Coast
    2 IP's fully paid off, plus share dividends and fixed interest is certainly enough for us, and we are under preservation age for our Super. We have a very enjoyable lifestyle.
     
    Gockie likes this.
  10. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    :):DYep.....lets doodad away.

    Give me a hint...but I am presuming oyu must be getting at least 50k per year...
     
  11. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,737
    Location:
    Sydney
    You've spent 200k on doodads in the last 5-10 years??
    Whoa. All I can think of is you are losing on the power of compounding interest, time value of money.
    I'm guessing you dont read MMM cause you'd get a heap of face punches.
    Each to their own of course.
     
    Last edited: 29th Jun, 2015
    Pins and Touristy like this.
  12. Befuddled

    Befuddled Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    426
    Location:
    Sydney
    Personally I only see 2 options for myself. Either go big or do nothing (own PPOR only). The reason is that the income from 2 average fully paid off IPs is, in my mind, not much higher than a full pension in its current form. You may get ~$100 extra a week but that does not translate to a significant improvement in quality of life. We all know starting out is the toughest. With 2 IPs, you have a great launching pad to continue investing. If you use 105% borrowing it would not affect your current lifestyle. However the benefits in later life is massive. You could be getting 2,3,4 times the amount someone on a pension gets, and that DOES translate to a big improvement in lifestyle

    Each to their own i guess
     
    Gockie likes this.
  13. Harro

    Harro Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    121
    Location:
    NSW North Coast
    Just under 75k. Super still to come. I like having passive income coming from a range of asset classes. Liquidity can be invaluable at times.
     
  14. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    Great stuff...exactly my thinking...noice......can't go wrong.

    I am presuming a lions share of that is off share dividends?...I am looking at this now for a bit of diversification.
     
  15. Harro

    Harro Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    121
    Location:
    NSW North Coast
    Correct. A mixture of LIC's, ETF's and direct share purchases. Also a term deposit which is nothing to sing about!
     
  16. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    Who cares about term deposits...most barely track inflation anyway....nice work anyway.

     
  17. Harro

    Harro Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    121
    Location:
    NSW North Coast
    There was a time when TD's were earning 7%. That seems like an eternity ago now however. Thankfully, only minimal amount in TD now.
     
  18. Befuddled

    Befuddled Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    426
    Location:
    Sydney
  19. Harro

    Harro Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    121
    Location:
    NSW North Coast
  20. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    teg499 likes this.