Why investors with large portfolios aren't as rich as you think they are

Discussion in 'Investment Strategy' started by Zoolander, 7th Sep, 2017.

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  1. WattleIdo

    WattleIdo midas touch

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    I grew up on the North Shore and can vouch for the weirdness of the area. I'll bet there's a lot of lying, arguing with reality and defaulting when it comes to rental payments. :cool:
    I judge a person by whether they stop to let a blind person cross the road or not. Doesn't happen much there, better not cross their path.
    Too many try-hards in the area, thinking they deserve this and that in life and pity help anyone who gets in their way.
    Not like that elsewhere.
     
  2. wylie

    wylie Moderator Staff Member

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    That's likely the entitlement factor. I've noticed over the 40 years I've been a landlord that the nicer the house, the pickier the prospective tenant.
     
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  3. fols

    fols Well-Known Member

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    Commenting about areas they have no idea about? Not me mate. I hold 4 properties in Logan. My comments about holding 10 units in Logan refer to the type of asset (unit versus a house) and lack of geographical diversification more than the region itself. I don't believe 10 units in Logan is a quality diversified portfolio, that will show above average growth over the longer term. My view only, but it's not a one size fits all. If this strategy Is working for people, more power to them

    I take your comments on tenants and 100% agree. I've had some shocker tenants in blue chip areas such as Bondi, Five Dock and Carlingford. I've had some great tenants in Logan, Deception Bay, Bradbury and Kingswood. Tenant screening & selection plus the quality of the PM plays a critical role here.
     
  4. Gockie

    Gockie Life is good ☺️ Premium Member

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    Interesting comments. I suppose I've stuck to the middle 40% of the market. Generally good tenants except the one I got through from Gumtree for West Ryde. Never ever again... we happily/thankfully parted ways after 3 months.

    Btw. I think migrants tend to make good tenants. They are happy to live in a decent rental, pay on time, keep the place well...

    So far I've never had a bad experience with migrants as tenants. Touch wood that continues.
     
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  5. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    Not targeted at you mate just what I have found by many posters. Its like people giving advice on real estate or shares and they themselves don't have any of either but provide advice based on news articles and stuff they read only or hear from their cousins cousins brothers mother - if you know what I mean.

    But yes I agree 10 x Logan is not the best but not the worst either. I've seen portfolio's much much worse than having 10 in Logan.
     
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  6. jins13

    jins13 Well-Known Member

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    I'm also from the area and completed my primary and high school in the area. Feel that the people I grew up with are very decent people but they are stuck in their own little pond and seem to be scared of venturing out. We used to make fun of people living and going to work in Parramatta and pretty ironic as I work in the area and live close by ha ha.

    Still, if I had a choice, would like to live in the area.
     
  7. jins13

    jins13 Well-Known Member

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    Good to know you have had a good run of good tenants overall. I've been very fortunate as well but just today, requested my managing agent to issue 2 week termination notice to two of my tenants for regularly being late on their rent. Enough is enough and yes this method means possible tribunal in comparison to the 90 days notice.
     
  8. MWI

    MWI Well-Known Member

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    I couldn't believe ALL those questions, what to ask successful investor. For me one question would suffice, "What is your NET WORTH from IPs?".
    Obviously, I would like to ask the writer some questions about property investments to make more comments. Why assume ever the need to sell?
    You know this reminds me of a story...I often tell it to make a point to Rookie investors who are often influenced by a number (number of IPs, number of $ value invested, etc...).
    An elderly lady attended a property seminar. The presenter on opening asked to raise hands if you owned 1 IP, then 2 IPs, then 3 IPs and so on. Well the lady raised her hand upon one IP, and eventually the last person held the hand up for around 40 IPs. So everyone clapped!
    When a break came a couple sitting next to the old lady asked, "So you own one property, do you?". "Yes, replied the lady, just one commercial property worth around $15million and have no debts on it as my husband passed away, so I am here to learn about property".
    Just goes to show we shouldn't ever be influenced by a number owned or how many $ invested.
    I apply the same concept to people, don't judge the book by its cover....
     
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  9. Ace in the Hole

    Ace in the Hole Well-Known Member

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    This then raises another question.
    The old lady probably passively inherited the 15mil sole commercial IP.
    The dude who accumulated 40 IP's likely built up invaluable skills and experience via the whole process.
    Who out of those two would feel more self worth, confidence and a sense of accomplishment?

    How much you gonna learn about property investing from the old lady?
     
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  10. eletronic_exp0430

    eletronic_exp0430 Well-Known Member

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    Agree. The person with 40 plus properties most likely didnt get there by not having any idea. Holding 40 properties is a big big big job. Heck even holding around 20 it takes up hours of my time per week.

    So - Even though the old lady's net worth is 15 million (good on her) the person who has 40 properties worth might also be the same net worth (you are assuming its not) and one thing I know for sure is someone who has 40 properties their cash flow is the utmost important and they would be raking in tens of thousands in rent per month. So if you think about it for a while there is also much respect for someone who can pull this off and maintain a huge property portfolio. Its not easy.

    One thing I agree though is the individuals net worth. No point owning 5 million in property and owing 4.8 million. Even though this scenario would be highly unlikely due to finance reasons. You wouldn't be able to get to this point simply on serviceability numbers - so its not a real world reflection of someones situation.
     
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  11. sash

    sash Well-Known Member

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    Yeah..am scratching my head...$5m in property and owe $4.99m......;)

     
  12. Beano

    Beano Well-Known Member

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    Yes ..counting the money and spending the profit is a big job ....I may stop buying as spending the money is taking up too much time lol :)
     
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  13. Scott No Mates

    Scott No Mates Well-Known Member

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    Have they simply replaced their low income with rent and now believe that they're 'rich'?
     
  14. kierank

    kierank Well-Known Member

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    IMHO, this not a right question,

    The right question is (simply):- “What is your NET WORTH?”

    In other words, what is your Net Worth from property, from shares/managed funds, from businesses, in cash, ...

    Or in other words, Total Assets - Total Liabilities which is the correct definition.
     
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  15. Pentanol

    Pentanol Well-Known Member

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  16. kierank

    kierank Well-Known Member

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  17. MWI

    MWI Well-Known Member

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    I agree. I actually had it that way then added IPs... so you are spot on! However, the article was just on wealth from property so I made it a bit more specific...
    However, the author would disagree as he/she mentioned once you sell you net would not be as such due to taxes, etc.
    What I don't understand is why would anyone sell a goose that lays golden eggs?
     
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  18. Arkad

    Arkad Member

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    That is the million $ question, not often in those stories does someone say I consider living off $x amount to be financial independence especially if that amount is not something that readers will get excited about.

    Most property material that you read often refer to the $100,000/year and that has become very much the benchmark/guideline because there is such a psychological importance attached to earning 6 figures+ and you could live a pretty good life with $100k a year I would have thought.

    But I guess like most things in life it's very much objective, some people might say hey $50,000/year off rent is enough for me to not work whilst others might say $200,000+/year from my portfolio and I will be independent.
     
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  19. Plutus

    Plutus Well-Known Member

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    Its super subjective. $50k a year for me is more then enough, I could live very comfortably on that but I have no dependents and live in an affordable city.

    Trying to support a spouse, aging parents, kids, etc or want to live in inner Sydney or Melbourne... Suddenly $50k is a lot less money.
     
  20. devank

    devank Well-Known Member

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    Not the ones from nearby though. They can easily drop everything and run away. It is overly generalising... but...