YIP Investor of the Year 2012

Ah, so RE

 

I question some of the numbers as well.
The December issue had one that seemed like nearly a $500k anomaly in their numbers for one of the guys in there.

 

That's crazy but that is mining towns for you. I loved them when I first started out. I'd wrote down every separate strategy or tip and try and work it into my strategy/goals. They were a great motivator to take action. I still occasionally buy the odd one if I've got time to read. I've been in one of them twice. The first time they were very thorough with the addresses and valuations were on point. The second time I think they just had a stab in the dark.

 

You're famous!

 

From looking at the website - the massive failure is her USP.

It seems to come up in every page - so very actively advertising it..

 

@Peter_Tersteeg -- if you owe 100K, you find a way to pay it. If you owe > 1M, banks problem? How do they recover from this actually?

Thanks!

 

That's what I was getting at @trinity168 if you owe that kind of money you probably can't find a way to pay it back. You declare bankruptcy.

With penalty interest you'd find the repayments on $1M might be upwards of $8k-$10k per month. This is more tthan most people salaries and doesn't leave much room to eat or even cover the costs for commuting to the place where you earn that salary.

 

So they declare bankcrupcy and "walk away" from it? And the repercussion is the X number of years that they can't get any loan from a banking institution?

Thanks.

 

Read Consequences of bankruptcy — Australian Financial Security Authority

 

I am sure many will want to know what she has achieved that is pretty stock standard when paying for mentoring services. However, good on her if she has been able to reinvent herself.

MTR

 

I have doubt re the figures of the stories in API for a while，it doesn't seem stack up. Really need to read with a grain of salt.

 

Greedy at a wrong time without the fear from common sense is a receipt for disaster. When thinking about leveraging in property investing, people have emphased too much on the positive side of leveraging, not much has been mentioned re the negative side of it -- when it is loss the loss will be magnified many times by the leveraging, this is where investors need to be very fearful of.

 

The panelists at YIP must take responsibility though for choosing them as winners...

 

I look at investing as a marathon not a sprint.

Yes you can sprint if you want to but that is taking on more risk and you could lose it all. Kate and Matt did (in $$$ value) what I would set out to achieve in 20 years in the space of 5 years.

In 2011 Kate and Matt, “After some research we discovered that we could build a unit for roughly $300,000 and get a bank valuation after completion for $600,000. In 2011 I purchased a house in Melbourne (Watsonia) for $510,000 (Bank Value pre auction was $530,000 however got it cheaper as no one else bidded).

Surely this should of set off alarm bells that for 90k LESS you could buy a house in Melbourne on the middle ring. So it was only a matter of WHEN not if the market would crash in Moranbah.

Move forward 5 years my house is worth more than my original purchase, will be getting it revalued next year and would anticipate it be worth around 750k (700k+ for sure, see links below as to my valuation.. My house is 4b2b1c, renovated) theirs is now 1/2 -> 1/4 the value of their purchase (Median house is 238k).

K&M - 600k -> 238k = -362k
Me - 510k -> 700k = +190k

I prefer the slow and steady approach so I am not over exposed and if there are bumps along the road I should be able to weather them.

Sold Price for 6 Medbury Avenue Watsonia Vic 3087 - 705k
Sold Price for 13 Wattle Drive Watsonia Vic 3087 - 795k

 

Story of Icarus

Encyclopedia of Greek Mythology: Icarus

 

Great post.

IMO, some of the risks involved with leveraging aren't fully understood or appreciated, there's probably not enough attention focused on it.

Going gung-ho is all well and good, so long as there's complete information about the risks associated with it and strategies to minimise/mitigate those risks. I doubt the 'complete' information part is fully analysed in a lot of cases though. From a finance portfolio perspective, where in my opinion much of the risk lies (rather than properties itself), very few consider the expiry of interest only periods. Many do some risk sensitisation for rate changes (e.g. +1.5-2%) but thats only half the story.

For someone with $1million worth of debt that is currently I/O at 4.75%, if that debt HAD to turn into P/I, the monthly effect on your cash flow is equivalent to a 2% rate increase. Note a 0.20%, but a 2% rise! $1800 monthly. That can cripple someone who hasn't got appropriate buffers very quickly, especially if there hasn't been a corresponding rise in equity values that allows selling as an exit strategy.

Now i'm not saying people won't be able to extend I/O terms, but finance changes (like APRA) and scenario changes definitely mean that there's a risk element that you won't be able to.

 

There were many gurus promoting Mining Towns and I am sure many got burnt, Dymphia Bolholt probably owns none herself.??

We have read many posts on PC where forum members are still recovering from losses.

I consider mining towns high risk, but for those who got in early in the cycle they are sitting on cash flow positive properties. I
I am not a fan of mining towns, but winners and losers of course, timing is what always matters

 

Redom

I get what you are saying.

Property investing is much higher risk proposition today than it was say 12 months ago, as you mentioned financial changes, market sentiment and markets turning. What investors are ignoring I believe is that interest rates have risen and this is huge.

Its not necessarily about taking a steady approach as OP mentioned its more about understanding when to buy, what to buy. Going slow and steady means nothing if you buy at peak or the wrong market just my thoughts.

MTR

 

I agree. Buying well with a plan will ensure risks are minimised.

 

Back on the topic of YIP, they sought me out for my expertise on the cash flow vs capital growth topic. I gave them my thoughts. They also asked for a list of our properties which I provided, be interesting to see if / when they'll publish that. We have far less properties than some of the pros on this site, but its all on track for goals soon.