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Monid: Our story

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  • Monid: Our story

    Two disclaimers before I begin.

    1. While this is going to be the story of my wife and me in terms of property investing I’m going to write in first person and say I rather than we. Apologies, to my wife, but I think it reads better that way.

    2. We are not super investors certainly not in the same league as folk like Dean or Robyn. For a fair while I’ve let that put me off doing one of these my story things, both on the don’t have as much to share front and on the don’t like to blow my own trumpet front.

    3. Simone's disclaimer: Having just found out that David has pasted our life story on the net without warning me I was initially shocked and reticent to have so many strangers to be reading the intimate details of my personal finance. Lucky for him I did read it because I found a whole lot of misremembered reporting going on! However having read through all the posts and having seen how helpful people are finding it I have agreed that it should remain in all of its riveting glory for everyone's enjoyment and education, on the condition that the information not be used for comparative bolstering of anyone's egos. We are what we are and we are pleased with it.

    However thinking about it recently it occurs that while the super investors are very inspiring they are also somewhat off putting (no offence guys ) because they are so darn super… And there is only so much room in the market for super investors not everyone can consume that many properties, and not everyone wants to. I thought people might enjoy a somewhat different story of a somewhat risk averse small scale investor, and they might find it more in tune with where they are or where they might be heading.

    In terms of format I’m basically going to walk you through several property investing decisions we have made, why we have made them and what we have learnt from them. I’m going to do this sequentially from our first property to our last and I am going to include some of the properties which got “away” either because we didn’t want them or they were snapped up before we got there…

    I’m going to try and post a story of one investment decision every day or so, but in the meantime, between posts feel free to ask me questions and I will endeavour to answer them J

    I’ll start out before we bought our first property (our home) with a wee bit of background about myself. My mother was a School teacher, highly educated and is now racing me to complete her PhD. She now lectures at Massey University in the School of Education. My father is the complete opposite, dropped out of school when he was 15 and became an entrepreneur starting several businesses. He did best when having spent the night in a bar talking to a plumber. The plumber told him that the best shower mixer in New Zealand at the time was the feltonmix mixer, but it was almost impossible to get hold of because the Kiwi company that made it did a terrible job of marketing it and distributing it. The next day dad walked into the company and asked to speak to the boss and told him what the plumber said and offered to take over distribution… And the rest was history, dad is the reason that half the cheap rentals in the country at least have decent shower mixers. That business ended when the owner’s sons on the advice of the accountants cancelled the distribution agreement. He then opened a plumbing supplies store which went south rapidly, basically the margins were too low to compete (20% retail 5% or less to trade.) Now he runs a specialist soccer shop www.soccerscene.co.nz So I am the son of an educator and an entrepreneur. J

    Basically I’m a philosopher by training and trade, although while I studied for my first degree I worked in my father’s plumbing supply shop and did bathroom designs. I studied mostly philosophy interspersed with political theory, sociology and a touch of economics. Once I finished my undergraduate I was addicted to philosophy, and so continued on studying concentrating in my Masters on Philosophy of Religion and Ethics, and in my PhD (Which I will hand in by the end of the month!) on Political Philosophy and Bioethics. My interest in the last was spurred mainly by my first wife Kerry who had cystic fibrosis. As such I became her primary care giver and learnt more than I ever wanted to know about medicine, doctors and the ethics of medical practise. At the end of 1999 Kerry passed away. In 2000 I met Simone my present wife.

    Okay that’s enough for a first post, and a tease since there has been no actual property information yet. Tell you what I will share our current buying rules:
    1. Property must be cashflow positive or neutral when conservative figures are used (for rent, repairs and maintenance) and capital gains/ depreciation aren’t taken into consideration.
    2. Property must be in an area that is growing or at least diminishing at a very slow rate.
    3. Property must be such that we would be happy to live in it ourselves (the anti-slumlord clause).
    4. Property must not take our LVR above 65%.
    5. We must have at least $5000 readily accessible per property dwelling for emergencies.
    6. In addition to the above we must have at least enough dollars available to service 50% of our properties being empty for a month.
    7. Must have a plausible exit plan that will work in reasonable whatif scenarios.

    Any questions, comments or suggestions fire away J

    Last edited by Monid; 01-07-2007, 09:18 AM. Reason: Simone adds her two cents
    New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki

  • #2
    Was reading this on RM's site yesterday, glad to see it migrate here!!


    • #3
      Well done Monid.
      Looking forward to next installment


      • #4
        Great work Monid - an interesting story.


        • #5
          Hi David

          After your impressive post to me last Friday, I was curious to know more about you.

          I guess things must have manifested itself to lead to your thread here "Monid - Our Story"

          Looking forward to the next installment and hope that the Super Investors can contribute to help you go forward further to the next level...

          Regards Ron
          Last edited by RonHoyFong; 13-05-2007, 11:30 PM. Reason: post


          • #6
            Originally posted by Ron
            Looking forward to the next installment and hope that the Super Investors can contribute to help you go forward further to the next level...

            Regards Ron
            Originally posted by Monid View Post

            And there is only so much room in the market for super investors not everyone can consume that many properties, and not everyone wants to.

            Ron, Not everyone wants to be a superinvestor as David said above...
            Last edited by rueben; 13-05-2007, 09:51 PM.


            • #7
              Great Idea


              great idea. And you are 100% correct, everybody has their own motivation and why's to where they want to get to. As long is you are moving towards your goal and you motivate others along the way, who cares what the goal is ? It only has to have meaning for YOU.

              The only comparison that would be fair would be Monid now versus Monid 10 years ago and is it towards your goal or away from it and a review every now and then. If you compared yourself to investor a, b or c that would simply make you feel inferior.

              This was a big stumbling block for me too a while back and great to see you pluck up the courage to tell your story.

              Looking forward to the next installment.

              Last edited by Fritz; 13-05-2007, 09:28 PM.
              Argue for your limitations and sure enough they're yours. - Richard Bach


              • #8
                Hi David,

                I'm looking forward to getting to know you (and Simone) better through this thread.

                I have one question: Given your buying rules, have you found anything lately that meets the rules? If not, why not? (I suspect you have been very busy, and are also offshore, so have not really been looking - but I might be wrong.) If you haven't purchased recently, do you think that you will be able to do so in the near future, given your rules? Or do you think you might need to change one or more of the rules?



                • #9
                  Originally posted by rueben View Post
                  Ron, Not everyone wants to be a superinvestor as David said above...
                  While I agree (and have said so on here before), hopefully this thread will not degenerate into a "super-investors versus regular-investors" battle.

                  Last edited by SuperDad; 13-05-2007, 11:05 PM.


                  • #10
                    Originally posted by SuperDad View Post
                    While I agree (and have said so on here before), hopefully this thread will not degenerate into a "super-investors versus regular-investors" battle.

                    Absolutely agree - Excellent thread David - I'm appreciating hearing about you and Simone's investing journey.


                    • #11
                      Hi David - this is great to see. We know that only a small percentage of readers ever contribute to a forum, so your story will be reaching people far and wide.

                      Good on your for doing it and offering some inspiration to those who might otherwise be intimidated (or maybe don't believe they can do it) by the bigger stories out there.



                      • #12
                        Well, you go to bed and you find a bundle of lovely encouraging posts when you wake up , and a wee
                        bit of argy bargy.

                        Cheers for the support guys, I'll respond to stuff in order.

                        Ron, you were somewhat influential on this thread, unfortunately in a negative way, you may remember a few months ago this exchange: http://www.propertytalk.com/forum/sh...1&postcount=84
                        I was at the time going to do this thread, but was put off by your insistence on the declaration of how many properties I had as if that changed the quality of my comments. Having thought about it further I decided hey, this way I can show (he says humbly...) that even someone without a spectacular number of properties can occasionally give useful advice.

                        Anyway glad you are now enjoying it, and I am happy to cherry pick from the "super investors" (We really need a new name for you chaps or at least capes )
                        ideas that suit my goals and plans.

                        Fritz, cheers for the encouragement, looking back at the ghost of David past is an interesting experience, our goals have shifted a fair bit as I will cover in the next few chapters. It has been quite interesting just sitting down to write this in terms of where we were in our thinking about things and where we are now.

                        Paul, you are absolutely right, not too much has been bought by us or even looked tempting to us recently. In part it has been a function of busyness and in part a function of being on the other side of the world, and while we have dabbled with the idea of investing over here for reasons I will go into later we have chosen not to. We have however recently found a property which does fit our rules, we now just have to decide whether it is worth it, since it is a fairly big purchase and a somewhat different property than we have looked at before, but more on that as well later.

                        PS I'll post the actually follow up in awhile...
                        New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


                        • #13
                          Our House

                          We started looking into property towards the end of 2000. Basically at that point I was renting a house with a friend, sharing the $300 a week rent between us. However the friend was off to England for his O.E. so I was going to either have to find other accommodation or pay the $300 myself (I’m not keen on flatmates who I don’t know I’ve had a few bad experiences…) Simone was living with her parents but wanted to move out.

                          We talked about moving in to a flat together, and then Simone said “why not buy a house?” I have to admit I hadn’t even contemplated the idea, but once we started talking about it and looking it seemed good.

                          I'd had never even thought about owning my own home. In contrast Simone had always assumed by the time she was heading off to University that she would have found a way to make a deposit on a large house which she would buy, live in and rent out rooms from to her friends during university. Thus having them pay down her mortgage until she could cope with it on her own, at which point she could kick them out and have a large house to herself mwahahahahaha She suggested this as a possible plan for us. This was in part due to her mother's fine example of treating Real Estate Agencies as if they were candy stores... Thus developing Simone's taste for properties.

                          We spent the next couple of months looking at properties and getting fairly disheartened. We had about $25000 a year income between us (We were both full time students) and didn’t feel we could look too high (we were Auckland based) so we looked out South, at a couple of holes on the North shore (Built ten years ago and already rotting, having supplied plumbing and fittings for spec houses out West and on the Shore I’m well aware of the ‘quality’ of many new houses the fittings often look great but are rubbish.) and out West, but found nothing in our price range.

                          I was looking in the Trade and Exchange when I saw an advert that said: “West Auckland house, wooden floors, $110000 ONO” We thought well, it’s within our budget (actually it was the cheapest house we had seen by about $5000) probably is one bedroom or two bedroom or just an apartment, but hey a phone call is free. We called the owners, and went and saw the place, it was a three bedroom bungalow in Art Deco style.

                          Hand built by the owner’s father who used to own much of the area, using a copse of trees you could see from the house site which he cut the planks from… It had all the flaws that you might expect, a bathroom which you had to walk out the front door to use, bright pink walls (the owners told us they had their son paint it to brighten the place up a bit… not a good call) the kitchen sink and bathroom vanity had been hand built by the owner’s father, with all the ugliness that that entailed (the bathroom designer in me shuddered). Still it was cheap and cheerful and a reasonably sized three bedroom house, 15 minutes drive for the centre of town (not in peak traffic).

                          So we started negotiating with the owner, but they really weren’t willing to budge, the next door neighbour had already offered them $115000. However after talking to them about it, it was clear they weren’t keen on selling to him since he planned on bowling the house down, and replacing it with units they preferred to sell to a young couple who would treasure the place, so after further negotiation we settled at $111000. (A note, our history on negotiation hasn’t been very good. Although our registered valuation before renovation was $120000 so I guess we did all right)

                          The conditions were finance, LIM and access for renovation once the sale was unconditional (We wanted to make a couple of improvements before we were living in it…)

                          Tomorrow we will talk about our experiences with the bank, what we did to the property once we had secured it and what we learnt from buying our own home.
                          Last edited by Monid; 01-07-2007, 07:42 AM. Reason: I was horribly wrong Simone corrected me now I remember straight...
                          New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


                          • #14
                            AAAAWWWWW!.....intermission already!

                            I look forward to the next one!


                            • #15
                              So we went to the bank which I had banked with my whole life armed with logic, we had a $15000 deposit ($5000 of our own money, and $5000 loan from each parent) and I was already paying $150 which was what the total mortgage repayment was going to be… With Simone’s income as well as mine we couldn’t lose.

                              We were surprised and disappointed to find out actually we couldn’t afford $150 a week despite me actually being paying it. (That’s the problem with being a philosopher, you get caught up in reason rather than reality sometimes)

                              So we needed a plan B. We went to a mortgage broker with basically the same story although Simone had increased her hours, he said it should be possible to get finance. We waited a week, then called him, nothing had moved, and that finance date was getting closer and closer. So we started hitting the banks ourselves and went to the National Bank. The mortgage advisor there was very friendly and said “you are students right?” We said yes, she said “oh well with the additional income you can get from your student loans there should be no problem…” (At the time this didn’t seem odd, now it seems downright scary)

                              So we had finance, to celebrate I proposed to Simone! (and she said yes )

                              We had made it a long settlement, (6 weeks) so we could renovate. First things first that pink had to go, replaced with solitude (Light blue) and bastile (Black-blue) from Resenes bought at staff prices because my parent’s next door neighbour was a store manager (About $200). Since the walls were in good nick, there was little prep work, just painting painting paint.

                              A couple of days later we were ready for step two. The place had lovely rimu floors, except in the lounge where a tatty old carpet had been laid. However it was all in desperate need of a polish. So out went the carpet and we polished the floors, having hired a floor sander, and convinced one of dad’s friends with some experience to give us a hand for a six pack. A week and a half later the floors were smooth and dry… (Cost $300) Now it was time to get serious, first some building work was needed. Fortunately one of the tradespeople who owed dad money was a builder so he worked off his debt (and we paid it off to dad). There were no wardrobes, so we added these. Then remember that front door you had to walk out of to get into the bathroom! Well the bathroom door was opposite the front door, and we reasoned that the front door could be easily shifted around so that the bathroom was now inside the house… This was done and hey presto the luxury of an indoor bathroom was included in our house. (Cost approx $1500)

                              But an ugly bathroom, with a handbuilt vanity unit and an old iron bath, no shower. Had to go! Since I was still working for my father at the plumbing supply shop I got some great deals from our suppliers and picked up:
                              a 1000x1000 corner angle shower at cost about $500, ($1000 retail)
                              a back to the wall toilet with a slight (read unnoticeable defect) for $50 ($800 retail)
                              an Athena 900 cm pregnant bowl vanity with black granite finish (again with slight undetectable flaw) for $350 ($1200 retail),
                              a Clearlite spa bath for $350 ($1000 retail)
                              and Delta tapware (basically the same quality as Grohe, uses the same system) throughout the house for $300 ($1000 retail)

                              However before this could be put in the old stuff had to come out, so in we went with the sledgehammer to get out the old iron bath and the vanity. Once we had broken up the bath, we found that behind the bath there was an electrical socket with exposed wires actually touching the bath. When we asked the owner about it afterwards, she said oh yes she remembered when she was young you had to jump into the bath without touching the ground otherwise you would get a mild electric shock!

                              Once all this was installed by another gentleman who owned my father money ($1200) we then tiled the floor ($500). Transforming a tired old ugly bathroom into a lovely new modern bathroom, the crowning cap was a new high pressure hotwater cylinder ($800) which turned those showers from dribbles into cascades.

                              So we spent $6050 and transformed the house into a nice place where we could live happily. We spent more on fittings etc than we would on a rental, but since this was to be our home it seemed worth it. We didn’t get a valuation after renovation since we didn’t need it, but the house would have been worth about $135000.

                              1. Badly advertised properties can be good buys.
                              2. Even if it feels like a waste of time call those properties which don’t give full information, if you can’t be bothered calling then no-one else can either!
                              3. Small building work can make a huge difference to the quality of life in and the value of a house.
                              4. Banks use formulas, not sense.
                              5. Bathrooms even at cost are damn expensive.
                              New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki