Ron Hoy Fong - Will The Next Boom Be The Boom Of All Booms?

[Bluecoat]

For a trade yes although one needs to buy exceptionally well in a down market. And you haven't made anything until you sell.

I was referring to all the new students who dont have the luxury of that budget to get a descent yield without forking a lot more in developments to get the yield.

[DaveW]

You can make cashflow if you want it, you just have to work for it.
You don't ask, you don't get.
Wish I had of known that when I was 16.
Girl action or house action, same principal, who would have thought.

That is the crunch of it all Paul. Well played.
You would do well to carry on into bigger deals in commercial property.

[Don't believe the Hype]

That is the crunch of it all Paul. Well played.
You would do well to carry on into bigger deals in commercial property.

I've always wondered this. The problem as I see it is that my level of expertise in residential real estate is high... developed over more than a decade and what I don't know I can find out from my network of trusted individuals. In essence the returns may not be as big but it's a low risk way forward.

The alternative is to move into bigger commercial deals where my level of expertise is close to zero, my network of trusted individuals is limited and the potential for downside as a result is far greater.

Why would you risk the farm to move into a space you don't know?

[DaveW]

There's no reason why you can't do both residential and commercial. Sure you have to learn the different ways of making money in commercial property but once you have learnt this then your team can be used for both property types. Taxes is the same, lawyers are still reading contracts, plumbers are still required, you still need ways to find deals.. And it's the last one inwhich Bluekiwi (and I'm sure yourself) have an advantage which comes with experience, no matter residential or commercial. you've learnt how to seek out deals.

Commercial deals are bigger numbers for not much more work, but not many people make the transition.

[Don't believe the Hype]

Thanks Dave - I guess what I'm focused on is the increased risk associated with moving from residential to commercial. It looks like higher stakes to me.

We've worked our whazoo off to get into a position that allows us to never have to work again.

The cash flow from our investments is such that every month the rent covers all our P&I payments, all our costs and there is enough left over to do whatever we want. We're currently 2.5 months into a 6 month Europe trip with 2 young kids. We'd keep going but one of the kids need to start school...

As an output of the investments we've made we have many many millions of equity well into the double figures and from my POV anything that risks this position isn't worth it. I could chase down a ego driven target of $100 million, $250 million or $500 million and probably be able to achieve it (well the first of them anyway) but to what end.

If i get it wrong I'd have to dust off the old CV and go work for the man to pay the bills... and if I get it right I'll miss my kids growing up and maybe end up divorced which would mean I only gt to keep half anyway

My investing is now more for sport - I love to negotiate - and if I negotiate a good deal I firstly offer it around to my friends/family/contacts at no profit margin for me and if no one else wants it, I'll buy it.

So in essence, our priority is preservation of our current income/asset values before it is increasing our asset base.

[DaveW]

Preserving ones wealth can be just as challenging as acquiring it, I agree!

It soinds as though we are in a similar boat I'm also on travels with a family of 5, and real estate investing is more a hobby than anything else. I like to give back and help others also. I don't need to charge for my time.

There is obviously more than one way to acquire wealth though property and like you I accumulated a number of residential properties to get to a point to quit the JOB. And like you, I enjoy finding and negotiating a deal.

I then came across a deal comprising of 3 residential units grouped together with 3 retail shops. So it was mixed use dealing with both residential and commercial. The residential units were easy to rent out, the retail was a learning curve (this was more than 10 years ago) and I came to enjoy the negotiations of lease contracts with business tenants. I was able to double the rent of the retail shops thus doubling the value of the commercial component of the property while the residential was providing a steady income.

This was the catalyst for my venture into commercial investing, although I focused more on industrial and office rather than retail. I was increasing the value of my commercial portfolio by 50-100% every 9 months while most everyone else were content with the doubling of residential over 7-10 years.

[Perry]

What I'm focused on is the increased risk associated with moving from residential to commercial. It looks like higher stakes to me.

Prudent perspective, as I see it. Moving from B&H residential to residential development is also a graveyard, too. Seen it happen, first hand.

[DaveW]

Prudent perspective, as I see it. Moving from B&H residential to residential development is also a graveyard, too. Seen it happen, first hand.

It's ok if you want to advise people to do B&H residential but there are also people who fail on that without making proper due diligence

[Perry]

RK allegedly said that real estate was as dumb as dirt.

Some dabblers must've been even dumber!

A bit of luck helps, too, I've noticed. From personal experience, I mean.

[DaveW]

RK allegedly said that real estate was as dumb as dirt.

Some dabblers must've been even dumber!

A bit of luck helps, too, I've noticed. From personal experience, I mean.

What you say equally applies to development, if you just dabble in it then stupid is as stupid does.

Even for B&H you should aproach it as a business with no stone left unturned, work hard, and not rely on luck.

Once you've made your millions then people will say you got lucky.