Fanatical Poster!!

[AustinWong]

Ha ha!

I am now a "Fanatical Poster"

Imaginary chocolate fish all around folks.

Amazing I have written so much and still no IP.

But soon folks...real soon....

[donna]

Thanks for your contribution AustinWong and we'll be keen to hear what you decided on when you've taken the plunge.

Regards,

Donna

[janesco]

Yes come on Austin Wong we are all waiting...... Baited breath and everything...

Seriously though the first one is the hardest. It is both a leap of faith and a leap into the unknown.

I think you have done the right thing by studying everything and debating on the forum. Don't feel pressured or be pushed into the next step. Do your home work on the property. Make sure the figures match what you need.

It is a big step. I remember my first one.... The nerves were gangling. My wife and I went out for Dinner that night after buying the property. Our theory was that we were happy with the property now lets celebrate while we are happy about it. If it falls to pieces then it falls to pieces but at least we were happy about it once. Oh the negativity...


Final word from me on this subject is it's hard work but the effort is definitely worth it. When I was in the army our motto was "Fortune Favours the Brave"

Remember to enjoy yourself as well.

Sorry for the lecture it wasn't what I intended

[RentMaster]

'The world is waiting, Anticipating...'
Roger Hamilton

[fudosan]

Hi janesco,

You'll make a good mentor!!! Very motivatiing message.

[fitboy]

Hey Austin

I must say that I was surprised when I found out when you didn't have one. Keep to your rules, but I'm sure there is many places out there that will fit these rules.
Hey we will have another chocolate fish when you do!

See ya

Fitboy

Bevan James Eyles

[muppet]

Hi Lawrence

Congratulations on becoming a "FANATICAL POSTER."

However when you reach a 1000 posts you still remain a Fanatical Poster.

Regards

[AustinWong]

It is a big step. I remember my first one.... The nerves were gangling. My wife and I went out for Dinner that night after buying the property. Our theory was that we were happy with the property now lets celebrate while we are happy about it. If it falls to pieces then it falls to pieces but at least we were happy about it once. Oh the negativity...

Brilliant.

I will try and remember this all the way. And yes I do believe fortune favours the brave.

I must show my wife what all of you have written.

2 days to go until I meet up with my associate and will put together some rules. Then I will be off.

Thanks again all, you have all been great.

L

[LondonKiwi]

Lawrence

The first one is definitely the one you will think longest and hardest about. It took me about 10 years to buy the first (I had an offer on a property 10 years ago in Mt Vic in Wellington for 169K but got cold feet and pulled out...saw the same property marketed a few months ago for $350K plus!).

Anyway I made my first purchase this time last year and the 2nd one 3 months later.

Looking to purchase another 2 this year on top albeit in a different location.

All the best for the first one and heck I'll toast to you when the deal is done!

Cheers

LK

[Marcus]

Hi Lawrence,

Over the last few years I have talked to many people that have claimed to be interested in buying their first rental. The majority of these people are still saying the same thing now, and I have long gone given up discussing the pros and cons with these people. Most of them know the answers to their questions anyway but have some strange need to hear it from someone else over, and over, and over again. I eventually wind up coming away reciting the old adage "you can lead a horse to water, but you can't make it drink!”. Sometimes I get the feeling its not so much that the horse doesn’t want to drink, but rather the jockey riding it would rather they die in the desert.This can become quite draining.

The few successful strikes I have had however have made up for this.
It's a bit like playing golf really.
10 hooks , 7 slices , the odd whiskey

Then you hit one straight!

Regards,
Marcus.

[Gerrard]

Good call Marcus!

There's so much learning that comes after having the first property. If it's causing sleepless nights why not take the plunge with a simple and "safe" property first time round.

It may not be highest yeild, but if it's an investment you're comfortable with then do it, learn from it, then make the next one better, and the one after that, and the one after that...

Gerrard

[MiniMogul]

It took me a year of gathering the courage to purchase my first deal, and slowly getting used to the fact that 98 percent of the people I opinion shopped thought what I was going to do was a terrible idea.

(you're crazy buying in those towns, you won't get capital gains, you'll be fixing toilets in the middle of the night, etc etc)

Once I was comfortable going against the mass paradigm fear-ridden blah-blah, having done loads of research and following the lead of investors with multiple properties not people that would be lucky to buy one house their whole lives, I was away.

Agree with the first deal being the hardest. It requires the most mental energy and TIME and is just 'such a big deal'. The second deal is soooo much easier - you just follow in the wake of your first deal.


however I made every mistake in the book on my second deal. I'll number them all! Probably too cocky after my first deal.

1) I bought the worst house in 2) the worst street....3) gang members were next door....(though I swear the selling agent did not know this, and we did not discover it for weeks - and I didn't even pick this up when I was at the house renovating it for a few days - it was quiet as next door!)

4) it had structural issues, but I went ahead anyway- (possibly a mistake?)

5) I overcapitalised on the renovation - I didn't spend 10 percent of the purchase price, I spent 56 percent of the purchase price renovating! The reno kings wouldn't have done that!

6) Then I had 6 weeks vacancy due to GREED - overpricing the rent, etc etc etc

(lesson learned!)

YET - my 'let me give you hope' point - is the deal STILL worked out really well even despite having made every mistake. This is because - as I learned from dolf de Roos - property is a very forgiving investment.

You can DO stuff to increase your chances of making the deal work.

The rent ended up being 115 a week. At 130 it sat vacant, but at 115 it rented straight away.

helped possibly by the fact that as the house had floorboards throughout (no carpet) I would allow a tenant with a dog. The tenant fenced the entire 1800 sm property for me for 2 weeks rent in lieu of bond. I was chuffed. They stayed for a year.

115 was still a 23.9 percent return on the purchase-price plus renovation (maybe it wasn't overcapitalising after all!)

Minus the cost of the initial vacancy problem, I probably made 12 percent return in the first 6 months (not bad for a worst case scenario) and close to 23.9 percent in the year after that.

which I would have been happpy with even if no capital gains - plus I have had capital gains of (conservatively) 100 percent in 18 months.

I reckon I could sell it for 50 k today on an 11.9 percent return, 'nothing to do' condition. And all of this was in an area where people said 'you're crazy, you won't get capital gains there.'

Basically, even if I had completely cocked up the deal (which some would say I did) and barely broken even, capital gains would have saved me.

Just work out what is the worst that can happen. for me - it was, no tenant.
Which meant the risk was the cost of borrowing 16k plus rates = not that much, could deal with that.

the buffer of that risk was the the high yield which compensated for vacancy.

The risk of losing capital if I had to do an urgent sale - fairly low. Chance of selling for what I paid plus reno costs very good.
Worst worst case I'd be down 20 percent. Again, though not desirable I could live with that amount of risk -.

So for me it was evaluating the worst case risk of the investment, (albeit mistakes made) and doing what I could to mitigate those risks (good management and renovation and lateral thinking etc) and then once I figured out it was do-able, and that I wouldn't be financially destitute if it went wrong, then going for it.

Also starting with a 'baby deal'.
Good idea if you are extra cautious.