Steve the other day you said this.
P.S. For what it’s worth, my empire is built on the basis of buying positive cashflow property to the extent of building sufficient passive income to achieve financial freedom. I’ve bought cheap properties, which is all I could afford at the beginning, and I’m yet to ever lose money. I can testify that this is an effective strategy with more experience in the trenches than the vast majority of property investors.You also said that you started investing in property in 1999.
Your decision to invest in property in 1999 was a great decision when the market was flat, with housing prices increasing in value two fold.
Now if i remeber rightly 1999 was the year mum and dad investors swamped the stockmarket (attracted to huge growth thru technology stocks). Now as we all know stock prices were out of control, some even doubling over night.
Now why did the share market rise so quickley? Because normal everyday people were scared of missing out.
You have all heard the term of what goes up must come down (economic cycle). And as you know it came down with a thud, stocks that were worth $10 were now worth no more than 35c, now i here you say what has this got to do with the housing market!
The reason why the tech stocks crash was because people were paying $10 for a stock when it was worth no more than 25c (Demand v’s supply), the same as the housing market people want to get into and not miss out.
I liken the tech boom to what has happened to the housing market of the last two years.
Another eg is What ever happened to the show Money hosted by paul some one? Well it went of air because people lost faith in the share market which the show was based on, now all you see is Location location, hot property, and auction squad, what does this tell you? the majority are investing their money in to property.
Now i am not saying i am in favour of shares over property im saying you need to read the market and be able to transfer between property ,fix interest, and shares.
I have made great money in the tech boom in which i transfered in to the property market and have also made great money but now i am investing in fixed interest (due to unsertainy) with and idea to go back into the share market.
I play things safe, when i see things are getting over heated i am happy to get out. As steve said “remeber success comes from doing things differently.
Now as for what steve said above:
I’m yet to ever lose money. I can testify that this is an effective strategy with more experience in the trenches than the vast majority of property investors.Steve you said that you started buying houses in 1999!
I put it to you that you have only seen Positive times and this formula will slowly die in bad times, and as for your claim that you had vast exsperience, well i would hardly say buying your first property 4 years ago as vast.
Remember when everyone is running away you run forword.
As steve says do things differently.
tails277
Tails,
How long have you been investing ?Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkTails,
1. Steve is recognised as one of Australias leading positve cashflow property investors, are you?
2. Just because someone has only been investing for 4 years, does this mean they do not have more knowledge or be more successful than someone who has been investing for 20 years?
3. Steve has put this site and forum together to HELP others to learn more about investment strategies. Perhaps if you think you know more and can do better, you should put together your own site and forum to help others who have your way of thinking.My 2 cents.
Matt.
Hi Tails277,
Thanks for contributing your opinion. And thank you Matt for your contribution too.
Please don’t lose site about the nature of this post. Tails277 has a valid criticism of my lack of years experience and it is expressed fairly.
It’s healthy to question whether or not an investing technique is appropriate, and if my approach is flawed then lets flesh out possible causes for its downfall.
The property market has certainly seen significant capital growth since I began investing in 1999.
However it’s important to remember that I invest for cashflow and not capital gains.
Given the 30 year average interest rate is above 10%, it is not unreasonable to expect interest rates to rise soon. Maybe not tomorrow or even this year… but I don’t expect interest rates to remain where they are now in 2010!
That’s why it’s not just important to invest, but to also adopt a a risk minimisation strategy for rising interst rates.
For me, I reinvest a large percent of our +ve cashflow to reducing debt. This has two effects:
1. As debt falls, positive cashflow increases; and
2. As debt falls, impacts of higher interest rates diminish.I believe you are right to suggest that the good times won’t last.
However I feel that the people who stand to lose the most are those who have maxed out buying a home or highly leveraged property.
As for experience, yep, I guess four years is not forty years. And 7% interest is not 18% interest.
All we can do is wait and see whether the Steve McKnight way stands the test of time. I’m confident it will.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Steve you said this the other day.
The property market has certainly seen significant capital growth since I began investing in 1999.
However it’s important to remember that I invest for cashflow and not capital gains.Since 1999 the average house in australia has more than doubled in most areas. Now your saying that you are not interested in this kind off growth and you would rather travel the country side and look for a property that is going to provide limited capital gain but is going to return you $10 incom p/w after all out goings.
Are you crazy? By looking for a house based on a cash positive income you are limiting your self to 55k dumps in the middle of no where with little or no capital gains because i cant see some one paying 500 rent pw for a house valued at 250k in the country.
Good luck.
Tails277,
On this matter I feel that your ignorance detracts from an otherwise interesting perspective.
I don’t invest in dumps. I earn far more than $10 per week +ve cashflow. Your generalisations show your lack of research and understanding.
Come to the Masters seminar and let me show you how it all works.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
My 2 cents.
One of the main reasons behind why we invest and look for positive cash flow properties is because it creates a passive income stream. That means we get paid whether we get out of bed or not. Saying that it is only $10 per week is missing the big picture, our aim is to establish a platform where we are no longer dependant upon our employment positions. The main advatage, and putting it into the most simplistic manner is that it is an investment which puts money into our pockets.
The problem i feel with depending solely on a capital gain is what do you do with the money once you have sold out and collected your gain? This isn’t exactly a strategy for building a strong foundation for financial freedom, it is more a get rich now philosphy, where as the aim should be to build your passive income stream. Negative gearing and capital growth solely, won’t do this.
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