All Topics / Help Needed! / General Questions

Viewing 15 posts - 1 through 15 (of 15 total)
  • Profile photo of RancidRancid
    Member
    @rancid
    Join Date: 2004
    Post Count: 2

    I catch the train every day and a lady is reading this book in my carriage everyday, scribbling with a pencil. I sat next to her today and asked her if it was achievable. She responded that she does not know yet, and to ask her in three and a half years lol.

    It got me thinking, and I thought I’d type in the book name and see if I could find any reviews on it. I found this forum, run it seems by the gentleman that wrote the book.

    I have a few questions.

    1. I owned an investment property some years ago. It had a positve return, with rent easily covering the mortgage repayments, insurance etc. What it did not cover was the major work required when the pipes in the bathroom sprung a leak and wrecked the plaster board. Also, periods without tenants required me to pay off two properties on occasion, one of them being Christmas after which I disposed of the property for some profit. The question – purchasing additional properties could result in expenses that exceed the rent minus mortgage payment, and periods without tenants result in financial burden. Does the advice in the book rely upon tenants always being in the property, and does it account for unexpected expenses.

    2. After disposing of the rental property, I went through a succession of houses (five in five years – all primary residence) which made me a tidy sum of money. This was not banked, but was spent on bigger houses each time. I now live on acreage with quite a large house that has substantial equity. I expect that the equity will rise substantially in coming years having been quite careful about the area in which I purchased. This will be the home I retire in (about 30 years away) Nonetheless, the mortgage payments I currently have preclude further loans without compromise of my comfortable living. I guess this relates to my first point, in that I do not want to be in a position where I have to make payments on two mortgages (let alone 130).

    All this said, I understand positive cashflow and have seen a number of opportunities of late, but have been reluctant to move due to my first experience with property investment. I don’t want you to give away exactly what is within the book, but I would be annoyed if I purchased the book and these concerns were not addressed. Is this book for anyone, or only for those that are prepared to live an extremely frugal lifestyle for as long as it takes.

    If you think no-one cares you are alive – try missing a few mortgage payments

    Profile photo of bcbc
    Participant
    @bc
    Join Date: 2003
    Post Count: 85

    From memory mine cost 30 bucks, you could spend twice that much on grog on a night out. I can garantee you wont wake up in the morning with a hang over and swaer never again , if you by the book [:D]

    You will benefit from the books principles but it is outdated.

    BC

    Profile photo of RancidRancid
    Member
    @rancid
    Join Date: 2004
    Post Count: 2

    Well, I can agree that $30 is not a large amount – although I don’t drink I can quite easily spend considerably more than that at lunch with a client. I was contepmlating purchase of the book after having my curiosity piqued by the woman on the train. It was unavailable in the bookstore, hence my search on the net. I found this site, joined, and asked some very specific questions. Beofre asking the question I could have told you that the book was likely to have some sound prinicples. My concern was that this is all I would glean from it. No offence intended, but if this is the calibre of answers that are received, my curiosoity is satisfied.

    If you think no-one cares you are alive – try missing a few mortgage payments

    Profile photo of bcbc
    Participant
    @bc
    Join Date: 2003
    Post Count: 85

    >No offence intended, but if this is the calibre of answers that are received, my curiosoity is satisfied.

    No offence taken, I am glad I was able to help, if you have any further questions dont hesitate to ask.

    BC

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    Rancid said:

    “Is this book for anyone, or only for those that are prepared to live an extremely frugal lifestyle for as long as it takes.”

    Rancid, funnily enough, I got asked about this question by my mother recently. I told her I had had some drinks with some property investors and she said they must be rich with that amount of properties. I told her I don’t know many IP investors who live “richly” as we’re all concerned with paying mortgages etc.

    I know it;s not relevant to your overall points, but I’m wondering if anyone of you investors lives really well- “richly” if you will.

    Or do we just take our tax deductible holidays to rockhampton and spend our time looking in RE windows, never buy any clothes, and never buy luxuries…

    Are our holidays in rockhampton? or the hamptons? Or are we waiting until we are 60 to start living well? and then, the gold which we will hang upon our proud and successful bodies, will shine and flash in the sun…

    kay henry

    Profile photo of richmondrichmond
    Participant
    @richmond
    Join Date: 2003
    Post Count: 831

    Hi Kay

    I don’t live frugally, but I don’t live richly either… I don’t see the point in denying myself and my wife life’s pleasures… As I’ve said in other posts, my dad died at 26, two months before I was born… walked out the door to go to work and never came back… killed in a plane crash. So, that means I understand, probably better than most, that you never know what’s around the corner, so while it’s all well and good to plan for the future, when moments come along to enjoy, make sure you enjoy them without constantly thinking about dollars and cents.

    Cheers
    r

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    Richmond,

    I hadn’t read previously about your father- it’s a sad story :o(

    I agree with you about living well today. I remember those old wive’s tales about these old men living a pauper, but after they died, they were found to be a property millionaire! But after having spent so much time on here, I wouldn’t be surprised if that’s the way people live- no luxuries, no non tax-deductible holidays… deferring any sign of pleasurable living until the magical wealth comes upon us! Retire early, but until then, no life for decades!

    Give me pleasure now, because who knows what tomorrow may bring? And why not have pleasure now anyway? We ain’t living in the depression!

    kay henry

    Profile photo of crjcrj
    Participant
    @crj
    Join Date: 2004
    Post Count: 618

    Rancid,

    It seems to me that what you’re asking about is risk management which is understandable when you’ve had an expensive unexpected repair and vacancies. There are some risk management strategies referred to but probably not specifically what you’re seeking. On the other hand if your property is positive cashflow what you make each week from it after expenses will provide a buffer if you put it away for that.

    For what it’s worth my risk management strategies are:

    a. at the beginning borrow or put aside some extra money to cover vacancy or repair
    b. get a property with multiple tenancies. I have a amall block of flats (4). There’s an occasional vacancy and at times 2 flats have been vacant but even when two are vacant there’s still been cash coming in to cover most expenses. Might have needed a topup of $100-$200 a month which is not much if you
    c. invest with a partner (although this also has risks)

    crj

    Profile photo of aussierogueaussierogue
    Participant
    @aussierogue
    Join Date: 2003
    Post Count: 983

    rancid – 5 houses in 5 years – thats alot of stamp duty and associated costs…

    i dont know too many people that buy and sell within 1 year and come out infront

    cheers

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    Rancid, I can’t help but wonder if youa are still reading after your second post.

    If you are concerned about ‘wasting’ $30 and having learnt nothing, have a look in the library.

    To answer your very specific questions though (in case you are still here)

    1. I am guessing that if you had to pay for all the repairs out of your own pocket, that you had not taken out any form of building or contents insurance? This would have covered all costs bar your excess if you had.

    Not having tenants is a concern for all investors – however as has been mentioned in another response, if you have more than 1 property, a single vacancy is not a 100% vacancy, so you still do have money coming in. Of course, you could have your ’emergency funds’, and you could also take out landlords insurance, which will cover you in some instances. You could also drop the rent.

    2. Steve advocates purchasing properties that are postive cashflow, so therefore it does not cost you any extra at all out of your pocket, not compromising your standard of living. Also to combat your concern of no tenant, increased expenses etc. he advocates using Principal & Interest loans, therefore reducing the amount owing, and perhaps even paying your ‘profit’ into the loan to further reduce it, thus providing you with a buffer if anything ‘unexpected’ happens.

    Cheers
    Mel

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Rancid,

    It doesn’t sound like you’ve got the mindset that would allow you to be comfortable with property investing on the scale advocated by Steve (or even on a smaller scale, say a handful of rental properties in addition to your home). Don’t take this the wrong way – I don’t intend my comment to be derogatory or condescending.

    Reading your post reminds me of myself before I read my first Kiyosaki book years ago.

    I’m guessing you probably also invest in shares, because the liquidity (issues of price aside) doesn’t lock you into a significant long term financial commitment (not that there’s anything wrong with that – I invest quite a bit in shares too).

    I’m sure you know quite well that the potential for financial gain comes with risks. There’s no such thing as a risk-free technique that will make you rich (although if you’re rich, some extremely low-risk high-gain techniques will become available).

    When you spend money on lunches with clients, aren’t you still taking the risk that even after spending that money and time on them, they’ll go elsewhere, in which event your money would have been wasted?

    And whether or not you want to go full-bottle into frugal living with every cent going into your investment properties, or keep it more moderate and still enjoy a good lifestyle, is entirely your choice. If I stopped smoking my cuban cigars, drinking 25 year old single malts and buying champagne for the girls, I’m sure I could easily afford to pay the mortgage on another investment property (not even taking into account the rent income), but that’s no fun for me.

    I don’t think anyone can convince you, just in a short (or, for that matter, long) post on a forum board, to buy the book. You have to decide for yourself to take the risk and buy the book.

    I encourage you to take the risk and spend the money to buy Steve’s book (or another book for that matter – I’d recommend any of Kiyosaki’s earlier books). You’re taking the risk that it’s a dud, and your money is wasted. Maybe you’re also taking the risk that you don’t like what the book you’re reading is telling you, in which case you decide it’s a dud anyway. Maybe it’ll be because you are not prepared to take the risk of stepping outside your comfort zone and implementing the strategies and techniques. Is that really a big deal if any of that happens? You simply lose the $30 of risk money (or you could sell it on ebay for maybe $10 to mitigate your loss), swear at me for wasting your time and money, and move on with life.

    Cheers
    Elysium-M

    P.S. – many forumites actually know how it feels to have rent stop flowing in from more than one property, and having to cop the mortgage payments entirely out of your own pocket. But that’s a risk you take too.

    DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    Elysium said:

    “If I stopped smoking my cuban cigars, drinking 25 year old single malts and buying champagne for the girls…”

    My God, Elysium, that does sound decadent! How many girls do you buy champagne for?

    sis and PG- you need to take some hints from this guy!! hehe

    kay henry

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Hi kay,

    There’re never enough girls who deserve champagne!

    richmond made a very good point earlier in this thread. To build on that point, you also never know when you might no longer be able to afford enjoying yourself. So you gotta enjoy life (in a financially responsible manner, of course).

    Cheers
    Elysium-M

    DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

    Profile photo of kyl_37kyl_37
    Member
    @kyl_37
    Join Date: 2003
    Post Count: 18

    You could always ebay it afterwards if you didnt like what you read…

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Or offer it for sale on this forum…

    Oops that would be spam, wouldn’t it? [;)]

    Cheers
    Elysium-M

    DIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…

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