Real Estate as an Investment? (1 Viewer)

[sugaryblue]

my own home say i have $300k equity and a $100k loan on a $400k property. i then get another loan for say $250k on this house and buy an investment property for say $200k. the other $50k goes towards fees/taxes and the first years loan repayments. say after about 2 or 3 months i find a tenant which provides rental income which then goes towards maintenence and loan repayments. i now have 2 houses, one that is unencumbered with a mortgage (ie the investment property). when i feel financially comfortable, i can get a mortgage on that investment property and buy another one, that will now be unencumbered. later on i can get a mortgage on that to get another investment property and so on.

but you have to be careful when investing in Aus though (at least in NSW), coz like when you sell your investment houes, probably half of the profits would've gone to the government as taxes, stamp duties etc etc... which i think it's butt annoying for investing in Australia!!!

 

[waterfowl]

Unless you have the money, I think it isn't really a good idea to invest in any big areas such as the Northern Beaches or Sydney. The best idea is to invest in properties in suburbs that are still quite low in value but are starting to boom.
That way your investment grows much quicker.
Buy the worst house in the best street - I forget who says that.

As soon as I have enough money, I want to buy a property (preferrably on the Beaches, but I don't know how long it will take me to earn that ) and live in it with friends that pay rent. That way my friends benefit from living in a nice house, and I benefit from my friends helping to pay off my mortgage.

Investing in property is probably only a good idea if you are passionate about it - that way when you become stressed about payments, tenants etc you still have your passion for property investment.
Read, read, read, read and read! I know of a couple of very successful investors that now own development companies, that taught themselves through reading tons of books on the subject, by asking investors for advice, and practicing hagling with real estate agents.

 

[noneother]

Hi Doe your post about saving/investing was quite inspirational. I'm still ignorant of the world around me. Quite frankly I have no clue about how society works. Ive been in the position where I'm sheltered all my life but find it difficult, even apphrensive about realizing what life is really like.

My goal is to be able to be able to gain financial security in the form of investments etc.. I've pretty much just started a job this year whilst studying full time at uni, but would like to know what are so ways to make the most of my meagre savings I currently possess? ($2000, lol)

 

[LeftrightOut]

My goal is to be able to be able to gain financial security in the form of investments etc.. I've pretty much just started a job this year whilst studying full time at uni, but would like to know what are so ways to make the most of my meagre savings I currently possess? ($2000, lol)

I'm a few years ahead of doe but my opinion is if you have a small amount and aren't going to freak out by losing it you might like to try some speculative investments or high risk shares. Even if you don't do much with it at least make sure it's in a high interest savings account (5%+) as that would get you around $100-120 in interest a year for your 2grand just sitting there, which isn't much but it's not like you are going to lose it either.

For speculative low cost options i'd consider things like ebay, domain names, maybe creating a website for ad revenue and so on. I know others might have ideas on ways to make a few bucks on the cheap that is legal.

 

[noneother]

Hi, how do I get started in speculative investments or high risk shares? Thanks

 

[doe]

noneother if i were you i would go out and spend the money on yourself. use it (or a portion of it) to increase your knowledge. if you dont understand what you are putting your money into eventually (though probably sooner rather than later) you will get taken for a ride.

some good books to read would be

the richest man in babylon by george clayson
think and grow rich by napolean hill
rich dad poor dad as mentioned above

some books on shares are

fire you stock anaylst by harry domash
one up on wall street by peter lynch

i will pm you when i get home

 

[noneother]

Cheers for that Doe. This is by far one of the most informative threads I've read in a while, can the mods sticky this?

 

[Benovista]

i work in computer security and do "secure development", which is a bit of an oxymoron. the weekend work was some security stuff that had to be done outside business hours. my first real job was as a webdeveloper earning a mighty $13/hour

Hey there. Im currently studing website design full time and hope to do web development/ design aswell.

 

[Sarah168]

Nothing radical about it. Most of it is common sense and some of it is very questionable. Here's a good analysis of it http://www.johntreed.com/Kiyosaki.html

Excellent site. I've head alot of people raving to me about Kiyosaki's book and I was cynical of it, judging from the way they're kept exclaiming he is a "genius".

 

[doe]

it is still worth a read. there are some things that maybe "common sense" but i was unaware of them and at the very least they helped me get my head in order.

i really dont want to get into a fight about some stupid book. i would encourage everyone to read it and make up your own mind, i am sure your local library has a copy. there are useful bits and there are crap bits. with any source of information, you need to learn how to take things that are useful to you and discard the rest. i do this by comparing it to my own experiences. i read rd/pd so long ago i can barely remember most of it but things like "live within your means, then increase your means" have served me very well. even if the rest of the book is absolute crap and complete lies it was worth it for that gem. i know enough people on high salaries who are consumed with debt to know that salary has little to do with financial security. being able to control your expenses is fundamental.

when i read a book i generally hope to pick up one or two new things overall. there is heaps of crap written in every area, it is not just investing. when i go to borders and see shelves and shelves of computer books i know that 90% are absolute arse. after i read rd/pd i read the cashflow quadrant which was also interesting, then i saw kiyosaki put out another book, then another book and it was pretty clear to me he was just trying to cash in. so i stopped buying and reading his books. all of you have the intellectual capacity to work these things out for yourself, just open your eyes and pay attention.

 

[LeftrightOut]

i read rd/pd so long ago i can barely remember most of it but things like "live within your means, then increase your means" have served me very well. even if the rest of the book is absolute crap and complete lies it was worth it for that gem. i know enough people on high salaries who are consumed with debt to know that salary has little to do with financial security. being able to control your expenses is fundamental.

But that's the thing, it's not something he thought of first, if you listen to just about anyone they will all say this exact same thing. It's just that many people don't have the discipline to follow it. He doesn't give you any advice on how to spend less than you earn, he just says you should do it, so what made you decide after reading his version to take it seriously when all the other people who may have said the same thing in your past didn't?

Take Idiots Guide to getting Rich, same advice, Money by Paul Clitheroe same advice but at least those two books give you some useful strategies instead of anectodes about people that never existed and boasting about things that never happened or distorting the past or making a certain strategy look easier than it is.

If people want more books try
"The Millionaire Next Door" and "The Millionaire Mind" these are great to find out what makes a wealthy person tick compared to just a rich person.
"Buffetology" share trading stuff and investment philosophies
"100 ways to motivate yourself" some tips on how to get up and do stuff little by little
"How to win friends and influence people" Used to be compulsory reading for business people, great book by Dale Carnegie
"How to lose friends and infruriate people" What not to do
7 Habits series (7 habits of highly effective people, 7 habits of highly effective families, 7 power of the 7 habits)

As well as stuff written by Brian Tracy, Zig Ziglar, Dale Carnegie, Anthony Robbins etc.
Those should keep you busy for a while, although any such motivational or business book you have to watch out for and see if it has any hidden message. For example a lot of Zig Ziglars stuff is MLM sales oriented.

I think Kiyosaki has a book out now called "Raising the financial IQ of your children" not sure how good it is though. I've flipped through his other books and most seem like a reqritten RD/PD with maybe a few extra paragraphs thrown in. the problem is what Reed says is true, it's the MLM crowd that made him and now he has to repay them by peddling their stuff to unsuspecting people who think whatever he says is good advice. Even in his Cashflow game one of the ways to hit the big time with little expense is to get into MLM which is grossly incorrect when it is looked at in realistic terms.

Also as has been said before, go to your local library and look these up The library system is a very under utilised resource in this country. And don't go buying the stuff new, try hitting ebay or garage sales to pick these things up, especially the Anthony Robbins and Zig Ziglar stuff.

 

[lil_star]

Doe, do u reckon its wise to start ur own IT business while in Uni? How hard is it to network and make new clients? What holds me back is what if it fails:s

 

[LeftrightOut]

Doe, do u reckon its wise to start ur own IT business while in Uni? How hard is it to network and make new clients? What holds me back is what if it fails:s

I'm not doe but I have run a few businesses myself. You can start a business whenever you like, whether you succeed or not depends on you and your business plan.
You will need to decide what type of IT business:
is it service or goods based?
how many hours would you be willing to devote to it?
Do you have the funds backing you while customers wait to pay you?
Do you have the funds to keep you running if you make no sales in 3months? 6months?
Write down what you know about the industry or sector you want to get in specifically, what will differentiate you from others already in there?
How many competitors service the area? Have you heard feedback about their service?
Have you heard anyone say I wish there was a *your possible business* around?
Do you have wholesale contacts?
Are you a reclusive person or outgoing?
How do you handle pressure? How do you handle negative feedback?

An "IT business" can be many things. With the amount of planning that is shown in your post I would say you are not ready for it. There are high margin IT businesses and then there are low margin ones.

 

[Phanatical]

Chinese author Chu Chin-Ning has written a number of books discussing Eastern philosophies to business, and strategies that will help you succeed in the western market. She uses the eastern philosophy of the Sunzi Art of War, and reinterprets them in a business sense.

If you wish to start an IT firm, you have to have a good business plan, and a very real sense of the market that you are entering. For the last three years, I ran Quest3000 Technologies, and while it wasn't very successful, I learnt a lot of lessons about the industry that I am now taking into my next venture, a design and development firm with a team of some of Australia's brightest programmers and designers.

 

[doe]

Doe, do u reckon its wise to start ur own IT business while in Uni? How hard is it to network and make new clients? What holds me back is what if it fails:s

ok it depends on a lot of things

first off, listen to what LeftRightOut says, but dont get discouraged. there are a million and one good reasons to not start a business, and it can be easy to talk yourself out of it.

do i think its wise? no i dont think its wise. i think its foolhardy and destined to fail. i cant really say, based on 3 sentences, if its a good idea or not. however, i am of the school of anything is better than nothing.

how hard is it to network and make new clients? in a way you are networking everyday. every person you meet and interact with forms part of a social network that is very important. are you good at forming and buliding relationships with people? if not, start learning now. can you communicate effectively and clearly? if not, start learning now. when you finish uni stay in touch with the people you did your course with, in time some of them will be in high places. making new clients can be easy and hard. this really falls under the topic of building a business, so it depends on what you are doing, but i will use myself as an example. basically i am selling myself. i am not a pushy sales in your face person because i dont need to be at this point in time. the people who are part of my social network who i think would potentially be interested, know what i can do and know that i am good at it. i have never had anyone cold call me and ask them to do work for them. it does happen, but never to me. people i have worked for ask me to go back and work for them, but that is not really a new client. i keep my eyes open and when i see a place where i might be able to fill i need i speak up. sometimes people i know speak up for me. your best bet is to first, be really good at what you do, preferably the best. i fill a niche, and i am good at what i do. the more people who are aware of you and what you can do the bettter. go out into situations that will have people that may be interested in your skills and abilities. the australian has an IT section every tuesday which im pretty sure has a list of all IT related events or sepcial interest group meetings on for the week, many of which are free. go to them, build relationships and sell yourself. technical skills are nothing special. i can pick up the phone and reach hundreds if not thousands of skilled sysadmins or programmers or whatever. people, especially small businesses, go with the people they know best, and have an existing relationship with.

so ... what if it fails? i dunno ... go get a real job the best thing to do is to come up with an exit strategy ... ie what you will do when things go bad. i am assuming you have no real responsibilites like a mortgage or kids to feed. thats a plus. if things go bad well shit happens. what if what fails? do you have anything you can lose? except time and maybe money? we are young, we can always get them back. i wouldnt borrow any money, even though i seriously doubt you could get a bank or whatnot to lend to you at this stage. make sure you dont end up in jail. how would that happen? i dont know (trading while insolvent might be a good way, but im not a lawyer so who knows). look at any potential risks, work out how to protect yourself against them, then just do it. i love taking risks. i have nothing to lose. maybe i will lose money. i dont really care, its only money. i do make sure im not gonna get in jail or be declared bankrupt though. if the shit really hits the fan im going to move to windang and sell pc parts. if things dont work out, learn your lesson and move on wiser. dont be afraid of things not working out, only failure makes us experts. i am not motivated by money, i am motived by my personal goals of where i want to be. you should work out where you want to be. money is a means to an end, you cannot eat it nor use it as shelter. i love computing and genuinely believe it can make peoples lives better. i dislike the IT industry as it is today and one day i hope to be able to change it. i really like people as well. i like helping people reach their goals as well. it is why i do what i do.

make sure you are good at something, register yourself for an ABN as a person (much cheaper and simpler than getting a company) then keep your eyes open. finish your degree though. while i was doing mine i had an agreement that come exam time i would not be as available. at this stage you should just look at building experience and getting some credibility. depending on what you do, you dont need to spend a lot of money. i dont have a website and i have an old, kinda crappy laptop. i have 1 suit that i rarely wear, only to initial or important meetings. other than that i wear jeans and a t-shirt, and have long hippy hair, in IT we can get away with more, hehe. i have my mobile and a gmail account. i either work onsite or from home (ie my bedroom) it is cheap but it is all i need. do not kid yourself, noone goes "gee that guy has a better website/office, we will go with him". there is no need to fork out for that kind of stuff.

the obligatory book references:

the e myth revisted by michael gerber. disgregard the franchise stuff but make sure you read this book.
tax for the very small business by susan young and kate robinson. dont mess with the tax deparment either

those two are really important, some others are

"million dollar consulting" by alan weiss, other books by alan weiss are good too.
"how to organise and operate a small business in australia" by john english. you can probably go without this one, depending on your knowledge.
"the penguin small business book". look at this and the one above in the bookshop to see if you need them. i knew a lot about computers but nothing about setting up and running a business so they were useful to me.
i also read autobiographies of IT people and business people, or biographies if im scraping the bottom of the barrel. just recently i read lou gerstners book (he oversaw the IBM turnaround) and a book on steve ballmer. ballmer is an interesting guy.

good luck and dont forget to have fun as well.

 

[doe]

He doesn't give you any advice on how to spend less than you earn, he just says you should do it, so what made you decide after reading his version to take it seriously when all the other people who may have said the same thing in your past didn't?

that is a good point. i think really he just presented his point so well, it made me actually follow through. he really sold me on it. i guess that is why he has done so well and been raised to cult status by some people. the same people he is kinda milkind dry, this is why i dont go to church

thanks for the book reccomendations, i will certainly check them out. i have read a book on buffet "the warren buffett way" by hagstrom, the first half was pretty boring but it got better as it went on. id love it if buffett wrote a book himself, maybe i should buy some berkshire shares just to get the reports.

anthony robbins is an interesting chap, he is very good at motivation but i find it is only short term (which hey, sure can have its uses). i find now that i have a good sense of who i am and where i want to be it is the best motivation. seeing things come to fruition helps too.

what do you think of peter spann? my dad got me a book buy him that looked remarkably cheesy (generic guy in front of ferrari on the cover) but i remember i quite liked it. i cant remember any of it now, maybe i will go back and re read it, i saw his name pop up on that real estate board too. that board is very interestingas well, thanks for that too.

 

[LeftrightOut]

I didn't mean to discourage But if one can not answer these simple questions then one is not ready to take on the commitment of a business.

I have seen uni people start businesses some make it many don't. PC Hardware seems to be a popular choice, selling stuff just above cost to other students. Fixing PCs is another. As is web design and programming consultancy work. Once you have worked out a possible area you want to make a business for let me know and i'll gladly tell you all the pitfalls as I have been involved in all of the above. I even went the route of setting up a proper Pty. Ltd. company which was a bit of a waste of time due to refiling fees etc.

A website is a simple and relatively cheap thing to setup, probably cheapest way of transferring information to people who may end up with your business card but don't want the implied obligation of a making a phone call, but this depends on the type of business. It can also make you look more professional and serious.

Some people support the idea of "fake it til you make it" but that's really a personal preference, a lot of companies like the idea that you aren't the only one working on the project just in case you get sick or have exams there will be someone else to fall on.

There's also the issue of how you employ yourself, super, insurance (workers comp, public liability, professional indemnity) and so on. This only becomes a more serious matter if you start making a lot of money, and this is something startup business owners often neglect. This is not that serious if you only make very small projects, say up to $5k a project.

 

[LeftrightOut]

what do you think of peter spann? my dad got me a book buy him that looked remarkably cheesy (generic guy in front of ferrari on the cover) but i remember i quite liked it. i cant remember any of it now, maybe i will go back and re read it, i saw his name pop up on that real estate board too. that board is very interestingas well, thanks for that too.

I haven't read much from Australian authored motivational or investment books. The books I obtain are usually old library stock for nothing or second hand for cheap, even got a Kevin Trudeau set for $5, haven't listened to it though.

 

[lil_star]

thanks Doe and Leftoutright...I'll plan whether I want to go with the business idea once I compile answers to the questions u both posed.

You have answered my best concern....having a great website. Since its not "that" "that" imoportant I think I'll go with a basic one. Every time I wanted to execute my plan I thought I dont have a flashy website...and to make one I need fair bit of time and creativity. But hey? There are more important things than just a fancy website

 

[Phanatical]

My new firm has some amazing developers And designers. The idea is that each area will prop the other up - making the developers look good, and the designers look competent.