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Episode 104 | 7 Ways To Lose Money In Property

After last week’s much-anticipated talk with Jan Somers who is an example of someone who has made many successful choices when building her 40 plus year old portfolio, today’s episode features Bryce and Ben discussing seven of the most common ways many of us lose money when investing in property. With key advice and some examples of how and why the choices we make as property investors can have a negative impact on our portfolios, the guys make sure to warn us and help us understand why these ways can cost you money rather than make you more.

The first way to lose money in property is choosing the wrong location. As they have mentioned in countless episodes, location does 80% of the heavy lifting when purchasing property so making sure you have the right location is one of the key things to look for. It covers many areas such as amenities, human interest and practicality; so getting it right means a lot to your portfolio. To find out the rest of the points, make sure you tune in to this latest episode!

And don’t forget, we will be at the Melbourne Property Buyer Expo this weekend so if you are around, do come and say hi! 🙂

 

The other stuff mentioned in this episode are:

 

And as always, if you like this episode (7 Ways To Lose Money In Property), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

Episode 064 | Case study: mid 30s couple, combined income of $150k p.a, existing PPOR and two IPs

It has been quite some time since our last case study so this time on The Property Couch, Bryce and Ben will be discussing one the case studies that we’ve received from our fellow listeners! Here’s what Tom wrote to us:

 


 

After listening to Episode 56 where you discussed various other case studies I thought I might write in to see if you were interested in discussing our situation. I’ll try and keep it short!

Basically, my partner Kirby (30yo) and I (32yo) are both teachers on a combined income of about $160k. 3 years ago we got the bug to do something with our money but weren’t exactly sure how. Our simple goal is to have choice whether to work or not. If we had no loans to service we imagine a passive income of $80-100k would be more than enough, and any more is a bonus!

We had a PPOR property valued at a tad over 300k with a mortgage of ~200k, limited other expenses and a disciplined approach to spending. Property sounded like a great avenue so we went about increasing our knowledge. Unfortunately our naivety led us to a property investment ‘education’ group where although we have learn a lot we have made what we think are two poor investment decisions. We overpaid for both to fatten the developer’s margins.

Our first was brought using the above equity in our PPOR and was a House and Land duplex in Dakabin, Qld for circa $500k. Although the yield is decent there were many costs that the property investment ‘education’ group failed to mention/understand that we have been left with, and there is little scarcity or owner occupier appeal to make growth a good prospect. We have always had tenants in both sides which has been great. We borrowed 90% on interest only terms.

About 18 months ago we signed another contract, this time on a 4 bed H & L in Doolandella, 18kms out of Brisbane for circa $400k. After a long land settlement this was completed yesterday and will be advertised for rent tomorrow. Looking at about a 4.9% yield. Again, this is on an interest only loan at 90%. Deposit and costs were paid from our savings – I know, huge mistake!

Right after we signed this contract we found your podcasts which have taught us that there are so many fundamental errors in our property selections, and if we had our time again would have purchased existing properties with scarcity and owner occupier appeal.

We have just had our first child and Kirby is now off work. We have a ~$45k buffer in our PPOR offset and somehow are still managing to save, even though Kirby is off work, although receiving maternity leave payments.

We use a credit card to pay for 95% of our spending, and repay at the end of every month to ensure no interest payments.

So, we are still very keen to use property as our investment vehicle and have learned so much in the last year but are now stuck as to our next step. We doubt we would have enough equity to purchase again now and the fact Kirby is off work will severely hamper our serviceability. She will return to work at the start of 2017.
Questions:

  • Do we sell both/one of our current properties? We’d like to keep if possible as I am a firm believer in buy and hold, although will they hamper us moving forward?
  • Where to from here?

Any information from you would be extremely appreciated. I’m sure there are a number of people who have used ‘property spruikers’ such as these to purchase less than ideal investments.


 

If you like this case study episode (Mid 30s couple, combined income of $150k p.a, existing PPOR and two IPs), don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

Episode 054 | Q&A – Entry into the property investment market, debt reduction and investing in house and land packages

It’s Q&A time! This week on The Property Couch, Bryce Holdaway and Ben Kingsley will be answering the questions below from our fellow listeners. Thanks again for submitting your questions!

  • Entry into the property investment market question from Aaron: Hi guys! could you possibly talk about entry into the property investment market? Specifically how much money you need? I have some money sitting in a term deposit but I have heard that you need more like $40,000 before you can even look at starting out. If that’s true, then I need to keep saving. But I keep thinking to myself “what if its better to start investing that money into cheaper property so that you can start investing sooner rather than later”. How much money should people have before starting?
  • Debt reduction questions from Marty: I have just finished the new book and found the content informative and practical. I do however find myself grasping for answers about debt pay down in the practical section. How does the graph move to a zero debt position on IOnly loans? I would like some more detail on this area as it’s probably the missing link for me in the whole process. In case study three a couple with surplus annual income of 36k Pays 1,000,000 in principle in 10 years with IO loans. The property selections are not high yielding so I’d expect the cash flow to be only just positive even at year 15. Am I missing something?
  • Debt reduction questions from Mitch: Hey guys. Love your podcasts and your book. Just a quick question about paying down debt to start receiving passive income. In your book you say to set up all loans to interest only, if I want to retire off passive income at the age of 40 how do I pay down debt without selling any properties and without access to my superannuation?
  • House and land packages question from Rob: Hi Guys, love the podcast – I’m an avid listener and after finding you, went back to Ep 1 and went through them all. I’m just about to place an order on the book… Fundamental Question: Is a house and land package always a bad investment, or are there situations it can work as an investment property?

 

If you like this Q&A episode (Entry into the property investment market, debt reduction and investing in house and land packages), don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

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