在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo
The following is a summary of my notes from Peter Spann's presentation at the BIG meeting on 26th April 05. Peter's life story and many of the ideas in this thread have already been well covered on the forum.
For further view points refer:
Question: What does Peter Spann do when he arrives for a BIG meeting 45 minutes early?
Answer: Buys a block.
Peter purchased a property whilst waiting for the meeting to start. Because Peters property investing is very systematic he was able to identify and act on a quality investment immediately. Confidence and speed.
Don't work because you have to. Work is boring. Work to learn and not to earn.
Peter's 3 keys to successful investing:
* Have a strategy for what you do.
* Is you strategy successful? Repeatable to the point of being boring?
* P.S finds investing boring to tears and needs motivation to invest.
* Investing is a very systematic process. Know what you are doing instinctively.
* Strategy = A long term plan of precisely how and when you will invest.
* Buying at the right time with property is rarely the most important factor.
* Taking action is the most important element.
* Over the last 12 years PS has used only 8 investment strategies, with only 2 being added in the last 2 years.
* The poor souls discussing the 'What is the most important thing in an investment seminar' thread; should know that the only important thing is 'Did it motivate you to take action?"
* PS has failed more than most people.
* Last year PS lost 5 of his IP's. He simply forgot he owned them (seriously). Whilst driving past one of his IP's Peter stopped and knocked on the door to ask the tenant if they were renting and who they paid their rent. When he approached the property's PM Peter discovered they were managing 5 of his IP's and had 28k in rent to give him.
* With your strategy you can choose any two of:
iii) Low risk.
* St George Bank recently gave PS a 68M facility. A lot of this has come from developing a relationship with a commercial investment manager and from momentum.
* Momentum is important in investing, and the most energy is taken getting a strategy up to a successful level. Developing new strategies diverts your attention and takes a lot of energy.
* "How do I make this happen" A question successfull people ask.
* Just keep going.
* PS has got most of his compounding only in the last 4 years 01-05. in 2001/2002 PS earnt 800k from his business and 5.5M from growth in his properties.
General Investing Thoughts:
* There is more money out there than people know what to do with. Lots of venture capital for ideas. Money is not the problem, thinking that money is the problem is the mindset of the middle class.
* In the mid 90's renovating was a very good method for increasing the rent and hence the CG on a property. In 98-99 investing boomed making this strategy less effective.
* By mid 2000 PS's property's had got to 70-80$ a week negatively geared due to the CG.
* Knowledge is very important with investing. Knowledge mitigates risk.
* When investing in property think 'What will this be worth in 10 years time? Will it outperform the median growth rate for the area?"
* Growth is very important with property, much more important than cash flow. Negative gearing is just an unfortunate side effect of gaining the quality properties for longer term growth.
* Cashflow is better gained from different asset classes with attending lower risk. PS had a 77.67% growth in his share portfolio last year, and CPT's were up 29% as well.
* Become an expert in your suburb. Know what the properties are sold for.
* Investing is boring.
Interest Rate Thoughts:
* PS has his rates fixed, locked in 18 months ago. If you intend to hold your propeties forever then fixing has to be considered.
* A prediction of rates going to 12-14% in this cycle.
* We are at the end of a 14 yr cycle, the cycle is normally 8-10 years. This cycle has been abnormally long. PS thinks we are in the cash part of the cycle currently. PS has some gold sitting in a vault (didn't say where) to back up his opinion. In the event of a nuclear attack Peter mentioned no strategy of action.
* PS predicts in a few years a 18-24 month property investing Nirvana when interest rates peak and are coming down, Rents are high and CG is starting to kick in.
(1) Buy Quality.
* PS would be proud to live in all of his properties.
* All properties are managed by professional PM's
* Any repair under 5k is done automatically.
* Properties are renovated every 10 years and refurbished every 5 years.
* Small gifts are given to the tenants $20-$25 saying 'Thank you'.
(2) Hold Forever.
* All dogs are shot every year, the bottom percentage of PS's portfolio is sold regularly.
* If the cash is needed elsewhere PS will sell. Pat yourself on the back and enjoy your money, thats why we make it.
* If a ridiculous price is offered for a property then PS will sell. This situation is 'A beautiful thing'
The 3 L's of Property Investing.
(1) Leapfrogging (c)
* Buy - Increase rent - Revalue - Repeat
* PS has done this strategy 351 times.
* This strategy is not as effective at this moment.
(2) Land banking
* The ultimate strategy. How the wealthiest people get that way with property.
* Buy land and wait till it becomes very valuable through things like rezoning and encroachment.
* A long term strategy
* Buying Brisbane river front land at the moment could be a very smart investment. There are only 897 river front blocks and they have shown 19.7% annual compound growth.
* Commercial property
* CPT's for positive cashflow
* Shares in CPT's can be volatile but tend to be yield stable.
* A good hedge for residential property as resi property and CPT's tend to be counter cyclical.
* High gearing is available on CPT's, and the yield has been great recently.
Philosophies in life.
Passion points to purpose. Find out what you truly love.
Your life will become easy when you have purpose. Waking up in the morning and wanting to work. Retirement is a middle class concept. The wealthy live longer than the middle class.
Making money is the easiest thing to do. Money isn't real and it isn't backed by gold any more. Raising a child is difficult. Making money is easy.
Don't live a life of quiet desperation.
Great stuff Andrew - thanks for a good synopsis for those that couldnt make it.
Two quick points if I may:
A prediction of rates going to 12-14% in this cycle.Click to expand...For rates of this magnitude, we are basically looking at near double digit inflation, or at least 8-9% minimum (from our current rate of 2.4%) - did Peter say why he thought the Govt would mismanage inflationary pressures so badly in the next couple of years that interest rates would have to double?
Don't live a life of quiet desperation.Click to expand...Perhaps a nod to Henry David Thoreau when copying verbatim
Again, great summary, with plenty there for people to think about.
Thanks for sharing. I was there too, but wrote very little down - more enthralled with listening.
This one's going in my favourites.
Thanks for the BIG summary.
Appreciate your summaries, and have missed not having them lately.
Excellent summary Andrew.
I've always found Peter Spann very entertaining to listen to, not like some presenters who just give facts and details.
Terrific post, THANK YOU !!!!
Peter Spann is one guy I look up to for inspiration : WhY ????
1. He was a checkout chick ( I can relate..... I was as a teen.... )
2. He runs seminars, but does not charge THOUSANDS... i.e. he is truely trying to teach.... Still I do not begruding him making SOME money for his time.....
3. He's down to earth and one of us..... no BS....
4. He doesn't do the " I have a secret which you can learn too for $ 99,000......... etc etc...."
Cheers for the post AndrewA (and cheers Peter for the material) - I benefited from it...
I share Jamies opnions re interest rates
THanks HEAPS Andrew!!!
Also, Thanks again Peter for the talk, you were truly inspirational!
Fabulous post ! Concise summarization is a real skill. & you've got it.
I'm a Spann fan & I'm a Jan (Somers) fan.
I'll add my thanks too! Thanks Andrew and Peter!
That was a great post.
That post now resides on my HD...
Every time I looked over, you were scribbling like a demon, probably why there was no need for me to write any more than the 10 words I jotted down.
Top stuff !!
you either have to take shorthand or taped the night, LOL.
Great post, my wife took down the notes that night while I listened intently.
I then put her note and my memory to paper in my note book which is always in my shirt pocket, if I knew you were going to put a post like this together I would not have gone to the bother. I would just print your post out.
So if your at the next BIG meeting with Jan speaking let us know so we do not have to take notes.
Great summary Andrew. Thanks for putting the effort into posting it.
It sounds like PS didn't go into what strategy he is using at the moment.
Did PS elaborate on what the 'cash part of the cycle' means ?. Is this where cashflows are improving and prices are dropping ?
Andrew, you are a legend in your own lunch time.
That was one BIG meeting I didn't want to miss, but I got involved with a patient with a lot of issues, and forgot all about it, until it was too late to drive over to Salisbury.
From what you have written, it seems PS is implying to stay reasonably liquid for the next 18 months....can you confirm?
Sorry to sidetrack here, but how does one JOIN the Bris Investor Group ?? I'll be back soon and would like to join....
Sorry to sidetrack here, but how does one JOIN the Bris Investor Group ?? I'll be back soon and would like to join....Scott,
ScottClick to expand...
Just turn up on the last tuesday of the month.
Should be easy for you as your free at last.
Thanks mate... yes.... will look forward to attending.... should be in July.....
Thanks mate... yes.... will look forward to attending.... should be in July.....Oooh, we have the Reno Kings speaking in July!!!
ScottClick to expand...
Of course, that means you'll miss the Panel Event in June... We have Jenny Parker, a VERY smart real estate agent (and friend of mine), Rolf Latham (Broker to the stars), and Jan Somers (You heard of her??)... And the topic is "Overcoming Fear in Investing".
But... We'd love to see you in July!
Thanks.... you can count me in.... Will obviously JOIN BIG at the same time...... RENO KINGS.... just my luck !! Fantastic !!!
Having Jenny, Rolf, & Jan as panelists in June would be great.
Maybe for variety though we could have different panelists than Jenny, Rolf & Jan in May.