mrd

Over the past 8 years or so speaking with all types of people on the subject of investing in property, many, generally new to investing, ask me the “what if” questions. My broad base of experience has meant my answers have generally put their minds at ease. Two questions, however, that I lacked a good solid answer for were:

1. How good will your portfolio be if we have another world war?
2. How good will your portfolio be if we have a worldwide recession or depression?

Well, with regards to Q 1, I still have no concrete answer for, and hopefully never will. With respect to Q 2, however, I can now (i.e. only now) say from experience… “It’s all ok”!

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At the peak of the interest rate cycle the standard variable of the big 4 banks was 9.57%. Assuming you took up the offer of a professional package with the banks and qualified for the full 0.7% discount your interest rate would have been 8.87%. For a peak rate, that isn’t too bad considering long term history. I recall buying my first home in 1994 when the rates had come down to a low 10.5%. They then dropped to 9.5% and I was dancing with joy at how much money I was saving and how cheap interest rates were.

How times have changed.

To demonstrate how the changes in interest rates affect your holding costs I will use the properties at Endeavour Gardens as an example…

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It was said recently that (when the chips are down) there is ‘no greater motivator than winds of disaster blowing up your butt’.

It may be a little descriptive… yet nevertheless so true! You see, it’s not what happens to us in life that determines our future, but rather how we respond (not react) to that which happens. Of course each of us are affected in some way by circumstances, but how we respond is our own choice! We should never allow ‘circumstances’ to control us… or deter us from our focus in life!

Consider the story of Colonel (Harland) Sanders…

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Do you realize that the only time in our lives when we like to get old is when we’re kids? If you’re less than 10 years old, you’re so excited about aging that you think in fractions.

‘How old are you?’ ‘I’m four and a half!’ You’re never thirty-six and a half. You’re four and a half, going on five! That’s the key

You get into your teens, now they can’t hold you back. You jump to the next number, or even a few ahead.

‘How old are you?’ ‘I’m gonna be 16!’ You could be 13, but hey, you’re gonna be 16! And then the greatest day of your life…. You become 21. Even the words sound like a ceremony YOU BECOME 21. YESSSS!!!

But then you turn 30. Oooohh, what happened there? Makes you sound like bad milk! He TURNED; we had to throw him out. There’s no fun now, you’re Just a sour-dumpling. What’s wrong? What’s changed?

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People of integrity expect to be believed; and when they are not, they let time prove them right! It’s exactly the same with wisdom.

Parents expect (or at least hope) their teenagers would listen to and act on their advice. When they don’t, they allow time and experience be the child’s tutor and settle the matter.

Driving to inspect a property the other day, a friend lamented: “The frustrating thing is that you warn your kids against making unwise decisions. They ignore your advice and when everything comes apart, you are left bailing them out”.

From time to time I experience this same frustration in my role as a Property Mentor; except I don’t have to bail anyone out afterwards. I set out to steer individuals away from potential (and sometimes certain) financial peril, to a life of prosperity, possibility and options. BUT when people are not open to hearing anything that differs from that which they have already concluded… sadly, and all too often, I have no option but to stand back and watch the results of their poor decisions unfold.

IMPORTANT Reality Check!!!

As tempting as they may be, “I told you so” are unproductive and unnecessary words. That aside, I’d be lying if I said I haven’t been tempted to use them more than once.

We are currently in a global downturn and while fear and ignorance drive most people to react… my very strong suggestion is that you do not react, but rather respond! How you respond… especially during these uncertain times, will have a major bearing on your quality of life… five, ten and twenty years from now!!!

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Keep this philosophy in mind the next time you either hear, or are about to repeat a rumour.

In ancient Greece Socrates (469 – 399 BC) was widely lauded for his wisdom.  One day the great philosopher came upon an acquaintance who ran up to him excitedly and said, “Socrates, do you know what I just heard about Plato, one of your students?”

“Wait a moment,” Socrates replied.  “Before you tell me I’d like you to pass a little test.  It’s called the Triple Filter Test.”

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To make sense of the property market we must separate opinion from fact. Opinions will always be heard… just in greater numbers now perhaps. If you are prepared to “drill deeper” and dissect the evidence available; the facts will speak for themselves. There’s no reason for allowing the conflicting voices of opinion to keep you confused!

In the current round of Web Seminars we are offering, I highlight four key factors that are a MUST… if you expect to draw any credible conclusions.

1.    Record Population Growth
2.    Investors Have Fled The Market
3.    Home Ownership Unattractive
4.    New Construction Has Stalled Badly

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In last weeks fa@mrd we looked at HORRIBLE DEBT. This week, we will continue our debt series by looking at the 2nd types of debt…

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Have you ever wondered why the things that evoke the most passion or emotion in us… are usually known by four-letter words? Some of these include love, hate, fear, work and of course… Golf! Another emotion-charged four-lettered word that causes most of us to break into a sweat… is DEBT!!!

Mostly, we are conditioned to fear debt and avoid it at all cost. So why does debt propel one family to great riches… and another to poverty? How come the majority of wealthy people quite adequately manage large amounts of debt? Can debt be a positive thing to help us get ahead… or is it always a negative thing to be avoided? Before we can accurately answer this, we need to clarify our definition of debt!

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A well know finance industry figure recently launched a series of seminars. After reading the professionally crafted sales email, designed to invoke fear and panic and have me rushing to attend his paid event, I decided to address what appears to be a case of insincere opportunism.

Studying the world of global finance since last year is his authority for making such predictions. He proposed failure within our financial system is so systemic it is irreversible;  concluding our property market would soon crash.

A man (or a woman) with an experience is never at the mercy of a man with an opinion.

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