Polymath, businessman, hustler and visionary tinkerer Thomas Edison (another genius who left school at 12) late in life said he was “still too young to play golf”.
I’m a bit the same, but did pick up a neat phrase from a golfing buddy of mine who doesn’t suffer anxiety blowing half a day hitting a dimpled ball around a field: “drive for show, putt for dough”.
Now, you don’t need to know what that means exactly, but you get the idea.
And seeing as you didn’t opt-in to get golfing platitudes, you can have that one on the house and this too: “revenue for show, profit for dough”.
Get to the point already will ya.
ahem
Check out this simple buy and hold type residential rental property P&L…
Prop value – $800,000
100% geared (no cash down)
Borrowed costs incl. Stamps, etc.
Total lending – $835,000
Gross rent 5.5%
Int. only rate – 6.5%
IN
Rent – $44,000
OUT
Interest – $54,275
Management @ 9% – $4,885
Insurance – $1,000
Maintenance – $3,000
Rates, sewerage, etc. – $3,000
TOTAL – $66,160
PROFIT LOSS= -$22,160
Check out the top line, or revenue – $44,000.
Compare that to the bottom line, or profit, whoops, loss of $22,160.
A word from someone with a bit of knowledge in this area, the loss will probably be greater.
And when is the loan repaid? None of the spruikers talk about that do they?
Listen to the negative gearing crew booing and hissing. Okay, fantastic, you get about 40% of that loss back and whoopty doo. You are still looking at a loss at least 25% worse than declaring more profit.
And more boos from the capital growth crowd. Reality check – you can’t use it unless you sell it. Imagine working for free for 30-years but claiming it makes sense because you’re upskilling.
So what’ve we got here? A ridiculous investment, producing nothing realisable, and nothing upon which any serious financial security can be built.
As one of my multimillionaire mentors told me years ago, this type of investing is lame.
Why do so many people foolishly get themselves into this kind of mess? Because the fool next to them is doing the same thing and baaa, baaaa, baaaa they go. There can be no other reason because mathematics and common sense would tell you to do something different.
I know a thing or two about making a profit and will share that information with the right people.
To find out if you qualify, start by booking a call with me >>HERE. We’ve got around 10-minutes to find out about you (you should already know about me) and from there – if you’re eligible – we may get you in for a 1-hr Property and Finance Consultation with me in person. Sorry we don’t accept any new clients prior to initial screening.
Currently, our team of 7 is managing 46 transactions. If you want in, recommend you book today.
P.s. Please don’t book a call and ask me or my staff what we do. We choose who we do business with and will simply hang up on time wasters. Read my book, Google our 218+ 5-star reviews, read my blog and go to our Facebook page. Thanks.
Cheers,
Brodie Brown
BH Brown Mortgage Brokers