This week on Ask Kevin Young Roxy and I answer a question submitted by a long-time club member Roy, who asks;
‘90% of my properties are in Perth while the others are in country Queensland in mining towns. Prices dropped about 15%, and rents 20%. For Queensland mining towns it’s prices and rents have dropped 75%. I have some interest only loans converting to principle and interest, also the interest only loan rates have increased, I am unable to refinance the P and I to I/O because of serviceability problems.’
Now Roy’s first mistake was buying property outside of the club. Property Club would never have advised him to purchase so many similar properties in the same area. Especially not small mining towns, which are definitely not a smart investment at the moment.
When investing in multiple properties diversifying your portfolio is very important. You don’t want to put all your eggs in one basket! Take Roy as an example here, he invested in the same area and now that both rents and prices have dropped he’s in trouble. If he had a more diverse array of properties this wouldn’t be as big of an issue.
The Club is working with Roy to help him sort out his repayments on these properties, but he may have no option but to sell. At the moment I don’t know enough about Perth and country Queensland prices to say whether we can keep it in the black.
It’s a real shame that Roy is going through this but at least other Property Club members can learn from his mistakes.
Remember to always buy through the club where we can make sure your investments will see you through retirement!
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