2012 Property Investor of Year goes bust

From Kate Moloney, 2012 Property Investor of the Year:

+ In 2012, at the age of 24, Matt and I were crowned Australia’s Property Investor the Year (Your Investment Property Magazine) click here to see

+ Three years later, if we were to sell our properties, we would still owe the banks about three million of dollars (not including arrears interest and selling costs). We are currently in the process of sorting out the debts. The outcome at this stage is uncertain (despite living with financial cancer, happiness is a choice we make every day)

+ Life has been tipped upside down in the last two years. Goodbye success identity, can I have a new one, please? Ideally, my real one.

+ I live in Moranbah, QLD. Have been here for six years. The towns real estate market has dropped approx 75% in the last three years. The vibe is … depressing. Right now my mission is to shine a light on it and be of service to others in similar positions.

+ I have written a book called Bright Yellow Happiness its due out in 2016. I never wanted to publish it, but it feels like the right thing to do.

+ Despite “living with financial cancer” I am happy and empowered. I believe whole heartedly in personal development and empowerment. When they are combined with your everyday life, you become powerful, even in the face of challenging adversity.

+ Who knows whats around the corner. At the moment, I am taking life day by day. My intention is to share Bright Yellow Happiness with the world in a soulful way, that’s true to me.

A cautionary tale. Be kind in comments, perhaps buy the book.

Comments

  1. This is what happens when people are blinded by greed and hypnotised by glossy magazines hell bent on pushing false positives.

    • A magazine that showers a naive young couple with praise for taking on dangerous levels of debt. Makes me want to puke.

      But that’s right, real estate is a risk free investment.

    • It’s all good. I’m happy to help these guys out when the time comes by purchasing their properties off of them for 70% less.

    • She should’ve sold her portfolio when the magazine came out and her win would’ve been somebody else’s losses. All her IP were in regional speculative mostly mining places. I can’t understand how people thought that the mining boom would have lasted forever. It was clear back in 2011-12 that mining would bust sooner or later and when that happens, the “value” of a property would dive as without the boom those properties are worth next to nothing. My guess is a lot of so called investors are going through the same pain though. Sad, but investments always come with risks and it’s generally all about timing the markets…

      • How could she possibly understand? When the article was written, the mining boom was all she knew – it been going continuously since she hit puberty.

      • Great find StatSailor. Imagine if property charlatans would responsible for their advice like just about every other professional is.

        It might be just me, but if someone tried to sell me an investment by telling me that it had risen by 59% in two years, I’d run the other way, not leverage up and jump in.

        “While there are many affects FIFO workers bring to mining towns, the most prominent is severe rental
        shortages and skyrocketing rents. Indeed, rents until recently hit $3,000/week and median house values
        have risen a staggering 59% in the last two years.”

      • @AB
        Regards FIFO wrecking towns.
        I have found the towns/councils are reluctant to approve camps to house the fifo workers, I dont know why, probably wanting to speculate on property boom, perceived negative social effects and behaviour.
        Its best if you get a camp in real early, so fifos can stay somewhere, once job finished fifos go and camp goes, the smaller number of new permanent employees at the newly constucted whatever can be housed in the town, if too many camp can be retained if practicable.
        A lot of single people prefer camp, meals are cooked, rooms are cleaned etc.
        If you are single and working 12 hour shifts plus some travel to and from jobsite, the last thing you want to do is get shopping and cook food.

    • Australian Stories #1: The Battler Property Entrepreneur

      Never had much interest in travelling or eating out or anything, so after six years of working my partner and I had plenty saved and decided it was time to put the money into a house of our own. Just hated the thought of all of that dead rent money. Bought ourselves a modest little cottage on the inner city fringe,, fixed her up a bit, and by the time my wife was pregnant we decided to upgrade to something a bit bigger in the suburbs, something with a yard for our kids.

      We did pretty well out of the cottage – something like a 40% gain tax free in less than five years, so you’ve got to be happy about that. Well, the next house was a bit more expensive, but we just fell in love with it, we had to have it, you know. The bank was more than happy to give us everything we needed. We were daunted by the idea of carrying a $200,000 mortgage, but interest rates had been coming down, and things were going really well. We never imagined we’d both be living in such a beautiful big house, but over time we came to feel that this was our reward for being more careful with our money, for making sacrifices.

      After a while, with the wife back at work, and another promotion for me – we thought it was time to start thinking about building up a property portfolio for our retirement, to give us some more flexibility down the track. Well, the bank was more than happy to give us everything we needed. We bought a fixer upper a few streets down from our current house, rented it out to a local teacher – he helped out a bit fixing it up. Rates were starting to go up a bit, but we’d fixed the bulk of it at 7.5% and were comfortable with the repayments.

      Prices in our area were starting to really pick up. Our neighbors had sold their house – which was no bigger than ours, and probably needed more work done – for $550,000 ! It was incredible – they’d only paid $280,000 seven years earlier.

      Well, we’d got some extra days at day care for the kids, so my wife was able to go back to work full time now. We thought we’d diversify the portfolio a bit, so got ourselves a unit off the plan in a neighboring suburb. The bank was more than happy to give us everything we needed. The rent wasn’t quite covering repayments at that point – but the tax effect was pretty sweet – we just needed 4% capital growth a year to be raking it in ten years down the track. Some of the spec buyers ended up selling after a month and pocketing a 40% gain. We were absolutely spewing we didn’t buy more !.

      A mate knew the developer, so we got in early on his next release and ended up buying two off the plan. The bank was more than happy to give us everything we needed. We turned over the units after a year and decided to pay off our debt. We own our house and the property up the road outright now. We’ll probably give the kids the other property once they’re old enough – let ‘em move into it when they’re ready for university.

      I get really annoyed now when people talk about unaffordable housing. It wasn’t like we were gifted our own house. It was hard. It was bloody scary carrying so much debt. But we made sacrifices, worked hard, made some smart decisions. You’ve got to make your own luck.

  2. this young lady has the courage to see that there is more to life than money…and it took being broke to realise this. She gambled and lost big…but the sun still comes up.

    bravo…wishing you all the best

    • ResearchtimeMEMBER

      Amen to that… life is often about timing. When we succeed – We ascribe it to our own skill, rather we were there at the right place and at the right time.

      The converse is also true!

      • I think people underestimate the role oluck and timing has on their lives! I fear for my friend that just started a business, bought a house and had a kid all within the two past years.

      • Correct Alby

        Majority of people want to better themselves. I guess that’s why they play Lotto.

        But to be so greedy to risk huge sums of money in remote areas is beyond comprehension.

        At her level she’s a sophisticated investor not looking for shelter.

        Too bad.

      • ResearchtimeMEMBER

        An unfortunate theme on this website, granted. Although the Lass in question seemed to take full responsibility.

      • Escobar, ‘to risk huge sums’ – The source of this obscene leverage behaviour is that these people don’t think they are risking anything. Human nature I guess after seeing 20 years of boom, we somehow think that past determines what will happen in future. What is really shocking to me that this is happening after 2008 GFC and many asset bubbles to study in recent times elsewhere in the world. Ignorance or stupidity?

      • Sophisticated? LOL. Carrying over $5m worth of debt and less than a mill in equity. Must take some sophistication signing loan contract after loan contract. Is there a specialist higher education calligraphy course that prepares you for that these days?

    • Yes, when things in life go pear shaped it can be soul destroying and the choices can be move on with help (good family,friend support, medication etc) or gradually allow it to consume you until you can’t handle the stress any more and the human cost is tragic.
      The system here in Australia as talked about lots in this MB blog should never allow this to happen and yes the bottom line comes down to Luck.
      That young guy Nathan Birch with 200 properties and estimated wealth of 50m, he has been lucky with his timing and strategy and the fact he lives in Sydney during this time of its existence…..imagine if he was in Ireland,Spain, Greece even USA or imagine if he had decided to go to university to become an engineer,doctor etc….good luck to him on one hand but what pathetic systems we have here in Australia when speculating and getting the timing right and borrowing shitloads is the way to succeed…as we rip nearly everything out of the country and populate it with a new invasion of foreign vultures bring our culture down down deeper n down.

      • ResearchtimeMEMBER

        But that is the market. Speculation is key to human existence. Science is exactly the same, hundreds of ideas fail, but its the one that can be transformative…

        The property market does vote – eventually, timing in this game is everything. If people are willing to lend to people whom they think will pay them back, then I say let the market do its thing.

        Thats how we get regeneration. Otherwise all innovation dies. The US understands this, hence its bankruptcy laws are no where as constrictive as ours, which are far less so than most of the EU. Done by design, it allows financial creativity. Why do you think the global IT industry is basically based in the US? Its not because they are the smartest…

      • Yep,,we are living in a country that sacks Scientists and engineers you know…..but property spruiking gets the headlines in unFairfax.

      • ResearchtimeMEMBER

        Again, thats how the market works. If you don’t need the scientist, then why hire him/her! It could only be written by a non-scientist!

        Lets get real here – Science is only useful if you can monetise it. there are probably 5k out of work geologists at present. Want to hire them? How about 30-40k biologists who did the degree and couldn’t find a job. If simply producing scientists was the answer – then the EU would not be in the predicament its in. Nor China for that fact. It is a nonsensical stupid argument.

        The reason why we have a market, because the market works.

      • RT…and how all of that is working out regarding the “MARKET” ? Is the whole economy doing well for what you’re spruiking that science “Doesn’t matter” ? Thanks for assuring my very point…that is what is wrong with the world.

      • RT…..”The reason we have a market , because the market works”……”Humanities speculation a key to its existence”.

        To borrow from the ecological economist Dr Nate Hagen, “Nature has an automatic negative feedback loop to overconsumption of resources and status. The lion surveying the African savannah for it and its families energy needs could not bring down the 3rd Giselle, it’s gullet would be full. The system stays in sustainable balance. Humans have no negative feedback mechanism to consumption. Thats why we “Keep up with the Jones'”.

        As money is our marker for energy, given the creation of a credit system, a government deskilled in governance by vested interests and a profit motivated ‘market’, the above mentioned savannah eventually looks like the shale oil fields of California.

        The key to humans existence is actually the evolutionary instinct to consume more energy than all other competing organisms. It’s called greed.

      • ResearchtimeMEMBER

        Yes, greed powers innovation. But ultimately its the market that picks the winners. And ask what happens to all that wealth spent on useless/failed projects – where does it go? To essentially the same place those Gisele’s go – to money heaven.

        In my experience, very few companies succeed. its incredible hard to pick the winners before hand. Use IT, for every Google and Apple, there are probably a hundred thousand failures. That incidentally is a good thing. Whilst those companies currently succeed, they will eventually be cut down by something greater in the future. That is the way that innovation, research, and ultimately the markets work on a macro scale.

        Nothing, absolutely nothing is permanent. It is monetary and scientific evolution…

      • Lets get real here – Science is only useful if you can monetise it.

        Indeed. No value in advancing human knowledge if you can’t turn a profit on it tomorrow.

        Who monetised gravity ?

      • ” No value in advancing human knowledge if you can’t turn a profit on it tomorrow.”

        Let’s just hope some super bacteria doesn’t rise up while we’re busy ploughing money into Viagra instead of new antibiotics.. Otherwise those words might be chiseled onto humanity’s gravestone!

      • ResearchtimeMEMBER

        OK – taken a little out of context… I like science for science’s sake. But real research. it won’t make you or the country rich though…

      • @Researchtime
        “If people are willing to lend to people whom they think will pay them back, then I say let the market do its thing.”

        The problem is that the property “market” doesn’t bear any resemblance what so ever to a market.

        In a normal market, the invisible hand decides what and how much is produced, supply and demand are reflected in and respond to prices, and decisions to invest or lend are informed by risk.

        In the property market, the government through use of planning and zoning decides what is produced, where it is produced, and how much is produced. As a result, supply and demand are disconnected from price – as prices rise, supply fails to respond, and rather than falling, demand increases on the back of speculation. Risk is transferred from those making decisions in the economy to the government via guarantees, resulting in risky lending and investment, with gains privatised and losses borne by the government.

        If you look at the property quango and see a market, then you’re blind.

    • I’m not sure about this. Where is the contrition for engaging in a system that screwed over her fellow citizens, where is the acknowledgement that she was part of a generation of a.holes that didnt give a flying f..k if they were in the beggar their neighbour mess.

      The only contrition is that she gambled and lost – I don’t have much time for it.

      • Locus of ControlMEMBER

        I wholeheartedly agree AJ. Hers is self-pitying introspection only; there is zero insight or remorse for the implications her actions held for those around her at the time or now. I’ve mentioned some of the social harms in a post further down. Can’t see past her nose or the forest for the trees…

        Many these days have zero concern for anyone but themselves. Narcissists.

    • The sun keeps coming up on >$3m in debt (plus arrears interest and selling costs), how wonderful.

      You really think the bank(s) will let her walk from the debt and set a nasty precedent for themselves?

      Small wonder the banks are putting up rates out of cycle. Layoffs at the banks are coming. Expect to see more of both in a belated attempt to plug the holes in the great ship MegaBank Titanic.

      • I doubt the bank will have any say in the matter, simply lodge a debtor’s petition with AFSA and banks be damned!

        There are some consequences for it, but not as big as 3 mil.

      • “Small wonder the banks are putting up rates out of cycle.”

        It’s not because of defaults (yet). It’s because they have been forced by the government to have a higher shareholders funds/loans ratio.

    • Well said dan the man. I have some sympathy for her. Young person seduced by fantasy and aggressive lenders. I was always scared of mortgaging myself after watching the family next door to us get torn a new one in the 91 recession. They appeared to have everything in their new home even a Spa bath which to 90s bogans like ourselves was totally sophisticated. Seeing the bank sell the place for half what it cost to build left a impression on me.

  3. Brilliant!

    I don’t need to buy the book, this has made me all bright and yellow, and happy inside

    Hopefully in a few years they can appear on a new version of ‘The Biggest Loser – Real Estate edition’

    • Makes me happy as well. This woman helped price out a bunch of people who wanted to buy a home to live in. Now she lost all her money. Seems fair.

  4. Shame on the banks for allowing her and her partner to leverage into a mining fuelled property speculative binge – The big question is how (incompetence) and why (greed) did the banks let it happen?

      • Mine tried to tell me to buy a house in Gladstone – about 2.5 years ago!!! Bit of commission involved I think

      • You probably meant financial planners swizzy. You know, the ones that did a ten week certificate course when they found out that motor mechanics get dirty hands. Any CPA with a FP licence has high standards to apply and would not risk their membership on dodgy deals.

    • GunnamattaMEMBER

      Well the upside is that now this young lady has recognised the futility of it all (and best of luck in her future endeavors) there is now a bank trying to account for the discrepancy. Should give them some practice.

      • She was only 24 it seems when she got started. No way she could have really understood what she was getting herself into.
        I got married at 24, if I knew then what I know now it would not have happened.

    • @ Stomper – absolutely bloody right! Lending is a 2-way street, and how the banks could lend someone – I’m not sure how much but clearly over $3 million to gamble on house prices is predatory, irresponsible, and should be criminal. I would have made this comment if you hadn’t.

      I don’t know what sort of income she’s got outside of property but macroprudential LTI limits are sorely needed – I’d suggest an absolute maximum LTI of 5 (including net rental earnings), although even an LTI of 5 means that at a measly 5% interest you’re paying 25% of your total income in interest. This is before you pay tax, before you feed and clothe yourself, and only then can you think about the rest of the capital.

  5. Sigh… We need a much better standard of financial education in Australia. People just don’t understand the risks involved with leveraged investing… and financial planners are allowed to spruik these schemes to their hearts content with very little accountability.

    • Great point HA!
      The debt ‘sellers’ are everywhere and woven into the very fabric of life in Straya. Debt = wealth ( it seems).
      The regulators should also be ashamed and the citizenry should be ashamed for allowing the usurers to operate with impunity and hoodwink the masses. Just hope 2016/17 and the lessons it brings like this one are never forgotten.

    • more financial education makes people leverage more – uneducated folks still think you need to have money to invest
      risk especially debt related risk behaviour cannot be taught at school, it’s cultural and moral issue coming from the society. On the other side ability to asses the risk is life skill and in case of financial transactions heavily influenced by the media.
      Anglo-Saxon culture is in love with debt while in most of continental Europe debt is still seen as a deadly sin.

    • “People just don’t understand the risks involved with leveraged investing… ”

      The vast majority probably do.

      It’s that 1% that don’t and get what’s coming to them.

      And it’s the 1% of those that are reported on.

      I bet not many (if any) are reckless or don’t understand the risk of leverage on this site.

      Remembering that risk means probability of variation.

      • Optimism is one indicator of success. 😉

        I made up a number to make a point.

        But of the 1/3 of housing stock that is investor owned (say 2.5m)…. how many are highly leveraged.

        Of the 1/3 mortgaged owner occupied – how many are highly leveraged?

        Obviously 1/3 of houses are not leveraged.

        The average loan is somewhere around $ 350k- 450k depending on what you read.

        Dunno.

        But I’d bet the majority are not reckless.

      • That’s a straw man dude.

        Reckless is not an objective concept, its subjective. Being reckless means taking more risks than others. Thus the majority can never be reckless as they are taking equal risk to what others around are. 30 years ago to buy with a 10% deposit would be reckless, today it is conservative. Doesn’t prevent aggregate human behaviour from building systemic risk (quite the opposite in fact).

      • Matthew (dude/bro)

        HA was talking about risk and “people’s” understanding.

        The girl in the article was reckless in my (subjective) opinion.

        Now that you’ve introduced systemic risk…. well I doubt bankers really know what that is as distinct from “people”.

        While you’re at it maybe we should discuss inherent risk, financial risk… etc.

        Also, just because I attempt to qualify “people” as not understanding leveraged risk as being in the vast minority does not make that argument a strawman (by definition).

    • +10 Without knowing details, rather than funding christian counsellors for schools etc., funding, reintroduction and/or rejigging of ‘home economics’.

      This could include finance, loans/investments, real costs/PV, diet/cooking, health, psychology, critical thinking and media analysis….. but probably unlikely?

  6. If the above extract is indicative of the precision and attention to detail that has been lavished upon the book, I will pass.

  7. “Australia’s Property Investor the Year” what were the criteria? oh wait, found it

    “This young couple wowed our judged with their awe-inspiring ability to get together property
    finance, even in times when they’ve been without savings or equity”

    • “This young couple wowed our judged with their awe-inspiring ability to get together property
      finance, even in times when they’ve been without savings or equity”

      Where’s APRA ?????????????????????

    • Who said NINJA loans were only in America? You can’t see me but I’m shaking my head in disbelief right now.

    • Do not tarnish the Fully Qualified Ethical Accountants (like me) who only charge fee for service for quality advice with the same brush as Financial Planners and Real Estate Spruikers who charge commissions and are in bed with mortgage brokers.

      However I am sure their are also unethical accountants out there.

      • “Do not tarnish the Fully Qualified Ethical Accountants (like me) who only charge fee for service for quality advice with the same brush as Financial Planners ”

        What about financial advisers / planners who also charge fee for service and are constantly advising clients to wind up Self Managed Funds their accountant recommended because they have $100k in super. LOL’s!

        Plenty of good and ethical planners and advisers out there. The real problem is the financial illiteracy of the general populace.

      • There is a whole industry of tax agents who specialise in property. There is something wrong with the ease of which a client can be setup to create investment property deductions, and the difficulty for clients to make self-education claims, for example.

        This probably explains the lack of financial education being discussed.

      • They will tarnish everyone with the same brush. For a web-site that is an alternative to the MSM bias, we equally get idiots posting comments here.

      • There are plenty of ethical accountants out there. When I mentioned a smsf a while back his first comment was “you’re going to buy property are you?” with an incredulous tone in his voice.

        May be I’ve just been lucky over the yrs.

    • wow how sensitive are accountants!
      what is their consensus about AGW????
      accountants vs engineers climate change death match!!!

  8. they are strayan heros and the govt should bail them out as its just unastrayan to lose money on real estate – a current affair should do a charity fund raiser for them

  9. mine-otour in a china shop

    Fair play to this woman trying to make some good out of the bad. I will read the book and guess if it is anyway half decent that it could be compulsive reading for many others.

    I hope there is a chapter on the happiness factor for older people, who were gambling heavily on investment properties for an early / luxurious retirement? Taking debt cancer to your grave is a realistic outcome for many of these elderly gamblers. At least younger people have a chance to learn the lessons and press the reboot button and be better off mentally for it.

    • I was at a BBQ on Sunday and a friend’s dad was there who has been a property bull for years, advising all and sundry that they can’t lose with ‘bricks and mortar’. I was having my usual friendly dig at him quietly suggesting he rent me one of his places for mate’s rates. He was unusually quiet in his banter, even saying he needed to offload some of his ‘stock’ quick smart. The fear in his voice was palpable…

      • Funny my landlord called me the other night, I had recently sent a letter to the RE Agent saying I wasn’t happy with the rent increase because nothing gets fixed and I don’t agree with a 9% increase in 2 years. When he came around to fix a couple of things recently he was really standoff-ish and difficult to deal with, but the call the other night was a surprise since I told the RE Agent I wanted to deal with him through her… Anyway he told me his phone accidentally dialed me from his pocket (happened once before) and then said sorry for disturbing you etc.. It was a complete change in tone, I was really surprised as last time I spoke to him he was quite aggressive, but now was completely timid. I don’t know how many other properties he owns and maybe since he did so well on the place I rent he’s been buying them up like crazy based on the “it only ever goes up mentality”? I dunno. But it was odd I’ll give it that.

      • Rent went up by about 6% after 6 months and another 6% in the next 6 months. No exaggeration to say we were no fuss, pay on time model tenants for 4 years but new property manager thought we were paying too little or just wanted to push us out. Mediation was pretty much useless as sure they would just come back in the next 6 months. Really feel the 2nd class citizen aspects of renting under these conditions. We moved. This lady’s story is sad but no doubt she would have been happily screwing down the tenants for every cent too when up against that kind of leverage. Her greed is not a victim-less crime but still no hard feelings. Stay agile, they are sitting ducks, we can always move.

  10. as an aside, CFD’s should be banned in Australia as well

    disgusting business, and talk about leverage

    they are banned in the USA for good reason

      • plenty stomper

        massive leverage

        not transparent

        banned in the USA because of the leverage involved

        borrowed money, you can lose more than your original input

        they are disgusting

    • I disagree,
      To people who understand risk management and lot size allocation the leverage is useful. You dont require large sums of money sat in your account to trade appropriate position sizes. People should take the onus upon themselves to fully understand the financial tools before getting involved.

      • There is no way a individual can truly understand the risk involved in dealing with a CFD provider. Years ago I worked on the desk with one of the largest brokers in Straya, we seriously looked at partnering with one of these outfits, but the deeper the firm dug the more dangerous it looked and they walked away.
        The even refused to join in with the ASXs own version.
        I was glad they did. MF global was a wake up call to for many people who refused to read the fine print. I believe ANZ had it as a approved product with E Trade then when it all hit the fan they washed their hands of it all.

    • The USA has had a long history of problems with bucketshops so I think they banned them because of that. There are now many reputable companies that do them and as other suggest if you manage your risk and are prepared to put in the time and effort to learn and improve then then they are fine.

    • Understand your comment and as a trader who uses options, warrants and CFD’s, like any tool or instrument, if you know what you are doing and have appropriate position sizing and understand your risk tolerance, they have a place. That said, I have a strong training and background in finance which I would say differentiates my use as a sophisticated investor from a regular SMSF investor.

  11. I think people are starting to wake to the fact that from now, it will be hard to make money.
    …..and how easy it seemed in the past.

  12. “Be kind in comments, perhaps buy the book.”

    I dunno… this is what the crashniks want.

    Besides, buyer beware.

    And now she’s scamming her way with a book?

    Who’s funding the book? – the bank?

    • Pragmatically, Escobar, you are right.
      It’s not about ‘be kind’ it’s about what she/they can do now to bring some dollars in. If in 5 years time they are on the circuit as guest speakers, then the matra will be “If we had not gone into property, we wouldn’t be here with you today, ‘recovered’ and rich from our property escapade in an unforeseen way!”
      Life isn’t about ‘failing 20 times to become successful once’ as we are often told. It’s about avoiding the very obvious potholes and traps that this young woman fell into. Sympathy score? 0.

      • She built most of portfolio between 18 and 23, so she and hubby (probably bf at the time) were still basically adolescents with only half developed brains.
        Incomplete pre-frontal cortex development means people in this age group are not fit to make decisions about taking on 100s of ks of debt.

      • people in this age group are not fit to make decisions about taking on 100s of ks of debt.

        Or in this case, over three million!!!!! WTF!!!

      • Yep – if the Moloneys – teenage amateurs – “deserve” what happened, then the “more adult”, “professional” lenders who lent them the money deserve every dollar of the haircut they’re going to get (and, ideally, to lose their licence)

        It’s notable that relatively young people are over-represented in ‘Property Investor of the Year’ type articles.

      • escobar, I assisted my ex B.I.L. to go into bankruptcy some 15 yrs ago and back then your trustee got a 1/3 (I think) of your after tax income above 60k (from mem). If you have any assets they’re gone except for trade tools, cheap car and personal stuff etc (no lux items). You’re under the review of your trustee for 3 yrs, but if they think you’re hiding stuff they can request the court to extend.

    • “Who’s funding the book? – the bank?”

      I self-published a family member’s memoirs through CreateSpace (Amazon). Cost me about $150 for design and layout (could have done it myself but wouldn’t have looked as nice). Even a bankrupt property investor could have financed it themselves.

      • Yeah, I was amazed at both the ease and the cheapness of self-publishing these days. CreateSpace will charge you more if you do the design through them but I just found someone through one of the freelancer sites.

        Both eBook and physical copies from the same submission process. No up-front cost – people just buy copies (you set the price at or above an Amazon minimum) and I assume Amazon prints them as required. I ordered 50 copies to give away at his 80th birthday and I think I paid around $5 each plus shipping.

      • Self published through mob called moshpit publishing.
        Doesn’t look crazy expensive – they offer print on demand, so she doesn’t have to get one printed until someone places an order (no more garage full of unsold books)

        http://www.moshers.com.au/

      • @Escobar – Yes, depending on what services you pay for. CreateSpace will offer nearly everything but are far more expensive than finding your own freelancer (they may or may not do a better job). I was happy enough to do the editing myself over a week or so given the fairly small audience of this book.

        Edit: The paperback is selling for US$6.57 which is the minimum that Amazon let me set it at. I’d be happy to send you a link if you can think of a way to get it to you – I’d prefer not to post it publicly here.

    • Book is almost certainly print on demand – nothing to fund other than a couple of hundred dollars of layout and editing.

      Don’t see the scam – unless the contents turn out to be a clever way of converting you to an extreme form of Calvinism, it’s hard to imagine it being other than what it purports to be – feel good self help stuff in the vein of the gift, but with a tinge of anti-materialism. You either like it or you don’t – big deal.

      • Stats

        I get your meaning.

        If life gives you lemons….

        Sorry to reference the only good bit of that show last night.

  13. You can see from this the pressure the QLD govt must be under to get the Adani mine up and running
    Everything west of Townsville and include Tvl its self, has gone tits up. Coal is dead.
    How about Wagners building that private airport at Toowoomba for the future ponzi demand.
    The madness that has overtaken these people is just staggering. (it must be something in the dust up there) What happens to this lady when her husband is laid off?? real desperation.

  14. I wonder how many people bought in these mining industry exposed towns using their Super over the last 5 years. The number of times I have been given advice to put super in ‘positive yield’ property outside Syd/Melb…

  15. She’s not bad looking. No doubt Reusa invited her and her hubby to some of his famous swingers parties for the propertied pretty people back around 2012…she’s off the guest list now though. Loser!

  16. Dear o dear, she deserves sympathy.

    Kate, best of luck with the book, judging by what’s coming you’ll see some success.

  17. Ahhhh. 2012 and the year ended on a high, iron ore was $150/t and all was right in the world. A cautionary tale indeed.

    Wonder how the runners-up are faring.

    • Nathan Birch – he is running a mentoring business leading more fools off the cliff. He profits from the mortgage, accounting, legal referrals and will probably be lynched by his disciples in a couple of years if he doesn’t top himself first.

      This will be epic

    • ‘Position to semi-retire’
      ‘Just want to enjoy ourselves’

      So why didn’t you start liquidating your portfolio??
      You don’t make a profit til its sold.

      • “You don’t make a profit til its sold.”

        From what I’ve read on property investment forums, you never sell because “you don’t have to pay tax until you sell”. All the cool kids are borrowing against their equity mate.

      • From what I’ve read on property investment forums, you never sell because “you don’t have to pay tax until you sell”. All the cool kids are borrowing against their equity mate.

        Exactly the advice my property loving folks gave.

        “Buy IPs, reduce your tax and use the equity maaate as a deposit when it comes time to buy a place of your own. Just don’t sell the IPs, because you’ll have to pay tax on your capital gain”. (paraphrased).

        I declined their advice, given blithely at the time the “credit crunch” was on and I worried it would turn into something more sinister. Instead the Wife and I got our home the old fashioned way. Worked, budgeted and saved and bought in Brissie in early 2012 at the bottom of the SEQ correction.

        Was it hard saving enough for a 20+% deposit? Yes.
        Did we pay tax? Yes.
        Do we have a manageable mortgage, no other debts and a lifestyle that we enjoy? Yes.

        So as I rently said to my olds, “Why would I want the worry of a string of IPs?”

      • So what you guys are basically saying is that there are a great many property investors out there who will only sell if the market falls enough to mean they make a loss (which they can then claim). Should make any sort of mild retrace interesting.

  18. Hopefully she finds enough happiness to apologise to those that followed her stupid ideas. Nathan Birch is next, he was runner up in the awards, but is more dangerous as he’s been “mentoring” people to do the same thing for years. The bust will be big, families ruined. I only hope banks and regulators do not get bailed out.

    • 88888

      His gross return is 7%!

      Not bad. He buys well it seems.
      It means his gross % was higher to enable him to be at 7% after bubble inflation.

      His net is 1%

      Must be land tax that’s killing him.

      He should write a book.

      • He couldn’t anyway.

        Trying to do so would end the divergence of the real price and the fancy ‘valuation’ he achieves when using the decrepit house in the worst suburb as security for his next loan.

        There are no winners from him selling anything. His bankers pump his ego while the depreciation clock ticks loudly. Heaven forbid an interest rate cycle.

      • ResearchtimeMEMBER

        Think about it though – 200 houses, $50m net value – is absolutely nothing… he only has a $25k equity in each house on average. Monthly fluctuations in some Sydney suburbs are bigger than that!!!!

        You are right, he is probably already toast…

  19. There will be more stories like this by the bucket load.

    I have no personal feelings towards specufestors, and certainly not sympathy.

    • Ditto. Yes they were preyed upon. But it was their greed that caught them in the end. Problem is, they denied homes to non-stupid people in the process and directly contributed to the coming disaster for the whole country.

  20. Mad Magazine used to sell a board game in which the objective was to loss all your money. We just have property investors in mining towns instead.

    At least for this young lady, she has time to rebuild her life and move on to something useful for society. Many may not age on their side.

  21. Mining BoganMEMBER

    So she’s discovered it’s the little things that makes life good. Why do they always have to wait until they’ve lost everything to discover this? It’s like finding Dog on death row.

    There’s enough folk in this place espousing the simple life. Grab a few comments, bundle them up in an ebook and off we go. Give it a cute name. “A Bear’s Guide To Happiness”.

    We’ll make a motza.

    • Locus of ControlMEMBER

      You better generate some content quick MB, cos that hipster icon that you were planning on plastering on the front cover, an animal (in our case a bear) wearing glasses and a cardigan has long hit the mainstream (i.e. Kmart) and from there it’s a fast trip to passé and bargain bin.

      Formulaic whimsy has a shelf life.

      • Mining BoganMEMBER

        Is Paddington Bear still popular? Might be able to sneak him in. He knew his money too. I can still remember the scene he made when the bank didn’t give him back the correct five pound note. It all ended well though.

      • Locus of ControlMEMBER

        Maybe a Care Bear will ratchet up the feel-good factor. You know, hearts and rainbows and stuff…

      • My vote goes to Rilakuma. His blank, expressionless face is quite fitting. Plus he’s from Japan, he can be the poster bear for all things deflation

        (He’s feeling relaxed cos he’s debt free?)

  22. Bugger me. How are PI Magazine and its so called experts going? They select the winner of an investor of the year competition whose portfolio consists of a heavily diversified, risk managed, innovative, strategic bunch of properties………the vast majority of which are located in Moranbah and surrounds.

    They’d be better off putting their penmanship into a scattergun of letters to every politician in the country asking to be bailed out. You know, privatise the gains, socialise the losses.

  23. Stack up merchants in bubble markets … supposedly called property investors …

    Michael Lewis described this … quoted back early 2009 within Housing Bubbles And Market Sense (http://www.scoop.co.nz/stories/BU0901/S00046.htm ) …

    Bernard Hickey: Short, sharp lessons due on prices … OPINION … New Zealand Herald

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11582389

    The Big Short Official Trailer #1 (2015) – Brad Pitt, Christian Bale Drama Movie HD – YouTube

    https://www.youtube.com/watch?v=LWr8hbUkG9s

  24. You can believe in personal empowerment all you like, but when you are $3M underwater you are not powerful. You are buggered, and will be for a long time. A positive attitude is one thing, but she seems to be planning on carrying on with the delusional optimism that led her to where she is, when a little more caution might be in order.

    • “You are buggered, and will be for a long time.”

      Bankruptcy is 3 years right?

      But yeah… hard to borrow after that – but not impossible from second tier.

      She is young and will recover.

  25. Diogenes the CynicMEMBER

    At least we have bankruptcy here and not debtor prisons or worse debt peonage. Graeber describes the consequences of bankruptcy in his book Debt the first 5000 years, which is worth reading. Selling off your family members or yourself to pay debts is a really harsh way of settling with the creditors. I wish the lady all the best but won’t be buying her book.

  26. I cannot wait for this to happen to the investors i know, and have warned repeatedly. They think I’m a fool for renting. Apparently i just don’t understand it because i wasn’t born in Australia. I am going to miss out forever!

  27. Australian Housing Bubble = The root cause of so much depression for all types of losers. The only cure is true mean reversion of prices & debt, not in psychiatric or psychological care.

  28. Don’t have to buy in Moranbah to loose your crown jewels. Even in many parts of “ever growing” Sydney’s Western suburbs houses and units have dropped by some 25%. So if you borrowed on minimum deposit and can’t get a tenant you’re on the way to a bankruptcy court. On top of this, even if you had a buyer for your house, chances are they won’t get a loan on the old terms.

    This will get a lot worse before it gets better

  29. She seems well positioned to cash in on the property specufestor support group industry.

    That might be the next bubble.

    • Assisted Suicide is the next bubble.

      I have rented the top floor of an empty office block in Brisbane, It has several cars that exhaust into the drivers seat, a padded room with a gun, a light fitting with a noose, a missing Window, some exposed electrical conductors, and access to the roof. With government funding i hope to get religious representatives on site.

      • Locus of ControlMEMBER

        Boom times for several ‘after-market’ industries too.

        Funeral services.

        Grief counseling.

        Can someone come up with a snappy acronym for it? You know, like FIRE, but for THIS ‘industry’.

  30. Lets not confuse what is really going on here. She was the tragic patsy of the banks and mortgage brokers (and the slavish Laberal politicians) as they screwed over a generation of Australians by turning housing into a financialised asset that became the collateral of everything.

    Did she ever show any remorse for families renting off the little landlords during the good times? Did she ever stop to wonder what it might be like to be a family that couldn’t afford a home because the speculators were rampant? Not for a moment. And if she won she’d be drinking cocktails with Reusa as she mocked the losers.

    There is no contrition here… yet. Wait until the neoliberal world she loved so much comes crashing in as the book sells 8 copies to family and she becomes the tragic renting from some landlord that ranks her just above a cockroach infestation and private healthcare is all to expensive and suddenly society seems cruel and unkind. Just then there might be some contrition about what was really going on – selfish, disinterested greed on a massive scale.

    No time for this pap.

    • Are we innocent when we are party to the harm? Does lack of real knowledge but reasonable constructive knowledge make a difference? I just work in tobacco marketing, it’s not like i own the company … sort of thing.

      I have empathy for the personal circumstances she now finds herself in – it should never have come to this.

  31. congratulations on her for putting this out there – financial hardship can be hard to face up to.

    I would suggest this is a leading indicator for the broader market, but hey, no one in Domainfax land will listen until the carnage is nation wide and staring them in the face.

  32. Despite “living with financial cancer” I am happy and empowered…

    what a disgusting thing to say – as though her greed inspired investment decisions have been caused by some bad fortune thrown her way.

    • yep, more indulgent selfishness. I’ve put together a draft she might like to work off on the next go:

      “Upon reflection, i realise i prioritised my own greed, i realise i was used shamelessly by big FIRE due to my own overconfidence and silliness, and most importantly i am now starting to understand what it’s like to be an honest person doing a useful and productive job trying to save and buy a house.

      I also reflect upon the harm i have done. I helped lure others into the quagmire of debt thanks to my own ignorance, and i participated in a system that did real harm to decent people just trying to own a home to raise their families.”

    • > Despite “living with financial cancer” I am happy and empowered…
      Craterface: Hi, I’m Craterface. Welcome to Luna Park, I’ll have to confiscate your alcohol, sir!
      Bender: Better mascots than you have tried. [Drains his beer and sticks the empty bottle in Craterface’s eye.]
      Craterface: At least I still have my self-respect. [Starts laughing, before breaking down into despondent sobbing.]

  33. Locus of ControlMEMBER

    Zero sympathy here.

    One part conceit and one part greed makes a residential property investor in this country at this current time. Conceit blinds them to the true risk of their actions. Greed drives them to acquire more and more.

    The social harms are numerous. People priced out of property. A woeful misallocation of capital that could have had better uses. Bad debts for banks in significant numbers have implications for depositors and shareholders. The mispricing of risk is bad for the economy overall.

    I’m glad she’s newly enlightened. No I won’t be buying the book. I have plenty of fine philosophers extant in my collection already, some of whom had already ‘worked it out’ more than 2000 years ago.

    • +1 No sympathy whatsoever for those who leverage into risk on the taxpayer’s dime. Are we supposed to start handing out medals to people belatedly forced to discover some basic wisdom ?

      • True that this on its own is moral hazard that deserves what it gets, but the indifference to those that were harmed is somewhat breathtaking.

    • Totally agree. There is no remorse for the harm caused, only for the fact she didn’t win.

      There is much less merit in learning an age old truth about the silliness of leverage, than understanding that private greed and indifference has public consequences.

      I suspect she will learn that soon as the banks and the receivers crush her with all the indifference they’d show to a fly in the kitchen.

  34. Nice work MB on not giving into the schadenfreude on this one. Proves the smart and beautiful people really aren’t property bulls! However, also proves there is no joy to be found in being a property bear. On the up you are isolated – even ridiculed and disdained by your peers. On the way down no one throws roses at you for being right as they are all broke. Let’s face it, property bears just hate to party!

    • Dude – Get a boat! I have the equivalent of a 1 bedroom apartment with 360 degree water views that I change each year for a low fee of $1180 plus fuel to the new locale! We property bears know where to party – anchor the boat out front of Mosman or Pittwater and party all night – gone before the pigs arrive.

      • Funny, I actually looked into this. Mooring fees and boat maintenance seemed too much near the city. If anyone has a spreadsheet that would be handy to see. Party on!

  35. TailorTrashMEMBER

    I’m glad she is “empowered” ………living as a bankrupt after you thought you were “rich ” she will need all the empowerment she can get ( she obviously has been to a few “power breakfasts ” ……and has gotten the right words ) ……………but her book might be a best seller and she can join the “victim industry ” and become a celebrity circuit speaker ………………..Her book might even beat Kim Kardashians ” How to take the perfect selfie ”
    …….sorry I dont feel one iota of sympathy …..

  36. I’m certain this wont be a popular comment but when did that ever worry me so:

    Is it possible that Savers are the real problem?

    I know, i know, that’s stupid: How can you possibly lay blame at the feet of honest hard working mums and dads that sock away a few dollars for a rainy day?

    I’d say it all depends on what you call savings.
    Lazy money sitting in a bank account / pension whatever are not saving, least ways not in my book. That money will never really contribute to grow the economy. It’s lazy money that the system really needs to flush so that pricing power will be returned to the residual lazy money aka “savings”

    Now if you define “savings” as building a business with profitable IP or growing margins and growing revenue than I’m a huge fan of savings. But honestly how many Australian’s are using their savings to build something with real residual value?
    I look at this mess from a global perspective and I see a system flushing what it has in excess and its not savings, it’s boomers living entitled western lives. making this really a demographic and geo-political problem rather than an economic / monetary problem.

    • I kinda agree CB. I have raised before, why should cash earn anything above CPI? and if genuine CPI is going backwards why shouldn’t cash…

      The issue here is confusing rent seeking & speculating with productive business – cash doesn’t have much to do with that.

      • Not sure I agree.
        Ultimately money is supporting / chasing these speculative returns because it cant identify any productive uses for the savings (and the leverage that savings enable).

        In that sense it’s all demand deficits, which is to say that the lack of spending on the dream of a better future is in and of itself destroying our future. If I dream to be a fashion designer and create what for me are the worlds most beautiful dresses there’s not net productive gain, the world isn’t suddenly a better place however it is through our mutual cooperation and our spending that we enable the joy that these dresses deliver.
        So I believe our root problem is that we’re getting old and just aren’t that interested in the dream, we’re all willing to let someone else dream while we take our lazy returns and the truth of the matter is those lazy returns should logically be negative real returns.

      • @ CB – I think you’re still latching onto symptoms, not the actual root cause. What enable this part – “we’re all willing to let someone else dream while we take our lazy returns ??

      • I see where you are going CB. There’s some truth in that – all the savings are building up in the system chasing after passive returns. It’s a good point.

        It’s not perhaps that we are getting older and stopped dreaming, but rather that we have (perhaps unwittingly lead there) created systems where risk is under rewarded relative to owning capital.

      • Savings = Investment.

        So unless you have savers, there won’t be businesses

        Interesting comment. I assume that you would therefore support laws that prohibit personal initiative unless it was supported by debt? Kinda explains how things really work in Australia…
        That said:

        When some one “invented” the wheel, are you suggesting that they took out a loan to enable the idea and transform it into a business?
        When an inventor has a moment of brilliance and sees how some widgit can change the world are you saying that this foresight was enabled by someones “savings”?

        I can only assume we live in two very different worlds, a fact for which I’ll be eternally grateful because frankly I’d cut my own throat if I was forced to live under your apparent world view.

      • You may be attributing meaning to my comments that isn’t there. Borrowing a whole lot of money to buy a house, for example is not saving, in fact it is dis-saving (i.e. negative saving).

        As for the guy who invented the wheel, say imagine was a an agrarian who was living hand to mouth to feed himself. He farms in summer and forages in winter. He gets a good crop one summer and instead of having a massive end of summer feast, he saves the excess. That gives him some free time in winter to tinker around and invent the wheel, instead of foraging. With the wheel, his farming becomes more efficient and he can actually farm enough to support himself and others.

        Nowhere in that analogy is debt required, but it does require saving.

        Extend the analogy to probably the biggest predicament of today – managing the ageing population. That’s going to place a huge burden of toil on the younger, fitter generation to take care of older people. So you’ll either have a lower standard of living to take care of the baby boomers, or as a society you can save and invest – for example by building new infrastructure, making things more efficient etc. So you may spend more time looking after ageing boomers, but less time getting to work, less time to get your job done etc. But that infrastructure and investment will require sacrifice now – ie saving.

      • Gral,

        That’s true. However it doesn’t explain which way causation runs.
        If you think the economy is constrained on the demand side 99% of the time, you would say investment creates saving. If you think the economy is constrained on the supply side most of the time you would say saving creates investment.
        Keynes belonged to the first camp. And I think he is right. 99% of the time, planned saving depresses income which then depresses investment.

    • if you are trying to distinguish between ‘savings’ that are placed in a particular asset class (i.e. cash) as result of risk appetite, as opposed to ‘savings’ that are allocated to short-term liquid assets to match short-medium term liabilities (i.e. treasury management), then the bigger question is what factors serve to shape an individual’s risk appetite ?

      Fear is a pretty good starting point, ignorance is also playing a big role, but surely also judgement as to relative opportunity and opportunity cost. In which case I would be asking – what is the real root cause of the problem here ? You’re a systems analyst, you can work it out !

      • You don’t need to be an Albert Einstein to work out that the whole bet is on perpetual price rises as rent income is unlikely to ever cover mortgage repayments with so much building going on, i.e.,units, houses and granny flats. It has happened in the stock markets and other countries as well. But then, if a man couldn’t dream we wouldn’t have ever started flying, ah?

      • You’re a systems analyst
        Yea not really, but I can certainly understand why you might think that. Truth is I’m just a lowly Engineer with a deep seated love for complex systems, I’ve drifted into Finance because in today’s world there are few systems more rewarding for those that understand complexity than our Financial system.

    • Australian savings certainly aren’t the problem – otherwise the banks wouldn’t have had to borrow $900 billion from overseas to fund our property loans.

      • But those borrowings are not for business, they are for asset speculation. Leveraged savings chasing speculative gain – this is CB’s point i think.

      • Australian’s don’t need to borrow money from anyone to support higher RE valuations, the debt creates the asset, it’s bog standard double entry book keeping.
        What we do need to borrow for is the ongoing support of our Current Account Deficit, it is impossible from a practical perspective for our Trade deficits to continue to exist without new borrowings (loans) that are generated outside our system (not with standing the sale of assets that is)

    • It all comes down to the nature of savings.

      A man of your (China-Bob) understanding of complex derivatives and engineering feedback loops should have no trouble getting a basic grasp of what money and saving is.

      Money is based around the useful purpose of a “means of exchange”. When performing this role it works as a token that represents real resources.

      When the system is working well a person can create extra real resources (eg by working) and decline to use them immediately for self, and instead sell them for money. The money they receive is a token that represents real resources.

      Later the person can spend their money and exchange the token for real resources.

      [NOTE: Of course this relies on a community of people using the money as tokens and providing matching exchanges of real resources and tokens. ie Someone else must take the other side of each trade).

      It is possible to get a return on investment in several ways.
      Imagine a man A who invests 100 units of his time to create logs or pipes. He can use them to form simple play equipment that will give his kids 10 units of pleasure per year.

      He can lend them to a father in another suburb (man B) where his kids will get 10 units of pleasure. But man B should pay man A in this case. This is a return on investment.

      He could also lend the materials to a local builder for use as scafolding. This might allow the builder to do 20 units more of work per year. The builder can pay man A 15 units per year and still be ahead.

      Alternatively man A could sell the pipes to the builder and buy 100 cattle from a farmer. He could jam them in his back yard, collect milk all year and then sell the flock which would likely be 102 cattle after a year of breeding, living and dying. This is a return on investment.

      Alternatively the man could lend his money to a bank, who would lend it to builders, farmers or fathers, who would buy the real resources they need, repay interest and principle to the bank and achieve exactly the same real resource allocation as above.

      This simple example shows that placing money in a bank can have the same effect as investing real resources, and as such, it does deserve a similar real return on investment.

      • Well said, but what happens when the number of tokens supposedly owed someone and therefore recognized by the society far exceeds the opportunity value of those saved tokens. I suspect that’s where we’re at.
        price wage Inflation is one solution
        Negative rates of return is another
        maybe there are others but I suspect they’re actually just composite solutions.

        As for:
        A man of your (China-Bob) understanding of complex derivatives and engineering feedback loops should have no trouble getting a basic grasp of what money and saving is.

        Ah yea, thanks I think or maybe I’m the only one that cant see that /sarc tag

        Truth is the more I understand Money the less I understand money. I get the feeling Skippy is at a similar junction. It’s only when you start seeing the financial system BS for the mindless greedy BS that its actually is that you can come full circle on Money.

      • Head between hands and fingers in receding hair [sexy tho] china-bob…

        History shows us money is a contract i.e. pure expectant information before the act of trade reached a conclusion and physical liquidity of all asset provided by an standardized object was necessary e.g. one persons asset is another liability in the purest social – philosophical compact and yeah it broaches on epistemic closure as a fact.

        This is why I subscribe to MMT, not out of ideological bias or environmental conditioning, but its the best approximate theory which accounts for the evolution of monetary system architecture we currently operate under.

        How people f#ck with it is another drama all together.

        Skippy…. the strange thing is contrary to some really quasi religious sort I embrace capitalism e.g. out with the bad and in with the good i.e. social uplift tho some want to hijack it for personal reasons… FFS…

      • @skip, I realize you think me lower than a snakes belly and shallower than a puddle ….my only retort, an escape to the wonderful world of Oscar Wilde
        “It is only shallow people who do not judge by appearances. The true mystery of the world is the visible, not the invisible..

        All jokes aside, for me money is a means to an end, without the goal, without the end money is pointless, it’s easy to make its easy to loose a rather pointless to chase because it’s intangible, money’s the carrot that we collectively invented. For me Money is like a lazy whore always wanting to be paid extra for what she didn;t deliver.

      • Actually I don’t think you’re pond scum, tho Aristotle-ish w/ a side of Upton in your currant manifestation… been there and done that thingy…

        Sadly I can’t just jack my head to yours and let you fuddle around whilst you reel from the horrors and the hard earned enlightened bits, which is always about shoving more stuff in my head than one really wants or needs. It can be a bit of hard yacka in the land of a thousand screams…

        I geuss at some point in your life your going to have to make a ethical stand, not based on morals but what works for most and has a higher probability for our species to move forward.

        Skippy… I for one would welcome you or anyone else here to my abode and show you honest hospitality, without any strings, save indications that you felt you were honored guest.

    • China-Bob,

      Yes I agree completely, savers are the problem. I have made this point before and it goes down like a lead balloon.
      People define “savers” far to broadly imo. By savers what I really mean is bondholders.
      People who expect to earn a real return not as a reward for risk taking but simply for postponing consumption. These people are the problem. The solution is to ensure the real rate of interest on bonds is always zero.

      • Bond holders and savers are not “doing nothing”, they are providing their capital to others to invest. In return for this (and the risk – because yes, there is some risk) they are paid a small percent on their capital.

        Jeez. Next you’ll be telling me that rent money is dead money…

      • By “capital” you mean money, which they have hoarded rather than doing something useful with it like buying consumer goods. They can’t be freeing up capital, because a decision to not spend money doesn’t magically create capital goods.
        We are not going to agree on this, because your “saver” is someone who earns cement and steel and bricks and either chooses to lend them to someone else or throw them in the ocean. My saver is someone who chooses not to spend money – the only effect being to depress demand. Which one sounds closer to the real world?

    • Oh FFS ChinaBob. Savings are not “lazy” money. If you have savings in a bank, the bank will invest it. It does not sit in a pile under the teller’s desk. The only difference between that and you investing directly is that the bank is choosing where to invest the money, not you.

  37. I’m more amazed at the fact that it almost took 3 years, 2 years after the peak, for her to sort out the debt (likely bankruptcy) with that level of negative equity. Why did the bank not chase for more equity sooner? Did her rent manage to cover the interest payment on the loans after the peak for 2 years?

    This suggests to me that people with that level of negative equity (or even less) may stay afloat longer than what one might generally expect (or just me?). Probably means the “bust” may take a little while longer to eventuate if it takes so long to call in the debt collector and the banks start repossessing.

    No sympathy from me either. She and her partner initially won big by pushing up the prices, which cause other people who just wish to live and not speculate to become poorer and deeper in debt.

  38. The most frightening thing about this is this forum: https://propertychat.com.au/community/threads/greed-vs-aggressive-action.6706/
    Especially this comment: “Personally, I think it all comes back to risk mitigation. My view is that some are too focused on excessive accumulation, rather than appropriate risk reduction. But good luck to them – they tried & failed – that’s a lot more than 95% do, And hopefully they will keep trying and do it better each time until they win”… Sure, let’s let people keep trying and others accept the downside. Correct me if I’m wrong, but the lenders will ultimately end up wearing this. And should the lenders ever become insolvent, it will ultimately be the taxpayer. Am I wrong?

  39. Direct quote from her Facebook page…

    “You don’t need WINGS to survive, you just need HOPE. And as the worse possible circumstances write themselves into your life, it is HOPE that will give you the compass to BODLY progress through it.”

    I don’t think I’ll be reading the book with that sort of thinking or editorial standard….

    • I’m glad I don’t need wings to survive…..’cos I don’t have any.
      Bright Yellow Crap, more like……

  40. This really is the tip of the iceberg. I personally know many people who are in way over their heads. Perhaps not to this degree, but they are carrying far more debt than I would feel comfortable with on an us diversified and illiquid portfolio.
    Many are feeling the stress now, no holidays, marriage pressures, working in jobs they hate because they can’t afford not to. But others seem to be in total denial, they seem to not have any concept of how unsustainable their investments and lifestyles are. Maybe they are all earning a lot more than I think, but my back-of-an-envelope calculations just don’t add up.

  41. Some of those judges are still out there commenting on markets. And the same bankers than lent these people so much money, are still in the banking system. Probably promoted by now. Somehow, they, the advisers, the bankers, the punters, analysts and others could see nothing wrong with putting money into places like Moranbah or (even worse) Zeehan (Tas). Fools and their money might be easily parted but what responsibility is there for lending them the money in the first place? What a horrible mess…

  42. Declare bankruptcy and start over. Tell the bank that they have lost a debt slave and let the bank shareholder cover the loss.

  43. Its not like the signs weren’t there.

    I still differentiate between that and the inner city house market. It hasn’t been as infected by ninja debt jockey investors and remains a relatively stable market because people are living there, rather than being short term renters. After the mining area collapse, I expect that mid range apartments (where investors are everywhere – and over indulged) will be next.

    • “I still differentiate between that and the inner city house market.”

      Of course – you couldn’t really get two different markets. But I wouldn’t assume that the inner city isn’t vulnerable if we have a larger crisis. Inner city Dublin prices dropped around 50% including in some very desirable areas.

  44. Talk about egg on your face.

    Our fifth annual Investor of the Year Award has revealed some of the country’s most shrewd investors yet, as we present the property powerhouses who are showing the rest of Australia how it’s done….

    http://media.wix.com/ugd/7f5d3e_db59a67e7b2f4a2a8fa0b23c9abf0431.pdf

    Edit: and the gift that keeps giving, I wonder if they’ve edited their archives dept?

    “These are ordinary, everyday Australians who have chosen to make a difference in their lives through property investing. By showing fortitude, the willingness to take risks and a sense of the gigantic opportunity that is Australian property, they’ve strived ahead and offer a shining example of how to succeed.”

    Edit 2: This just gets better. And one of the judges is…….
    Tim Lawless,
    head of research
    RP Data

    Hahahahahahaha, that must be embarrassing.

    Edit 3: sorry if this is boring you, but…. I love this bit.

    How the winners were picked
    Investing in property is an emotional decision and it isn’t all about the numbers. In addition to looking at the size of each investor’s portfolio and rental returns, we also examined how they conduct their investment activities.
    The winners in the Investor the Year Award reflect, not just investors who have made money, but those who have made it big by thinking outside the box. Lifestyle matters. Ethics and attitude matter. As a result, each of our judges were encouraged to consider:
    ? Entrepreneurship
    ? Overall strategies and property selection criteria ? Contributions to other people
    ? Risk management
    ? Innovation
    ? Financial skills
    ? Success against the odds

    Edit 3: sorry, but this is too funny, look what they won!

    A prize pack worth
    $17,146 including:
    ? $5,000 cash from Crawford Realty and Your Investment Property
    ? A 12-month Real Estate Investar ‘Premium’ membership valued at $2,988
    ? A tailored risk profile and strategy plan by MyProp Mentor Me valued at $2,500
    ? A selection of reports
    from Washington Brown valued at $2,360
    ? My Knowledge access from Real Estate Investar valued at $850
    ? A 12-month membership to MyProp.com.au valued at $259
    ? A selection of reports from RP Data valued at $200
    ? A 12-month (platinum) membership to NMD Data valued at $199
    ? A 12-month membership
    to HomeSource Access valued at $110
    ? A 12-month subscription pack including Your Investment Property and Your Mortgage magazines

  45. The champagne, cocaine and casual sex in 2012 have really taken their toll on her.

    Reusa, was she hot in 2012?

    • Let’s hope she scrubbed the internet forums of any derogatory comments she might have made about renters and savers.

      Her career as a motivational speaker would turn to be even more short lived than her Property Millionaire one.

  46. WOW what a lot of people don’t understand is how many sports people are used by scam artists… opps I mean business entrepreneurs to burnish their scams… its just good marketing to psychologically attach the virtues of successful competitive sports personas as a facade for looting or sucking in the rubes….

  47. Okay, last one….it’s for Tim! 🙂

    “They picked the market cycle in Moranbah well, purchasing their properties in the early part of what turned out to be a very strong growth phase. The Moloneys were innovative in their initial funding and have made hay while the sun shines, diversifying as the mining sector slows down.” – Tim Lawless, RP DATA

  48. Classic survivorship bias situation. Domain would like you to believe that investing in RE is a no brainer with 100% success rate. Stories like this do not exit in their view of “reality”.
    “As Nassim Taleb writes in his book The Black Swan, “The cemetery of failed restaurants is very silent.” Of course the few that don’t fail in that deadly of an environment are wildly successful because only the very best and the very lucky can survive. All you are left with are super successes, and looking at them day after day you might think it’s a great business to get into when you are actually seeing evidence that you should avoid it.”

    I guess she was too busy “investing” with no time to read Nassim Taleb.

  49. wow over 200 comments, this must be a record for MB. Any negative commentary about property and the spruikers and S#[email protected] heads come out of wood works. You are pathetic bunch, who sound so desperate that makes most people laugh. It will also be good to see your credentials too. Probably most are fakes. 🙂

    • Lady Di,

      Not many have had a go at her, most are mocking the award and those behind it. If you don’t like it, don’t read it.

      If her and her bf were the winners I wonder how the others are travelling and I wonder how many people were encouraged by the bullshit to go and try the same.

    • There’s some harsh cynicism perhaps, but i don’t think anyone really lacks empathy for the circumstances she now finds herself in. She’s a victim in her own right for sure, but the contrition is not that of someone that sees the bigger picture or looks to acknowledge any personal role in the problem.

  50. Thanassis Veggos

    Property crashes are exactly the same as earthquakes: you know where they’re going to happen, you know why, you know how, you even know roughly how big they’re going to be, but you have no idea when.

    And, same as earthquakes, it always takes a big one before people take them seriously.

    Australia hasn’t had a big one… yet.

  51. Tell ya what, the runners up will have problems too. Mt Isa and other country towns will not be shooting the lights out either, especially when Sydney, Melbourne and Brisbane’s 20 million units and granny flats come onto the market and nobody wants to rent or finance them.

  52. 267 comments so far (in less than 12 hours, with half of those in the first two hours). Is this an MB record?

  53. The Qld coal mining and coal construction boom was downturning a couple of years ago.
    The WA iron ore minining and construction boom is downturning recently.
    And next is the huge Gas plants downturn/completion in WA, Qld and NT.
    Followed by the car industry.
    The doom and gloom has a fair way to go yet and impact Australias standard of living, mortgages etc.
    Notice the delay between Qld Moranbah downturn and actual impact on investors for example, people will do whatever the can or takes to keep their head above water and all the balls in the air.

  54. Sad story… All the best and I hope they come out of this OK. People fail plenty of times before reaching higher goals. Just look at potentially the future POS, Trump. How many times did he go bankrupt again? And now said man may soon hold the most powerful position in the world, a position only 44 before him had the privileged of holding.