Bad Times/Challenges

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How Bad Times are simply life giving you an opportunity to grow.

The full chapter on Bad Times/Challenges will show you how to use the obstacles of life to your advantage.

If anyone tells you there will not be bad times – run! They are either lying or ignorant. It is part of the human experience to encounter many difficult and trying times. The key therefore is how we deal with bad times when they arise.

Because it is far better from a psychological point of view to consider all bad times as challenges to overcome, I will use the words “challenges” or “obstacles”. I suggest you start using this terminology in your own life. This way, you train your mind to think that any difficulty is just a challenge to prevail over or an obstacle to get around.

I have experienced many challenges in my life. The most poignant is the challenging year I had in 2006.

I like to set goals. So I started on 1 January 2006 with a number of clear goals for the year. I also like to have big goals. My big financial goal was to make $1m that year. I not only had a goal, I also had a strategy – to buy, renovate and sell 20 residential properties with an average gain of $50,000.

20 x $50,000 = $1,000,000


My total income for the previous year was under $100,000, so this was a big stretch goal.

However I had a number of factors on my side:

  • I had previously renovated five properties so I knew what I was doing. I also knew how to add value rather than add cost.
  • I had bought and sold a number of properties and I really did understand the residential real estate market.
  • I had a loan facility that would allow me to buy and renovate, providing I turned each property over quickly.
  • The property market was booming and properties were selling on average in 20 days.
  • I had great group of reliable tradespeople to do the work.

After a good period of looking I found an excellent property with the following positive features:

  • A private seller willing to sell $15,000 under market value.
  • A nice house on a lovely section that would appeal to families.
  • Lots of ability to improve the property at a low cost.
  • A great area and sought after location.

I bought the house in February 2006 for $410,000. I borrowed the whole amount at 9.2% p.a.

The renovation took six weeks and cost $14,291, also borrowed at 9.2%.

Therefore the cost per week to hold the property was $750.

I was so pleased with the result and so confident of the market, I started to market it at $520,000 which would have given me an $85,000 gain if I sold it quickly.

I advertised the property and floods of people came through it. Everyone loved it. I had a number of comments that it was the best presented property on the market. Everyone loved it – but nobody bought it.

This happened for week upon week. I started dropping the price. As the weeks passed, the prime mid-summer selling season finished and the autumn arrived. I continued to advertise and I continued to drop the price. The flood of viewers turned to a trickle.

Around this time a few unfortunate coincidences occurred:

First, my main source of income, my recruitment business went into its worst ever year. For years, I had budgeted for income of around $40,000 for the autumn quarter, the actual was $6,177 which only just covered the costs of running the business, excluding the lease.

Second, I had just taken on my first full-time employee and he had to be paid.

Third, a big rental property I owned suddenly became vacant and just before winter it was proving impossible to rent out. It went from $600 per week in rent to $0. The outgoings on the property were $525 per week.

Fourth, I had also employed a full time employee to build up an internet real estate company I had purchased. I budgeted for the business to at least pay his salary. It didn’t even come close.

Fifth, expecting a good year we were in the process of doing a major ($150,000) renovation on our house. Much of the work had been done and now the invoices were coming in; builders, plasterers, plumbers, glazers, joiners etc.

Sixth, the booming property market turned. It didn’t turn bad immediately, but the real heat and bubble went out of it. Any excess I hoped to get from the hot market evaporated. Buyers began to sense that it was no longer a sellers’ market and the tide was turning.

By now, it was winter and I had a house I couldn’t sell, a rental property I couldn’t tenant, two full time employees to pay, my own mortgage to pay, an office lease to pay, renovation invoices to pay and a wife and three children to feed, clothe and look after.

What started on 1 January looking like being a hugely profitable year, quickly turned to a nightmare.

The rest of the story and what I learned is in my book.

I had never really understood before that you really do learn the most from life’s challenges. I learned more in that year about myself and money than I had in any successful year.

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