“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” boasts Your Investment Property Magazine in 2012.
Showing the rest of Australia how it is done, were winners Kate and Matt Moloney. They had built a solid portfolio of 16 properties, with an estimated value of $8.5 million and retired at the age of just 24.
Ten of the properties were in the coal mining boom town, Moranbah, three in Mackay and the remainder in Townsville, Fitzibbon and Miles.
The judges were impressed. Tim Lawless from RP Data said, “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.”
David Hows, MD of Real Estate Investar applauded, “At just 24, Matt and Kate have achieved more than most investors do in a lifetime. They’ve shown significant skills across investment strategies and have seen amazing results. They also have a plan to ensure this is just the start.”
Tyron Hyde, director of Washington Brown said, “It’s obvious that Matt and Kate are on the path to glory! They have clear goals and stick to them, in fact, beat them. I particularly like the ‘de-risking’ strategy they are aiming for now, replacing mining income with more secure and diverse areas.”
None of the property experts understood the macro environment and China’s fixed asset investment boom that was creating insatiable, but unsustainable appetite for coal. (‘Has the mining investment boom come to an end?’ – Who crashed the economy?, 24th August 2012)
Yep, you guessed it, “They picked the market cycle in Moranbah well.” Just three years on, and a 75 percent plunge in Moranbah property prices according to Kate, has left her in a “debt disaster”. If Kate and Matt were to sell their portfolio now, they would “still owe the banks about three million of dollars (not including arrears interest and selling costs)” describing it as a “financial cancer.”
Great article, the irony is surreal….
Are these full recourse loans? I read elsewhere that this couple is trying to settle with the bank for $3mil….which calculates out to be $12-16k per month for 25 years….God help them if they have children.
Sounds like our couple got a little greedy, and may suffer for years….not that I’m particularly happy to enjoy their downfall, as it was their signature on the dotted line…their lack of reading the fine print. The banks themselves are not to be blamed, as they know full well as their lawyers write the fine print. Both will suffer….
“None of the experts understood the macro environment”…..making them…not experts? There are so many amatures parading as experts in Australia.
Who’s next? A generation of young families, or wealthy investors….of everyone as has a piece of Australian real estate in their super…..via banks, and services.
As I learned living in America through the GFC….the Stockmarket will fall, and housing prices will also. Those with cash, will pick up bargains from bank auctions in 2yrs time. Those with large debts, won’t be at the auctions as lending standards will be much tighter.
So get into USD in the mean time, or gold…..prepare for the first recession in a generation (25 years)!
I’ve started to realise that I feel really sad for people who find themselves in this situation. Sure, they drank the Kool-Aid but then we’ve all done that in some sense about something or the other over the years.
Nowadays, when people tell me that they are trying to buy houses in Brisbane, if I’m close enough to them I will gently ask them what they would do if their house became worth less than they paid for it. With a bit of luck it takes that one question to get them thinking…enough that they will not buy a place. Sometimes I have to get out the data on debt and serviceability of that debt across the globe but people’s eyes usually glaze over.
I decided to stop congratulating people on buying houses a while ago and I think I’ve had to learn to try and connect to their emotional state in order to give them a heads up towards what looks like a painful storm ahead. I think about people’s hard work, their sweat and and their hopes disappearing into…nothing.
I feel for them in the way I felt for my father-in-law when he realised he was going to get pennies in the dollar for his mortgage funds. I feel for them the way I feel for my family when we fled a warzone and had to leave everything behind in the 70s. All that ‘wealth’ can disappear in the blink of an eye.
I’m really sorry for everyone who is about to get affected by what is unravelling; we’re all going to lose something but I hope we don’t lose sight of each other.
I had the same conversation with my son yeasterday as I had with my dad thirty years ago, sparked by this question:
“What’s more important, love or money?”
My dad was adamant that money trumped love. But my son suggested that they can just be sides of the same coin. Money can be used with love. Love can use money. They’re not mutually exclusive. If you don’t have enough of either, life gets pretty bleak.
So, protect your love, protect your money. Be careful out there. Thanks for this blog. It’s a beacon of sanity.
It’s funny how just recently a lot of the MSM websites were running a story on a young property mogul. But when do they ever run a story on the failures such as these people? It obviously shows some incredible bias and the fact this kind of thing is rarely if at all published which gives the impression to the general public that property investment is entirely risk free.
@James. They would be fall recourse.
I guess it’s the age old strategy of buy and hold. That way you don’t need an exit plan (clearly they didn’t have one). They are probably trying to hold on for the next boom!
The other big problem they have now is rents have collapsed. SQM reports has rents for houses falling 58.8% over the three years and 61.6% for units in 4744. Vacancy rates have surged too, so assuming they have tenants in all their properties, they have less than half the rental income coming in from three years ago, making it even more difficult to service the loans.
So there is a God.
Hey everyone!! Want to start a charity for this person? I’m starting off with 5cents.
I too will chip in 5 cents.
Although I am a lowly renter I have a heart, I can see that their greed overwhelmed them and they have realised their misgivings.
All I can say is sucked in…. In the nicest way. Those of us who are productive in the economy, provide real jobs in the economy have been doing it tough for years, physically, mentally and financially have gotten no support or respect from the property and banking sectors.
Of course when it was going great for this mob I bet the common lines were being sprouted:
“If people just took some risk”
“If people just made some decisions”
“Anyone can do it, they just choose not too” etc. etc.
They never stopped and asked “Why isn’t EVERYONE buying houses?”….did they ever consider some of us wouldn’t touch housing with a loan no matter what?????
No doubt the bank will cut them slack on this one: Expect a national tour from her “Loosing the lot wasn’t the end of the world, #$% bank was really flexible” blah, blah, blah
The bank’s can’t afford to hang her out to dry….. They’ve got $1.5Trillion to recover from investors, they don’t want to scare off new ‘investors’ in housing.
If there weren’t so many people sucked in by the shysters in the FIRE sector, we wouldn’t have booms and busts.
This couple have had their 15 seconds of fame which is now being followed by a lifetime of ignominy.
As has been done here the names of those who applauded this should be plastered far and wide so that we can ridicule them whenever they offer advice in the future.
But of course these people have no shame. They’ll continue to claim that you too can be good looking as long as you invest in this or buy that product.
never feel sorry for these people,its the reason a lot of my family and friends couldnt efford a house and still cant without a 50% housing crash
Yup, if a sheep feels sorry for a wolf it is going to pay dearly out of its own pocket;)
@11 3s
haha, haven’t heard that line before. Yes, a sheep should never feel sorry for a wolf.
Sorry to be off topic, but let’s all stick together on the NG debate. Have been following this subject almost 10 years now, and I do not recall a time when all of the major parties are all recommending change, so I will take that as a small win, but hope for more. Love the emotional spin being promoted by the property ‘spruikers’ such as alteration removal of NG risks distorting the market (and that has not happened to FHB’s putting upward pressure on prices ?), and that nurses/teachers/emergency services employees with NG IP’s will be hit (admirable professions I agree, but doesn’t have the same ring to it as cleaners/parking inspectors, or even politicians for that matter with their property portfolios!). Anyway as a poster has said on another site, let the debate continue and the pro NG debate will be exposed as having more holes than a Swiss cheese factory.
Buying/investing in a mining town was always going to be a big risk. The local economy is based on one industry, Mining so if that downturns then so does everything else, housing, the local shops, everything.
It is sad anytime things go wrong like this. The story might have been about losing on their housing investments but what about all those people who rely on the mining there for jobs. They are (or will) also be in a bad place now too.
No one wins from an economic down turn except the uber rich.
Sorry, cant feel sympathetic for The Moloneys. They are Ponzi puppets, foolish investors who dont understand the rise and fall of the market. No different to stock market investors. If you dont know when to buy nd when to sell, you shouldnt be in the game. Ahh, but marketing and low interests rates are easy sweeteners for wannabe hopefuls.
They got what they deserved like every egotistical patsy. A lack of foresight is a lesson learned and there’ll be more on the way. All the Mum and Dad investor clowns parading like they are God’s gift and have been handed a goose that lays golden eggs will no doubt look like gooses themselves when it all goes pear-shaped.
A lack of foresight due to ego will be a lesson learned. Idiots!
Totally agree with (10) karl2, these ignoramuses have collectively ruined a country’s values and lifestyle and created a debt-ridden enslavement to banks where the more debt you have the apparently more rich you are.
World economic growth at year 2000 levels and falling..
Loaded with trillions more debt than anytime in history.
Imagine such debt disasters writ large for masses of over-leveraged Australians living in capital cities such as Sydney and Melbourne.
Yes, yes, yes – we’re all in agreement and we’re all preaching to the converted. And yet… I dunno, I’ve got a bad feeling that we’re going to be stuck with unaffordable housing for a while to come.
We still haven’t seen QE on a massive scale in Australia, or experienced a recession, let alone a depression in a generation or more, and let’s face it, our politicians are self-serving idiots.
So until we have a straight-talking, anti-corruption, Bernie Sanders-type progressive in Australia, I fear nothing will change any time soon. The 1% will continue to get richer and everybody else will get poorer.
I hope I’m wrong!
It’s been reported that less than 10% of properties purchased under Negative Gearing are new stock
http://www.abc.net.au/news/2016-02-15/janda-nothing-to-fear-from-negative-gearing-reform/7168716
This is a change for the better.
Anyone who loses from this made some bad choices and only has themselves to blame.
Here’s a forum thread about the young couple, Kate is also a member and making a lot of posts in this thread. Looks like a big wanky back patting exercise to me.
https://propertychat.com.au/community/threads/lost-millions-of-dollars-in-property-and-still-smiling.7856/
I’m shocked at some of the comments though…
Kate Moloney in regards to responsibility in paying back those loans:
“Actually we are negotiating. We could walk away, but We want to take responsibility for our actions … ”
So I’m assuming what she means by walking away is they can declare bankruptcy, the bank then wears it. Pretty piss poor IMO.
@21
Reading through property chat IMO Kate has a great narcissistic edge. Reading her posts I’d say she drinks a large cold jug of denial each morning. You’d think life has just comedown to property ownership. OMFG!
Who’s the idiot now?
As for the book..An idiots guide to failure?
Property speculators are just plain lazy with no imagination and the sole motivation of living off the hard work of others. They produce nothing and are easy targets for banks who also print money from nothing. This country needs people who create projects that enrich our environment. Small business people who work hard to improve the economy and create employment are discriminated against by overwhelming regulation and taxes. Governments love the wealth effect created by speculation and favour the non-producers to the detriment of the economy as a whole. The bursting of the property bubble is inevitable and will come as an enormous shock to all those congratulating themselves on buying a little shit-hole now worth millions. Sad to see the Kates & Matts of the world being sucked into the debt vortex when they could be doing something useful.
Kelvin Thomson (Aus.Labor Party).In 2007 said that, “Poor Australians are struggling to pay rent while taxpayers bankrolled units for foreign students”. Labor’s homeless housing funding went to asian property developers and to asian students. So Australian taxpayers ended up funding Rudd’s $4.5 billion NRAS (national rental affordability scheme) to subsidize foreign students buying into up market Sydney housing.
Dymphna Boholt fined for making false claims at her seminar. (She had Kate & Matt on stage at her seminars as one of her success stories)
http://www.jenman.com.au/news_item.php?id=428
I was reading a fair bit on property chat (not something I normally do) but the threads where Kate is active.
There is something wrong with her, she still talks and acts like a success, a motivator, a leader, and claims that the failure was really just a cleansing and now she is all about empowering people and using her intuition to move forwards again! All this spiritual nonsense! But it was her completely dumb and irresponsible actions that got her in a $3 million dollar mess. I think the fact that she can (and I hear she has) can just declare bankruptcy and walk away from the whole mess has made it all ok and the fact it was never her money in the first place. Some guys on the forum who are mortgage brokers say she will probably be able to get a mortgage again someday if she saves enough capital. Someone like her should never be trusted to invest a single dollar of anyone else’s money for the rest of her lifetime. I mean so what if she learned from her lessons. Unlike most people she couldn’t see that when a house in the middle of nowhere costs more than a house in the suburbs of a big capital city it might not be good value at all.
One guy was asking her why she doesn’t solve her financial problems by investing in more property!
Yeah right like on which planet is she going to get another loan to invest in property while she is negative $3 million and bankrupt??!
And this seems to be the attitude of everyone on the forum, buy property = only way to make lots of money.
Other people have asked her a few times if she is mentoring now! Because naturally she is such a great expert at property investment!
Seems she has a few people on the forum interested in her book.
“Property speculators are just plain lazy with no imagination and the sole motivation of living off the hard work of others”
Exactly the same as stock market investors, or interest seeking cash investors, etc. Still the same old palpable tall poppy syndrome .
@27 ewok musky
Three things: The first, a land-lord uses debt (aka someone else’s money), then expects tenants and future purchasers to pay for it all.
Second: a stock market investment is a non-fixed asset that must move and innovate. If it doesn’t the company folds, quickly. VS: How many land-lords refuse to modify, improve or fix their holdings? The only time improvements happen is if the property is to be flipped.
As for interest seeking cash investors, that is their savings, which to achieve they have had to have the discipline to spend less than they earn. It is all theirs, no one else’s.
There’s a massive difference. The fact that you fail to see that, shows, ironically, no imagination. Fancy that eh?
Yeah also have to disagree with ewok there.
Most speculators (over 90%) purchase existing property so do not produce anything at all, or stimulate any new jobs in the economy. Over 70% of them are also negatively geared meaning they they have largely used someone else’s money rather than their own.
Stock market investment most of the time provides funds for companies to produce goods & services, and stimulates new jobs to be created in the economy. Stock market investment actually has a lot more work involved in it than property speculation. The ones doing it for a living using other people’s money need to do study and training before working full time in the field. The ones that casually invest in the stock market usually do it with their own money. In contrast the dumb speculator girl from Moranbah had no formal training, went to a few stupid seminars, then straight to the bank to fill in a bunch of loan application forms.
Cash investors provide banks with the funds that facilitate loans to many businesses. The businesses can now produce goods & services, jobs etc.. as above. Cash investors only receive a little in return for their money and they don’t expect to be made wealthy from it. Cash investors also use their own money rather than expect it to be given to them from someone else. Cash investors don’t burn millions of dollars of other people’s money without a second thought and then write a book how fulfilling it was.
There will be a story on 60 minutes on Sunday night, I hear they have interviewed her as part of their story.
” Over 70% of them are also negatively geared meaning they they have largely used someone else’s money rather than their own.”
How do you know that? You dont. You just hyperbole to prop up your own argument.Negative gearing is not often a windfall as you think. try it some time, instead of endlessly whining about it. It is not making that many people rich.
What bogans, should have bought in Sydney. GUARANTEED 10x increase of SYD house prices in next 4 years!!
Kate has a book to sell, an I bet she plans on selling a few million of them:
http://www.katemoloney.com/
Ha ha ha! Suffer in yer dacks! I look forward to further stories of greedy debt-head idiots losing the lot.
The biggest line from the property guru’s is that there is “just not enough supply”…what crap, that’s because everyone owns 2-5 houses!!!…like these greedy fools who now are crying poor…i bet they would not be blaming the banks if their portfolio was worth double…typical australians, always blame someone else when wrong and be a guru if right..(i’m an Australian just fyi)
The 60min interview highlighted two important points from Kate’s mouth.
1. Yes…we were greedy!
2. The banks should have a duty of care…
How can you feel any empathy for any of these fools when they knowingly and intentionally mortgaged themselves to the eyeballs, rode their “fame as investors of the year” and now try to apportion blame at the banks for their own greed???
Did they not sit down and think about future ramifications of their actions?
Especially considering almost all their eggs were in one basket (Moranbah). How the hell did they think they going to pay $30k a month in repayments on interest only loans if anything happened?
Same goes for the other couple on the show that used their primary residence as collateral for their $2.3m units in Moranbah….what did they think was going to happen if they couldn’t make payments for the loan?
If the book is half as full of hot air as the interview is – save your money to buy any (former) asset or belonging that these fools will be selling at the fire-sale when the inevitable bankruptcy kicks in!