Property as a business not investment.

Looks like limiting beliefs have been covered (and with a far better description than I would have written)

To answer the other previous qn - I plan to fund my retirement through cashflow businesses...

Here is hoping I can afford my addiction to powdery white substances without putting that back too far!

Ronulas said:

As you Corsa and Acey have pointed out, nothing is impossible. Just sometmes seems impropbable. My "limiting beliefs" as you put it, comes from that improbability.

Click to expand...

Hi Ronulas



Before I started out, 1 Property was impossible.

Then I associated with a few people who had a couple of IP's, it became less of an impossibility but more probable that I would get 1 IP.

Now, I look at people who have 20+ properties like the Brenda's and a few other investors that I know and I think that this is possible for me (fingers crossed )

Some people I talk to are amazed that I have got 8 whereas now I want to take it to that next level. We are all on some spectrum of our own reality, and I think that Tcocoro is asking the forum how he can get to that next level as well. Whichever level you are on, keep in mind that at some stage you probably thought what you have now was not possible but now you have it so it is now a reality.

Turning the mind around can be an amazing thing and once its turned, you cant turn back.

Good luck with everything

Best Wishes

Corsa

My story in a nutshell

I have just come back from Canberra and have not been able to reply till now. I am amazed and the amount of feedback from my original post.

I am still reading through the posts but wanted to quickly write a reply for now until I have a chance to finish reading all posts and answering all questions which are varied and many.

However quickly reading through some of the posts I got the impression that there is scepticism on my apparent success.

In my original post I thought it best to not delve into the details of my purchases as I wanted to bring more attention to the questions I had rather than trying to stroke my ego with any kind of wow factor regarding the number of properties I have amassed.

Below I will provide my story in a nutshell and I hope this provides some light to the "hows" of my original post. I will then post a detailed answers to people answers\questions to my original post i.e. book keeping, strategy etc which I want to learn more about.

My story, I am 24 and I have finished a bachelor of computer science degree at USYD majoring in computer science and economics. I started university at 18 and finished at 21 (3 year course). I did 36 hours a week in order to complete the course in 3 years rather than 4.

After completing my studies I worked at PwC as an IT consultant and then IBM which I left only early this year which I consider my resignation from PAYG.

Where did I find the time to open a cafe? start a finance brokering business? invest in property?

If anyone here knows or is an IT consultant knows that for the past 2-3 years the IT industry has been tough and as a consultant this can be prolonged periods on the beach or doing nothing.

During these times of doing nothing I thought of investing I tried shares but after reading 1000 books I concluded that first I needed money 100k at least as investing with 20k just wont work. (I tried investing but found it too hard to balance risk mitigation and % return on such a low amount)

So my strategy began, invest in property and use the equity to invest in shares. (which has since changed to invest in property and invest in business, later I will mix share trading but have not done so yet).

I didn’t have much money so I tried to find a cash flow positive property and found one at Glenmore park 272,500 purchase at 95% lend. It wasn’t cash flow positive but very close.

I then felt very defeated for i planned for 6 months and now I have a property that would take years to appreciate so I went looking for another property and that’s when I went to Canberra thinking it would be a farming community.

1st stop Jerrabomberra. What a head turner I found it incredible the property boom was in full swing and the properties looked great. I mention this because I thought buying in Canberra would involve buying a fibro house surrounded by cows "I apologise to all Canberians for my Sydney City ignorance". (This is a lesson of moving out of your comfort zone)

I had a limit on how expensive the house I wanted to buy could be this was 300k. After looking around I found this to be impossible but then I saw an agent who said but if you build you can probably get something under that figure. I said great looked into it and found that land and construction would cost 260k! not including interest etc.

I purchased this property as well at 95% but on completion got valued at 380k. I used the equity to setup an cafe which provided me additional income and in combination with rents allowed me to purchase more properties.

ANZ had refused to lend me anymore money so I approached another funder (this was a major step as I found smaller lenders to be much more flexible and will to find away around financing limitations). I asked about everything and found that some funders provide loans against valuation. This meant if I found properties at cost which was 80% of valuation I could buy without a deposit.

So this is when it all began, I looked for the cheapest high quality builder and then concentrated on finding the cheapest block of land. Simply right? Sounds easier on paper but its possible if you sweat blood negotiating.

So basically I started buying this way, IBM provided income, rent provided income and so did the cafe.

I started to find more and more deals and hence more and more people got interested with what I was doing.

I provided brokerage services to such people and the growing numbers of investors meant I was able to negotiate ever discounted prices for carpets, building etc. etc.

So now I am here today 2 years later with an ever growing property portfolio, roaring brokering trade and successful cafe.

I hope this quick summary of my property investing career provides some insight and some validation of my story, probably not as sceptics will always be sceptics but for those who are snoopy please feel free to check rpdata and search me up you will find Glenmore park and the price and year will at least show I started 2 years ago unfortunately rpdata doesn’t cover Canberra.

I will keep reading the posts and reply concentrating on my original question and again apologies for taking so long to reply! Please note that I am not offended by anyone scepticism and welcome it as long as its backed with But how could you do this when "blah" is in your way and "Serviceability" and this and that. This way I can respond.

I look forward to reading the rest of the posts.

Congratulations tcocaro,

Thats a wonderful achievement, and a journey all investors (young and old alike) can learn something meaningful from.

All the best for the next stage of your life, and beyond....

Jamie.

Still amazed.

tcocaro,

Excellent read. I knew you had a good story to tell. I take all my "limiting beliefs" back. Well done on finishing you bachelor so quickly and picking up a good job for leverage and an even greater well done for your success in the buisness\property game.

On behalf of everyone else who responded to your post. There was no one else besides myself who dispayed any skeptisism. Everyone responded in good faith that you were legit.

I have to laugh at your description of Canberra. When I was posted here I thought similar things myself.

I did not know you could loan money on valuation befor the property was even developed, so thanks for that info.

Where did you end up setting up the cafe? Canberra or Sydney?
Do you run the brokerage services by yourself or do you employ someone else?
Can you still build in Jerrabomberra and achieve such instant capital growth immediatly or is the place priced out?

I have no doubt after reading your recent post that you will succeed in whatever you put your hand too. You have worked hard from the very begining and the results speak for themselves. Thanks for an interesting read.

Hi tcocaro,

Great story.

How did you know that the property marktet wasn't going to run out of steam 2 years ago leaving you highly leveraged ?

Do you still intend to buy IP's now as long as you have the funds ?

Cheers

*To the rest I am still writing up my post, please stay tuned as there is a lot of posts to go through, digest and reply to.

WillG:

When you say run out of steam do you mean growing by 20%? For me a growth rate of 5% will suffice. 5% of 400k is 20k, this is sufficient to purchase another property.

In relation to being left highly leveraged this is why a portion of all capital gain is directed to cash flow businesses such as my cafe, brokering etc.

People keep arguing about how servicability limits ones ability to get financing or ability to make repayments. My answer is to find ways to increase cash flow through businesses. Working is not the solution. Reason being is that work limits the time and focus you can put into research and expanding your portfolio.

I think this is more information than you wanted - I apologise.

tcocaro

I'm impressed with your thought process, at 23 your worked out that a business could provide the cashflow that would allow the purchase of more assets. I'm 36 now and I only started thinking about business's 12 months ago. I haven't been able to purchase any property since December 2003, serviceability is hampering me.

Well done!
Cheers
Quoll

lending at valuation

congrats tcocaro - an amazing start to a healthy financial future and an early retirement (if thats what you want) no doubt. I love hearing about the younguns!!! I am 25 and have 3 IPs - now hitting the servicability wall as I bought 1 +cf and 2 -cf and my wife just stopped work to have a baby. Now regretting the -cf properties a bit and getting itchy feet (ip1 april03 ip2 sept 03 ip3 april 04 and nothing since!)

I am considering options,including selling ip1 to produce deposit and use a similar sized loan to buy the next place (would have to be a good deal to be worth the loss of a property) But I was particularly interested in what you said about the lenders who were willing to lend at 80% of the val regardless of purchase price. Would you be willing to email me which ones?
([email protected]) sorry not sure how to do pms on this forum yet. I know you have to negotiate a great deal to get out of the deposit altogether but i would love to have a go at it. Also - did you get the vals done by an independent company or did the bank go through and do it?

Apreciate any more thoughts on this under discussed topic...

Cheers

Great stuff Tcocaro, but seems like very high risk though.
My opinion is to maybe to increase your equity and get some cashflow from your IP's.
And make sure your always ready for a tax audit.

surf's up!