Young investors - tell all

alexlee said:

Oh, you meant don't compare oneself to the point where we do something stupid because we want to go too fast...... Sorry......

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No worries mate...no need to apologise.

With goals, lets say you want to eventually own 10 properties. The key is to figure out when you want it to happen, say 5 year from today, and that means you would need to buy 2 houses per year. The question is then this... Is this doable and rational? If it is, good, make that your goal and focus on your goal, what you must DO to get there and what you DO have instead of focusing on what you don't have.

Hope that makes sense.

I agree with SOS completely.

Sultan of Swing said:

If you just want an idea of market value, ask a local REA to do an appraisal. Be up front with them and tell them you're not selling. If they're still happy to do it you MAY have yourself a good agent who is looking at the big picture and is there for the long term. I often give appraisals for people in that situation and look at it as an opportunity to build a relationship.

If you want to draw down equity you'll need a registered valuer. That will cost maybe $200 - $300 and is usually arranged by your bank.



Well done!! That's 3/4 more than I've been able to get my better half to read.

After reading a few more responses, I think its just a matter of time and growing into the debt, one loan at a time. I think as the equity increases her confidence will also increase.

As some have read in a recent post, we bought a block of flats (or as Geoff says, a flock of bats ) a couple of months ago and we have a debt of around 370k. Today we've made an offer on another property ( and I'm anxiously sitting here waiting for the damn agent to call, lol) and wifey is ok with it.

Something that i thought of that will help is to write a manual explaining what to do if something happens to me. eg, with life insurance money, invest it here, payments will come out and go there etc. Contents insurance is with XYZ, landlords insurance is with ZYX, shares are sold here etc etc.

So I guess I should start....

Cheers

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This reminds me of a post Olly did early last year.
Shock horror her life was turned upside down.She needed to inform her beloved of all her investing and how to follow it.
Olly posted a thread on making a kind of diary for those that are left behind and have to try and follow the paper/money trail.
I had nothing to do at the time and thought oh what the hell, it will probably be a good idea and make it easier for me to quickly grab insurance numbers, account numbers etc.
Well buggar me probably a week after l had completed my info diary [it does take some time to do} my life got turned upside down.The best thing was l just had to walk into my office pick up my little info diary and say to Hubby if l dont come home its all in here!!
I strongly recomend you make an info diary, no matter what your age is or the value of your investments, you may find it easy to follow your paper trail, make it easy for your loved ones as well.
Cheers yadreamin

Hi guys,

I have no idea what age “young” is meant to be…..but looking at the age of some of the contributors I am extremely impressed with their level of knowledge and commitment to investing. Some of the achievements to date are staggering. Congratulations all.

The wife and I still consider ourselves to be reasonably young at 35….we reckon we’re about a third of the way along, with another good 70 years up our sleeves to enjoy it all. Not quite ready for the old folks home just yet.

We started out very humbly with the purchase of our first IP at the age of 23, and second IP when 25, all the while renting. We delayed buying our very modest first PPoR until the age of 27, when we were able to put a decent 90% deposit down, and borrow the other 9K off my parents to exclude the bank altogether on the purchase. We paid it off 2 months after moving in and had a big “title deed party”….that was good fun. Much champers was quaffed…..and big headaches ensued the following day.

Things seemed to snowball a bit after that. We sat for a couple of years in that PPoR and lived well below our means (despite our relations objections to upgrade) and started buying IP’s again.

One thing led to another – I remember a big colourful chart the wife and I used to keep updated on our bedroom wall. The assets zipped on past the big 1 MM mark about 5 years after we started. We didn’t consciously plan to keep going on and on, but applying the principles learnt from great teachers like Jan, Noel and my wife’s uncle, things just got a bit out of hand.

We jumped “investment ponds” about 2 years ago and starting buying assets like smelly warehouses…..something that never even crossed our minds a couple of years prior. About 11 years after we started we sailed past the 10 MM mark.

Last year we moved into our paid off dream PPoR in a pretty decent area as a reward for the hard yards we had put in previously. Just about to embark on a full reno so that’ll slow the whole proceedings down somewhat. Should send the “lifestyle” factor through the roof though.

Our portfolio number of props is still of modest size, only holding about 8 or so, so it’s reasonably easy to manage. We look at stuff now that is a few multiples of what our first PPoR cost us, so we don’t place a lot of emphasis on the number of properties held. An office block in the CBD or a big distribution centre near the airport is now more attractive to us than say a clutch of 100 houses / flats.

If the growth and value added exercises keeps heading in the same direction, we are actively shooting for the 70 to 80 MM mark by the time we reach 40. Only time will tell of course. Our three girls will be in high school by then, and I’m told it gets mighty expensive at that stage of proceedings. Beyond 40 I have no idea what will be in store…..but I envisage it’ll be pretty much same ol’ same ol’.

We like what we do, and find that one of the most enjoyable past-times is to lean over the fence out in the industrial wastelands and strike up a fascinating conversation with some old Greek or Italian gentleman who always seem to make our operations look decidedly amateurish.

Still plodding along with my day job, and still hesitant to ditch paid employment completely….the bosses still treat me like a numpty and I’m not ‘authorised’ to approve expenditure anything over $ 100. But it pays OK. We have made a small concession and I’ve quit the overseas gig and will be coming home to Australia permanently to manage the IP’s. My 64 yr old American boss is throwing me a retirement party in the next couple of weeks, which should be fun. I suppose I’ll pick up a job in Perth when I get back.

One of the strangest occurances is how the Bank handles us now. We’ve been shuffled from branch customers – to preferred customers – to premium banking – to private banking – and now they are threatening to shuffle us off to institutional banking….didn’t know there was such a thing ??

Anyway, we’ve had fun over the past 12 years playing around with our “dogboxes on a chunk of dirt”…..and looking forward to what life serves us up in the next couple of years.

Kudos, Dazzling! Always love your posts, and 35 is young (didn't used to think that way but now that I'm staring down the barrel of 30….)

Now THAT's the sort of story that gets me all excited! Gives me some signposts to follow on my own investment journey. I’m making plans for the next stage (starts after I come back to Sydney around '08, with some decent credit lines and a lot of ideas) and your story gives me a glimpse of the possibilities.
Alex

Great post Dazzling.

Its nice to finally hear a bit more about yourself and your investing history. (You may have posted it before but with the number of posts nowdays, I missed it )

I think one of your biggest assets (advantages) is, your wife and you are likeminded. It would be awesome to be able to discuss investing with and interested partner.

Cheers

Talk about inspiring !!!!!!!!!!!!!

Dazzling said:

The wife and I still consider ourselves to be reasonably young at 35….we reckon we’re about a third of the way along, with another good 70 years up our sleeves to enjoy it all. Not quite ready for the old folks home just yet.
We started out very humbly with the purchase of our first IP at the age of 23, and second IP when 25, all the while renting. We delayed buying our very modest first PPoR until the age of 27, when we were able to put a decent 90% deposit down, and borrow the other 9K off my parents to exclude the bank altogether on the purchase. We paid it off 2 months after moving in and had a big “title deed party”….that was good fun. Much champers was quaffed…..and big headaches ensued the following day.
Things seemed to snowball a bit after that. We sat for a couple of years in that PPoR and lived well below our means (despite our relations objections to upgrade) and started buying IP’s again.
One thing led to another – I remember a big colourful chart the wife and I used to keep updated on our bedroom wall. The assets zipped on past the big 1 MM mark about 5 years after we started. We didn’t consciously plan to keep going on and on, but applying the principles learnt from great teachers like Jan, Noel and my wife’s uncle, things just got a bit out of hand.
We jumped “investment ponds” about 2 years ago and starting buying assets like smelly warehouses…..something that never even crossed our minds a couple of years prior. About 11 years after we started we sailed past the 10 MM mark.
Last year we moved into our paid off dream PPoR in a pretty decent area as a reward for the hard yards we had put in previously. Just about to embark on a full reno so that’ll slow the whole proceedings down somewhat. Should send the “lifestyle” factor through the roof though.
Our portfolio number of props is still of modest size, only holding about 8 or so, so it’s reasonably easy to manage. We look at stuff now that is a few multiples of what our first PPoR cost us, so we don’t place a lot of emphasis on the number of properties held. An office block in the CBD or a big distribution centre near the airport is now more attractive to us than say a clutch of 100 houses / flats.
If the growth and value added exercises keeps heading in the same direction, we are actively shooting for the 70 to 80 MM mark by the time we reach 40. Only time will tell of course. Our three girls will be in high school by then, and I’m told it gets mighty expensive at that stage of proceedings. Beyond 40 I have no idea what will be in store…..but I envisage it’ll be pretty much same ol’ same ol’.
We like what we do, and find that one of the most enjoyable past-times is to lean over the fence out in the industrial wastelands and strike up a fascinating conversation with some old Greek or Italian gentleman who always seem to make our operations look decidedly amateurish.
Still plodding along with my day job, and still hesitant to ditch paid employment completely….the bosses still treat me like a numpty and I’m not ‘authorised’ to approve expenditure anything over $ 100. But it pays OK. We have made a small concession and I’ve quit the overseas gig and will be coming home to Australia permanently to manage the IP’s. My 64 yr old American boss is throwing me a retirement party in the next couple of weeks, which should be fun. I suppose I’ll pick up a job in Perth when I get back.
One of the strangest occurances is how the Bank handles us now. We’ve been shuffled from branch customers – to preferred customers – to premium banking – to private banking – and now they are threatening to shuffle us off to institutional banking….didn’t know there was such a thing ??
Anyway, we’ve had fun over the past 12 years playing around with our “dogboxes on a chunk of dirt”…..and looking forward to what life serves us up in the next couple of years.

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Daz,
Awesome mate. I will print this out as is and put it on the side of my desk to give me a boost to push harder towards my investment goal. Well done, you are a great role model for people on this forum to reach for the stars. I really do think this thread should be put in a sticky section somewhere as new young investors should be able to find this easily. Lots of newcomers come onto this forum asking questions about how to get started and how soon to buy more etc, this thread would be invaluable to them [and us]. Well done Daz, sounds like you've got the whole package together mate. The balance between family, relationships & investing is so critical, if one part is out of equilibrium, its so hard if not impossible to achieve true wealth.

JIM

investment strategies

Just a reminder that property (even investment property is cyclical)... so to ip newbies out there who are seeing dollar signs in their eyes from all these glowing posts of the number of young people who are 'making money'...As Jim Sinclair, a famous financial analyst once said,

"Bulls make money, bears make money, pigs don't!"

Profit or losses are not realised until the stock is sold, this includes shares, property, cars etc. I notice that property owners including myself tend to put higher price on their house than what the market is willing to pay. The trick is timing the market and not to get too greedy!!!

I however see a lot of people just can't help themselves at the trough until its too late!

Hey Welcome to the forum !!!

Im probally in the same boat you . I am 18 years old about turn 19 in May. I have been researching , reading and educating myself for probally the last 4 years on property investing. Despite getting into uni I choose to work instead. After just finishing my HSC last year I was lucky enough to get a job in finance in a large bank paying just under 40 k a year which has given me a good start to my savings. Whilist I am living at home I am saving aproxmentaly half which is I think is a good effort after tax and the small living exspenses I have. Some of my mates dont even have job and they spend more money than me. I have found that if you budget and go over your finances and are strict with yourself it becomes a positive habbit. In about 2 and half years I am looking at buying a place for aprox $300 k up at Newcastle, I live in Sydney and I think newcastle and suburbs around newcastle have got alot of potential. Hopefully if I can get two properties in my name before I turn 23 I will be happy. From their I will used the equity to build my porfolio up.

Hi all,
All these stories are inspirational, nice and all but unfortunately I dont see it as achievable in sydney. The properties most of you mentioned buying a few years ago are just too cheap to be in sydney. I bought one for 350k in 2003 and it is now worth 300k. I was 22 when I bought it and it has set me back heaps now. The rental yeild is low and the capital gain is negative. It hasnt put me off property investment but only made me want to invest smarter next time. I borrowed 350k then and after making extra repayments now only have around 265k owing. House is worth around 310k. Three years have passed and im looking for something else. I want to use some of my equity to get something around 250k-300k.

I only dream about one day coming on this forum and writing a post that is also inspirational and something that others can learn from but for now I will have to wait and not loose sight of the bigger picture. I am 26 in may and aim to have 4 properties by 31. Im also getting married in september so fingers crossed..

Anyway congrats to all and u should be proud...

Tiger, you don't have to be limited to Sydney. I'm from Sydney and all my properties are in Brisbane and Perth. I remember when I bought in Brisbane all my Sydney friends said 'Why are you buying in that backwater?' When I was in Tokyo and speaking to colleagues who grew up in New York, they asked me 'Why would you want to buy property in a backwater like Australia?' You don't have to own property in the biggest cities to be a rich property investor: witness guys like Steve McKnight.

Also, don't be too concerned about the number of properties. It's the value, loan and implied risk (one $1m property is riskier than 4 x $250k properties in terms of vacancies). When I first started buying, the bank wouldn't lend me more than $150k (in 2000) which shut me out of the Sydney market. Strangely enough, I bought one Brissy place and took out a $150k loan, and then less than a year later bought my second IP and took out another $150k loan. So I had $300k in loans by the end of that year even though the bank insisted I could only borrow $150k.

Start on something cheaper, then work your way up.
Alex

I think what alot of people get caugh up in is the stigma of investing in certain areas. I think to be a succesful investor you have to take the personal feelings out of investing and take on a buisness like approach that isnt subjective. Just because you dont like an area of place doesnt mean its not a good place to invest in. The underlying figures such as rental return , growth ect as well as future prospects should be what you are looking at. If you can find a property in sydney that gives you the return you want that you can afford go for it. If not look else where . Their are many different markets and im sure one will suit you. Although im not an investor yet , I think its best you stick to one market and specalise so you can consolidate your reaserch into one area and know the area like the back of your hand. When your starting out anyways ....

gigigoodyear said:

Just a reminder that property (even investment property is cyclical)... so to ip newbies out there who are seeing dollar signs in their eyes from all these glowing posts of the number of young people who are 'making money'...As Jim Sinclair, a famous financial analyst once said,

"Bulls make money, bears make money, pigs don't!"

Profit or losses are not realised until the stock is sold, this includes shares, property, cars etc. I notice that property owners including myself tend to put higher price on their house than what the market is willing to pay. The trick is timing the market and not to get too greedy!!!

I however see a lot of people just can't help themselves at the trough until its too late!

Click to expand...

Very true. Property is cyclical. Average properties in median priced properties in median suburbs will appreciate over the long term. With some gearing even a 5% average increase will translate to big gains over 20 years. However, if you buy at the top of the market you may go through a few years of pain before you see the gains, and that might slow down your plan.

e.g. if you'd bought at the top of the bubble in the late 80's, you would have to wait until the late 90's before you saw gains. During the 80's you would have gone through hell paying high interest rates, the psychological pressure of watching your property go down, etc. However, if you believe in the general upward trend of property (and I do) you would have slowly accumulated property even during the 90's, the would have met the late 90's boom with a much bigger portfolio.

The conservative way of investing in property is to slowly accumulate property, keep the LVR manageable and make sure you can survive worst case scenarios (say, all your properties are vacant for 6 months, interest rates go up by 3% overnight, AND your salary halves). My own plan is about 80% 'time in the market' and 20% 'timing the market'.

Strategies such as buying off the plan with a view to flip it, when you can't settle yourself if you needed to, or having -ve cashflow you can't possibly manage unless you can sell properties for a profit is what catches 'investors' when the market turns.
Alex

investment strategies

Yes, I agree. There are a number of investment strategies which one can choose. I however will move back and forth through different asset classes depending on the return. If property is returning less than 5% then my money is better off working for me in shares at 12-20% and vice versa depending on market cycles. Sometimes I will sit on cash (currently at 6%) until I can find better value assets for my money. For instance, I will sell investment property at the top of the cycle and then buy it back near the bottom. But some are prepared to stay for the long haul through thick and thin which is another investment strategy but the cycles are too long for me when I know there is always a bull market happening somewhere in the world.

Some posters here appear over leveraged with negatively geared multiple properties and if the market cycle turns for the worse (ie higher interest rates) they are stuffed! Which is good for me then I will be buying at bargain basement prices..heh...heh..as people run for the exits.

gigigoodyear said:

Yes, I agree. There are a number of investment strategies which one can choose. I however will move back and forth through different asset classes depending on the return. If property is returning less than 5% then my money is better off working for me in shares at 12-20% and vice versa depending on market cycles. Sometimes I will sit on cash (currently at 6%) until I can find better value assets for my money. For instance, I will sell investment property at the top of the cycle and then buy it back near the bottom. But some are prepared to stay for the long haul through thick and thin which is another investment strategy but the cycles are too long for me when I know there is always a bull market happening somewhere in the world.

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Gigigoodyear, can I ask what your past experience has been with selling IPs at the top of the cycle and buying near the bottom? When was the last time you did this, and how did you identify the top and the bottom?

With your statement about shares returning 5% v shares returning 12-20%, what about the effects of gearing and the relative safety (in the sense that there are no margin calls on mortgages) of property?
Alex

finding market top

Alex,

bought property in brisbane in 1997 and sold end of 2003 as i felt the market was becoming overheated. I think all those tv shows on property auctions and renovations and having the conversations all around me re increases in property prices at dinner parties was a signal that market was topping. Also when taxi drivers and neighbours start giving you property investment advice...i even couldn't believe that my accountant (who is not a licenced financial adviser) was also giving me property advice about the best suburbs to invest in while he was doing my tax return. well...all these were just red flags to quickly dump and run.

Of course, no one rings the bell at the top or the bottom of the market. I was just keeping alert about what was happening around me. Most of this information I gleaned from reading books about the history of stockmarket crashes and manias. History does repeat itself and no, it is not different this time!

By the way, I lived in the property for the first two years then rented it out as I was going back and forth overseas for long periods of time.

After selling, I invested the money in listed property trusts, mutual funds and top 100 Aust companies stocks with the money and returns ranged between 12% - 17% so better than the bank cash deposit rate. Now invested in silver (up 45% this year) and gold (up 26% this year) and other commodities. Bull market should last another 3-5 years.

I am waiting for the property market to bottom again so I can buy back in. Again, I am watching for those little signals from the people around me. When they start telling me that property is a poor investment then that's the time for me to jump in and buy.

finding the bottom

by the way, i forgot to add - this forum can also act as an indicator of the top or bottom of the market. When I see less and less posts in this forum (ie people losing interest in property) and more and more people bearish about the property market and slagging it then I know that I am getting close to the bottom. At the moment, many people in this forum are still bullish about property.

gigigoodyear said:

by the way, i forgot to add - this forum can also act as an indicator of the top or bottom of the market. When I see less and less posts in this forum (ie people losing interest in property) and more and more people bearish about the property market and slagging it then I know that I am getting close to the bottom. At the moment, many people in this forum are still bullish about property.

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Due the nature of this forum people are naturally biased towards property but I would argue dispute the fact that this forum represents the bulk of the population (which drives the market) as people here's level of financial intelligence tends to be quite higher.

gigigoodyear said:

At the moment, many people in this forum are still bullish about property.

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Hmmmm........... Maybe because it's a property forum.

i think also because the majority of us here are intelligent and well researched property investors, perhaps we get "more" bullish towards the bottom of the market.

a good indicator of a boom market might be how many new investors are waahooing on this forum - and there ain't many.

i tend to use the mass media as my guideline to how the lemming masses are thinking. at the moment property is out of favour for the masses of uneducated one off investors ... read into it what you will.

Wa-hoooooooooooooooooooo

lizzie said:

a good indicator of a boom market might be how many new investors are waahooing on this forum - and there ain't many.

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I dunno, there's been a bit of WA-hooing coming from the far west during the past year or so!!! True, the roars may have dulled a little, but they ain't died down completely!!! IMO keep it goin' ppls, "make hay while the sun shines" I reckon!!!